From: Gordon Schremp To: Kelly Birkinshaw;,($0~C!n Brown ...

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From:To:CC:Date:Subject:Attachments:

Gordon SchrempKelly Birkinshaw;,($0~C!n BrownJim Page; Mike Smith; Nick Janusch; Paul Deaver8/12/2008 4:03 PMWSPA Economist Background - AB 868Topel CV - April 2008.pdf

Susan and Kelly:

Please see the attached file for some background information concerning Mr. Robert Topel,the economist mentioned by Don Craven at this morning's meeting with Valero. He will bethe person expressing WSPA's econometric interpretation of the ATC issue for theCalifornia market.

Regards,

Gordon

Robert H. Topel

CURRICULUM VITAEApril, 2008

CURRENT POSITIONS

Isidore and Gladys 1. Brown Professor, Graduate School of Business,University of ChicagoDirector, George 1. Stigler Center for the Study onhe Economy and the StateDirector, University of Chicago Energy Initiative ; ,Research Associate, National Bureau of Economic Research

EDUCATION

RA. (with High Honors), University of California, .Santa B,a:t;bara, 1974Ph.D., University of California, Los Angeles, 1980 .' ",

FIELDS OF SPECIALIZATION

·,.'.i

Microeconomics, Labor Economics, Industrial Organi?ation, Health Economics

PREVIOUS POSITIONS

Professor of Economics, Graduate School of Business, University of Chicago, 19861993Professor of Economics, Department of Economics, University of California, LosAngeles, 1986Associate Professor of Economics, Department of Economfcs, University of California,Los Angeles, 1985-86Associate Professor of Economics, Graduate School of Business, Univer~ity of Chicago,1983-85Assistant Professor, Department of Economics, University of Chicago, 1980-83

OTHER AFFILIATIONS

Research Associate, National Bureau of Economic Research, 1984--presentSenior Fellow, the Milken Institute, 1999-presentFellow, Center for the Study of Poverty and Inequality, Stanford University, 2006-presentMember, Brookings Panel on Economic Activity, variou~ years.Visiting Scholar, Board of Governors of the Federal Res~rve, 1990Research Associate, Economics Research Center, NORC, .1980-1990Consulting Economist, The Ra~lCorporation,'1982-.1989 ,Research Associate, Center for the Study of the Eco,nomy and the State, 198o-presentFaculty Research Fellow, National Bureau of Economic Research, 1981-83Research Economist, Unicon Corporation, 1981-88

Consultant, U.S. Department ofUibof,,1985-90Partner, Chicago Partners LLC 1994-present

EDITORIAL POSITIONS

Editor, Journal ofPolitical Economy, 1993-2003Board of Editors, American Economic Review, 1992-94Associate Editor, Journal ofLabor Economics, '1982-92Editorial Board, International Journal ofthe Economics ofBusiness, 1993-

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Member of the Advisory' Board: ERN Lalior Journals '

HONORS & AWARDS

Kenneth 1. Arrow Award, International Health Economics Association, 2007'Kirby Distinguished,Yisiting Prqfessor, Texas A&M University, 2006

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Elected Fellow, Society ofUtb'ot"Economists,'2004 ,', ,Research America Eugene Garfield PrizdJfd~'Medi8~t-'arid'Health R~~earch: '2005Elected Member, Conference on Research in Income and WealthElected Founding Member, National Academy of Social 'triJ&afic'e' . l

William Ladany Research Scl},olar, University of Cl},iqlgO, 1989-91William FishilliulRb§'Ja:ibh-SthbHir; tJIiivetsitYrt:ln':~iiibago, 1986;.87 'Smith Richardson Dissertation Fellowship in Political Economy, 1~?8!~~9,..." .. 'Foundation for Research in Economics and Education Fellowships, 1975-79Chancell.or's Intern Fellow, University ofCaliforJ;1ia, Los Angeles, 1975-79UniveiSif)rFellow)'Un1hWestemUniVersit)J; )1975" ,"-c"r' ,',

General Electric Dissertat.ion Fellowsp,jp, 1978:. "; I ;-:. • ".-"': • I .'/ f J

TEACHING EXPERIENCE: ' .

':/.

Graduate Economic The~ry I, II, IIILawl~E2onot±iid! artif I3'us'iJ{~ss" .,Competitive Str.~~~gy ,'.Advanced Topics'hi Lilobr'EconoiriicsAdvanced Topics in MicroeconomicsManaging the WorkplaceIndustrial Organization!Antitrust

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OTHER PROFESSIONAL ACTIVITIES.. .',1• i·< l

Thompson Lecture (I(eynote Adqress), Midwest Economie AS§,oCi~!ibh, 2000'Nominating Committee, Amedcan'Econ6iriic AssciCiatibn,li996, 1991-' i '

Program Committee, AmencanEconomiC Association, 20()6'-20'O7.Organizer, Universities'-NBER Research Conference: "Labor Markets in the 1990s,"

Cambridge, December 1989.Program Chair, Labor Economics, Econometric Society Meetings, December 1989.National Science Foundation Re;view Panel inEconomics, 1998, 1999

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Pihl Lecturer, Wayne State University, November, 2004Keynote Address, Federal Reserve Bank of Cleveland Conference on Education andEconomic Development; November, 2004Huggins Lecturer (Keynote Address), Department of Surgery Huggins Conference,University of Chicago, 2007

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UN~YERSI~~SERVICE

Director, Undergraduate Program in E~onomics, 1980-83Chairman, Graduate School of Business Curriculum Review, 1990-91Committee on Graduate Education, 1992-94Commi~ye .on.Und~rgr.aduat~. Education, .1993-94Council of the University Senate, 1992-94, 1995-97, 1999-2002, 2004-2007Committee of the Council of the University Senate, 2000-2002, 2006-2007Graduate Sch90l,ofBu~ines~ ~RHcy C.ommittee, 1995-97, 1~29-200JMember, Presidential Search Committee, 1999-2000Board of Directors, University of Chicago Laboratory Schools, 1986-92, 1998-2007Chai~an, Director Se.arch COIIW1~ttee, U of C Laboratory Schools, 2002.,.2003Area Coordinator, PhD Program in Economics, 2002-2007

BIBLIOGRAPHY

Books:

The Welfare State in Transition, with Richard Freeman and Birgitta Swedenborg.Chi~ago: Univ~rs.ity of C4icagQ Pres~ f9~ NB.~R, 1Q97.

Labor Market Data and Measurement, with John Haltiwanger and Marilyn Manser.Chicago: University of Chicago Press for NBER, 1998.

Valfardsstat i omvandling: Amerikanskt Perspectiv pa den Svenska Modelten, withRichard Freeman and Birgitta Sw~d.enporg. Forfattarna ochSNS Forlag, 1995.

Measuring the Gains from Medical Research: An Economic Approach, with Kevin M.Murphy. Chicago: University of Chicl}go Press (2003).

Reforming the Welfare State: Recovery and Beyond in Sweden, with Richard Freemanand Birgitta Swedenborg; Chicago, Univeristy of-Chicago Press for NBER, 2007.

Au Reformera Valfardsstaten, with Richard Freeman and Birgitta Swedenborg, SNSForlag, Stockholm, 2006

Articles and Monographs:

"Layoffs, Inventories, and the Demand for Labor," Ph.D. Dissertation, University ofCalifornia, Los Angeles, December1980.'

"Unemployment Insurance: Survey and Extensions," Economica 47 (August 1980): 351· ,79 (with F. WelCh) .

"Inventory Adjustments, Industry Behavior, and the Business Cycle," presented at theNBER Conference on Inventories and Business Cycles, March 1980'(\VitU'A;:StbcknianY

"Inventories, Layoffs, and the Short~RtinDemand'forLabor," AmericdriEcbnomic;,. ",j"')' ",,' • e,,' ,:, 'I ,,'

Review (September 1982):"769-87. ,; i'; ; f.','" ,.li.-v < i . ~.i:: ~., ",!) :t .f' . r ' ,•.•

"Experience RatingYfl!~e~ploy~entInsUi~be~d tb'e'lriddeiic~'ot:Bi1employih'eht;'?·'Journal ofLawa~'dB'C(j'no1JliCs(A~r1l1984):'6i~90. ,',' '; .",,- . ;.,.; r," ':' '.,

.. ; , ', ..:

"On Layoffs and Unemployment Insurance," AJ1ie'fftbri Ec'iino1fzi'cYR(!vthv (September1983): 541 59. ."-",}: :,1' ," ,;t''',' ',', '

: /' 1 ) • " r' ''i ' ,~

"Equilibrium Earnings, TUrnover, arid Unemployment: New Evidence;" Journal ofLaborI ; I .'~ . ; l •. " 'f r." '. \ • '" ;

Economics (October 1984): 500-22:' , , .

"Local Labor Markets," Presented at Hoover Institution Conference on Labor Markets,, . .' ,t"f $; '1 -: ~

January 1983. Journal ofPolitical Economy 94 (June 1986, part 2): 111-43: ',". < ",

"Estimation and Inference in 'Two-Step' Econometric Models," (with K. M. Murphy)Journal ofBusine~sand Economic Stati~tics ,3 (October 1985): 370-~0.

"Employment Risk, Sectoral Shifts, and'Unemploytnent," (with G. Neuriiann)',tih Studiesin Search, ed. N. M. Kiefer and G. R. Neumann. Oxford: Oxford University Press, 1989.

.'.> ! ~ i , . " ; { , ",I' ~ ,'. : ,r, rU f: ;.. ! t: . I :'.r ' .

"Unemployment and Unemployment;ltlsUr~h~b;,,.iRdedrchi;(Labor Economics;1 (1985):91-135.

~ .. J" "t' "

"Efficient Labol'eotitfaets with Empl6yillent Rlsk,"'(witlfF: Welcli)J RCihdJourndl oJEconomics 17 (Winter 1986): 490-507.

<' ~ - I, • ,. !f ~.t· ,I. .:'" .\ :~\', " ,,'

"Financing Unemployment Insurance: 'History,'ilic'ehtive~;'aiid~Reforiri," inUnemployment Insurance: The Second HalfCentury, ed. W. Lee Hansen and 1. Byers.UniversitY of'Wiscol:lsin'Ptess, 1990.

"Sectoral Uncertainty and Unemployment," UC~A Department of Economics WorkingPaper No. 384, September 1985!(with L. Weis~Y/iliEmp/(jy1hent, Unemployment, 'andLabor Utilization, ed. R. A. Hart. Boston: Allen & Unwin, 1988.

"ThelHousing Market in the United States" (with S. Rosen), Journal ofPoliticalEconomy (Augt!st 1988): 718-40.

"What They Say or What They Do? The Use of Survey Data in Predicting Behavior';(with K. M. Murphy), Graduate School of Business, University of Chicago, March 1985.

"Unemployment, Risk and Earnings: Theory and Evidence from a Model of EqualizipgWage Differentials" (with K. M. Murphy), in Unemployment and the Structure afLaborMarkets, ed. 1. Leonard and K. Lang. London: Basil Blackwell, 1986, pp. 103-140.

"Job Mobility, Search, and Earnings Growth: A Reinterpretation of Human CapitalEarnings Functions," Research in Labor Economics 8 (1986): 199-233.

"The Evolution of Unemployment in the United States: 1968-1985" (with K. M.Murphy), The NBER'Macroeconomics Annual, vol. 2, 1987, pp. 7-58.

"The·Impact of Immigration on the Labor Market," in Immigration, Trade, and the LaborMarket, ed. R. Freeman. University of Chicago Press for NBER, 1988.

"Efficiency Wages Reconsidered: Theory and Evidence" (with K. M. Murphy), inAdvances in the Theory and Measurement ofUnemployment, pp. 204AO. Edited· byYoram Weiss and Gideon Fishelson. London: Macmillan, 1990.

"Labor Market Adjustments to Increased Immigration," (with R. LaLonde), inImmigration, Trade, and the Labor Market, ed. R. Freeman. University of Chicago Pressfor NBER, 1989.

"Job Mobility and the Careers of Young Men" (with M. P.Ward), Quarterly Jdurnal ofEconomics 107 (May 1992): 441-79.

"Employment Risk, Diversification, and Unemployment," (with George Neumann)Quarterly Journal ofEconomics (November 1991): 1341-1365.

"Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal ofPolitical Economy 99 (February. 1991): 145-76. Reprinted in Outstanding Contributionsin Labor Economics, ed. Orley Ashenfelter, Worth Publishers, 1999: 162-192.

"Specific Capital and Unemployment: Measuring the Costs and Consequences of WorkerDisplacement." Carnegie-Rochester Series on Public Policy 33 (1990): 181-214.

"The Assimilation ofImmigrants in the United States: Immigrant Quality and theChanging Price of Skills," 'In Immigration and the Work Force: Economic Consequencesfor the United States and Source Areas, ed. G. Borjas and R. Freeman. Chicago:University of Chicago Press for NBER, 1992.

"Trends in the American Labor Market," GSB Chicago, vol. 12, no. 2, Winter 1990; pp:11-16.

"Why Has the Natural. Rate ofUnemploynient Increa~edover Tithe?" (with K. Murphyandie. Juhn), Brookings Papers on Economic Activity 2 (1991), pp. 75-142.

"Imll)igraht Quality and Assimilation in the American Labor Market" (withR. LaL0p.de~,American Economic'Review, 81 (May 1991): 297:-302.

"Unemployment and Insurance," in Proceedings ofNational Academy ofSocialInsurance" 1992. " ,

. , /~ .'

"Labor Markets and Economic Growth: Lessons from Korea's Industrialization, 19701990" (with (0. IDth);FJijfef.enees:cind~(f;hiifigesin! Wage,structU11e.$";' edrRichard~Freemanand Larry Katz (Chicago:"UniversitY ofGhicago'Press'ferNBER, 11995T-,

"Wage Inequality and RegionaLLabon MarketPerformance, in the, 'Wnited States,".Labour.Market and EconomiCRidformiincenEurofie; Japan, and,the'USA "edr:roshiakiTachibanaki (New York: S1. Martin's Press, 1994).

"Discretion. and Bias,in Performance Evaluation" (with·C.Prendergast), EuropeanEconomic Review 36 (June 1993): 365-65. .

"What Have We Learned from Empirical Stydies of Unemployment and Turnover?"Americcln Ecolfomic',Review; 83 (May J 993;): .H O-J\15\ : ".',.

"Regional Labor Markets and the Determinants of Wage Inequality," AmericanEconomic Review,l'84 (Iylay,l'99/:t.):'17:L2Q:. ,."!:, ." ,,',,) ii, ';, .'

, i. i."

"Ekonomiska problem i Sveriges valfardsstat -- inledning, sammanfattning ochslutsatser~n;with:Richjl!djB.IFtee.rtian'and'Birgitta Swedenborgl!In, Valfardsstatl h v' ; ;';-

omvandling: Amerikanskt PersjJeetivpii derI'Svenska,;M6a.elten, with Richard,FreeIilan\,.,and Birgitta Swedenborg. Forfattarna och SNS Forlag, 1995.

,i ,

"Lonepolitik och ~ttukturolilvandling,"with Per.:.Andets'EOin."In Valfardsstatiomvandling: Amerikdnskt-i[Jer,spectivpa den SvenskaMoaelten, with.Richard£nfemanand Birgitta Swedenborg. Forfattama och SNSForlag, 1995.

~..; .. ' .:; -, . - "'

"Favoritism in Organizations" (withC. Prendergast), JournalofPoliticalEconomy 104(October 1996): 958-78.

"Another Look at Look Labor Market Adjustments to Increased;Immigtation'J (with J:.Hojvat-Gallinand:R. LaLonde),- 1996.-. ,,', . ')', .\

"Economic Impactof Inte~atiop(;llMigration and the EconoITIi~ Iterformanc~9f I'

Migr~ts,".(with,R. I"aLp!1de), in Handbook ofPop1:llation andFamily Ec.onOfnics, ed.Mark R. Rosenzweig and Oded Stark{Amsterdam: North-Holl.and, 1997); pp. 799"'850.

"Economic T~oub1es:in Sweden's W.elfare,State," in The Welfa;t:e State in Transition, ed.Rich~rd Freeman,. Robert'T9pel,.,andBirgitla Swedenborg. Chicago: University ofChicago Press for NBER, 1997. .

"Wage Policy and RestfUcAJr:ing: The..Swedish Labor Market Since 1960" (with PerAnders Edin), in The Welf.are,Stat~ in:Transition, ed. Richard .Freeman, RobeJ;tTope1,and Birgitla Swedenborg. Chicago: University of Chicago Press for NBER, 1997.

"Unemployment and Nonemployment" (with Kevin M. Murphy), American EconomicRevi~ 87 (May·l991): 295~300.

"Factor Proportions and Relative Wages: The Supply Side Determinants of WageInequality," Journal ojEconomic,Pe,rspectives 11 (Spring 1997): 55-74.

" .

"Empirical Knowledge in Labor,Ecqp0mics," in Labor Market Data and Measurement,ed;John Haltiwanger, Marilyn Man~er, and Robert Topel. Chi~ago: University ofChicago Press for NBER, 1998.

"Labor Markets and Economic Growth~" in Handbook ofLabor Economics, ed. OrleyAshenfelter and David Card. Amsterdam: Elsevier Scien~e B.V.,.l999, pp. 2943-2984.

"Medical Research: What's IfWorth?" (with K. M. Murphy), Milken Institute Review: AJournal ofEconomic Policy (First Quarter 2000): 23-30.

"Entry, Product Design, and Pricing in an Initially Monopolized Market" (with S. Davisand K. M. Murphy), University of Chicago GSB, September 2001, revised January,)OO~.

Journal ofPolitical Economy, vol. 112 no. 1, pt. 2, February, 2004, pp188-225.

"Adverse Price Effects of Entry in Markets with Few Firms" (wit):! Steven J. Davis andKevin M. Murphy), Working Paper, University of Chicago, April 2001.

"The Economic Value of Medical Research" (with Kevin M. Murphy), in Meas,uring theGains from Medical Research: An Economic Approach, edited by Kevin M. Murphy andRobert H. Topel. Chicago: University of Chicago Press, 2003, pp 41-73.

"Current Unemployment, Historically Contemplated" (with Kevin M. Murphy andChinhui Juhn), Brookings Papers on Economic Activity 1. Washington, p.G.: TheBrookings Institution, 2002.

"Estimation and Inference in Two-Step Econometric Models" (with KM.·Murphy),Journal ofBusiness and Economic Statistics, 20, issue 1, 2002: 88-97 (reprint: 20th

Anniversary issue of the most important contributions published in JBES).

:~. , .

"Labor Markets in'the United States and Korea: FaCtor Proportions; 'Inequality, aridUnemployment" in Macroeconomic Implications ofPost-Crisis Structural Change, LJ.Cho, b.'Cho and Y.H. Kim,KDI'press;2005, pp'1131..:60.'· :', . ,

"Diminishing Retunis? Evidence on'the Costs alldBeneftts' ofi!mptoving Health'" (withK.M. Murphy) November, 20d2, Perspectives in Biology and MediCine,volumtf46, no,"3, (Summer, 2003): pp108-128. " ' "

"War vs. Containment" (witli SJ. Davis and K.M. Mtlrph'y), March 2003; presented atNBER Conference '6n N3:tiOn~}LSecUrity:Ec6nomiCs,:Novefubet'200~:\

.... .~. -:-'" ,• ..,...f' ~ j~i

"Black-White Differences in the Economic Value ofImproving Health", Working Paper,University 'ofChicagd;'])ecetiloer,2001 tevisedJAugUst,20041(Witlr~~MIIMUtf5hy)'.: l' "

Presented at the National Institutes of Health Conference onJRacHil~Disfiariti~!H'rtHealthOutcomes, December, 2001. Perspectives in Biology and Medicine, Summer, 2004.

~_:F ',: t, "~r,r'; .r.:',:::}:.' jr:'~' }r.';;·' I . : (") Ii. ""t~; ·5:~. t'''-·:.,~··i;.

"The Value of Health and LOllgevity?'(with K.M.'MttrphY),>Revised1March,"200S, NBERWorking Paper #11405, June, 200S. Journal ofPolitical Economy, October, 2006, pp871-904. Wirllier ofthe·200S Ettgene"Garjield Ecofiomie~tmpticlofMldieal ReMiirch' ,',Award, given 15Y'Res~irch'A:rifeii.ck'WiJitier dfthtf2007f1?enfie~h ~:t'/Aftdw'AW£rd, given <

by the International Health Economics Association for the best paper in health economicspublished in 2006.

1";"

"The;'Ptivate 'and'SocHll Benetfts·'ofEducation"; (with Fabian Lange),.Handbook,oftheEconomics ofEducation, North-Holland, 2006 (forthcoming).

• ",,' , .': • i •• \. • , ;-l '",: . lo. :1 -! ,.J / '

"The Social Value of Education", KeynoteAUaress;; FederalResetveBank ofCleveland'Conference on Education and Economic Development, November 2004, in EducationandEci/ndmlc DevelOpm~nt,'F~derallteserVeti3~of Clevehirtd' Economic-Review j

2004~ pp 47-58. J, ,,;; \ -' \,

"On Human Capital and Economic Growth" (with Fabian Lange), Working Paper,Univ'ersity ofChiclig6j;Septeinbet/200Si' '

". ;; ,J .':- : \"" (: p :,":", /';,!

