Z-0642.1
HOUSE BILL 2232
State of Washington 68th Legislature 2024 Regular Session
By Representatives Doglio, Mena, Berry, Bateman, Ramel, Ormsby, Reed,
Fosse, Macri, Pollet, Peterson, and Duerr; by request of Office of
the Governor
Read first time 01/09/24. Referred to Committee on Environment &
Energy.
1 AN ACT Relating to petroleum products supply and pricing;
2 amending RCW 19.86.140 and 42.56.330; adding a new chapter to Title
3 19 RCW; creating a new section; prescribing penalties; and declaring
4 an emergency.
5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
6 NEW SECTION. Sec. 1. The state of Washington finds and declares
7 that in the midst of an energy transition away from reliance on
8 fossil fuels, but until that transition is complete, the petroleum-
9 based transportation fuels are of critical importance to the people
10 and businesses of the state. The legislature further finds and
11 declares that the Washington state government requires: At all times
12 a complete and thorough understanding of the operation of petroleum
13 markets, to enable it to respond to possible shortages, price shocks,
14 oversupplies, or other disruptions; and access to timely reporting,
15 assessment, and data collection activities to serve information and
16 policy development needs of the governor, the legislature, public
17 agencies, market participants, and the public.
18 Washington consumers, state and local agencies, businesses, and
19 policymakers, planners, and enforcement agencies lack access to
20 sufficient pricing and operational information held by refinery
21 operators, fuel suppliers, and others in the supply chain for
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 1 transportation fuels. Such pricing and operational information for
2 transportation fuels is critical to understanding the cost basis for
3 prices, identifying improper pricing or supply control behaviors in
4 the market, and protecting Washington state consumers, government
5 entities, and businesses. Similar information is already available
6 for other critical fuels, such as electricity.
7 To protect consumers, Washington state must collect detailed
8 pricing and operational information from refineries, fuel suppliers,
9 and others in the petroleum products supply chain, analyze the data,
10 and provide summarized reports to the public and lawmakers to expose
11 relevant cost and pricing practices in the industry, and to identify
12 market design flaws, market power abuses, and any other manner by
13 which market participants act to harm competition or act contrary to
14 the best interests of consumers in the state.
15 Furthermore, to ensure that the market for petroleum products is
16 free of anticompetitive and predatory conduct, the legislature finds
17 that additional legal consequences are needed to ensure that
18 petroleum industry prices and practices do not harm consumers.
19 NEW SECTION. Sec. 2. The definitions in this section apply
20 throughout this chapter unless the context clearly requires
21 otherwise.
22 (1) "Commission" means the utilities and transportation
23 commission.
24 (2) "Destination facility" means any structure, group of
25 structures, equipment, pipeline, or device, other than a vessel, that
26 receives oil in bulk to or from a tank vessel, railroad car, or
27 pipeline, that is used for producing, storing, handling,
28 transferring, processing, or transporting oil in bulk. A "destination
29 facility" does not include any railroad car, motor vehicle, or other
30 rolling stock while transporting oil over the highways or rail lines
31 of this state.
32 (3) "Division" means the division of petroleum market oversight.
33 (4) "Environmental marketing claim" means a claim about the
34 environmental attributes of a product, package, or service in
35 connection with the marketing, offering for sale, or sale of such
36 item or service to individuals, or in business-to-business
37 transactions. These claims include those made in labeling,
38 advertising, promotional materials, and all other forms of marketing
39 in any medium, whether asserted directly or by implication, through
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 1 words, symbols, logos, depictions, product brand names, or any other
2 means.
3 (5) "Gross transportation fuels refining margin" means the
4 difference, expressed in dollars per barrel, between the volume-
5 weighted average price of wholesale transportation fuels sold by a
6 refiner in the state and the average price of crude oil received by
7 the refinery.
8 (6) "Major marketer" means any person who sells transportation
9 fuels or oil intended for use in Washington in amounts determined by
10 the commission as having a major effect on transportation fuel
11 supplies in Washington.
12 (7) "Net transportation fuels refining margin" means the gross
13 transportation fuels refining margin minus the refinery's operational
14 costs.
15 (8) "Operational costs" means costs, expressed in dollars per
16 barrel, necessarily incurred by the operator of a refinery in the
17 state to produce transportation fuels meeting Washington
18 specifications including, but not limited to, costs of labor,
19 electricity, natural gas, chemicals, maintenance, hydrogen, and other
20 intermediate oil products, federal renewable identification numbers,
21 obligation costs, logistics costs, and additive costs.
