HB2232 – Assessing petroleum products supply and pricing.
Prime Sponsor – Representative Doglio (D; 22nd District; Olympia) (Co-Sponsors Mena, Berry, Bateman, Ramel, Ormsby, Reed, Fosse, Macri, Pollet, Peterson, Duerr – Ds) By request of the Governor.
Current status – Referred to the House Committee on Environment & Energy.
Next step would be – Scheduling a hearing.
Legislative tracking page for the bill.
SB6052 is a companion bill in the Senate.

Summary –
The bill would have the Utilities and Transportation Commission collect, analyze, and report on operational, pricing, and cost information from fuel suppliers, refineries, and other entities in the supply chain for transportation fuels sold in the state. It creates an independent Division of Petroleum Market Oversight with a director appointed by the Governor.

The Division would provide independent oversight and analysis of the transportation fuels markets to protect consumers by identifying market design flaws, market power abuses, and any other ways in which market participants act to harm competition or contrary to the best interests of consumers. It would be authorized to compel witnesses to testify under oath and to subpoena relevant material including current and historical pricing and sales data and industry contracts.It would provide guidance and recommendations to the Governor, as well as members and other divisions of the UTC on issues related to transportation fuels pricing and transportation decarbonization in Washington, and would report its findings and recommendations to improve market performance at least annually to the Legislature, the Governor, the UTC, the Attorney General, and the Department of Licensing.

Refiners, marketer, transporters, storers, pipeline operators, terminal operators, and ports through which transportation fuel is imported or exported would have to report a range of specified information to the UTC on a monthly or an annual basis. The Commission could require additional information needed to fulfill its responsibilities under the bill, and would create a quarterly public report summarizing the collected monthly data from refiners and major marketers, aggregated to preserve the confidentiality of protected information. Records of contracts, transactions and prices would have to be retained for three years so they would be available for review by the UTC. Importers of fuels by ship would have to notify the UTC of arrivals in advance and provide specified information about the delivery; refiners and nonrefiners entering into spot market transactions would have to provide monthly reports on those. Refiners would have to report on maintenance and turnaround activities. (The Legislature intends these to be carried out in a way that ensures that there are the minimum levels of fuels in production or reserves to adequately and affordably meet demand.) They would also have to report on unplanned maintenance events.

In consultation with the Department of Ecology, the UTC would adopt a method for refiners to use to quantify the volume-weighted fees or estimated costs associated with the clean fuels program that were embedded in various prices for wholesale transportation fuels. Those would be included in monthly reporting as well.

After notification, there’d be penalties between $5,000 and $20,000 a day for each day the submission of information was refused or delayed, up to a maximum of $500,000 per submission, as well as penalties for false statements or representations. There are provisions about protecting confidential information.

The UTC would analyze and interpret this information to explore:
(a) The nature, cause, and extent of any petroleum or petroleum products shortage or condition affecting supply;
(b) The economic and environmental impacts of any petroleum and petroleum products shortage or condition affecting supply;
(c) The demand and supply forecasting methodologies used by the petroleum industry in Washington;
(d) The prices charged by the industry, with particular emphasis on retail motor fuel prices including sales to unbranded retail markets; any significant changes in those; and the reasons for changes;
(e) The profits, both before and after taxes, of the industry as a whole and of major firms within it, and where in the supply chain these profits are realized, including a comparison with the profits, return on equity and capital, and price-earnings ratios of other major industry groups and major firms within them;
(f) A comparison of companies’ profits at their Washington refineries and at any other refineries they own in the United States;
(g) Emerging trends relating to the supply, demand, and conservation of petroleum and petroleum products;
(h) The nature and extent of the industry’s efforts to expand refinery capacity and to acquire additional supplies of petroleum and petroleum products; and
(i) The development of an information system that will enable the state to take action to meet and mitigate any petroleum or petroleum products shortage or condition affecting supply.
The commission would also analyze the impacts of state and federal policies and regulations on the supply and pricing of transportation fuels. It would submit a quarterly public summary of its analysis and interpretation of the information it gathered to the Governor and the Legislature, and prepare a biennial assessment of it. (It could hire consultants to help with its work.)

Before July 2026, and every three years after that, the Commission would submit an assessment to the Governor and the Legislature, developed in a public process, that:
(i) Identified methods to ensure a reliable supply of affordable and safe transportation fuels in Washington, including considering the potential benefits to consumers of creating estimates for the fuels that should be held in reserve by refiners to prevent shortages that result in sharp price increases, and,
(ii) Evaluated the price of fuels and other refinery products, consideringh market demand at three, seven, 10, and 20-year intervals, and examined whether branded fuel additives have any impact on fuel efficiency and vehicle emissions, and if so, how much.

It would also assess the presence and availability of retail outlets, including monitoring changes in their availability that contribute to increasing retail prices in local and regional areas; consider different levels of supply conditions and assess the impact of potential refinery closures in Washington; and include an analysis of the impacts on production of planned refinery maintenance, unplanned maintenance, and turnaround. In consultation with the Department of Labor and Industries and stakeholders, the UTC and the Division would consider ways to manage necessary turnarounds and maintenance that would protect the health and safety of employees and the public, and minimize the impact of maintenance-related production losses on fuel prices. It would evaluate the utility and feasibility of alternative methods to maintain adequate supplies of transportation fuels, including delivery alternatives for fuel and components of fuel, such as delivery by rail, a publicly maintained strategic fuel reserve, and other solutions beyond the activities of refineries and petroleum market participants. It would propose solutions to mitigate any impacts, including an assessment of the employment impacts and the cost and cost-effectiveness of any proposal. The assessments would have to include recommendations and alternatives, and the first one would have to include the evaluation of transportation fuels refining.

By 2026, the UTC and Ecology, would prepare a transportation fuels transition plan, taking into account findings of the assessment. It would have to include include a discussion of how to ensure the supply of transportation fuels is affordable, reliable, equitable, and adequate to meet demand. It would have to be prepared in consultation with a multistakeholder, multiagency work group they convened to identify mechanisms to plan for and monitor progress toward the state’s reliable, safe, equitable, and affordable transition away from petroleum fuels in line with declining demand and its climate goals. (The bill specifies a list of stakeholders that would have to be included in the work group.)

The bill would make it unlawful for a person to make deceptive environmental marketing claims about transportation fuels, whether they were explicit or implied, and authorizes enhanced penalties under the consumer protection laws for violations.