"Wage Determination and Employment in Sweden Since 1990", (with PeterFredficksson); Working 'Paper, University. 6fiCliicago~and'Uppsala!University,De'ci:~tnb~r;:2005> '"0' /, , -:. .\ ," '\,'.'\

: r: -,,"j.

"Reforming the Welfare State: Recovery and Beyond in Sweden" (with Richard Freemanand Birgitta>SWedehborg); ,Chapter 1 juReforming the'Welfare Siate,'JUnjv'ersity,ofChicago Press fOf N8ERi,' 2008. ' .'

"Aterhamtning och terstaende problem I den svenska valfardsstaten-inlendning,saminanfatining'odh s'tutsatsei;' in Ait Refonnera Valfardsstaien, with)Richard'Freeman 'and Birgitta SWedenborg, SNS Fer1ag, Stockholm, 2006, 9;,·34.'

"Forandrade ,forutsattningar,-for s"\\enskllone~ildning" (with..pet~r FredriJcss<m), ip.Attl , .. ,· i'

Reformera Valfardsstaten, with Richard Freeman and'Birgitta S;weQenborg, SNSForl~g,Stockholm, 2006, 65-82.

"War in Iraq versus Containment" (with Steven 1. Davis and Kevin M. Murphy), forCESifo Conference '!Guns andButter: TheEconomic Causes (lnd Con~equences ofConflict", Munich, December 2005, February, 2006.

"Social Value and the Speed: ofInnovation" (w:ith Kevin M. M4TPhy), AmercicanEconomic Review, May, 2007.

"Unemployment", The New Palgrave ofEconomics, 2008

"CriticalLos~Anab~si~ .in$e Whole Foods Case", Globql (:ompet~tion folic)!, Ma;rch,2008, @ http://www:globalcompetitionpolicy.org/index.php?&ido;=949&action=;=907.

Congressional Testimony and Present.ations:.,:,.,)

"Unemployment and Insurance," Testimony before the U.S. Senate Committee onFinance, April 23, 1991.

, ) :; \ :. 1 : ~ ,

"The Economic Value of Medical Research," Testimony before the U.S..SenateCommittee on Health, Education, Labor, and Pensions, May 10,2001.

"The Value of Improvements in Health and Longevity", Presentati{)1J,Jor CongressionalStaff and the American Cancer Society, Washington, July, 2005.

Selected Reports:

"Unemployment Insurance Financing and Unemployment: Empirical Investigation 'ofAdverse Incentives," Final Report, U.S. Department of Lapor Contract Np. BQM2204,6,November 1982.

"Unemployment and Unemployment Insurance," Final Report, U.S. Department ofLabor,ETA, May 1984.

"Local Labor Markets," Final Report, U.S. Department of Labor, Office of the AssistantSecretary for Policy, March 1984.

"The Use of Survey Data in Predicting Behavior: The Case of Enlistment Intentions,"Final Report, U.S. Department of Defense, May 1985.

"Equalizing Wage Differences," Final Report, U.S. Department of Labor, Office of theAssistant Secretary for Policy, August 1985.

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"Sectoral Change aIid:Worker Displacement;" Final'Report, U.S; Department:ofLabof,Office' of the Assistant Secretary for Policy, March 1990.

Book Reviews:

Employment Hazards by W. Kip ViscusL' In Journal ofEconomic Literature, March1982. '

Handbook ofLaborEconomics, ed. O. Ashenfelter and R: Layard. In Journal ofEconomic Literature, 1988.

Selected Comments:

"Con'linen:{on "S6tne'·R!ecetit1E>evelbpnientsZiilLabot~Ecot1BfiIicsJ alid~'}jheirr Iml'lic~tionsfor Macro~cbfiOiliic§"}~''9"iJiir:fjdl(6fM6heYi:GreditahdlBahltihg220iCfAhgust· 1,9.88Fparf2).'!

"Comment on 'Industry Rents: EvidenceandltriplicatiofiS'~'t(by Lawrehce~S'urtltners and,Lawrence Katz) Brookings Papers on Economic Activity, Brookings Institution,Washington, DtG.:;1989.·;' "J:>' wn,,'><, r ' ,. ! ""F"i

"Comment on 'Wage Dispersion between and within U.S. Manufacturing Plants',Brookings Pdpers'onEconbniic ActiVity; ·199:1. "" '

: ,.)1 " .' .. i</ "j \ 1 ,! ~ 1 '1 ~ ~I - )) , _ ;

"Comment on 'Why Is the U.S. Unemployment Rate So Much Lower?'" NBERMacroeconomiCs J4nhual;;1998~pp.,611.7·2'.", ,'H

~-; "',,"~ < t,.;: '.{.~l._..:~;~

"Comment on 'Does Immigration Grease the Wheels of the Labor Market?'" by George1. Borjas. Brookings Papers on Economic Activity. edited by William C. Brain8;rd!ahd!, ,:"George L. Perry. Washington, D.C. Brookings Institution, 2001.

\ ~ 1[ . , ii

"Comfu\fnttoi(~Where'dnhlie'Productivity GrowtH Gb?: IhflaHoriilj)yiuimics 'and,the,'Distribution oflncome'" by Ian Dew-Becker and Robert J. Gordon. BrookingsPapers on ,Economic Activity. edited by William C. Brainard and George L. Perry. Washington,D.C. BrdoKings<InstitUti6n,J200o\3t35.:.44i ';'""i",··' . ~/

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Mike..Smith\'~jih1 SoYd;.Karen Douglas

Chris Marxen; Claudia Chandler; Diana Schwyzer; Gordon Schremp; Jim ...8/12/2008 6:06 AMAS 868 Status Overview 8-11-08 rev.docAS 868 Status Overview 8-11-08 rev.doc; AS 868 Schedule - Options 1, 2 & 3- 8-7-08.doc


Good morning

I have a late addition to the Transportation Committee agenda for tomorrow. I am requesting a delay in completing thework required under AS 868.

I have attached background material that explains the status of our work and the potential delay in its completion. The firstattachment is a brief description of the issue causing the potential delay; the second attachment contains three optionalschedules for completing the work. Our recommended option would delay completion of our work by approXimately sixweeks, with the report being adopted by the CEC and delivered to the Legislature in mid February rather than December31,2008.

Also, at some point, we would like to brief the author, Assembly Member Davis, of the delay.

Lastly, will this report need to be reviewed by the Governor's staff before it is submitted to the Legislature?

Thanks, Mike.

AB,668,~,~xten~,i(m,~~qu~st ,"",August 13, 2Q08.' .' .,..... - . - .... ' ..

Issue: ,.Ae~8,68~(Qa~i's,-,GhaPteL398, Statutes or2007Y r,equiresthe Energy ;C6~mi,ssionto conduct a cost-benefit analysis and survey and tomake.recommend~tion$Jo theLegislature regarding future legislation and regulations, regarding the referencetemp~rqture for fuel d!spensptiq/J". as specified, not later tha,n Depember 31, 2008.

- -" ..

. . . . ,

Significant prob,lems t;lave arisen,concf3rning the, Go.llection of fuel dispenser il1formationthat is necessary to quantify the cost of installing temperature compensate (TC)equipment at retail outlets. The original plan envisioned the· use of the CMSAcontracting process to \rir,eacons~ltant tpperform ,site survey~ of m,osLof the, ret~i/stations in.palifornja,.w!Jh toe prilllarY p.L!rpos~()f c9I1e,cti~g rrt,~il.di~R~ns~r.d7t~ili? pylocation, hence the original BCP request. Thaf initial apprpacb pro'ved,to be unworkabledue to the delayed start of the field work (2008/09 budget required passage).

The second approach (plan B) staff pursuEld was to ha,\ie the county 'se~lers': w.hoinspect..~nd ver,ifX d.is,peH$e~§, ~re PrQperly'calibrated, c~llectt~is .i~fC>,rr¥i~~io'~~~~}W~ singlecontractthat would oe'coordihated'through their' trade ass9Ci~tion.' BlIt' ~s W~'.began towork through the contract issues, it became clear that the trade 'assoCiation groUp wasnot a legal business entity (more like a loose coalition,9f m~mbers). We wereleft.withan option of contr~ctingwith(5~differen\ countie~, proble'r1;I.a,tit ~6saythe leasf ':

Plan Gwa$ the!1 developed,to,obtain' information from the air districts from the permit~

they reg'~,it~.foIalr ~~jsli§~,a'nd,'1J~""retailoutlets that dlsperise·gas9n~e. A~~r $t~ffi .identified the infbrrriatior"requiredforeach district's permit, We began to confactlhemfor purposes of obiali"liri"g the ihforrriation electr6riitaIlY:: 'But after eveHtLiaily'g~ttlhg .through to the correct individuals at each district, almost all of the districts informed usthat the fuel dispenser make and model information, critical to ascertain the cost ofinstalling TC devices at retail locations, was not entered into any of their data bases.Less than five percent of the make & model information was available electronically.The rest of the districts only have the detailed dispenser information available in hardcopy. We are now left with the modified Plan C detailed in the following paragraphs.

Proposed Remedy:' Pursue other sources of information and data collection strategiesdesigned to obtain make & model specifics for individual retail stations. The alternativework plan includes a three-fold strategy: survey request to major oil companies forelectronic data; visiting air quality management districts to obtain photocopies ofgasoline dispensing facility (GDF) permits; and mailing surveys to remaining area of thestate not covered by the first two approaches.

The proposed remedy increases the staff time to perform this portion of the analysis,necessitating a revision of the original schedule that takes the final completion dateslightly beyond the original December 31,2008 deadline. Options 2 and 3 (seeattached) are modified schedules with new completion dates 29 and 43 days,respectively, beyond the original deadline.

1

Staff feels that the modified schedule resLllts in a slightextehsion;tn~fwilr stilhl1eet'all'of"the obj~ctivesof the Legislation and original work plan. Option 1 (also a!!ached) is arevisedl;s~h~dule' thafresults' iri a'db'ptionofafihal report by'tl1e"originaldeadlihe: but Will' 'result in' ~ report of diminisHed qiJ~lity. " .'

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SuggestedCo'ursEt' of Action: Mbdifythe sth'edule to enable completion ofall'of theadditipnal "York necessary to ~ompletethe appropriately detailed analytica,l workassociat'a'd\¥ith'qLiaritiftcation ofth~f cbst of re'tail outlets'f6r'installatio'1"oFT0:. "

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C denotes review to be done by CommissionersX requires notice to stakeholders

Pros:• Final Report completed prior to December 31,2008.

Cons:• Insufficient time to complete necessary additional cost information data

collection & analysis. ' ,• Insufficient time to complete necessary distribution terminal data collection &

analysis.• Commission does not fulfill analytical scope commitment made to stakeholders

during previous three public workshops.• Stakeh'olders only have one week to provide comments following the Committee

Workshop', rather than the two-week' period allowed in the other schedules.

C denotes review to be done by Commissipn;~r:s:"" .,.X requires notice to stakeholders , " .~ ,

Pros:• Sufficient time to completeinecess~ry,additional'~o~t,illfo,rmCltiQnAata,. 'J '

collection &analysis.• Sufficient time to complete necessary distribution terminal data collection & :.

an~_ly!;)isi' " . "r:L.. t':",:')':';.! .. '::':,' : ';'. i'J ' , ",. ,\.,';:<'

• Fulfillment of analytical scope commitment made to stak~bol.<;I,~rs<ql.:lrir)g::J1>,r~vious

/' rtbr,~,E;tPu.bUq~worls~~ops., . "jilt;:;:) ,!'!:}E''?'~L,,-,r'''':: ';:r .-,J,";!' ",I.' ';;L~;','

• Draft report completed prior to December 31 , 2008. -'J "

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Cons:!• Final:~e.PQrt. deliv~red to.. begi~lature 29.! da,ys; late~Jh.a~,qrigjO~! qe?91~l;le ....• Stakebolders comment: p.eriod: i{ol!Qwililg :Q,Qr;nmitteerWP.EkshQPJ~nIY1 ~lIow.~! for 7

business days, rather than 10 business days.• Commissioners' review period for revised Final Report occurs during the

Christmas holiday period & may not allow minimum number of business daysassuming one week of vacation. '

AS 868 Fuel Delivery Temperature Study 2008/09 Schedule - Option Three

Thurs, June 5Wed, June 25

Thurs, Ma 29Wed, A ril23

Fri, A ril4Tues, March 4

DATE

Fri, Februa 15

Tue, November 4Re uires 10 business da s

Thurs, Janua 24

x

x

xNOTES

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c

Tue, November 18Re uires 10 business da s

,:JUe,.Decembet~, ..'Fri, December 19Mon, January 5

Re uires 10 business da s

Mon, January 19Tue, January 20

/VIon, Janua26Fri, January 30

Mon, Februa 9

Distribute Draft Staff Report to Stakeholders

Comments Due from Committee WorkshoRevised Commission Final Report - Internal Review

C denotes review to be done by CommissionersX requires notice to stakeholders

'Pros:• Sufficient time to complete necessary additional cost information data

collection & analysis.• Sufficient time to complete necessary distribution terminal data collection &

analysis.• Fulfillment of analytical scope commitment made to stakeholders during previous

three public workshops.• Draft report completed prior to December 31, 2008.• Additional time for stakeholders to review Draft Report over Thanksgiving holiday

period.• Slight shift of schedule to delay Commissioners' review of revised final Report

until after the Christmas holiday period.

Cons:• Final report delivered to Legislature 43 days later than original deadline.


~.i.·!S··';7~ji:rB··:7n.i::', usan; rown·Gordon SchrempJim Page12/9/2008 1:33 PMFw: Hot Fuel WorkshopHot Fuel Workshop

This comment was e-mailed to me today. Please docket and respond appropriately. Thanks! Susan

Page 1 of2

Gordon Schremp - Hot Fuel Workshop

From;' ·····I~'R9~~rt,p,e~a1l1n,(~RQ~,~rtJ)[email protected]~>To,:lr~melliQtt@~nergy:stat~.ca;US?

Date:: "12/9/200R,1':24i'PM",L'i,' t,

Subject: Hot Flle,l Fo.!~~hBRCC: i~~r9~~~S~,~f~t~t~!~i~A~H~f

To: California Energy Commission

Attn: James D. Boyd and Karen Douglas

From: Robert Denham, CEB Attorney Editor, University of California

Date: December 9,2008

As a private citizen, I wish to comment on the proceedings of the Hot Fuel Workshop which I was unable toattend. My attention was directed to this issue by an article in the San Francisco Chronicle (Warm WeatherMeans Less Gas in Your Tank, Dec. 4).

The article seemed immediately suspect to me in the suggestion that making gallons bigger could saveconsumers money by reducing the cost of a given quantity of hydrocarbons, because it appeared to assume thatthe price per gallon will remain the same. when size of the gallon increases. Further investigation has onlyconfirmed my initial impression that the claimed consumer benefits of temperature-adjusting are almost entirelynonexistent.

I now learn CEC Staff only asserts that the average price per gallon will not increase as much as the average sizeof the gallon with the consequence that consumers will retain an unspecified but presumably small portion of the$438 million of revenue that would be lost to station owners if the average gallon were to increase from 231 to232.7 cubic centimeters with no increase in the average price per gallon. However, the Staff report gives no basisfor the suggestion that consumers will retain any of the revenue.

The Staff Report Overview states (p 44): "Staff believes that retail station owners over time will attempt to recoverthis revenue shift during warmer months by either raising fuel prices, non-fuel commodity prices, or a combinationof the two strategies."

Yet surely it's obvious that station owners will recover essentially all of this supposed revenue shift by making thenecessary minor adjustment in fuel prices. Gasoline prices fluctuate widely and often wildly, sometimes by asmuch as 50-100 percent in the same calendar year, both seasonally and for economic reasons. The notion thatstation owners would have any difficulty raising nominal average prices by the necessary 0.8 percent (2 cents pergallon) to recover the lost revenue, or that the difference would even be perceptible amid the welter of other pricechanges, is scarcely credible.

Regardless of whether current prices are competitive, oligopolistic, or collusive, the presumption is that stationowners have already chosen the optimum price for them. Nothing in economic theory or common experiencesuggests that slightly changing the average size of the liquid measure for gasoline will have any effect whatsoeveron the optimum average price for the quantity of hydrocarbons currently represented by the gallon measure.

The Staff Report Overview further states (p. 45): "But revenue recapture will be neither precise nor consistent,because station operators will not monitor temperature continuously and adjust retail prices accordingly tocompensate absent any other competitive factors."

Yet it is not necessary for recapture to be precise or consistent or for adjustment to be continuous for average fuelprices to be adjusted by just enough to offset the lost revenue. Indeed, there is a strong presumption that this isexactly what will happen, because station owners have already chosen the optimum price for the quantity ofhydrocarbons represented by the current gallon. Changing the unit of liquid measure would not appear to affectany of the relevant pricing considerations. Imprecise and inconsistent recapture could also just as easily lead to

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Page 2 ot2

overcapture.

Now to be sure there are some second-order effects resulting from increased transparency of retail prices. Forexample, stations that have warmer fuel temperatures (in winter or summer) than qth~r sta~ion.s in the ~~me areawill presumably have to lower their prices or do less' busiriess. Also, there isrc;:J:ti6~sij)iiity lnafconsi.:Ufters will f;:":

respond to more accurate price signals by purchasing more fuel in winter and less fuel.ln summer! ,these benefits'are genuine but difficult to quantify and are likely to be much smaller than the claimed benefits:Jrom,using larger"average gallons. «(,,' I,

Conclusion: The consumer benefit of increasing the average size of the gaildn measure for gasoline is almostcertainly nonexistent.

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Gordon Schremp - Fw: CEC Letter (attachment)

From:To:

Date:Subject:Attachments:

"Duncan, Tristan L. (SHB)" <[email protected]>,1:<:jbQyd@efie~gyis~~,tefca~us>,<[email protected]>,'. <gschfemp@energy:silite.ca.us>12/9/2008 11:30 AMFw: CEC Letter (attachment)CEC_Fuel_Temp_Letter.DOC

From: Frazier, Nicole E. (SHB)To: Duncan, Tristan L. (SHB)sent: Tue Dec 09 11:20:49 2008Subject: CEC Letter (attachment)

Mail Gate made the following annotations on Tue Dec 09 2008 13:30:25

CONFIDENTIALITY NOTICE: This e-mail messageincludingattachments.ifany.isintended for theperson or entity to which it is addressed and may contain confidential and/or privileged material. Anyunauthorized review, use, disclosure or distribution is prohibiteq. If you are not the intended recipient,please contact the sender by reply e-mail and destroy all copies of the original message. Thank you.

file://C:\Documents and Settings\gschremp\Local Settings\Temp\XPgrpwise\493E56F3Sac... 3/3/2009

December9,.2Q08

Gordon Schremp, Workshop FacilitatorFuel and Transportation DivisionCalifornia,Energy Commission1516 Ninth StreetSacramento, eA958l4-55l2

RE: Impermissibility"of-Temperature Compensation for Retail Motor FuelSales Under California Law

Dear Mr. Schremp:

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Tristan L. Duncan

2555 Grand Blvd.'.}' . j.

. . Kansas City

Missouri 64108-2613

·816,474.6550

816.559.2040 DO

816A21.5547 Fax

[email protected]" ,.

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I am writing on'behalf of Pilot Travel Centers LLC, Circle-K Stores, Inc., 7;.Eleven, Inc.,and Terrible ~Herbst;Inc. who are retail sellers of motor fuel in California. We reviewedwith interest11your recent draft report and offer the comments below for yourconsiderati6f1.

The CEC'Maintains that ATC'Devices are Permissible at Retail, but CaliforniaCase Law: and ApplicableStatutes'and'Regulations Demonstrate that ATC is'notPermitted in:Retail Sales' of Motor 'Fuel.

1. Introduction.

In the CEC's recently p],lblished. dr~f1.report titled Fuel Delivery Temperature, $tuf!y, theCommission detailed a cost-benefit analysis and offered recommendations regarding theimplementation ·of, ATC.devices 'abretail service stations. l These devices would adjustthe volume of motor fuel (i.e., "a greater or lesser quantity of cubic inches"), according tothe fuel temperature,2 resulting in variable-size gallons.3

1 California Energy Commission, Staff Report, Fuel Delivery Temperature Study at vii (November 2008)(hereinafter' CEC Fuel Delivery Temperature Study)."

2 ld. at 7. As the report explains, "[r]etail ATC devices do not function the same way as the temperaturecompensation units used at the wholesale leveL A retail ATC unit dispenses either a greater or lesserquantity of cubic inches based on the volume correction factor (VCF) that is calculated using thetelllperature and density characteristics of the dispensed fueL" ld. In contrast, wholesale "transactions.at.the terminal" are measured in gross gallons and then a software calculation using AfI gravity .andtemperature of the dispensed fuel is used to calculate the quantity of net gallons..The net;gallons ar~ thenm:u.ltiplied by ~epost~dnet gallon price to calculate the total cost for that load of fueL" ld.

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"'The! CEC"stated that "[p]ennissive (voluntary) use of [ATe] devices at Califotilia retail 'stations is already pennitted under California law as it is not specifically prohibited.',4

, j'TIlls' fstatement is demonstrably incorrect. We respectfully submit this memorandum to December 9, 2008

itlfop11,the Commission that existing law does not permit California retailers to use ATC Page 2

'l'~: ~~vfces. ' T• f

',). ...;.