22 (9) "Person" means any person, firm, association, organization,
23 partnership, business trust, corporation, limited liability company,
24 or company. "Person" also includes any city, county, public district
25 or agency, the state or any department or agency thereof, and the
26 United States to the extent authorized by federal law.
27 (10) "Planned maintenance" means regular, periodic maintenance or
28 repair of one or more pieces of equipment within a petroleum refinery
29 that reduces output of transportation fuels at a level that may
30 affect market supply.
31 (11) "Refiner" means any person who owns, operates, or controls
32 the operations of one or more refineries in Washington.
33 (12) "Refinery" means any industrial plant, regardless of
34 capacity, processing crude oil feedstock and manufacturing
35 transportation fuels in Washington.
36 (13) "Spot market transaction" means a single bulk transaction
37 involving a maximum of one product and one delivery, with title
38 transfer occurring within one year.
39 (14) "Transportation fuels" means gasoline, gasoline blending
40 components, diesel, or diesel blending components.
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 1 (15) "Turnaround" means a planned, periodic shutdown, total or
2 partial, of a refinery process unit or plant to perform maintenance,
3 overhaul, and repair operations and to inspect, test, and replace
4 process materials and equipment. "Turnaround" does not include
5 unplanned shutdowns that occur due to emergencies or other unexpected
6 maintenance matters in a process unit or plant. "Turnaround" also
7 does not include planned maintenance as defined in subsection (10) of
8 this section.
9 (16) "Unbranded," as applied to fuel, means gasoline and diesel
10 fuel sold for wholesale or retail distribution to consumers without
11 proprietary additives or marketing under a brand name or trademark
12 owned or controlled by an independent refiner or an integrated
13 refining and marketing company.
14 (17) "Unplanned maintenance" means any maintenance or repair that
15 requires the shutdown of any part of the petroleum refinery that
16 reduces output of transportation fuels at a level that may affect
17 market supply, and was not scheduled as turnaround or planned
18 maintenance.
19 NEW SECTION. Sec. 3. The commission shall have responsibility
20 to implement sections 6 through 19 of this act and shall establish a
21 new organizational unit to collect, analyze, and report on
22 operational, pricing, and cost information from fuel suppliers,
23 refineries, and other entities in the supply chain for transportation
24 fuels sold in Washington. In addition, the commission shall provide
25 administrative support to the division created within the commission
26 under RCW 19.86.140 and sections 4 and 5 of this act.
27 NEW SECTION. Sec. 4. (1) The division of petroleum market
28 oversight is hereby established in the commission.
29 (2) Notwithstanding the commission's structure, the division
30 shall operate with authority independent of the commission's
31 authority.
32 (3) The division must be led by a director, who is appointed by
33 the governor and holds office at the pleasure of the governor.
34 (4) The director shall employ and prescribe the duties of other
35 staff members as necessary to carry out the provisions of this
36 section. The staff must include, when feasible, economists,
37 individuals with expertise in transportation fuels markets, and
38 investigative staff with legal training.
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 1 NEW SECTION. Sec. 5. (1) The division shall have the following
2 powers and duties:
3 (a) Provide independent oversight and analysis of the
4 transportation fuels markets for the protection of consumers by
5 identifying market design flaws, market power abuses, and any other
6 manner by which market participants act to harm competition or act
7 contrary to the best interests of consumers in the state;
8 (b) Provide guidance and recommendations to the commission
9 relating to the development of the assessment required by section 13
10 of this act and the transportation fuels transition plan described in
11 section 16 of this act;
12 (c) Provide guidance and recommendations to the governor, members
13 of the commission, and other divisions of the commission on any other
14 issues related to transportation fuels pricing and transportation
15 decarbonization in Washington; and
16 (d) Report its findings and recommendations to improve market
17 performance at least annually to the legislature, the governor, the
18 commission, the attorney general, and the department of licensing.
19 (2) The division may subpoena witnesses, compel their attendance
20 and testimony, administer oaths and affirmations, take evidence and
21 require by subpoena the production of any books, papers, records, or
22 other items material to the performance of the division's duties or
23 exercise of its powers including, but not limited to, current and
24 historical pricing and sales data and contracts with other petroleum
25 industry participants.
26 (3) The division may refer potential violations of law to the
27 attorney general confidentially at any time.
28 NEW SECTION. Sec. 6. (1) Each refiner and major marketer shall
29 submit information each month to the commission in such form and
30 extent as the commission prescribes pursuant to this section. The
31 information must be submitted within 30 days after the end of each
32 monthly reporting period and must include the following:
33 (a) Refiners shall report, by volume, price, and type, for each
34 of their refineries, feedstock inputs, origin of petroleum receipts,
35 imports of finished petroleum products and blendstocks and ethanol,
36 including the source of those imports, exports out of the state of
37 finished petroleum products and blendstocks and ethanol, including
38 the destination of those exports and the entity receiving those
39 exports, refinery outputs by product type, refinery stocks, finished
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 1 product supply and distribution, including all gasoline sold
2 unbranded by the refiner, blender, or importer.