:.As explained in greater detail below, ATC devices that would dispense more or· less than.'~·(231 cubic inches per gallon, so that the quantity delivered would vary with temperature" ,;

r; -J' l';are"prbhibited by California statutes in two ways. First, it is expressly· 'prohibited a~p:'··· .'"discUSsed in section 2 below. Second, the maxim that a practice is pennitted if not

expressly prohib'ited is iifappli'ch11le:irl the; 'context' of temperaturef.c6mp¢risatedi;sale~v;

Although that maxim might apply if the entire statutory scheme for the'·sale of,motbt fuek:were silent on temperature-compensated sales, that is not the case.

In California, as elsewhere, the Legislature expressly pennits temperature-compensatedsales in othersecti0fis-06the.;statutesl-namely·"in~.the'tse.ctioilsigoyerrting ..wholesal~! <q1d ;i'propane t'tansactions,'i Califomi'a:statbtes;t therefore; ar.e. nQt~ ,in:>facksilent on[temP~r.l\Wr~, ..compensation, arid thekrnile~jUpon! lwhichi 'ithe) .<DEO)ire1ies<'..is.,-inapplicabl~l')'1 In~tead, !:th~.! fi

correct rule of statutory construction, recognized by the California Supreme Court, is that,~ ,the express pennission of temperature-compensated sales in one section of relatedCalifornialstatutes; namel)'j imthe se.ctiol1$,'.r~gtJlatingilsal~.~lPF~whQl~~~I~;ll1~1:apd;prpp.ane,l :'.~ :'\'necessarily";'e:xcltides'~con '~prQhibits??temperatqr~~co)np~nsatedi salesAitl,; Qtber~~ectiQns i' f ' .>

where such sales are not expressly permitted, as in the se.Gti~ms.,goy¢roingftr~taills.~le~iof"' W

motor fuel. Therefore, silence on temperature-compensated sales at the retail level is notconstrued as "permission'~; rather, it is correctly construed as a "prohibition." In\ishortj1'('when one section of the statutory scheme pennits temperature compensation whileanother is'silefftI6t1 it/the silenc~ is'intetPt~ted'.as'Iif6hibitiOhf·tio~perffils~i6ii.,fj:', ;'," ;,'

;'{I,']' ~i{3i.~~·iL~~\ '! "··-l(·ll:~,.~·:..'~r\n:J.:·;".I·/r r-·Y:.:"C;·: ~"j .• i·, 2i~' ..·.:~n;"~ I<~r;t-y.~~.d~;_·;..,~/.; 1~ '~'.. ;l·~· •. 'I'f~~' ~ ~ 1"'

.2. California; lJaw\Expressly~iP.toliibitstOeViation~lfrofut:theltPrescribed ~Staildardilofl ':' ,;.o .

Dispensing~Retail>Mofor!FuelmjNoh~Vatiabhr~a~bns.r' ";':"; ': . 'Ij j:,j, "'i·(;',lr'l.;;' -"

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(a) ATC Devices at Retail Wouid Violate -the Standard for the Measurement of aGallon.

, To regulate commercial weighing and measuring devices, California has adopted the

standards ,J?N~Ji;~~r~ in!!Iy, N:~tjo~~l .~~tJ~t~ or ~~~~~~~f;/~1\~#ffut!?,19gy-(~I~fLHandbook 44. As the CEC recognIzes, Cahforma law/:~~qm.r~s,z:~tallersto seV:mptor

:," Geneva

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4 Id. at 2. ~l1is"iaetns repeatcitrseveralf tiiries in'the"report 8eidd-!at 8; 89, 90;106; 86'l2>3 >·Theiattil:ched· . . r'Londonappendix contaihS the exact qti6tations.c

'. ' . • " 1"'>(' .j Miami

.s.:'¢,a\. Bus. & Prof. Code § 12107; Cal.-Cod~ R~gs. tit. 4, § 4000. Although Cal. Code Regs: 'tlt"4':§ 4001 orange co~nty"'J , H db k44 . , 1 thi d' . ), San FranCISCOexcepts certam an 00 proVISIOns, none are re evant to S ISCUSSlon. \..,

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fuel by th,e gallon.,,6 And a ,gaUpn .j~. defined in California law as "231 cubic inches(exactly).'.'7 Agallgn is c9n~i~ere~a''unit,''.wl1ich is "a special quantity jp,' ternw qfwhich/oth.~r qUJ!11tities ~e.exp,r~ss,~d: Rurthef!llore, "a ugnit is fixed by.defil'fition anc/./s December ~a2g0:~independen~pfsUGh physical cqnditions as. temperature." .

Contrary to the CEC's statement, ;California law does bar the use ofAte devi~es at retailservice st~t.i9nS. Complian,~e"",ith weights~and7ll1easures standards is mandatory. Thesame statute that adopts Handbook 44 expressly states that "[i]t shall be un?awtul for anyperson to violate any of the rules, regulations, tolerances, specifications, or standardsestablished.under this section."~ "Violatqrs may face arrest, prp~ecutiQn., civi,land .criminal fines,- and injunctive lawsuits. 10

f. 'i ' ,.' ~ ~ .,.'. ':. ,", , ,J

As the COJ;nm~ssion re~ognizy9, goXemment )nspector:~ "ensure .c;()rnp~iance withCaliforni,!!.1~w, making certa,il1 that five g8;\I~ms,dispensed measure 1,155.. c:l1bicjnches," ,within a specified tolerance level. ll If the retail dispensermeasuresr correctly, ih.einspector places a seal of approval on the dispenser. 12 But if the dispenser "fails to meetall of the requirements of Se.ction 1210T' (i. e:, ,the statute ad,opting Hanqbookfl4),. thedispensero;is .deemed to be '~false,,13 andu'~incorrect,,,14 and the retailer may not use th.e,equipmentuntil it is properly calibrated, ~5 And rjf the retailer knew that the~dispens~rwa§not standardized,'he or'she is charged'with a crime. 16 . .

....

Therefore,·,,were a retailer to instl;lJI an·4~C devlce,,that dispenses a larger-galloQ.J~._g.,

234 cubic1inches) or.. a,.smallergallon (e.g., 229 cubic inches) than.the legally.mandate<i~ • . _. . ... . • . . • .- J.' , • ,,'

6 CEC Fuel Delivery Temperature Study at 8. See NIST Handbook 44 § 3.30 'Il S.1.2.1 (~andati~g thatdeliveries of retail motor fuel "be indicated and recorded . . . in . . . gallons and decimal subdivisions orfractional eq~ivalents thereof').

7 NIST Handk.~()1<.!44A-pp. C, at C-16.

8 NIST Hanqbook 44 App. B, at B-1 (emphasis added).

9 Cal. Bus. & Prof. Cod~ § 12107.

10 Cal. Bus. & Prof Code §§ 12013 (arrest), i2015 (fuanaatulg that sealer prosecute violators), 12020(criminal charge), 12015.3 (civil penalti~s)'IP012.1 (inju.pction).

11 CEC Fuel Delivery Temperature Study at 8 (emphasis added). See also id. at 65 (noting'that'inspectorsverify accuracy of dispensers "to ensure" that "correCt quantity of fuel (in cubic inches) is within specified .. . tolerances"). ' ..

12 Cal. Bus. & Prof. Code § 12505.

13 Cal. Bus.·& Prof. Code § 12019.


15" See Cal. Bus. & Prof. Code § 12506. Se,e also CEC F:uel Delivery Temperature' Study at 6,5. (recognizingthat if dispenser measures inaccurately, inspector will mak~ '.'minor adjustment to bring the device. back

.into compliance" or require retailer: "t~ h~ve the fu~l 'dispe~ser properly calibra~ed 'by.'a c~rtifiedte9~cian").


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size gallon (i.e., 231 cubic inches (exactly), without regard to temperature), then the're~~i1,~,would "dorate 'California law and would be subjeCt to ;the,1 above-described "',

;,,' ,sanctions7"yCalifOfuiaweights-and~·trie~sures offiCials. Iildeed;'the ihslfeCt6rs would be: December,~. 2008

duty bound to declare the ATC dispenser "false" and "incorrect." California law' Page 4

therefore expressly prohibit& temperature-compensated sales at r~tai1., ~ t', i "I ,,' .. , '..; ! f" , ' '. f. .", i ' : ' I "~; I , ;'1 .

(b)'XTC Devices: at Retiil WouldViolate California Law,'Ooveitiing Price Terms,UriWP,ncirig~'andVa1ue'Goriiputatiohs., ' ,-,. ,:: I

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California'Wei'ghts-and.l.hieastlfes laws' regulate:the maiuler in which :tetailers representprice in sales of retail motor fuel to ensure standardizatioh: aifd'~faithesstto,consl1mersP'Sellers of retail motor fuel must provide consumers specified price information so thatconsume{~llean maR~ (ifiiormed'ldeci'sioiliFoffHnotdfi fiier'pijtcha~es~: i 'TliB'CalifdfiiHi'Hi~s'regulating' :c()inilier~i'al' ~GigfungjanoJnteasurifigbeqliipilieriti dee ~ aesigned' to',; enstirertllat!! 'consumei'S"~ef dt'cui"ate pnce;'iiifonn~tiotirl8! '''1 ,,'" '. ' '. ,/,\

1':<t:'r~ ~ ..,'r tl~~.~:l' 'y:-.. :~~< ,,;o:..~L l}~;;":; ~Lf{~ :',:,~:ft~(:'.F~I·'''' .r<;< ~'~'. '~~qqr: ;:; ~'~'.Jf, .. rJ·,_.~-.~'r.~~~~.

'Californili'fIaw' tequii'e'g lJsellerS1of<,:retai:lk th6,tof[ fuelt. tb usel ui).it~'pricilig,.()'EheYl1mustpset",

prices on~aUper'uhftJbasis anU£ptoVide:'a:ccuta:te;.ihfoflhatibnfto cohsUfuers reflecting)this,'basis. 19 Deliveries :b,£;fuel tnust"~be indicated'arid1recorded .' .:;( :in:.J" .,gallonsY,2o, ,The,''unit price" must be "conspicuously displayed oriposted :btflthe¥.facei 0f arretaibdispenser, 'used in direct sal,~.,,21 Specifically, retail stations must provi.4e the price, per gallon.22 ,And, as discusseaf;'abbVe;;fal' gal1'ciffffatJ ietlliP'riiti~t mMstireati<a!fdt~terrhiiiea fyoltiiiie;"'" !";'

unadjusttid;1foH:empet~mr~ ..Jiih ~ot}{~f 'WbraS, retailers may nor sef'th<niliif'pricef acedtOiiig1' ,.J!;,'

to a variable-size gallon. ,", -,':,,~sbfit",rt ~ J' ,f'~~.

" :{i": "',i..,~, .. '~"l" ,.J" : ." .~.o,I. 11.·.

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17 See Cal. Bus. & Pro£ § 13413 (prohibiting sellers from "misrepresenting" price of petroleum' productsj; ,NIST Handbook 44 Introduction (stating that "purpose of these technical requirements'isto elithinate'rfrbfu>,use, weights and measures and weighing and measuring devices:th~tfgi:v.eJt~~~mgsJ.t4~~prYl~J~,~" tP~t ,ar.t;rfilJ", II

such construction that they are faulty (that is, that are not reasonably pennanent in their adjustment or willnot repeat their indications correctly), or that facilitate 'the perpetration of fraud, with6ul:piej'uaice to~' .. : ':L

apparatus t4l!t,~onfo~~:~sfc1o~~ly!.a,s,p'ra<;H~!ib!~M ~~lgm£,t!1,l:stapdard~':;'),.-:, ' i '_ "" J' "

18 NIST Handbook 44, § 1.10 ~ G-A.1 (stating that HandlloOK~4islr~qufbnieiitS'apply to cbhririercial

weighing-llAdi~~~~gie~YipWJ~l1t}:qgt l?,J,lly. ~s ~q,.qu31J.t.i,!XIP1.!t~1.~1H<>' ~'coWP'll@g ~Ylj~~tRl~hm:~~::' o~,the

basis of we,ig:b:~,qr,:~~~~,\l,fe); ~\Sr'H"W14p,12P,~ Ml~§:'3}P!.~l·~<\}.JfPro:Y!Fljyg lfu~t·li9.H~.<\~~~as,1iripg q~,:~cles " ',,' , ,,1,

must meet the requirements of both § 3.30 ("Liquid-Measuring Devices") and § 1.10 ("General Code"».

19 See Cal. Bus. & Prof. Code § 12024.2 (unlawful to charge or compute "an amount greater than a ~eextension of [the advertised] price per unit"); § 13470 ("actual total price per gallon'; of ~otor'rue'l m~;t bedisplayed on dispensing apparatus). .,

20 See NIST Handbook 44, § 3.30 ("Liquid-Measuring Devices") ~ S.1.2.1 ("Retail Motor-Fuel DeviCes'!).

,,) ",21 Id. ~ UR:3!jl("tsomputin'g Device")'(pro\!idingtlfadf i 'pfodild'6r'gtadeis'offer6d for slileat'Oiie o~ riibfe ;unit prices,'; c6b1putil'iga6vice'niust "coinpute[] aril:Jidisplayn-th~ sales price for:tlieselected'tiansaction"k .,',see also Cal:'BUs:'& Prof. Gode§ 13470 ("actuaYtotal pi'ice'per gallon" 'o'f motor fuel fuustibe'displayed on"· "

". dispensing apparatus):_~ I ..

22 Id,

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To comply..with existing. California weights-:and-measures laws, sellers.of r~tail motpf .fuel must 'ensure that the tiJtal sp,les,p1.'i¢e.accurately refle~;ts and mathy.lTI~tically agreeswith the computation of quantityffillltiplied by unitprice~23 That is, the.'oy.er~ll. ~\tptal December 9, 2008

sales price'" cannot.be._!livorced from ,the meaning of the ''unit price.,,24 Galiforni,alaw Page 5

also requires that. the valuesvinciicated on ,the dispenser meet the mandated~formula,

quantity x. unit price = totabsales. price.2S The price comput~tion must be !Jased,.on ,0.0,1gallon intervals.l6 Retailers are; required to provide a printed receipt showing (the totalvolume, ur,rit price (i.e., .price.pergallon), total computed price (i.e.,quantityx ..price pergallon = total sales), and product identity.27 In short, if a retailer used ,the ATe devicesthat the GEC calls pe~issible, he or she would violate the California pricing andcomputing)a,ws. 'J, " .••

'-l

(cjl.ATC Device~rW6tild Cause Retailers to Violate Misrepresentation Laws., :" , .; i . ~."

The C0111l,11i~si9n rightly :recogI)izeci th~t giv~n the lack of regulatory,s~ap.d~ds.~mlabeling or, sign,age for. ATC d.e,,:!ce~ at· retail service statio~s, i~~lemen.tatiol} of retail.temperature compen§atlon'would "lead to consumer confuSIOn." As su,?h,.J!ot.yply

23 See NIST Handbook 44, § 1.10 ("General Code") ~ G-S.5.5 ("Money yalues, Math~matlcalAgreement") ("recorded money value and any digital money-value indicatioiron a computing-typeweighing or measuring device used in retail trade shall be in mathematical agreement with its associatedquantity representation or indication to the nearest 1 cent of money value"); Handbook 44, § 3.30 ("LiquidMeasuring Devices") ~ S.1.6.5 ("Money-Value Computations") ("(a) A computing device shall computethe total sales price at any single-purchase unit price (i.e., excluding fleet sales, other price contract sales,and truck stop dispensers used only to refuel trucks) for which the product being measured is offered·forsale at any delivery possib1e.within either the measurement ran~e of the device or the.range of thecomputing elements, whichever is less.).

24 See id. ~ S.1.6.5.5 ("Display of Quantity and Total Price") (when "delivery is completed, the' total priceand quantity for that transaction shall be displayed on the face of the dispenser"); id. ~ S.I.6.6 ("AgreementBetween Indications") ("When a quantity value indicated or recorded by an auxiliary element is a derivedor computed value based on data received from a retail motor fuel dispenser, the value may differ from thequantity value displayed on the dispep.ser, provided the following conditions are met: (a) all total moneyvalues for an individual sale tliat: ~eindic~ted or recorded by the system agree; and (b) within eachelement, the va1uesindicated;~r'recorded meet the formula (quantity x unit price == tota:i s~les'price) to theclosest cent.").

25 Id. ~ S.1.6.5.5; id. ~ S.1.6.6.

26 Id. ~ S.l,6.5.2 ("Money-Value Divisions, Digital") ("computing type device with digital indic.ationsshall comply with the requirements ofParagraph G.S.5.5. Money Values,Mathematical Agreement, andthe total price computation shall be based on quantities not exceeding ... 0.01 gal intervals. for devicesindicating in·inch-:pound.units").

27 Id. ~ S.1.6.7 ("Recorded Representations") ("Except for fleet sales and other price contract sales, a.printed receipt providiilg tlie .follo~ilig information shall be available through a built-in or 'separaterecording element fotall ~raiisactib~:b6n4ucted'withpoint-of-salesystems or ~evices actiya,ted by debitcards, credit ~ards, arid/or cash: (a) the total'volumedfthe delivery, (b) the unit price, (c) the totalcomputed pHce, and (d) the'pr6duct idehtityby name, symbol, abbreviation, or code nUnibd-.").

:'::J ' "'" ~ • ,~:- .~

28 .CEC Fuel Delivery Temperature <Study at 90.

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would a retailer Violate specific labeling lawspertaining'oto motor fuel,29 but the retailerco.yl~ ..W~o:be found-liabl,e for violatil).g;provisions that forbid misleading practices and.misrepresentatioilst'regatclihg th€FsaIe of'motor,'fue1.3,o, 'Tlie:statutesgoverning the sale'of December 9,2008

petroleum productsriuike it ''unlawful for any person ... to make any deceptive, false, or Page 6

misleading istatement,by 'any means whatever: regarding, ~ua:lity,Jiquantity, perforrrtance,price, dis6ounttbr., savihif'used' in: the' Tsale',~cof.thotor fuel: I A' reta'i:leri is also prohibitedfrom "mi~pfeseIititlg"" the'; price' of'·niotor fue1.32 ~f by· implementing, ATe devices aretailer wouldcfeate'~coiifusion"! irtJ consumers;·· as -the CE0~$tated,:.the·!retailers·'surely

would be'i'ii:ieoi>afa.Yi0t:·Vfolatiiig:these'1ptoviSiotfs:3~: f; ',:; di/',\r) " i,: ie;"

As discui~ed, c~iifJrniri6i~i1b-~ must also set cindidveitise pri6~'si6n a p~r galtOllbasis.34 If a retailer advertises regular unleaded gasoline at $2.50 per gallon, th((~tifupmust dis~ense exactly. 2f~·cll~i~~}nches .of ga$~H~~"l~r~~fl}:dl~~,~,oK,t~wme~l\~~~)~foz:,~~c4.$2.50 paId by the consumer. If, Instead, the devIce dIspenses more or less CUbIC Inches offuel for $~~50'per' ga1l6n'{ tlieiftlitfcofislfirier doeslnotJI'eceiVe tne'iquantity (~3'l,[cubic':irtch; ~.

gallon) sb'e;Jiigreed 'tb'!paY[(i:;~V;$2:~(:Pperr.: gallOn): .<9iilifo'rnitPdeems) such r}i MJ'et.td.:be i

misleadiri~ibeda{{serfU1e uiiit pi£c'en($2~'SO')per!gaU6'ri)pin'\fli&t, {Would fmlsrepfesen.f.l the' i

quantity for which the consumer actually paid--i,e. 231 cubic inches exactly, not, forexample, 229 cubic inches, (lJ~lo':V (jO d.~gr~es F) or 234 cubi~ in.9hes-(a~ove,6(rd~grees

. , . ' .• ' fl ', .. ,,' J ", ,_" \' I ,- ;; _" , . '.'. .' ' " I" ). _ I ~ , ,r , ',. , <

F). A retailer tllU~. ~gl1l,(;t ,yio,~~t~, .:~~~i,f.9~~:s,!n~sreP,f~m~J;.l;~~t\PP, la~s, ,P'Y,:.lf~ii;1g ~TCdevices. ..." ....: .i:- n )11 ..:' ·-'·-·'IP· 'i} .. , .,~ f\:"" "i ,', '.. f..;;·:ll1~;'" -'i ;.'- ,t·, .. :,,,'

(,' s, .. ";',.,

!' ,?'." ..

J ,. i '.

29 Cal. Bus. & Prof. Goae §113595·(making'it ''uruawful forany'person'to'sel1:or1deliverany petroleumproduct ... from ... unlabeled or mislabeled container or device"). ,,<: .': ;.,;j ,!.

30 Cal.Bus.&Ptdf;j§J13~13.·;\'; ";;"""'"31 Id. ';:~<r~ ,".Ii:} , 1,.J"~. :. J~. .q.~., >'J 1!,.:;;f:~.. ;. ~~

,I' ';~" • ; "'·,'1.': \\..."" i ,'j. i". l ~. '(it'.: lfIH:.:i.;. i~' ~~i,':., 'j

32 Id~ .... ,.~ '~):'i~~, .: ~~ '::1'1:: ,:i:-; ;,.'i:-,·', ", .",~ "., ,~~:-:. " ~i 1\'),r-'~~'Y)" ,ri·!-, .:. ~. ;',"

33 Such practices ai~o;;':bu{it q~ite'p~'J~;itht'~Iig:~fidet liability url~~r c~lif~rlu~;sU;JaiTC~ni~etitio~;n~ i. .

Cal. Bus, & Pro,f, ~;~~;:§J§:'t7~09,'~f~~q,,:~«;~~j,c~,~,~~W,~i ~g~i'~~~~4~~~~1~K:¢~r: ,~,i~;~s~~~1§:I?50""ct~ . . .

34 See Cal Code Regs. tit. 4, § 4201 (limiting pricing signs on dispensers to, amongi,qth,e~,ip.(<?pn~t~.o~,actual price per gallon); NIST Handbook 44 § 3.30 ~ S.1.2.1 ("Retail Motor-Fuel Devic'es") ("[d]eliveriesshall be indicated'ahd 'recorded·: :.~J ;!in:diters of'fgallons'?:);.id: l~ S';li.6:4.1 ("Uilieprice:TG'computilig or:money-operattid1'deVice':'sliall:..l5eablei.:to: display:;: .... unittprice at ·which ;;thei'de:wice':is ;set'.itoJ computet ordispense"); id, 'IJ 1~6':5!4 ('''SeIecti6i.:r OfUIiit' Price") ("Except for 'dispensers'used"exclusivelyfor. fle~tfsales,

.other price contract sales, and truck refueling, .., when a product or grade is offered for.saleat,m~re:.than,

one unit price thr~)Ugh a com~uting de\jc,y,.the selection of thy,~t l?rice sh~U,p~,W~<!~ priprto .del,~v,ery,.. ':

";rA ~yste,!, shall no.{d!lL1J!Ji.t ;f;l) ,f:~qri?~/rOfj(~,fri~~i{frrj~~,1u~infJ ~~~lf~erl}A1n r~Sm~h~f!~~~~~~!!,r ~A,~",("Umt Pnce and Product. Identity") (provl<lmg that "umt pncel

; must be "conspicuously displayed ,., . on '..,', . 'rJ'~)-,-"~l'J" .,,-~\.' d' <" 1':/'" .'-,. '(ll·-. j'! !T::~J_,I'I~~_"l') .... rl" .',-:~j,'~, r ;'d t' '!:. ,f t

. retail dispenser"); id. ~,UR.3.3 ("Comp~ting Device") (proyi~ing,Hla~ ir';pr99Hct9f gr~deis 9.ffer¢~,fo,r.s~lrat one or more unit ppc~s," computing device must"co~puten andAi,~p.~~r[]'th~.'~ales price for'the

..s,el~.cted transaction"). See also CEC Fuel Delivery Temperature Study at 8 (recognizing thatCalifo'rniil"la~';i[r]equires retailers to advertise prices on a per gallon basis on its dispensers").

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3. The Express/Provision for:ATC Devices ,at,Wholesale'tlinpli~itly;:Bars;,l'helr,Useat Retail:: 'The Rule of'Statutory (;:onstruction that the Permission' oLQne Thing,is " ..the'Prohibition of Another: Demonstrates thaf.;Temperatu:te~CompensatedSales, i\re De~ember;9p'2008

7Prohibited~) ,,;''. ! fir, ' " age

. ,. . " ~, l ,.

Not only doe.s, C~lifQrnia law expressly forbid retailers from using dispensers th~t deliyer c

motor fuel in,'up.itst()thertp'~231-,cubic-inch gal!ons,bllt tltyla~, alsol i1JlplicitlY,pro/libitsretail ATC devices because they are expressly authorized only at whoiesale. One cannotview the retail provisions in a vacuum but must consider them in light of all lawsgoverning motof:'jfuel, salesY- ; T9-ese laws, distinguish between 'retail andY')Vl;lOlesale ,j I

transactions~ 'L',In",~t~t;lc\ c~>p.tr'!.~t t9 the ,!ytaihprovisions, California,law~expressly;permitstemperature compensation in wholesale fuel sales.36 The CEC recognized that while \ .'temperature compensation is expressly permitted for wholesaletransactions,37 a "lack or'regulatory structure'" exists for the use ofretail'kTC devices;38 "

{( • • :-,.' l, 11 :)'

;.-'...; .. ,:.I '

35 This foll~ws fr6~ tl},e famili;u., canon of statutory construction that,''' [0]tlier statutes dealing with tile ' J',' ""

same subjett as the 'one 'being'~bnstruel:I--comm:on1y referred to as statutes in' pari thateria~~':" should be' 'construed together. People v, HonigIJI, 48 Cal. App. 4th'Q89; 327; 55 GilL· Rptr. 2d 555, 576(1996)(citation omitted).

36 See CaL Bus. & Prof. Code § 13520 (prescribing that purchasers of bulk gasoline or diesel fuel atwholesale must be 9fferedoption of inyo,icing "on the basis of temperature-corrected gallonage"); Cal.Code Regs.' t£ 4,'§'4002:8"(providihg"method of testing' "*hdi~sale"deviCe~' e4uipped IWith [ATC]systems"); iCat~Bus:;8rPrOf:'Co'de'§ 12107 (iticofPorating NIST Handbook 44); ·Cal.'Code Regs; tit. 4, §.4000 (incorporating 'NlST Handbook 44); NIST Handbook 44 §' 3:30" t~ UR.3,6 ("TemperatureCompensatism, Wh()lesaleH).

,- • ~ \I, '.

Compare these retail sales and invoicing pI:ocedures with the wholesale procedures:

Retail prici'ng arid rec~ijJtpriicedures: Handbook 44, §'3.30 mJ S.1:6A.l ("Uiiirprite"); S.1".'6.5 ("MoneyValue ComlnitaHons'\ '8.'1.6:5'.4" ("Selection of Unit Price")'; S.1.6.5.5 Ci'Display"of QUantity andfotalPrice"), S.1.6.6.' ("Agr~~merit. Bet~een'IIidicaHons';), S.1.6.7' ("Recorded Repr~sbitatl0ns"), "S.5

'~""'I' ~ ,~t"'-""'·"'·",:.'_;"l~"'" ,",' ....... : •• >'q", .... ,

("Totalizers for R~tail M6to'r'-,Fue1 Dispensers"), UR.3 ("Use OfDevice"):UR.3.2 ("Unit Price' and 'ProduCt:' •• !\ i.l~.. f 1 ~-, ," ~. - ·i .), " r... .... ..i;b . , .

Identity"), DR.3.3 ("Computing Device"), UR.3,4 ("Printed Ticket");' & UR.3.5("Steps AfterDispensing';); Han<l.b.o~.k 4~;l (10~ G-S.5:2 ("Grhduatiorls; Iiidicatloti~, '!\no Recorded RepresentatiOrih& G-S.5.5 (h~10n'~y:Vaiu~s, Ma,tiiem~ti~a1Agreement"). ,,' -;".,~ ".

t~ :• ..( '. !.Lt !""',~ " ! - > .~, ~, .-;~ ,I '"

Wholesale pricing and,invoice proceduresL,Handbook 44, Sec. 3.30,~~ S.2.6 e'Temperature Determinationand Wholesale Devices"), S.2.7 ("Wholesale Devices Equipped with Automatic TemperatureCompensators"), SA.3 ("Wholesale Devices"), 8A.3.2 ("Wholesale Devices . . , Te,mperatureCompensaiion"), N.5 ("Temperature Correction on Wholesale 'bevic'es;'), UR.3.6" C'f~injJk'r;'tu~eCompensationriWholesale"), ,UR.3:6.1.2 ("Temperature Compensation, Wholesale " .. Autom~tic .... ,clnvoices"), UR.3.6.2.2 ("Temperature Compensation, Wholesale ... Nonautomatic ... Invoices"), &UR.3.6.3 ("Temperature Compensation, Wholesale ... Period of Use").

37' See CEC Fuel Delivery Temperature Study at 7.. :" .. ~-' . .;.. :., ~ , " .

38 CEC Fuel Delivery~TemperatureStudy at 90. On page 89 of the report, the Commission states that the!'near.~absenceH of any ATC regulatory framework in California means that no laws would regulate'whenretail ATC devices would be activated. The Commission then comments that "DMS regulations do ...specify that, if ATC is operated at retail, it must remain operational for i2 ~6ili;eclili~~ nlonths "at ~ ;tih:t6:"

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Because th:eL'egislature provided 'fdrfemperattfre compensation at wholesale but not atretf!i~.," ;he"use'of retail iATe :dev.ices'is prohibited. The maxim of,statutory construction ",mown' 'as' ;expf'esszcP:unius; 'estlJ exclusib Icalterius (the, 'expression 6f4 ofte,ltliirigis the(;)ece~b~~~~,2008

exclusion of the other) plainly applies here,39 When a form of conduct is designated in a, '" Page 8

statute (in this case, temperature compensation at wholesale), "there is an inference thatall omissionishoftld He' ''iltiderhdoJ;as'exdusi01i§;?~o If the· LegisHitt.ifefhadlirli~hde(Nb ..permit ATe' devices 'atretail~ -the Legislature "would have dories6 :expr~ssl)HariWrtotby'I ,,41 Cj\.' " -",-\, 'j' ' ; , , ' • ., '0 ' 'Sl ence. " .. ' ,', .. ',' ,;,,; ;, '\. ),.. 'Jt, ',',l: ,'J -

..":.

The Califotrtifi"Suprbme €6t1tt has'ruled;that>"[w]hen,the"eegi'slature "has'employed aterm or plitase"in\(biie'-plaeet,atid!~xcluaedit in'another;kdt;shdilld' riot'!be,imbliedrwhere::'-excluded:Jl,12y "~, ' ,'i j ", _;~ i.eli ' ")1',', ' ~, : I :r»q'~II:r':(, . ,

.(.. '

Nothing in the statutory and regulatofy:scheme s:uggests"thaHhe:begisl&.tut~~int.eti.d~d:the'wholesale ATC provisions to apply to the laws governing retail sales. In fact, quite theopposite is true, The absence of ATC devices in the retail laws indicates that the

Legisla~~) ,mtr~p.~~~b4ISir.P~b{ pt 1l,;Y,1<l?~~~l~:".m4~Ng',!RrQP,$1r~i]lfi~{l?riMl~J~ry:, 'construct~ql1J r[t~tgogniz.ed, ,Qy,.~the _C~lifornia :Supr.emy""Cmut, im~9.~t~ ,.pr,.oh!/Jiti,(m, oftemperature compensation in retail 'sales ofmotor fuel, notitspermission,'

"

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.. '- "~~,;., ~.' '! ... ~_,'. 1"., ... ,11.; , .•'." , ... :~. ,\ i' .' .!,":' ., '-HI

""".

As the CEC; has ..qbseiYed" no" r,etall, ,station: Op~ra.tiop in, C.,ahf01:nia",has;, iti~talled" Atc'43'" n Hl'·1 l i.J!.04., .. .I~l.:"'.'U- .. lL~ ..H .l!ttv. "1/ 1/;, ,.) < ··.ill .. ,·l ~!lb.1J l'(),fl: , ~l.\.'-t~ (. )IE t ,,_

dispensers. L ,,;This:, iSlcllO f,accj~ent.;,,-\C~liforni'a )~W' ,.,~~pxe~slY;' tpt 94H5,lts rt:etai!er~pfr9qJ.selling motor; fuel, in'variable-size :gallonst(i.e;',-,more than,:or' lessAhanr2Bll cubic ,inehes),

A similar statement is made on page.H8;- Itl'neither place'did;the,€othtniss~on:Cite'thetDMS~reg\JIl!tion to

which it ref~n,;~,~,. :F~~jp~,F~! S'1,~o~1 ~emMtipJ?- a,p'P2~!lbl~ ,~9~~tait.~a!~~'.~~.Rl'f ~~x<.~~~~~~~~,fll~l,,,~~\~~Emay be referring, to HandbOok44 ,which specines in a section ,related to wholesale transactions iliat" w hen fu~C.i~ b;~'IN~~~~id ~~..: ?;.~!:"'~j t6~ r e~~hJe-~oiite~~ied bkJr~l!ii~Jh~il!,b:boJ' i -rof s6i~fli'Jilrtl:~s ]method '~Ye~~at'l~~f~t~~~~rtle~~tiv~llZ:~~~ili . ~iibd Jes~:~ili~iWi~; i'n~~d:t6 6: t~mtAhli~' bU e~ ~~,seller in wriiili'l? Ni'sfJi1faBZ5ok 44 '1 3'.jb 'j :'tfR~i6!j':',}d{,lifha( s;;lli~~EC iJ~~ic~i.iBu~:'1' Pl'O{Code § 13520'\h1~h';p.r~vide~ tli~t ifie~k~i~~~-cg~p~b1a~elJllljii;~riill;gi~ecflKi~g6i~s~l~ ,th~sciller

, (';5~rWJt1..!-n"1,,:;)1.1, .... t L~""U~'Jj'1;:1 t.n ~ ~:n.,'1fHL~tUH. i.'q!)'tRtI.. ':'1rJ .1 .... " roo; J trW ~rl t ? ,:-...L -,tf)n'-d~rIi~I·1

must do so for all sales to the same purchaser for a 12~montli,p.~gr9:~~:;~el~,Q#!tjq~tw.~t *~~~\p'i;ji':!~~-9J~;apply only to wholesale transactions, On page 118, the CEC also 'states (Witlioul~citatioh) iliat DMS hasregulations'rfor;activa'tiilg ;NfCcdevices; rbut;as tilie fep'ott iecogmies\~tliose'lhhvs~ar~ fdr,vR6,';no.(d"etail '-t h ,_' ," "t "motorfuel:"nllv\"'\l-",','" 'J',:';'- 'n'.'.: "';',,:1 ,,-,,'.,':;;;. i ",; -;: ,v,'kd"!1' ;;. ",{'I "',!.' ,--,,'; ,

39 SeeBla~~iiti~B~tionwy662;<ith{~d. i:999).ti"',, .' ,;. ,i"c<;!; 'i',"d",.'

·'n""'1.\·~~\.'l\:,~ \. i /j .~ i I ;.;'~·rif····· i: "·'I~;I-J"·\:·!\/.' h \':~ J t " ~". \'-\~\~.'< 'Io'lt\,''l\' :. /' \t,'.n.· '\TV'~~ ~

40 Norman J. Singer'&/J.D, Shambie Siilger,"2A:'Statutes and-Statutory COristr!ictibh §"47:23 .Wth, ed:.2007). --,j! n'.-' '5° ' ','n,,' •.n," ,\

.. 41 ." .: :,;,__'" ld. § 47:23, at 416.. ~ 42 . ." "') ." It::' , .'.~' n!~ ...~; ..... / l

Pasadena Police Officers Assn. v. City ofPasadena, 51 Ca1.3d 564, 576, 797 P.2d 608, 61'4 (1990)(emphasis ad<ledr See also Phillips v. San Luis ObiSpo County Dept. ofAnimatRegulation;'183 'Cal: 'App.'3d t3:72, 379j228~<Dalf Rptr. 101- (1986).

,~ "{:';.~ ... ,..,-) .~, '~r ". ,.. ..-'A5{ j ", r' ' .• ~.

'.- '43 eEC Fuel :p~i~yery feinperaiUf~Stiidyat 2,'8'9.. . -., . . ") ...

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;..,State. law, also implicitly bars temperature compensation at retail because the lawexpressly permits ATC devices only at wholesale. The CEC is' thus incorrect in asserting

"_ that 'California law already permits'the use of ATC devices at retail:,-,i! ~epem~er.9,2008Page 9

') ': ,;We ask the Commission to remove from the Fuel DelivelY Temperature Study the'statements suggesting that ,existing.California law permits the. use of ATC..; dev,ices in

.:;r~t~iil'ga1'es of motor fuel. We similarly ask the CEe to remove the conclusions that~a

~:pr,?iri.b,ition of ATC implementation on a voluntary or. permissive basis would :requirer a. ~llv.v:9.~ange prohibiting ATC sales at retail because the proper rules of statutoryconstruction already prohibit ,temperature-compensated sales at retail. 44 To .cpnstrueCalifornia law any other ,way fliesjn the face of settled California law.

Sincerely,

Tristan L. DuncanCounsel for7-Eleven, Inc.Circle K Stores, IncPilot Travel Centers, LLC

. 44 The attached appendix lists all these statements from the report.

93244051vl

Geneva

Houston

Kansas City

London

Miami

Orange County

San Francisco

Tampa

Washington, D.C.

APPENDIX

Shook,Hardy&

BaCOllLLR0'f.: WWW.shb.com

'thg":fol1owing statements appearfin. the CalifoniHi Ehergy Co1111llission's"report· ' ,titled Fuel Delivery Temperature Study (November 2008).

Tristan'l;,i Duncan'

Permissive·{voluntary} 'use~lotJ;autOrrtatic temperature' compensation: (Nr€)~, '> ;:. ~

devices: at California' retaif!stations 1is i 'already-,permitted under California law' "as it is liot1sI>ecifically prombited.l! (Page '2.)

•

•

2555 Grand Blvd.

I}~?~as CityMissourl64108-2613. ". i '~j'l

'. 8'16'.474.6550

:816:S§9:2040 DO';1 '8~!6;42f5547Fax

Permissive! :(voliintary) i .use of atitorriatk:temperaturel' compensation. (ATC)n h " [email protected]

devices at California retaihstationiHs'aIready.-permittedfilnder, iGalifornia ~law; l • ["

as it is not specifically prohibited. (Page 89.)

• A prohibition of ATC implementation on a voluntary or permissive basiswould require a law change prohibiting ATC sales at retail. (Page 90.)

• Yet, [retail ATC devices are] legal to use on a voluntary basis per DMS>'regulations. (Page 106.)

• A prohibition of ATC implementation on a voluntary or permissive basiswould require a law change prohibiting ATC sales at retail. (Page 123) ,

GenevaHouston

Kansas CityLondon

MiamiOrange CountySan Francisco

TampaWashington, D.C,

3244051vl


----- ------------------------------

"Folwarkow, Scott" <[email protected]><gschrem [email protected],.us>

i,.<jboYd@ehergy:state:ca.us>;,'<[email protected]>"12/11/20086:11 PM ' . ", ,

Fuel Delivery Temperature Study - Committee Workshop Follow-upATC 12-11-08 - 20081211165511782.pdf

~VALER.O

December 11, 2008

Gordon Schremp, Workshop FacilitatorFuel and Transportation Divisi.onCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512

;Re: Fuel DeliveryTemperature Study - CommitteeWorksnop.J I' ." . ,'~ ',' ,,'.~ ',i ij:~1 §i;', :),,~_f'tl'~'..·" i ". ". " .

Dear MrrSchremp:,.':!, .' -; .

As discussed during theDecembec9. Committee Workshop, the enclosed memorandumsubmitted on:behalf of Valero Marketing and Supply Company and Chevron ,USA, Inc.addresses'the question of whether the :il1lplementation ofATC at retail stations is permissibl~under applicable California law.

~:'~~Scott N: Folwarkow

- Executive Director GovemmentalAffairsValero Marketing and Supply Company, and

On behalf of:

Chevron USA, Inc.

, .

CC: James D. Boyd I Commissioner and Vice ChairKaren Douglas, Commissioner

Enclosure

VALERO MARKEnNG AND SUPPLY COMPANY. Post Office BOl( 696000· Son Antonio. Tel(os 78269·6000

LATHAM & W AT KIN 5 LlP

December II, 2008

Re: Cali fornia Energy Commission StaO:'!s November 2008Fuel Delivery Temperature Study

505 Monlgomery Sireet. Suile 2000

San Francisco. California 94111·6638 .' .r '. ~.

Tel: +1415391.0600 Fax: +1415.395.8095 .". ~.,

www.lwcom .• ~'.', '"

FIRM I AFFILIATE OFFICES

Abu Dhabi Munich

Barcelona New Jersey

Brussels New York

Chicago Northern Virginia

Doha Orange County

Dubal Paris

Frankfurt Rome

Hamburg San Diego

Hong Kong San Franc/sco

londbn J1SffdA~h;ilos'Afi~l!jiW!: ; Sltlco;AValleYI!~}r:c~·. :Madrid; .. Sing~P9!e ..

Milan Tokyo ~!;tf,11~;;" 11,' ,:,' ':1"':Moscow ..,V\lashl.ngton. D.C. ' .

.'.-; ;1.1" U(!~.~~ ]1,~) (\( r·.·~~.]rr'~}· , t .