3 (b) Major marketers shall report, by volume, price, and type, on
4 sales of petroleum product intended for use in Washington.
5 (2) Each refiner, major marketer, major transporter, major
6 storer, pipeline operator, or port through which transportation fuel
7 is imported or exported, shall annually submit information to the
8 commission in such form and extent as the commission prescribes
9 pursuant to this section. The information must be submitted within 30
10 days after the end of each reporting period, and must include the
11 following:
12 (a) Major transporters shall report on petroleum by reporting the
13 capacities of each major transportation system, the amount
14 transported by each system, and inventories thereof. The commission
15 may prescribe rules and regulations that exclude pipeline and
16 transportation modes operated entirely on property owned by major oil
17 transporters from the reporting requirements of this section if the
18 data or information is not needed to fulfill the purposes of this
19 chapter.
20 (b) Major storers shall report on storage capacity, inventories,
21 receipts and distributions, and methods of transportation of receipts
22 and distributions.
23 (c) Refiners shall report on facility capacity, and utilization
24 and method of transportation of refinery receipts and distributions.
25 (d) Major marketers shall report on facility capacity, methods of
26 transportation and distribution, and all sales of petroleum product
27 intended for use in Washington.
28 (e) Pipeline operators and port operators shall report their
29 capacities for all pipelines and ports used to transport
30 transportation fuels.
31 (f) All refiners, major marketers, major transporters, major
32 storers, pipeline operators, or port operators submitting information
33 under this subsection shall include in the report for each reporting
34 period the full names of all persons or entities that directly or
35 indirectly own 10 percent or more of the refiner, major marketer,
36 major transporter, major storer, pipeline operator, or port operator
37 submitting the information.
38 (3) The commission may by order or regulation modify the
39 reporting period as to any individual item of information setting
40 forth in the order or regulation its reason for so doing.
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 1 (4)(a) The commission shall quarterly prepare and make available
2 to the public a summary report based on the data collected pursuant
3 to subsection (1) of this section. The commission shall aggregate
4 information used in a report prepared under this subsection to the
5 extent necessary to assure confidentiality of all specific
6 confidential information exempt from public disclosure and protected
7 as confidential under section 11 of this act.
8 (b) The commission may require additional information to be
9 submitted as necessary to perform its responsibilities under this
10 chapter.
11 (5) Any person required to submit information or data under this
12 chapter, in lieu thereof, may submit a report made to any other
13 governmental agency, if:
14 (a) The alternate report or reports contain all of the
15 information or data required by this chapter; and
16 (b) The person clearly identifies the specific provision of this
17 chapter to which the alternate report is responsive.
18 (6) Each refiner shall submit to the commission, within 30 days
19 after the end of each monthly reporting period, in such form and
20 extent as the commission prescribes, monthly Washington weighted
21 average prices and sales volumes of finished transportation fuels
22 sold through company-operated retail outlets, to other end users, and
23 to wholesale customers.
24 (7)(a) Beginning August 1, 2024, and each month thereafter, an
25 oil refiner, petroleum product transporter, petroleum product
26 marketer, petroleum product pipeline operator, and terminal operator,
27 as designated by the commission, shall submit a report in the form
28 and extent as the commission prescribes pursuant to this section. The
29 commission may determine the form and extent necessary by order or by
30 regulation.
31 (b) A report may include any of the following information:
32 (i) Receipts and inventory levels of crude oil and petroleum
33 products at each refinery and terminal location;
34 (ii) Amount of transportation fuels imported and exported out of
35 the state;
36 (iii) Amount of, transportation fuels transported intrastate by
37 marine vessel;
38 (iv) Amount of crude oil imported, including information
39 identifying the source of the crude oil; or
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 1 (v) The regional average of invoiced retailer buying price. This
2 subsection does not preclude or augment the current authority of the
3 commission to collect additional data under subsection (4)(b) of this
4 section.
5 (8) Entities must retain for commission review for three years,
6 but not submit to the commission, copies of all contracts or
7 agreements entered into, or amendments to contracts or agreements,
8 with other oil refiners, petroleum product transporters, petroleum
9 product marketers, petroleum product pipeline operators, terminal
10 operators, or any other entity that trades in petroleum products
11 whether or not those entities take possession of petroleum products,