.T I~ is melJ{~r~..l1q~"rr.l~~g(f..~~es. i£~.rtai? i,S?,n~ ~!~~8!1~i;gfd~,~:s~t:;t;~~.IJ~! n..:~,~~jCa Ii f~lI;p ia EnergyCommIssIon StaIrs Novemoer 2008 Fuel Delivery Temperature Study (UStudy") and ISsubmitted for your consideration by the law finns of Latham & Watkins LLP and~~ki'1IGl~JllP, 'Strauss Hauer & Feld LLP; Specifically, this memorandum discusses the propriety of the sub.iect

" 'legiil'6pitii6f1s'~jj-PlighFoffth"e te'nns~(jfi€alifofnia' Bu'siness:'&fif!j'ofessi'dns~eo-dej§"'136JO;:tl1e . ".statute authoriii"rig the@onirtiiss'iOil'tOlpreparethe 'ihstatit Stu~y~ ariti' ptovh:Jes- ~legnl'allth{)I'i lies~

ahatafgJiifiel1t~ 5aClfe'ssihg~llfel sn.lay;s\eftdIle~tl~ ''slat~'rilentSt'tJfafj~~ [a~slbf fliday;i'litfli ~W'f6Hjidse ..;·any retailer from installing ATC devices:; and "[p]ermissive (voluntfltY)Ftis'cr6f a\ltothiitic:1';fl,·:<iy

temperature compensation (ATC) devices at California retail stations is already permitted underCalifornia law as it is not specifically prohibited;"Stndy at p.8; 89.

As demonstrated below, because Section 13630 does not authorize the Commission or itsStaff to review the legality of'S~lllng:teln"p'~~~fu~J~~gilip'ensated motor fuel in California, and theundersigned believe that expressing~sttClrLviews isinotoappropriate. Moreover, under thepresently-existing,regulator.y;schcmclgo.veriiTng\retaibliotor fuel sales, any California retailerwho attempts·'~o!seH~m'<:)tot1uel,:on"atte.lJ1peraturel adjtfsted basis is exposed to substantinl risk orliability under California law. Accordingly, we ask that the CEC Staff either delete references tothe legality or illegality of selling temperat!.l~~i~.Qft1p.e.ll@ted motor fuel in Calilbrnia or.alternatively, revise the Study to accurately reneet California law.

I. BUSINESS & PROFESSIONS CODE SECTION 13630 DOES NOT GIVE THESTAFF AUTHORITY TO OPINE ON THE LEGALITY OF TEMPERATURECOMI)ENSATION j; . •,(1':.'1,

;'., , 1'-" -:;.:~ \ .... -:. "'~ .' ,. • ').". "

Business & Professions Code § 13630 authorizes the Califo~nia Energy (:ol11nlissT~I~:along with the California Department of Food and Agriculture, to "conduct a comprehensivesurvey and cost-benefit analysis" including surveying the temperature of fuel "during routi!J9~.

dispenser inspections." and compare various options relative to temperature compensation.including "retaining the current reference temperature of 60 degrees Fahrenheit. establishing adifferent statewide reference temperature:' "establishing different regional reference

SF\6R23(,.'i.2

December 11, 2008Page 2

LATHAM&WATK INSUP

temperatures for the slate" and "requiring the installation or temperature corrected or; comp~:nsated ecmipment at the p.ump:'

, '"

Section I36JQ·does not authorize,lhe GOll1mission or its StafTto opine on the legality 9"temperature compensatiQIl lIn.derth~icllrre·ntregulatOl:Y scheme. InrdoingsQ,in thc·Study,:theStall i.s a~tjng Qutside ,the grant of its,authprity. .See 28-SUM. Admin. &iReg. L -Ne.wsr8,.,· ..I0 (.2003)r~{a]n,agcncyacting outside its. statutor~; authority is acting /111m vires, and an)I,.:,.regulatioJ)s,it'issucs in such capacit)',are void't Slark r. Wickard, ;)2',L\:.I.S. 2~.8, ..309 (1944}("When Congress pass~s an Act en,lpowering administrative agencies.to{:Clr.r.y.ongQverninentalactivities, the.. power of those,agencies iscircumscribcd by the authority;;grantecP).. " C'l,:'

II. . "E~lSJING.CALlI!()R~IA LAW'FOrUI,nS I>ISPENSIN(; ~IOTQRIFU~jL.iAJ'. ,iI,

"THE RETAI.LLEVELON :rHE BASIS OF ANYTHIN(; OTHER,TJIAN ,"GALLONS DEFINED AS 231 CUBIC INCHES (EXACTLY). ':J> •• i

Although.California .law.Gontains nl.) express prohibition regarding theinslallatiol1'ofArC-equipped motor fllci cfispensers.statutes,and regulations cited elsewhere'in the Stucly,hmkeplain that dispensing 1110tor: fueLin anyiunit·other than in gallons of 231·.cubic inehes.(:exactly):isforbidden. See Study at 8 ("California law specifics the following: Requires retailers to sell1110tor fuel by the gallon; requires retailers to advertise prices on a per gallon basis Oil itscI ispensers; defines the unit galldn a's "231 c:ubic ilH.:hes (exact Iy)"). As the Study observes,al110ng those provisions adopted 1'1'0111 Handbook 44 into California Inw is the followingdelinitions ofga/lol1 as a measure of liquid volume: "4 quarts = \ gallon = 231 cubic inc-hes:"and "gallon = 231 cubiciiiches (exactly)." See Bus: & Prof CoJe§ 12\ 07; Title 4 C.C:,R. ~*

4000;~OOI (incdrj)ol:niintfHiliidi50ol<'44;;ApIJ. C at pp. C-3" C-9 and C-16).· Accordill'g'ry;CaliT81'dia ha~;cx:pl'essiYlld6pted 'a &tlI1iii()I~. drga(lbn as ailleaAl.11·c M liquid v6Ill(il;c~il~i/h()111re.!ere/uff}'liJ Icm/Jir/'a!Ure: 1- See 011:B.1.15. &Pr~;;". C(jde .~~ 12101; 12313: 'l'lt1,:"4 t:C:Rr

.! ~ 400 I .As the'Stlldy' fu'rtliet~ ackm)\vIMges, "[i]f 'thefe\Vas temperatllrecompeJis,lti()ll'ut "ctuil '{tbtionsin Cal ilornia, distribution 01' fllclunder wiinifdl' femperature conditions ,'j:lJltld b~ la{jl{J/~trby

dispensing, cdtl'Ijai'ccllu the vdlttme in'dicated by the device, sliglil(V 1II00'e.Ji~'lsol}l1e '''f' dieselfilclin cubic·:il1che,\·1 proVided 'tt) 111cill~rists. Cbll\iersely, if the fuel is colder thah (jO clOWersFahr6'lih'ei t (i 5.6 ~legl:ces Celsi lls),feli!c:r cuhic /ilches would be dispet1sed to ·I\)btkloi~ls." .Reportat 8 (en:lpha~is'adU~d)~ Thus, selling Hiotor fuel in lInits other than ili23i cubiC incl\ 'ghllt)l1swoUid rtonstitlitc 'a ,Jer se '~iolation of e'xi~tillg C(t1'ifl1rnia law in that c6nsuinclis',vqLlld rqceivemore o\-less than 23 I cubic in'ches (ex?etl)i) i):er 'gallon depending on the tenlpehi.ttir'e ohheli-teL2 . ' ,p, "

2

Hanclbpok 44 clari pes that ':[oJ uni\.j~ a special quantity in terms or whis.!l mh~rm~a~!~Jtjes areexpressed. In gen~~-,al, a .unit is t~xc~1 p~,d;Jlnition and is il1depe~/(IC:!'I'I!rSuc!1 n!,y,oir(!1 cOj7c1iliollS~!s leflll~era(lI,.e: E~alllple~: '.,ll,qp,:t~r,,~.I!: !ilfl:, ~he gram, H,e yard" tl~~ r?,l~nd.'. t!~c g~) 101)..",l,I,anpb9,qk 44, Appe!1dl~. !~, (f) C'UPNs ,ot ,~y'*Il1S and Measllremen,t") (~!,lp,hl,lSI~I~q~!S,d),.... , , ~-; • " • , , I" '''.' - ~.

,.Unlike sales at the wholesale·level,whcre·(~xistingCalifomia law spec,iflcally ..'contemplates sales onlthc"basis'ofteli1pcrature adjusted gallons;oexisting Caliromia lawrequires retail sales 10 be "indicated ancl' re,corcled" on the basis of purely volumetric

251'\682365.2

December ii, 2008Page 3

LATHAM & WAT KIN 5 llP

By the same token, motor fuel dispensers that dispensed motor fuel in units other than in23 I cubic inch gallons would necessarily be considered "incorrect" under present California law,subjec::(ting:Jetailers who deployed them to misdemeanor criminal liability. Spetil1cally,Cal ifotniaiBusiness,&,Pr~fes'sions Gode § 12107: provides, in pertinent part, that the tolerancesand specifications tU1~I:(.Hher, techhical'requiremerlts foric'Ommercial weighi'ng"and.measuringinstruments shall 'be, as,"publish'cd in theNatiollal1nstitute of Standards nndTechnolllgyHandI:)0'dk,44; except as specificblly/modi fled; amended, or, rejected by regulation adopted by thedirectoril? '\Furthennore\iBU~il1'ess\'&}Pr()fessicinsr0ode' § :le506(d~ deli nes"ajl'~'ihcOr'rectli ,instrument as one that "fails to;theerall of the 'requirements of'[Business&Professions CodeJSection 12107." Because a dispenser that dispenses motor fuel in units other than 231 cubic inchgallon's.rfai Isao'aispeiise' ~~gaIldt1s"f'as 'definedio)1.f§'~12T(ji7Hhe disperser,i~~~riecessar.i Iyi'deemed"incorrect." IBttsltfess}&~PrOfessions"iCode §n~020 e~pressly 'mlikesiitfa~,misaenle'[tt1'btJt\iuse an"incorrect weighing or m'easlifirlgo,device'HfdDalifOifHi() r:r...; -' ,<. T~ ;"qT~G .>'o;! .

'. Hurthehsales.ro'f:mdtoqfuehiniutllts o~henl)all Q;J hcubicinch IgaHonswould1nul'afoui ofan,additional prbvrsiomof,@~lir(Wl1ia:laW:'\;t~e. 'requirell1et)f1thaOacret~ilerhotlcharge 111or~,than the"true,cxtensiotl orin price'lpef;ruhit/t t:Wh~m!inotorfue/Jis sold' in Galifornia;;a.te teh1pe-ruti.l'res;l'lelow

• " ; • ~ .t ".. ~. \ ' , '\ ' I ~ I''.~" I

I : {~'; ,- • , ... , f.:- :' ".hf":., t,·,:;..r

.' Ii. '

: " : I, ; ... ,>,'.'j ."il:.l -; _'c.' F 11,:1';.' -Htl ~'./, j'F1J:mX'J!,;';lfl:,jfll';!(,!k';' r: fi'Ji:t',

g.qllet~.~:.,f~fg/I·lan~l~<?9KI~~\§}~Q. ~.'tt};"!·; J\~tol!l~~i~lt,~,~\lp.~rNl!X£i~t<;Jj.USl'nF!~\ i~ , '1' "

,,~~~f~§~~j~,t~~qbb~~X~lri !n,~!~~j~i~'r~ R~\.§~Jf~g f$)P~~J~!~~,~\eiywq~$~'~~~c.~~,~t{~s!,y.~$lY ,m ;the( ,I, "_ ~v~g~~~aJei)~y;~I;, lq~:·JJr~l#.Pp~·*~~,~.§t~;3;gt',~~·')!§l~~{;.!-t1,:,i:S~~.,3,~f;\~:~:,t.],h,~s~

:gW~t~iPP~f~V"in~W9~\~nsej f!H~v~ns..for!~h9!~~.~le devi9~,~I~:9~li np.<;~'l~liJI! ,~, ,~9~,~s of·,~~?JH~Hr~,t,~\XR!PN\e,lartm~19r(Ur,.P),hR'l~P1P,~~~,tl}f~.~~~HS'$~!~~~i~}tm,~4,~~;3Q,

, , \.S,.g.7;{) ),;,(?,)~~p~~iJ~~thH~~eP'er, ~e.aRM'd d~!qrmi')~lJ~jtij'~9uqWp.~r~tHr~j~tl~r} ;I~l th~, .. ,',' ,disB~P'?~elj. U11:3'*~l R3t,fl~~,~,;~·(6)j~~1~1~:i~1~.t~,\~~\prf;lpr.r ~~~Pt~~~[#,,~ fgr[~~.~H!.w~.a>~~~iBe " '" , "

-~~ql1l~Q~9i~!!,~,!J !~mt?$~~lH!RcHlmF~p~~N!'Jt1!l.~~~fl\ll~m\qi~ li~; §P..J9,1~}l7J}); ! ~1):~r~· "~~~H~~,I~e re<:Il;',I,r~me!.lJl!11mfttl~~lw\r!Hf~~}n,41Ic~J"'l\,~I)tr!1J~nh r,~C9)~p"rg ~Lem~rt,~M~J;t!~IW I :J ,

~~S?~lh~~ r~pr~~r!9.t~H91~~,C.if~r1Yl a~~m,9rl~t~, t9,,~lwY{Jtr~HPt y.9,I~r:p,e"l:!r\hr~r;c:~: i)~s, be,~!l ,. ~~j,\i.,st~P ,~Q,t,lm:~9l,~m~;at.' 15.°Cj\~Q,O)~HJtJ3f~~';§" t~·,g,~·4·~i~J; ~~~J?>r t~q~,i;~ ~~.~HHaw:, disclosures on the invoice (receipt) indicatiilg that the volume delivered has been adjus(~q

to the volume at JSOC (60°F) (l-IB 44, § 3.30 U.R.3.6).

In direct contrast to these provisions governing wholesale motor fuel dispensers, and inpafticmar!cBntfh~{t6Secti6n 3.30S:4i3:2' ~efererice(J!alJdve;\Hanihj6~kI44:S~~ti6Ii 3.30,'S:1.4:.J; the $e(;tioil"pertaj'n'i~g to liquid m'~~~il.rrhg t1e\rices;reqUir¢~ that for retail motorru~hj~\,jc~s, ·'[tijeii\leries'sllaH be indiCated add rec'9rd~~;ilfH~;'device is equipped tore~6}(hJfli'i~Hrdr! gali()h~ aha dec'iJifalisl,lJdivlsio,}s ahd' ffaJtlbWargquivalclitstllereof."BecauseAppendixC te:Hahdbook!44 defines 'a galldn,as·"2»r1 CuoiC'inches (exactly),"

, present California, law permits the sealing'only' off thosc'rettiihmoldr fuel, dispensers thatdispense equal-sized" volumetric gallons, within permitted tolerances.

3SF\6R236S,2

;/

December 11. 2008P~ge 4

LATHAM &WAT KIN 5 LLP

60 dCgli~~s Fahrcnhe\l, the consu,mcr would he "short-chqnged,:,3 I?us ..& Pr,of. Cocje *12024l.provides, i!lpcrqnqJ,1,Rq:~~~ tha~: ' .

(a) II is unlawful for any person. [lIthe time ofsaJe ora~omI11Qqity: to dp ~ny oJthe following: )(, i) t.~harge'.,m at1J.~)l1l1t gr~ater than th<r pl:icc l J)T to cO.1J1 r~I~~ nn . ..a'11o,tll1tgr~aterthan a true extension of a price per. un,iJ, that,is ,I,h91,1

. adv~~~isf,d,:,posted, marked, displaYGd, or quoted fort!l"i~,' .commodity. ,;(.2:r¢W,\?g~.Hn pnJount Wt;at~r than tl~.9 IH~yes! J"riq~.l?os~ecl on ~I~eS9n,11;11liqi,tiits~lfol'on a s!1e1ftag ~hatcorrespo'1d~t\o,ll1e ',"

,COli1l11l)dily: J,ot\-v,lthslanding .anv li'mitatiOIl. of the time period ,for"j":I';:,",' ,;:'" :'''~'·,;'I.t,,/,\'~,..Hi';~~: •.i";'i"'~·i·',<·~.:'· .' J "i' .,)" •. "',.J'" :'::Ij ,

whichjlkiibsted,priGe is in effect... , " . \ " ,. '(] .~~' (>'i;' • '

t ,,"2 ,'" ~ •. ~ .' .. ( l.;' ~ -( ~. ' .. •, _ .. 1

4 reta!l¢r, \.Yh9a("~crtis~$ \.)I1~a,,)rjce-pcr~gallon basis, hut; sells fuel in units ,otheUhan 2T!.~~. "~." ,-- ,...... !t I l .. ·~ ~,;.~,s .1. ..i. ic ._, -'!l'"~' l-'-' " .. , ••. '~'.-""'.-,'--' ~ • " • . ,.'- :•. ,,!.~.. JI. .• ".'"

cub~~ tn¢h $~:It.~Ji~ wlj,eli,~.ll~ .. t~JilB:~t~(Nr~,.\~. beJow 60 degre~~ g:q!~rfflr~i,t, deliver~19~sJhflp2~ IcubibiHches 'pcr tii'lit ijricc, in elTect chargiilg more than the ai.lvertised 'pdc~: I~)t, 2~ I ~~1~1i~in~he?

orrucl. Stich an action is illegaluncJer Section 12024.2 orlhe California l3usil1ess~t firof'essitJnsCode. : . ,.:'. " ' : " .. ';I ,,'-/

It!.

. }f.·~, ..'.: ~ •.H. ,,'),~ ,f'~ .. ~~ ,;1 , • -;." .,,:.,

..lhN1~Y 20Q7;t!l.e Slate pfCalil~rnia Department of Weights and Meqsures issu<;c!.a~t~\,~~;, .. ", . '.\.:' ",. ,~, ", ...1', .:, ".':' If.Ii~"i.1. !')1 1 , ,_..

certifiq~t~,\.)fl!PPI:oval ("CTEP'~.) to moior fuel dispenser manufaGturer, Gil,~~ll:~(~), .veedeJ-I~oot ,Comp.~Hy ("Gi!bar,<;,o''); rqjprqving an Encore series retaildispenset, having,t91l1PCI;fif,urc-coill i5chsatioll caj?~p!~ i~y' :,' thlsi·~~enLr~~lIlaWI)~.JH;ti'pl1 9o.~~,nO}, fll jer !J).f, IfipU,!H1t,\9 i/."IWJJtii~W)motor ruel in units,~)lh~!}hqll, 231 cubic inch gfilions ren~~in)s up,~wfl1l in C;al iforqj~~ l?,arril1gfUl11;lcr st,atutory ch.il1l~7,~".ai;.~Xplail}Gd in Section 11 above. ,

'-. ", .

Moreovel', the issihll1cc of a CTEP to Oilbarco, standing alone, is also insl\rti,~ienl tQrender Ll~c of A!rCflmc1idtlality l)!1 such dispense'rs permissible under California 1;:I\\r Il)r 'twoadd itiodhl indclJCndelll rctlsor1§. . '

!',

Firsl, the mere issuance of CTEP is insufficient, standing aloile, to effect [\ dmngl~ inCalil£Jnlia law.4 California"s Administrative Procedures Act, Oovernmenl Co~le *11340 e( seq ..

3 TheC)~C staff analysi!tol' the Division ofMcasUl:emcnt Standards' Tel1lpel:a~ure Survey~!cady shows Jl1aL.)}~pI:T~.dj,spensed in CalillJrnia at tel11p~ratllres below 6el degn?~sFahrenheit See Study, p. ~l."

4SF\6l!23b5.2

December 11, 2008Page 6

LATHAM e. WAT KIN SLLP

requires that a regulation be filed with the Secretary of State in order for a change in existing lawto become effective. Cal. Gov't Code § I I 340.5(a). As of the date of this merriorartduth.California has not completed this requirement.

Second, as the Study itselfobserves and'as qisclissed in greater detai Ibelow in Section IVof this memorandum; a: mUltitude' dftegulatbrfcmr~gesiwnllie n&essary-6~fOtie temperaturecompensation functionality c~Wne~used:i1rCa~illjri,lia:withbut causing un~ue harl11 to consumers.See Study, Chapter 7 "Related ls'sues:";'Spe'ciJkally, the Study notes th'atfemperaturecompensation, if recommended for application at retail, should incJude '~te'n'i.ilBHbhs that help toensure that consumers !\vi\t1"15e)pioviOe(J~wHH i\ftdtfu~tidWstirtibieni'tbINjete tht.bi~rislto thepresence of ATC at the senircels'tht!Hit'i>lSludY~tWt.: ;Fl\}trl~¥HI1~!'~ftldy;ijt~~:rr~tI~ thatintroducing ATC Wilhequire' dtNelbpm~Hefif'%!rteJ)q~'Yegu'iqit>fff~Qg1J~~efrof1'abeling fueldispensers that includes guidance for -Wording (N'm~5AtCrli~sYa:g~ill;Fo1WsYfe!!l Location oftI1~..:::-timingof lhc requiremen~, (wpel;1 ATC equipment is activated anq Al,ltl1ority to,~fIi~ thed~crlr;!:HSt~dy at 9~El msHb'rfl h1JdiHbnafrgg':lla'i6i5/gilidlrieelj~y6rlinht! ffier~) IsshaHbJ 'ofaCTitP' iYI~i5s(jl~t~ry ~f~~s~!if~t~~~f~,tl~~io f'Ate;fuh~t,i~l1~iWj~W;{~~ ~j'iYl?~fb~;'dJ~~~h~~t~~nbepetmiH~~~hr CaltfdfRi[.t1'«l r>"t!:,I.ti~'fhn ~I!P rq ;,:,' ',' "f' ',/!, l!1'~:"h "J'?" ,i" r1, ," ,[if'.! 1,/1,! ".1"1,1:" -,"

·nf".t·,)?·Tf(.~tl j~) ):;;~~;r;r:J~ifi l-~: -'c·(J1.d~~ ) (Jrfl ih ., :11' I p.',·,t;';1.}r'i l~Jh~'~';,: !I~~rAj~ "'I Ir':l(\~)i: ('\e .~ ...

Tpe s~lie of motor f~~1 0n,~; ~~!l1peratur~.~?!nPlel1~~teQj~a~i.s,i~ .~Q~bi~Re~lfln.c~J~[or!1ia onthe secq~Wi~~¢neiitl.~~rb~si~~ i1(~lta.f !n~ny, qq'li~I?f.§al~s ~YY{ll~ Ii,kely, Y~OI,llW, C~Jj)~l!!}I~~ s,~', ,'conSumer "";6'fecti~'f{Hf<v~:, 'S'~~ij19Idlrytofilim¥tliii'k'Bbsii1~s~ & PrOfessio~s'Cdue I§' J,7200J

'~,_..._~-'" '-t P :;k1' t'U' ,,,B 'on."U"-,'-'ht'· ,,'< l"f ~""""l" "lh'''l'' '" ',"" url',r". I <,-,j- "f',),. , 'Ir1rt"""

Cali fornia'stJnJ~Jr'djtri~etiiioif tlaw{ 't!W~rly, ,iipplreS't<i'~onaWcf'tl1al Is'not ex -ressly'fo,rljj(ld~'ll~

but stiIIJ\~Hta:1Ftit;i1'~Jd~,lel1i:witHl~'me~'iP'~1ffimgi:~:f{Rr§~~(5.ttM(,t';;,5~¢.b:g."C~l!,flt~7l·' l";' ',' ,: " ,

Comn'tHHlitJ7ilJjl~;'11}~g.l~v.' Lot~#.gYll!V'C~mll,V1fJle1i.!i.8~,~~C~!.~J70!W~O.ih\!1,&3:liJ\g:21~3,':, ,'" .".(I 999)("[a]cts may. if otherwise unfair, b~IBHMI~Hg~iftfh8M'iI\~ltfhfdi~!~offi~~ttHon' itiw e'vetf ¥fthe Leg?fj/p!,u,!'li/fliled. I()P"().\"C.t:;,Q~ (!lfJ,m· in sm,",',e,,~~(f1el, ·,Pl:q\!,}si()n.")(t::nlJ1,.hl!§i,s~"dde~),~; H~~retailef~ €kdalL~d'1H's61~s (in ateffl':efatUre cOllit;.eii~atea.bJsis' ~ri~f iiis~ni'ercn~~s 'dis"cils~d to

(", r/'f"'t'~! '~r'! t p·!(·~nlt'" ~-t ")t'fJ·J.r.~.• F'~'ft;:-"",~r-,;'" •. "., •. ! .Q-n' r·.;;~ ..·~'>!t'l j', l:? i!r~ ·'f·~:...qrj·,~-·t·t tv,. 1; . ..1':.1' ,,,ilJ ;":,1"

consuiilf5rs"1(~ssthah the 231 cuBic i'I'iclles'per galloriaUvertised, COIl!r~¢'~~P!·'~~~p~jq,r?~, "!1~,' ,retailer likely would have violated Section 17200 on the basis that the 'reiailerslippiie(f less' ,motor JUFUm~~s~r~~)}1, VQ!~nu;)~Hm9, ,~~y~n~~t'79, ,9!.! jHs,pr.ic~\ s!gl~[) ... ' " ' 'l{ I '." , ' ,

l> 't·· ;1" ..d~H" .. , ... r:·~fri·.. · : . .·f ·nJ.J~.'~I·~ _,i~;L~U;"-Hl~nju~}..L ,{,:~)~:. ;;. ',',

Moreover, the consumer confusion resulting from the unregulated use of ATC wouldlikely also give rise to an unfairness claim under § 17200, as implicitly acknowledged in theChapter 6 of Study concerning the pcmlissive use option. As the Study acknowledges, "[t]he

4 If the issitriiice of the CTEP t()'Oilbul'co is the event'thaI made"tise'ofArc di~pei~s~rslawfuH n Califo'rnia, it necessarily follows thal use~ oj"~ll.l~lr'diispein~ers \VaS unli\wful at alltime prior to May 2007, the date of issuance of the CTEP.

5SF\611236S,2

December 11, 20tl8Page 6

LATHAM&WATKI N 5ll" .I., .;

fact that .tl.~cre.a\e 90 r;~~Jal9t:}'J:1J\j~lance standards for laQclilW. oJ fucJ,d.ispcnscl:s or)::~rg~,sjgns

could IfNI: ~(1~ohslll~1~r;~;;t11:~~~?~at.th7 iniLi~Lstpges.p.Cner.lrj,~.~i,v~ A·Tc;.,Hs~fntJelaiJ $~aiipl)s."Stlld.Y"<}~f Qq;". 1·.~,lrt!1£t".t![gJdeg9~J$ !.nb~lll1g requ i!'emcnt~ }"{9P\d.~.~,'leges~ary, lo,cmpqwcr., ",consuTncrs' with sulTicicntinformati,on so as,to make a better· informed decision. J~errllissi~e

,.,.j ':;'"":: ,~] I'",', -', , ; .'.: t:'\;".,:":.<lj\,,,'J ,;i~'.,' i'\ .~'",'" 'I' .~. ',;.:'.,"! :,f :" ',4' .'.' .l~,"

ATC without adeqll~t~,I:egulat~lI'y~tructure does n,ot ~nsur~ thatsuHlcientl~~c ling standardswOllldib~ ~(lhered .10 L),Y::W A:j'C ruel i·et~iler." Consll\nerconfusioll is the,hallmark ofa'deception claim i.inder Section 17200 of the Business & ProressioJ1S Codeas well as under theCalifornia Consumer Legal Remedies Act. See. e.g., Department ofAgrintltllrc r. Tide Oil Co.,269 Cal. App. 2d 145 (1969),

Depl l?/Agricllltllre v. Tide Oil.Co. is especially pertinent on this subject. There, a statiunoperator was enjoined from advertising certain cash discounts that were lound to be misleading. 5

Finding defendant's signs advCltising "We give 2 cents Per Gallon Discount Coupons"misleading, the court explained that: "It.lhe practices of these defendants in honoring discountspursuant to these signs are singl!larly misleading in that they illdllce CI passing motorist to S(op,

expecling 10 save 2 cents pel' gal/on 4gas purchased. In fact, the evidence adduced at trialshowed that a purchaser can save 2 cents per gallon per coupon held but only if they uponsubsequent purchases from the same station." 269 Cal. App. 2d 145, 155 (1969). Theunregulated advertisemcnt of sales on an ATC basis could he subject to the same criticisminsofar as the customers may be induced to stop at the station advertising ATe expecti Ilg adiscount rclative to a station not offering ATC, and either not receiving one at all (because theATC station might be charging a higher price than the other station if the temperature or the fuelat both stations is considered) or ndifferent discount than he/she expected relative to a station notemploying ATC (because the price differential between thc two stations might be smaller thanthe consumer thinks depending on the difference in temperature orthe fuel at the two stations).Again, as the Staff acknowledges, the "lack or adequate regulatory stl'llctllre, consumerprotection and potenlialmarketing inequities" leads to the conclusion thatunreglilated, voluntarylise ATC should not be permitted until "nMS develops standards surlicicntto address equipmentaprroval, certific·ation testing, compliance cnlorcclllcnLconstitner labeling, and timingprovisions for automatic temperature compensation fucl dispensers for retail stations." Study at90. Concluding that the unregulated use of ATC is legal in California ignores the reality thatany attempted use of this technology, in the current legal environment. WQuid expose retailers tolegal penalties under California's consumer prote<.:tion laws - a result the Study implicitlyacknowledges would be certain.

v. CONCLUSION

In sum, until CaUfornia law is changed to allow retailers to dispense fuel in unitsother than 231 cubic inch gallons, sales or motor fuel on an ATC basis are munilCstly prohi bitedin California. Further, any attempted sale of motor fuel on an ATC basis would almost certainlysubject retailers to liability under California's consumer protection .laws until regulations

While the specific statutes at issue in Tide Oil Co. have since been repealed, existing Bus.& ProL Code § 13413 is materially similar.

6SF\M123b5.2

Deeember 11, 2008Page 7

LATHAM&WATK INSLLP

regarding Jabeling and signage absent standards suffiCient to aadress eq'uipmenl approval,certification testing,compliahceefiforcement, consuri1cr labelirig;'EindtJrping'phWis(ons forautomaticleriipe.raturecoinpelisafiol1Ttiel dispensers tor tletaif stati()n§·<!fTo;co.hJlud~) thtil use orATC-eqtJipped' dispensers is ~'Iawful bec'ause not prohioited" is both erroneous 'as u'tnatt¢r oflawand fans'ttHidknowledge:tIlesigilificant risk of liabi!hYfaced t:sy refailers who at~emp~¢d'to ..deploy this fechiidldgyliifthe' Clll'renttcguI8Wl'Y' envi~dniWtfin. "We ast< that (fie s(arl~'reYis~'theStudY'to'~ccurately renect California law', .'

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7SF\611236~.2


Diana SchwyzerKaren DouglasSusan Brown1/23/2009 12:59 PMHot fuels languageAB 868 Executive Summary DS.doc

Karen and Susan,Here is my cut at the Hot Fuels executive summary. Most of my changes are to the bulleted list of recommendations at theend of the document, though-! have made a few additional comments elsewhere. Let me know what you think and if youhave further suggestions to refine the wording.Diana

~;~~~:i~Ei~;:!iJi~~~;;ti~si~:~d~j~:,;.:.,.:.::.,!•..f,'.(.J...~,•.fi.,:,".;.t.""l.;,·,:,~,t.f,~,•.,.f,:.,,·~,~.:.·,'.,.:f..:,·.·:,!.J.>".~,:.~.:.:>~.~'" '~>~Feta:il,,:sta~.~~;.;~~tt2h~~!{that purchase fuel at retail stations would realize significant ' -".~,: '''', c,' '-C" -

" , ITlOnetary4:,en¢fiWin-.the;;Warmer areas of the United States, Other stakeholders representing;' '-'~b~sh-t~~s~t~r~s'ts"b~ir~~tiliatthe co~~ to'fetml statlorCoWnerswill'be s'fgfuflcant: "

This national debate has continued for several years but without any analysis being performedto determine if automatic temperatUre c'6mpeii'satloil=(A:TC) atretav:'stationswoilld be'a'netbenefit to retail motorists, As a result of th~s~;ii'cti~1ties' cm(nli~'iaSR'of analysis, iii Oetober2007J

"\,.i:,~-." ~_\l tt"" ',"",:. ',~"'" .f j., '-,'j'" "', ",' " ~ - -~, '.!;'j'J '

the California Legislature passed and the Gciv!'!morsighed'AssemblyBill'868 (Davis), whiChdirected the Energy Commission to coridhct: ac61t::beri~fitari~lysls:1~i;;" , ,,'

This report quantifies the benefits and costs associated with temperature compensation forretail sales of gasoline and diesel fuels irltali16tlila', The 'cosfibeIJtJit>ianai)M~'resilltsare;" jnegative (net cost to society) under all options examined, but when quantified in terms of cents ,

1per gallon the results are smalL Further, it is UTllikely that there are any plausible circumstances '\whereby some consumers could realiz~ '<1 smaltn:Eifbeh~f1fofATCa't'retail'irkallforiiia, The' .'.'. :fi~;r:i'?(fi ;'ij}~l·t¥,~~'::I:~;~';~:i,i.1~~~;tilh,t;~ ',;estimated annual recurring net cost~~to soci~tY;'WcomIMt~fyp~gsJthfil-brighi¥dc6nSumeis:'"' Jcould amount to between two hundredths (2/l00)ani:flS'BundreailiS'11S7lbo)'o'f acent'p'er',tgall:;,':~~)[\" ;, "~,,.~.,..' '~'~"'y""';"1.':'. ~~:~"'~.::, c,t?-m~~~r0~', ~7;_~ ':,,: '!:" ,~ :,. t

,.::nlJ~i~a,~·l~~~,e.(~~!Joated with th~ ATC de~ate can best beiCharacteI'iZed'ili'a series'of;:qtl,~~~~~';tfliit'~~g2W:jna summary ofthis report. " " - ,j

·=F!!E:;:z.f£~:l:£:;:;f!l£E=~~~:~;;"~:~~::~~re~}%i!tiHawaii is the only state in the nation that has adopted,a, form oftemperatun~,c.ompens~~on at :ilt;':~/!:?~f!~,..~n:~'J,~~~~;:t;£.t.~iiti,~rt$trretail outlets. This occurred when,the state increased the size,of their g~1l9n from,the US, ,'.~ , ,~ti!f(~~~~'i~r~~';t~;,:?;»[."r~~~t~)fi.:i?:,i;(C;i

standard of 231 cubic inches to a larger Hawaiian gallon,ofClb.out2~3cubic ~,<:hes. C;an,!lda, too,i{i~~;L\q;J:/i~~~~-I.i~~'i;':~~:,4.~:'~~;has adopted regulations and standards for ATC at retail, Even though ATC at retail is voluntary f~~~{9f,"'':;':''''' ' 'f!i:~'ijr:::-;;t/:XJtJ;~ l~i(!~ ,in Canada, more than 90 percent of the retail stations have converted to using the equipment. ' , ,

Most of the time in Canada, the temperature of ,the fuel i1? colder than ~e re.fer~nceistandardof u' ~!~;~'iiJ;i!!.'i'il,;j:t:fAi:',i""')~',lill~;~'it'1:';!r-i;'.f

60 degrees Fahrenheit. The ATC.dispensers,compensate fOFicoldel,',fuehenmeratures by:decreasing the average size of the liter dispensed to motorists,in,tflat cqUAtry,

~ l,: ."~ • t r ..

'~feta:iLst~ti6ri6'eratof'has,eleGted-:to:ll:istall:P.:-li<2"rea'd '.l,r","" 'In';6:ili~·''it1d\tis

~4.~l~ar,'whefu~~,;th~~oIJn~p"u~i?flJrjRis.~i<~~cN5i¥1~):l:lse",~I~!i9jfr~~"teffl,p'~i~~{.

1

V('jl"I:}.··-tr,·r ~!·:>:,i(·f")f-:';·l·~.i\; I :.~ t-f~f;~' ;" tl.. "'!- i-),.~'I"

• Is the temperature ofgasoline and diesei fuel soldM/Jf.l.l.if.~j~i~(:~q'1fH'l1ff~,.W.(l,r~%iP,~ ~V,~r!lge, ~1.wn,,' ,I

the 60 degree Fahrenheit reference standard? " ,-

, bJ'J1~uQb9:q ~J I[("i"'~ ;'Jf~t~6-'r(f~ i~' ~!'1 f-;jo-lf~.t ..~.,. JHri ii!"H~~:l\' f~!I)I\r.;-~l.o; ~t/I j '-:;l>.!

California is considered a warmer statE;I~~g~p;djUgJWE;ttE;mP~~~Plr!'!l~t~~Wh~t~~~~~,]~~,~~,g9DJ1 :",ilie results of a recent survey of rewJ(J'~tig~dh~ .~¥.~ltg~ttr~B~J'\!HrtP.! ~~!ill1,'lL~~,~.lr,,: ," tlu"'lgasoline during the base period fromA,prg ~9,9?t>to/0J:ighrMa,r,~,t~9.g~,wa.~ aR.?~t,7,l,d!!gr~:l:!s rn" :j'Fahrenheit. Diesel fuel was a little warmer with an average te~~Et~~llife;?f,h~a.~!;v)H9-~.~~~~) ',1 If

Fahrenheit.

·V.l~ ".Y:~'·~':-:fl!:'tl-tn t) '·:f!(:;~t·~·~{c¢FT1;:t! /~i'~"1 ;":':;~:j' / •.;~: f::~ ';;:';'; ) .... ~, :.)!

• IfATe was mandated at retail stations inC;!llifqmi,a,..'w.~ :W~!4I~]b,usin~~ses a,nd q:ms'1m~tsJJ~., ,.. ;, '.affected? '("'.' .".,·n .(,;,'):;.:.,1,,· ""'l'i"" , .... ", '1' ""."

/[JlrU-i'c.>r··UJ'-1f) 9!rf; t:iJ1L;,.!r\· : (,',h """"': ~'F:'f(t tt'{r(J .!J1:1 "r" ,." H .... tJrf-'h-,,:i

California retail station owners w~~19i~~R~~~~P~,.a.q5.!iH8n~iJ~,~Y~~~~)ii;*~i4,TFim~~ff~~\i';r,~:, t.equipment and slightly higher inspec~<?n~~~si'!9Wf9Pti.~f,~telV,~e.!r!;~~s~f,~;~'5IWC~~1.i:ffiJrJ~1~Xr, {.slightly large~gallons,(as measured in.. . . 0 • ize.wit).l.man es til . ..ml{

temEerature.flo,.

uw__ ,:,_~ ,-' C''''f'. __a!i!~rni_'h!.~~!.l!I!O,Y2ri~~-,~~..!ll~9 ~~I?rSte9-.:.~Q.!~~<:'~~:;~'~~,. :".!~ -,"J;--.additional benefit due to increased price transparency, estimated at approximat~lr;,~t?~(R9~fP~rt,!'~~ .

California businesses would be requiied'to'nave\ffeW'~leC:ttofiid-'c6fiiponentsliiiStalled: in'theirJ

fuel dispensetsat a total initial cost'6foetWeetl $I0318finiItiorr'wa1$12714'ihilliohf,or1between1 b I'"

.$10,704 and $13;136 per retail outlet. Recurring costs for more expensiv'e:'A:TG1reaay.aispenS.ersi )..maintenance, ancl'rugher inspection fees would amount to between $7.4 million and $20.6 .ffillHcinper year: 'The iiiHialA"tc refrofiP€6St'§'tif('comomatlonW'itH'the'retJttfugfafi:r\frallG,-ii :0, ,il "-.i·

expenses would average between eight.Rtihdfedtlls'(B1100):andi18:huridtetiths:(lBIl00)'bf.a cent,"!'per gallon. assuming retail statiorii 6wnerif'pa.'ss>along all10f tne.retto'fit1expenses by.raismg,retail,fuel prices alone over a period of'101tB't5'yea~s11<11 ;,,~ ')T "0' "i',uiJ C"!' ,.".... ,: "I- 1'" " ..

,:nf:J:n'1i;:;p~ :,J,rl.~'?rrr;:l,j -]i Csti i ,. qn ~,·!!·.. d -r!"!':~r:;::; .,r>~n 'It{i ~:I;{

Unlike the colder fuel temperatur~dynililiciirl"€iffiaaa,'AiTQ::deviCeswould'ildjiisi:'f()r,wam\er.",j, .... . .. .fuel temperatUres by slightly increasing tf(~ siZi'f'6ftllel'gaI16IVdisp'ensed ttN!1alifo1'rtia:tOri.SU1tu~rs':.\1'4\:~-tt: .. ' ." .... '. '. . "....•....:;:,' "(in cubic inches). The adjustment for the motorist woUldoe appr65dmIifelY1lrpertehefotihery-! o,n·~j~·~!~;~~~~~~*~~'~f1tj~f;i::i·:15 degree Fahrenheit increase in the t~rnperature 9,f.gas~l~e greater than ~e reference ~tand~d " 'i . . . "" . ',d' {.

of 60 degrees Fahrenheit. The slightl)Na~f 'aft~~l~~~~~~~iC:!incli.es)':wouI~~~fjlt·'f~~,~~· ";i:-,\~~~r,trSiJ;'Y}..llt~ ;~k}\.~:'''~~.J)~J,~ti''!-'!:~~l~~·:'~ t;:;,l ~+'''.~~J'J.

2

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• Would retail station owners charge the same price aft!;r ATe equipment began to dispense slightlylarger sized gallons when fuel is warmer than the 60 Ilegiie Fi1h;enHeit standard? If so, what wouldbe the impact on the expected benefits of retail moto~ist~? "

• IfATe was mandated, would the overall costs to businesses and governmental agencies to implementand oversee the;Jrogram outweigh any potential benefits?

If one assumes th~t the industry of retail station owners and operators will continue to growand remain profitable, .the conclusion is that retail station owners will in fact raise their fuelp~ices to compensate for. selling fewer units, all other things being equal. As such, expectedbenefits for retail motorists resulting from a conversion from gross to net gallon retail fueltransactions will be essentially zero.

Under the ATC scenario, the quantity of ne,t diesel fuel gallons sold would have been

approximately 3.037 billion or about 19 million gallons less compared to the status quo (no ATe o'f;. '1t~! >r'-"',,;'2.".~ji.:i.,\i"I.":,

at retail) of 3.056 billion because the fuel was also wanner (72.9 degrees Fahrenheit) than the 60degree Fahrenheit reference standard.

The representative value of the reduced quantity of gallons that consumers would not havepurchased if ATC had been in place at retail stations inCaiifornia during the study period was jj:,o :.'~ 'f, 12r ,~.'~ T,:'.·''>·· .., ','

calculated at about $437.5 million ($376.4 million for g~soiine' and about $61.1 million for diesel ""'ijv" ~h"'''!J, r;n 'j';'!:'T: c,"

fuel).

not have changed the total amount of fuel consumed in the state as measured in cubic inches,but would have reduced the actual number of Ile~ or adj).lsted gallons pu,rchased by motorists.

If ATC had been in effect at retail gasoline stations during the study period, the quantity of netgasoline gallons sold would have been approximately 15.508 billiol).or about 117 million gallonsless compared to status quo (no ATC at retail outlets) becaqse the fuel was wanner(71.1 degrees Fahrenheit) than the 60 degree FahreJ1l1ett r~!erenc,:~tandard.

The results of the ATC retrofit cost-benefit analysis (CBA) show net costs of between $205million to $530 million over 20 years. If measured in terms of retail gallons of gasoline anddiesel fuels, the CBA net costs would average'between five hundredths'(5/100) and 14hundredths (14/100) of a cent per gallon over the same period.

3

Areas for Further Research

Primary Recommendations

Research in the following areas is recommended to refine·the cost-benefit analysis,presented inthis report.

...

• ,c' .£,:;ft1 :~""'~~" Li~__ ';r ifi./ <"i ..H·l tl,.- iI'J;"IJ.~;t Ur~f:;;:' .~'l-' " "

The Legislature should consider requirin~ the CaliforniaDivision ofMemmrement;.Standards to develop standards add~es~iligequip~er;f'~PWbvaCci~rfWc~ti~n.testiflg.

"~'''''.1. H~"}:' ,.' .... ~j..a;:l .,~'r) ~_,_~ <.:' ~r(-.; i,~'::'."fl l-l.\,I;\"'';:;$\!'Al''-;·''; h l"'~;\ ~f

compliance enforcement. consumer labeling. and timing provisions for volUntary ATC atretail stations. Until that process has been completed. it is recommended that theLe~islature prohibit the use of ATC on a voluntary basis..

: ) .1"

• Ifa new reference temperature was mil1iddtiii.t, woUld'the'o'oeral/'r5{Jit§,to business'es mid governmentdl:agencies to implement and oversee the program outweigh any potential benefits?

The estimated costs of a new reference temperature and associlitJd larger gal101l'size (iii cubicinches) could amount to between $9.0 million and"$27.9millioh 6rfr6iifi$9i5't0'$2;879'perret~il

station. On a per-gallon basis these additional expenses inCurred by tetii'il ~filtion 'oWrterilwouldequate to between five hundredths (5/100) and 15 hundredths (15/100) of a cent per gallon foronly one year. After the modifications were completed, there wbuld be no additlomi.l reClitrirtg'costs for businesses or consumers;'< .

•

•

• The Le~islature should consider whether the value of the public perception ~iflEe tHe aFlflHal

flet Eests te Bedet,. af'e Be Ie'...., leBs.,~~aFl t'X~,,~fI~S"ft.,W)'il.t~ F~Fl' f.)~f'J~.U~~,.~rffl~~,k,it,i~ ,f'e€emmeftaea tHat tHe ~tate' s L~&4~',a~f.~: E,~~~.iat!.f.}MDyal~~ :p,~ ~Cf~~~!!~~~ f~Jrp.~s~,;,~f~f.'WY,;and consistency of fuel measurement in addition to the benefits quantified in the costbenefit analysis. justify mandatin~ the ""Aeft maldflg a fiflal aetef'ffiiflatio~ 'f~ga~J~g

maflaatea use of ATC at Califo~~,F

•

, ~1<"£'-~Jt f~~"f." ..~:-,~~ /};~'::1I:i:'":1~~~stl~':r;;i:3: ",-:,,'~~L~ :'~l .'J t" "~"", ,_, • ,:<::::,- '';:'5~~~~.\'~1lirf,~~'~:'' ".. !~,.~¥'"' ~':-;~"? ::

'.l'i; ,q:,,!j~';i1'!1~~RP~9,~}J!5![M1l;!}'\r~~ferencetemperature should not be pursued as a potential remedy to·i;:,'i*!~d'at~g§rteffip(i;'t1ifili:e-;compensation at the retail level.

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4

• The value of the perceived fairness. accuracy. and consistency benefits of ATe toconsumers. which was not included in this analysis. should be estimated through surveymethods that assess consumers' willingness to pay for such benefits.

-The value of increased price transparency associated with ATe. as calculated in this report.should be refined through collection of more finely-grained data on the spatial variability ofretail fuel prices.

5

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From:,To:CC:Date:Subject:

,Susanne Garfield 'l Jr, '

Gordon Schremp, Susan BrownDiana Schwyzer, Jim Page, Nick Janusch. Claudia Chandler, Mike Smith1/26/200912:18 PMRe: AB 868 Status

Susan,Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday?Are they holding firm for Feb 1'I biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer <[email protected],ca.us>Cc: Jim Pag~ <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>

Sent: 1/26/200912:13:05 PMSubject: Re: AB 868 Status

Susan: .J

AOK. We will wait to hear back from you guys some time on Wednesday. Look forward to the commentsand completing the document.

Thanks,

Gordon

>>> Susan Brown 1/26/2009 12:02 PM >>>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk withhim first.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Gordon Schremp 1/26/2009 11 :02 AM »>Susan and Diana:

Just wanted to check in and see if we could meet with the two of you some time this afternoon to discussstatus of the AB 868 report, especially the language of the draft recommendations. We would like, ifpossible, to post a final version of the report by COB Wednesday. But we could wait until Friday to post, if

necessary. We will find out more when we go to the preliminary Agenda revie~ meeting at 4 PM today.:·

Regards,

Gordon

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From:To:GC:Date:Subject:

Mike SmithGordon Schremp, Diana SchwyzerJim Page, Susan Brown, Susanne Garfield1/26/2009 2:00 PMRe: AB 868 Status

Why the need to wait until Monday to post?-----Original Message-----From: Gordon SchrempTo: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Susan Brown <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>

Sent: 1/26/2009 12:55:23 PMSubject: Re: AB 868 Status

Diana:

The revised schedule, conveyed to Assemblyman Davis, is that the report will be delivered to theLegislatLi-re on February 12, 2009 (assuming adoption at the February 11 Business Meeting with no majorrevisions). We should be able to meet that commitment if we keep the item on the Feb 11 cagenda.

Susan is correct in stating that all of the main stakeholders have been closely following this processthrough all of the previous workshops. Further,the current revisions to the document do not really changeany of the primary findings, just clarifications of the conclusions. So most of the stakeholders will probablyfocus on the wording of the primary recommendations, rather than have to plow through the entiredocument. Hope this is helpful.

Thanks,

Gordon

>>> Diana Schwyter 1/26/2009 12:24 PM »>Gordon,Related question: can you remind me when we promised to deliver the report to the legislature? IstheFeb 11 business meeting our last chance to meet the (extended) deadline?Diana

»> Susan Brown 1/26/2009 12:20 PM »>Yes---from my perspective, there has been adequate outside exposure in public workshops (both staff ledand Committee led) and input from an advisory committee formed by Staff under the legislation.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission15113 Ninth StreetSacrarrfehtoN~A95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Susanne Garfield 1/26/2009 12:18 PM »>Susan,

l(3/5/20092 Jim Pa~e - Re: AB 868 Status "J" ,",

'.'

. ~·\t?

Does the Committee feel that there will be adaquate outside review if it doesn't get 'posted until Monday?"Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989--Original Message---From: Gordon SchrempCc: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Nick Janusch < [email protected] >To: Susan Brown < [email protected] >Cc: Claudia Chandler < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >


, '•.• : .. I ~ .

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Susan:'.'~) .'. ; ..i J ':"'~'.', .••J

AOK",lWe:will:Wait,tol hear back ,from'you"guyssometime on-WednesdaY'3LQQ~ forward,!9,(tlil.e; COIT!.ITl.!:mt§:p:,and completir;)g,~l;le!document.· c, . '. +';'!,c '," .. '~' ;' . , .. ' .'

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,Thanks, ':' '~I"'r-" '

Gordon

»> Susan Brown 1/26/200912:02 PM »>Yes-we will have comments-I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk witn8:' .him first.--Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 NinthiStreetT';o.'j'· ,,"Sacramento, CA 958f4-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

" . ~f:.,,- ;,: ti1CC, 21,.:. ,~ .... ' ~ (', ~' '1 "" ... :~.::

>>>'Gordon, Schr.em,p 1/26/2009 J1't~O~ ~M>;» .Susan and Diana:

•.1,- Jr'·'

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"'F:,·I.:

Just wanted to check in and see if we could meet with the two of you s.qJ:P~ tLm~i!Qisr~ft~[!190r:l~to\<!isclJ~s~+,,~'

status of the AB 868 report, especially the language of the draft recommendatiop~.:We·\"Yo.uld: Ii~e;: if!, ,possible, to post a final version of the report by COB Wednesday. But we could wait until Fri~~y;!o.pqst, ,if,necessary. We will find out more when we go to the preliminary Agenda reviewr:r:IE~~tingf~tA PM te,c.!ay.,

Regards,

Gordon

From:To:CC:Date:Subject:

Diana:

Gordon SchrempDiana SchwyzerJim Page; Mike Smith; Susan Brown; Susanne Garfield1/26/2009 12:55 PMRe: AB 868 Status

The revised schedule, conveyed to Assemblyman Davis, is that the report will be delivered~"to

the Legislature on February 12, 2009 (assuming adoption at the February 1l:SL.isjn'essMe~·ti;'gwith no major revisions). We should be able to meet that commitment if we keep the iterri' o'n .the Feb 11 agenda. t

Susan is correct in stating that all of the main stakeholders have been closely following' thisprocess through all of the previous workshops. Further, the current revisions to the documentdo not really change any of the primary findings, just clarifications of the conclusions. So mostof the $tak~holders will probably focus on the wording of the primary recommendations, ratherthan~have to plow through the-~ntire document. Hope this is helpful. .. ", ,

Thanks,

GordonJ',.'

»> Diana Schwyzer 1/26/2009 12:24 PM »>Gordon,Related question: can you remind me when we promised to deliver the report to the legislature?Is the Feb 11 business meeting our last chance to meet the (extended) deadline? "Diana

»> Susan Brown 1/26/2009 12:20 PM »>Yes---from my perspective, there has been adequate outside exposure in public workshops(both staff led and Committee led) and input from an advisory committee formed by Staff 'IJnd~rthe legislation.---Susan ' .

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916)653-1279

»> Susanne Garfield 1/26/2009 12:18 PM »>Susan,Does the Committee feel that there will be adaquate outside review if it doesn't get posted untilMonday? Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications

IL{3/5/2009) Jim Page - Re: AS 868 Status

916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: Claudia,Chandler [email protected]>Cc:, to'i:~~~:~rn,[email protected]~ite:ca~:us> 'Cc':' SLi~ariQ~~~~Hi$19~<Scia'[email protected]>

.. ' .1 .' 1"# , .;, ,.~.' •• , • .' __.,. '

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Page 211

Sent: 1/26/200912:13:05 PMSUbjecb~~;,A~;,~§~ ,~J~~~~.,,,,, ,',::" <' .'

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SUS~J;i,:'" ',,::: "':, ' .;':\~)ni:::,: 2"'J :'.. ' ',c'T"':' ':'.,!.'.: '" ,'\(' 'c ","'0::' :::1(" ',J 'i,! '''''";;'""':, ',.!"';'. '

AoK." We wil(~ait fi8 !h~1~;~5~~kI1~o.,i~(¥9,d~~~ui$,~~~B,v~ .time .. on ,viedr2~~a~Q:;;~?o,k;:f~r)N,~;at6' thecomments and completing the document. ., .

Thanks,

Gordon.~ ..

»> Susan Brown 1/26/2009 12:02 PM »>

Ye~~,-~r~~,~,I~:.h~v.~ 9P~.rn~~~~·dJ1~~~)~~Efn,~~,Qr~,i.n~tir~0~i!pJ~~~~w!,R~·p~,I~~~'l8!;fi~~i}~;.LJ!rW!U.need until Wedne.§\qB~~t.gi'g,~lJ>~p'''"~ ..tQ,Y8u.W~ ~re verv~ bU~y, hKr-e,,,Sl!nf?~h-~lm?~,,~c ..tl.f1~ rC~?lr,and I need to talk'wittffiim firsf--:Sllsan " ... ' ''''',' -,,'.' .

Susan J. Brown

Sp~ciC!!r~H¥!~qr,~.~o F?r,n~is,~'~ger Boyd 2Ca,~tq,rJ;1}~I-E,'3ergYi p()ror;r;u.s§lpn ,15nr'Nint"~'Streef" ' :I",

Sacramento, CA 95814-5512E~mail: [email protected]. (916) 654-4741Fax (916) 653-1279


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Just wanted to check in and see if we could meet with the two of you some tirT1~.~{h)~~qff~r~99n, -,to discuss status of the AB 868 report, especially the language of the draft recommenClatibns.We would like, if possible, to post a final version ot their~PQr:t ~Y G9!~)lVec;in~§q~y: E}LJt;,~~" 'could wait until Friday to post, if necessary. We will find ollmore\vnen we go to the preliiTliharyAge~Q~:.r,~view;m~etigg,at ~ P~J~~aY:';f ,",.: 'I ,',",' , .... ~: ";1', '

R,egards,

Gordon

:(3/5/2009fJim 'Page - Re: AS 868 Status -

From:To:cc:Date:Subject:

Susanne GarfieldGordon Schremp, Susan BrownDiana Schwyzer, Jim Page, Nick Janusch, Claudia Chandler, Mike Smith1/26/200912:18 PMRe: AB 868 Status

Susan,Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday?Are they holding firm for Feb 11 biz meeting? Thanks, SSusanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>


Susan:

AOK. We will wait to heafback from you guys some time on Wednesday. Look forward to the commentsand completing the document.

Thanks,

Gordon

»> Susan Brown 1/26/2009 12:02 PM >>>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk withhim first.---Susan




!L(3/5/2009} Jim Page - Re: AS 868 Status

necessary. We will find out more when we go to the preliminary Agenda revieW:meeting at4 PM today. {

Regards,

Gordon

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Thanks,

Gordon

Gordon SchrempDiana Schwyzer _Jim Page; Mike Smith;,$u~a·n.:I3~ov;,~';Susanne Garfield1/26/200912:55 PM" _. -, ." -.. '

Re: AS 868 Status

»> Diana Schwyzer 1/26/2009 12:24 PM »>Gordon,Related 'question: cal} you remind me when we promised to deliver the report to the legislature?Is the Feb 1'1 business meeting our last chance to 'meet the (extende~j) de~9.line?Diana .

»> Susan Brown 1/26/200912:20 PM »>Yes---from my perspective, there has been adequate outside exposure in public workshops(both staff led and Committee led) and input from an advisory committeE{formecrby"st~ff_underthe legislation.---Susan -

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected] .. {91 6195.4-:4741Fax(91~)~p3~1279

• '.1 ,~ •

»>Susanne Garfield 1/26/2009 12:18 PM »>Susa~:!;' - - .,

Does the Committee feel that there will be adaquate outside review if it doesn't get posted untilMonday? Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications

916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: G!?Il\QJ,a,[email protected]>Cc: Mi~~;Sm!tti<Msmith<@energy.state'.ca:i,s:>,·' ,Cc: Susan'l)e Garf\~ld:<[email protected]>

.. ,,- .;. ~.' i. • ' ..... _. \. . '_ . , r

Sent: 1/26/2009 12:13:05 PM

SUbjec!,:, ~~:,ft~ !~8~ ,,~t~tW.~ "';,'; n' :, ..,... ,- "~ . , . .

Sus~¥',: ,':~:'~ '~\i;'];!~~;""~~~'~i~~:;' !,~ ~;:i';j;~,",;J' " I": '::: >', ; :" ,,\. ',:, ,', ' .' " ';':~' i'

AO~~rW~wir~~R't6"h~1~i;~c~f.Wq'm: Y9"u;g~is.,~qmK ~i,m~, 60i~~~n~SC~~y~,'~p(',6~,fo\~:W&:(ri~Un~comments and completing the doclJ'menf' "" ','. . ,.", " .:., J,

Thanks,

Gordon

»> Susan Brown 1/26/2009 12:02 PM »> ; " ".' '

Ye~~'T~~iYK!IJ;:.~~Y~ q~~~i~~Wrt!-UWW~)~~Em~9pqrq!~~Y.n~l~il~ ~lSa~e.':l o.C?u~J~~:9~ffi9~:;9r~tm",::, ,. , "need until Wedn~§~~xJp~g.~t:P,~R~}g,YBY .. fc.VifR ar~,)(~!'Y",~u~¥,h~re,.~lm::~""JIDi~~ ~9~J.n9qt,l:i!.I\ ~~,and I need to tallfwittrti'iln fii"st:':-:'Susan ' . '.., ,. "'~,,' , ,..

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Susan J. BrownSpeciaJ~qyj~q~"to,9?'IJlrt;1i.s§t~lJ~r~oY9 ; , 'Californii:f,Ef.ief ":dirrifnissi6n": '"151~}NintWjsM~~t'jt:,' , i \'.)1 ,,"~W',,','Sacramento, CA 95814-5512E-mail: [email protected] (916) 654-4741Fax (916) 653-1279

.. ' ::.1 -.'"' __


'" '.~ ~~~ ... ,,';"t:~;; . i"..J ~ ~

Just wanted to check in and see if we could meet with the two of you some timeAh)~;a,.sern9(;>n

to discuss status of the AB 868 report, especially the language of the draft recomrhenClations.We would like, if possible, to post a final version of 'he \r~p9.rt py GOB ,W~<;ln_~§da,y.\~y-t,yt~,: .could wait until Friday to post, if necessary. We will find outrriorewhen'We gato theprelirriin~ry

Agend~,.[~~i~yvJ~weting at 4 PM. tP,Q,~Y:~;,; _..' ,~, ... ;u, ; "" ''',<,--

Regards,

Gordon


Diana Schwyzer.Susan Brown; Susanne Garfield.Gordon-Schremp1/26/2009 12:24 PMRe: AS 868 Status

Gordon, ... ,-Related question: can yowremind me when we promised to deliver the report to the legislature? Is the Feb 11 business meetingour last chance to meet the (extended) deadline?Diana

»> Susan Brown 1/26/2009 12:20 PM »>Yes---from my perspective, there has been adequate outside exposure in public workshops (both staff led and Committee led) andinput from an advisory committee formed by Staff under the legislation.---Susan


»> Susanne Garfield 1/26/2009 12:18 PM »>Susan,Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday? Are they holding firm forFeb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <Njanusch(cUenergy.state.ca.us>To: Susan Brown <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>


Susan:

AOK. We will wait to hear back from you guys some time on Wednesday. Look forward to the comments and completing thedocument.

Gordon

»> Susan Brown 1/26/2009 12:02 PM »>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need until Wednesday to get back toyou. We are very busy here, since Jim is acting Chair, and I need to talk with him first.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]

Tel. (916) 654-4741Fax (916) 653-1279

»> Gordon Schremp 1/26/2009 11:02 AM »>Susan and Diana:

Just wanted to check in and see if we could meet with the two of you some time this afternoon to discuss status of the AB 868report, especially the language of the draft recommendations. We would like, if possible, to post a final version of the report by COBWednesday. But we could wait until Friday to post, if necessary. We will find out.more when we go to the preliminary Agendareview meeting at 4 PM today.

Regards,

Gordon. 0

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SusariBrowfl;Susanne'Ga'rfieldDiana Schwyzer; Gordon Schremp1/26/2009 12:20 PMRe: AB 868 StatusSusan Brown.vcf

Yes---from my perspective, there has been adequate outside exposure in P4blicwork,shqps>(bq~8 staff I~d.af.ld ;<:()rr:ID~I,it:tee led) and input from an advisory c;ommitteeformed:by.$taff urider thelegislation.~~-Susan

Susan], BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Susanne Garfield 1/26/2009 12:18 PM »>Susan,Does the Committee feel that there will be adaquate outside review if it doesr;')~t.get

posted until Monday? Are they holding firm for Feb 11 biz meeting? Thanks, sSusanneGarfield"

• ~ I \ ....

Assis~antEx~cu~ive Direct:pr ". ,Media ,and Communications916-654-4989' ' ' ,

". .• ~, '1 •

-----Original Me~sage-----From: Gordon ·SchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>


Susan:

AOK. We will wait to hear back from you g~ys some time on Wednesday. Look forwardto the comments and completing the document.

~. "-',

Thanks,

Gordon _.' I'

»> SU$i=ui'Brbwn 1/~6/2bb9j12:'02 PM »1> _i' . • '." . ." . ''·"'·'~I;""~·~l-r·'··· ·Ii...· "-.1."-1"-:' ..... .- .~ ... -.~. --40~. ••••• ;. .- o' ,- ~~ ... ~";'''. '._",.,-, " '" ~ ~" -'.' '~'~f,'~""" .~ ~ "'" ~ '''''r''~' .,~., -,~

Yes--we:'will 'have c6ri1ri1-eiits---I have been"c06rdliiating'WithJKareHi' DOljglas':;Officie~ but'will need until Wednesdayto get back to you. We are'veryi:t>'tJsyhere;'since Jim isacting Chair, and I need to talk with him first.---Susan


>>> Gordon Schremp 1/26/2009 11 :02 AM >>>';,-<:," [' ...... ,-'),.., t-. t; ;, . l '.\. -Susan and-'Diaria\:; ., . ,', " )., " '.

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Just wanted to check in and see if we could meet with the two of you some~tlm~ thisi~>,.i'afternoon to discuss status of the AB 868 report, especially thet{rar1g¥ili~ge'6(tl1e~dh:Jft:::,··:·.',recommendations. We would like, if possible, to post a final verSlon!Qfrtn~1~dJto(~ ~:'COB Wednesday. But we could wait until Friday to post, if necessary. We wifirflfla:bfit, r.,

more when we go to the preliminary Agenda review meeting at 4 PM'~tOHayt} 'F, -';q" \'·P'::J·~~·t)~: ,'-;,; ,'J(.J' \ ';

Regards,

Gordon

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Susanne Garfield ._<~:,.,. .~

Gordon Schremp, Susan BrownDiana Schwyzer, Jim Page, Nick Janusch, Claudia Chandler, Mike Smith1/26/200912:18 PMRe: AB 868 Status

Susan,Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday?Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne Garfield.Assistant Executive DirectorMedia and Communications916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>


Susan:


Gordon

»> Susan Brown 1/26/200912:02 PM »>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk withhim first.---Susan


>>> Gordon Schremp 1/26/2009 11 :02 AM »>Susan and Diana:


necessary. We will find out more when we go to the preliminary Agenda reviewmeeting at 4 PM today.

Regards,

Gordon

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Mike.Smith.Gordon Schremp, Diana SchwyzerJim Page, Sl1sanBrow~, Susanne Garfield1/26/20092:00 PMRe: AB 868 Status



Diana:

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The revised schedule, conveyed to Assemblyman Davis, is that the report will b~ delivered to theLegislature on February 12,2009 (ass'umin'gadoption at the February 11 Business Meeting with 'no majorrevisions). We should be able to meet that commitment if we keep the item on the 'F.:eb'11:agenda.

Susan is correct in stating that all of the main stakeholders have been closely following this processthrough all of the previous workshops. Further, the current revisions to the document do not really changeany of the primary findings, just clarifications of the conclusions. So most of the stakeholders will probablyfocus on the wording of the primary recommendations, rather than have to plow through the entiredocument. Hope this is ~elpful. .

Thanks,

Gordon

»> Diana Schwyzer 1/26/2009 12:24 PM »>Gordon,Related question: can you remind me when we promised to deliver the report to the legislature?:. Is theFeb 11 business meeting our last chance to meet the (extended) deadline?Diana

»> Susan Brown 1/26/2009 12:20 PM »>Yes---from my perspective, there has been adequate outside exposure in public workshops (both staff ledand Committee led) and input from an advisory committee formed··by Staff unaer the !Iegislation.--.;,Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth ·StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Susanne Garfield 1/26/2009 12:18 PM »>Susan,

Does the Committee feel that there will be adaquate outside review if it doesn't get posted ,until Monday?Are they holding firm for Feb 11 biz meeting? Thanks,S" '

Susanne Garfield . -Assistant Executive DirectorMedia and Communications916-654-4989-----Original Message---From: Gordon SchrempCc: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Nick Janusch < [email protected] >To: Susan Brown < [email protected]>..,Cc: Claudia Chandler < [email protected] > ' ',' 'Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >


Susan:

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AOK.~MJ e:will1lNaitto;,Aear ,back fror'Yf yOlLguys';some time on 'Weqnesday;c,Look:,fqrward, to ,the commentsand completing:the'rdocument. s' ":1):'-" ;.,:, " ,,-,

Gordon

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»> Susan Brown 1/26/2009 12:02 PM »>Yes--we will have comments--I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk withhim first.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth~Streets::·,:.:;· '/'; ," . ,,','C '·'.Ii:"") ,."

Sacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»>'~~;d~n':s~h;~~~,;~';2-6;2().~9J:1::02A~·,~~~:1', .C: ".~..Susan and Diana:

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Just wanted to check in and see if we could meet with the two of you som~ time:thjs,aft~rnoolilto·discw;:jS".(:,

status of the AB 868 report, especially the language of the draft recommendations. Wewouldllke; ifpossible, to post a final version of the report by COB Wednesday. But we could wait until Fnid~y·to post, if: "necessary. We will find out more when we go to the preliminary Agenda review meeting'·atAiPM ,today.

Regards,

Gordon

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l2~20b9ft5iana SchW)'Zer -Hot fuels again Page nl

From:To:Date:Subject:Attachments:

Diana SchwyzerSusan Brown1/26/2009 9:56 AMHot fuels againAB 868 Executive Summary DS.doc

Hi Susan,Here's the Exec Summary again, with Karen's final comments incorporated (the bullets look weird in track changes, but it'sright when you look at final view).Diana

EXECUTIVE SUMMARY

The issue of reduced volumes of gasoline or diesel when distributed at high temperature, or"hot fuel," is not new. It is, however,-a"con:troversial Su.bjecHhat has created strong'and;divergent opinions, Some.stakeholders believe that if temperature· compensationwas practicedat r~tairstatibrts;motorists that purchase fuel at retail stations would realize significantmo~~t~ryberi~fits in th~ ~armer areas of the United States. Other stakeholders representingbusiness interests believe that the costs to retail station owners will be significant.

This national debate has continued for several years but without any analysis being performedto determine if automatic temperature compensation (ATC) at retail stations would·be.a netbenefit to retail motorists. As a result of these activities and the lack of analysis, in October 2007the California Legislature passed and the Governor signed Assembly Bill'868 (Davis), whichdirected the ·Energy Commission to conduct a cost-benefit analysis.

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I:,',1The prirp,ary issues associated with the ATC debate can best be characterized in a series of

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questions that follow in a summary of thiineport.

This report quantifies the benefits and costs associated with temperature compensation forretail sales of gasoline and diesel fuels in California. The cost-benefit analysis results are ,,j':"';'- \.,:,3'!i,",";;::"':·:''''C. ! t:': \I. ,,'negative (net cost to society) under all options examined, but when quantified in terms of centsper gallon the results are small. Further, it is unlikely that there are any plausible circumstanceswhereby some consumers could realize a small net benefit of ATC at'retail in ·California. Theestimated annual recurring net costs to society; if.completely passed through to consumers,could amount to between two hundredths (2/100) and 18 hundredths (18/100) of a cent pergallon.

• If temperature compensation has been ,instituted for most wholesale transactions for purposes,ofremoving the inequity of temperature variations from financial transaction, why has that practicenot extended all the way to the California reta!l consumer?

Hawaii is the only state in the nation that has adopted a form of temperature compensation atretail outlets. This occurred when the state increased the size of their gallon from the U.S.standard of 231 cubic inches to a larger Hawaiian gallon of about 233 cubic inches. Sanada, too,has adopted regulations and standards for ATC at retail. Even though ATC at retail is voluntaryin Canada, more than 90 percent of the retail stations have converted to using the equipment.Most of the time in Canada, the temperature of the fuel is colder !han the reference standard of60 degrees Fahrenheit. The ATC d~pensers compensate for colder fue~ .temperatures bydecreasing the average size of the liter dispensed to motorists ir\.that country.

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• Is the temperature ofgasoline and diesel fuel sold to,Califqrnia,consume1;s-warTlJer; on aver.age; than:the 60 degree Fahrenheit reference standard?

California is considered a warmer state regarding fuel-tempera!UJ~·~tretail St;ations. B~ed onthe results of a recent survey of ret;ail;stations;..the ~v;~r~g~..;terqperattIr~qf regtIl~.grl)..cl~'.~

gasoline during the base period fromApril2007rthroughMarch 2008was about 71 degrees.Fahrenheit. Diesel fuel was a little warmer with an average temperature,otnearly 73 Q.egr~es

FaI:rrenheit.

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additional benefit due to increased price transparency, estimated at approximat~ly,.$258;qQO,per .,year.

California businesses would be requi.i~d f6'havenew"efeffionic'componentSiriSt~med-iri'tlieir'

fuel dispensers at a total initial cost ofBei:w~en $i03.8tnililorl'anif$127:41:riillio~;5r'b'~tween·' :,'$10,704 and $13,136 per retail outlet. Recurring costs for more expensiveXTCireadydiSperu;~rSi

maintenance, and higher inspection fees would amount to between $7.4 mipion and $20.6million per year. The initial ATe rerrofit' tostS:iiCcombmatioil'with'thlrr~Ctiriiilg'a:fuluar" ,-> :'expenses would average between eight htiJelfE!dthS (8/tOoy;aI{a 18htindredths'(18/100)'ofa ceiltper gallon, assuming retail station oimers' pa$s along a116f the:retr6fitexp'~esbyraiSihgrefuilfuelpricesaloneoveraperiodoflO'fCY1S'years:'''' ~ .!. ,<' --, ,,' ' d'

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Unlike the colder fuel temperature aynamic in'~ada,~TC ae';,i~esW6uld adjust'for Warmei:;r~A'i:h,,,,;,;,c41-'~:;"c._ ~-<-'( _,

fuel temperatures by slightly increasing the siZe! ofth~'gallon 'ellspl&lsecf to' Califorma cOhSumers >" ~Ji.,,' ,"~f:~n~+t~!>;;, F,~'tq"", }n

(in cubic inches). The adjustment for the motorist woUiCi b~' app~8xiIriately '1p~icenf'f8i every! 'itp:~~~.f,~:~~~~:;*r46~J~,)~m15 degree Fahrenheit increase in the temEerature of gasoline greater than the reference standard "of 60 degrees Fahrenheit. The slightlylargeian'd\v~i~bi~t;JiZea;'gauoiiS;(lh~8ibi'E~ii{~~)1Wo:JlQ:7i'::c

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• If ATC was mandated at retail stations in.California, how would businesses and conSUmerS beaffected?

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The representative value of the reduced quantity of gallons that consumers would not havepu~chased if ATC had.been in place at retail stations in Califomia.dtll'ing the study period wascalculated at about $437.5 million ($376.4 million for gasoline and about $61.1 million for dieselfuel).

Under the ATC scenario, the quantity of net diesel fuel gallons sold would have beenapproximately 3.037 billion or about 19 million gallons less compared to the status quo (no ATeat retail) of 3.056 billion because the fuel was also warmer (72.9 degrees Fahrenheit) than the 60degree Fahrenheit reference standard.

not have changed the total amount of fuel consumed in the state as measured in cubic inches,but would have reduced the actual number of net or adjusted gallons purchased by motorists.

If ATC had been in effect at retail gasoline stations during the study period, the quantity of netgasoline gallons sold would have been approximately,15.508 billion or about 117 million gallonsless compared to status quo (no ATC at retail outlets) because the fuel was warmer(71.1 degrees Fahrenheit) than the 60 degree Fahrenheit reference standard.

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It one assumes that the industry of retail station owners and operators will continue to growand remain profitable, the conclusion is that retail station owners will in fact raise their fuelprices to compens~t~ for selling fewer units, all other things being equal. As such, expectedbenefits for retail motorists resulting from a conversion from gross to net gallon retail fueltransactions will be essentially zero.

• Would retail stationowners charge the same price after ATC equipment began to dispense slightlylarger sized gallons when fuel is warmer than the 60 degree Fahrenheit standard? If so, what wouldbe the impact on the expected benefits,ofretail motorists? .

~i~!.~f~~~~~~?~~~.~,~;H;~.raild~;~,6;W·~l~~~.~,*~i~:(~~$':~~;i~~~~~~~c~~~t~~e~hf\$.~!!lcr,E!ase"a.fle,?,~Jjl1!ty.tg,~tt!'!IIJ.pF mcrerneIl.j.al~E!JqJensere~<:rvery.by}nsre,asmg pn~esJQrf""'! ' "~:.l·::~,"l'_~"<t't\,:<i~"'~~'''(~~;''''' r~rf<::f,t'· ~! ... :";_Y:,,, ''':!(''\};1;:, .•,' '; '-.': .' < "'<:'~:,~; ','.' "" ;", '",.; '--"}i·-,-:';"·\:"" $;""11"""': ;-;?\ ..u," ,,:",,' :........ '- _.;c}~ (. - ",.,.. -.

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The results of the ATC retrofit cost-benefit analysis (CBA) show net costs of between $205million to $530 million over 20 years. If measured in terms of retail gallons of gasoline anddiesel fuels, the CBA net costs would average between five hundredths (5/100) and 14hundredths (14/100) of a cent per gallon over the same period.

• If ATC was mandated, would the overall costs to businesses and governmental agencies to implementand oversee the program outweigh any potential benefits?

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• Ifa new reference temperature was mandilted; would theciverall costs'to businesses ana goVernmentalagencies to implement and oversee the program outweigh any potential benefits?

The estimated costs of a new referencEdempera:ture' arid associi:lt~d larger galloh size (iri Cubicinches) could amount to between $9.0 million aTIcP$27:9'hilllion or'ftom'$925fO$2i879:per retill:'station. On a per-gallon basis these additional expenseS iridirred'byremil station ownerS:~6Uld

equate to between five hundredths (5/100) and 15 hundredths (15/100) of a cent per gallon foronly one year. After the modifications were completed, there would'be no additional recurringcosts for businesses or consumers..

-Mandatory use of ATC at Califgn:rla.Fe~~ ~.taP~ns.s~~1,1l¥no~ k~~ryqufred {fthe~ole'cii~a ~-.- ... " h , .. ~ , ....,...:1,., l' J .:!)Lt;.·.~ .. l.~4",J ... , __ ~·.• , ./1 .,H':1:J'.l' ·"'i'-· ,.'. .

is that the net result of the cost-benefit~aJ.ysis be pos*y~,(a ~et benefit to society). .

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address temperature compensation at the retail level.

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• The Le~slature should considerwhether the value oithe public per~eptionsiH~e$~ ilflfili;ij+Ret eests te seeiety are se lew, I~s~ tr.afl~~e teRthS'(Z!iO) e{~' eeRt'~~r g~iJ?~.A~,~?~~, ifis, " ,,'"reeemmeRaeel tflat tfle state's Legislatlire eeRsieler t1:le vallie of increased fairness, accUracy, t

and consistency of fuel measurement.-in·addition to the benefits Q;uantified in,the cost-,... . ,. ,;t~J "J~4" ";"o·"..f"" ••. /" ..... :...,"~tr.~.".,? ...·"'".~.. t "',,, t-r_l.-J."'. ':.;,).: ••~. ·...1.1 • J<"."-··d-.~;:)j1""~~'~:;"'~ .... i ~

benefit analysis, justify mandating tl1_e)iffle~jHali:i~g:~~¥ar~~~~~e~le.g~f~iRg~;:ib:·~;.• • :fr'':'''.,; ~.\(t:.. '-.;:--- .... ~1t.~-$i.~.·.-Lf-\.~··'~·.··.l···;"·~f"~~.p..~tffl::.. t_.

maftelat~eluse of ATC at Calif:~;~~:~4~}!~~~,~#~~~:::;~:::~'~,;1~~;~~~:~tr~~~j". Y .. "~~~,J• The Le lslature rna want to cohslaer,re umn 'station,owners'tomstall' .

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~L·.,.:,;apptoxiinately50.percent of pumps bein~ ATCcompliant within five' yeats: arid woUla 0

:: "'~siiWifi'cin'tly;~~dtteilie cost of a transition to.mandatory ATC in the future. thou~h stillresultin~in a net cost to society 'n .:~ .". " •. ",.',,, '<' .; "unc..;· .• :'''''' .," """ .",- " •.' .

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• The Le~slature should consider reQ.uiru;~ th~'California DIvi~ion of Measurement ,Standards to develop standards addressin~e<;juipment approval. certifi~ati~~ testi~i,compliance enforcement consumer.labelin~.and.timin~provisions for voluntary ATC atretail stations. Until that process has '6~.co~pI~t~d: It j~~ec~~e~dedfuatllie'. .Le~islature prohibit the use of ATCJo~ ~'~~i~ta'iY'b.i~i;.:' ','- '<. _. ,." ,. ,..., .

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Research in the following areas is recommended ,to supplement the cost-benefit analysispresented in this report.

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The value of the perceived fairness, accuracy, and consistency benefits of ATe toconsumers, which was not included in this analysis, should be estimated through surveymethods that assess consumers' willinlmess to pay for such benefits.

The value of increased price transparency associated with ATe. as calculated in this report.should be refined through collection of more finely-grained data on the spatial variability ofretail fUel prices.

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Susan BrownSusanne GarfieldDiana Schwyzer; Gordon Schremp1/26/2009 12:20 PMRe: AB 868 StatusSusan Brown.vcf

Yes---from my perspective, there has been adequate outside exposure in publicw,0rkshops (poth staff.. led and Committee led) and input from an advisory committeeform17d ,~.y Staff unde'r th~ legislation.---Susan

.susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Susanne Garfield 1/26/2009 12:18 PM'»>Susan, '.,.Does the Committee feel that there will be adaqi..Jate outside review if it c;loesn't getposted until Monday? Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne.Garfield

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Assi~~a.nt.;Ex~~uti:v,'@. Dir~ct9~Media and. Communications91(?":~54~4989" ",". " .---::Original I~essage----

From: GotdonSchrempCc: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Brown <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>

Sent: 1/26/2009 12:13:05 PMSubject: Re: AB,868 Status

Susan:

AOK. We will wait to hear back from you guys some time on Wednesday. Look forwardto the comments and completing the document.

1~(374/2009.}.Diana-Schw:yzer -He: AB,868 Status .',

Thanks,

Gordon

.f ...." - ~~;'; : ''.: 1 ,.

Susan]. Brown$p,edalAcjvisor to Commissioner BoydCa'iifornia' Energy Comniission1516 l\lintl1 StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

Justwanted to·check in and see if we could meet with the two of y~u~o\Tft;;¥Jlne;tfil'~:U{:;afternoon to discuss status of the AB 868 report, especially tnm~ng;uag~',Jdf:~n1etartfti:2~;::recommendations. We would like, if possible, to post a final ~gFsion~Bf't~~rEM({rf',~~bsl"':COB Wednesday. But we could wait until Friday to post, if necessary. We *TI.iJfr~tci":6ue.l Fmore when we go to the preliminary Agenda review meeting af"4"PM'~toCfar~. i6r'!~),;'10--'~:

cirrt9'i(t~j"2 ~'rctrtCH;,) ..;11{)1'"'}

Regards, -':~j,j,i~~~dtJ8,{2:.L~Jl;;:.G.';;r~y'.wj,;~(iQ> 1~}";yvJn'J2 ,:S;;6~G ::>:).::-: ~:. ;:':.~ .~:.'.~'§J,,,~: :o:~fr;;:' '~~'L; ;"'f)§iJ (::.... ::: ~t;:S':! i-;' i' ~. ".'

Gordon

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Diana SchwyzerSusan Brown; Susanne GarfieldGordon Schremp1/26/2009 12:24 PMRe: AB'868 Status

Gordon~

Related question: can you remind me when we promised to deliver the report to the legislature? Is the Feb 11 business meetingour last chance to meet the (extended) deadline?Diana

»,? Susan Brown 1/26/2009 12:20 PM »>Yes~--frommy,perspective, there has been adequate outside exposure in public workshops (both staff led and Committee led) andinput from an advisory committee formed by Staff under the legislation.---Susan

Susan J. BrownSpecia(Advisor to Commissioner Boydcalifornia Energy Commission1516 Ninth StreetSacramento, CA-95814-5512E~mail: [email protected]. (916)654-4741'Fax (916) 653-1279

»> Susanne Garfield 1/26/2009 12:18 PM »>Susan,Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday? Are they holding firm forFeb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia anBCommunications916-654-4989-----Original Message----From': Gordon schrempCc: Diana Schwyzer <[email protected]>Cc: Jim ,Page <[email protected]>Cc: Nick Janusch <[email protected]>To: Susan Br()wn <[email protected]>Cc: Claudia Chandler <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield '<[email protected]:ca.us>


Susan:

AOK. We will wait to hear back from you guys some time on Wednesday. Look forward to the comments and completing thedocument.

Thanks,

Gordon

»> Susan Brown 1/26/2009 12:02 PM »>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need until Wednesday to get back toyou. We are very busy here, since Jim is acting Chair, and I need to talk with him first.---Susan

Susan J. BrownSpeciai Advisor to Commissioner Boydcalifornia Energy Commission1516, Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]

1[(3/4/200~) Diana Schwyzer ~Re: AS 868 ?tatus

Tel. (916) 654-4741Fax (916) 653-1279

»> Gordon Schremp 1/26/2009 11:02 AM »>Susan and Diana:

Just wanted to check in and see if we could meet with the ty./o of you some time this aftemoon to discuss status of the AB 868report, especially the language of the draft recommendations. We would like, if possible, to post.a_finalversion of the report by_COBWe9nesday. But we could wait until Friday to post, if necessary. We· will find out more when we go to the preliminary Agendareview meeting at 4 PM today.

i.

Regards,

Gordon

1[(3/4/2-009) DlanaSchwyzer - Re: AB868 Status Page 111


Diana:

Gordon Schrem pDiana SchwyzerJim Page; Mike Smith; Susan Brown; Susanne Garfield1/26/2009 12:55 PMRe: AB 868 Status

T~e revised schedule, .conveyed to AssemblymaR lJ)avis, is that 'the report will be delivered tothe Legislature on February 12, 2009 (assuming adoption at the February 11 Business Meetingwith no major revisions). We should be ableCto meefthat commitment if we'keep the item onthe, Feb 11 agenda.':.,

Susan is correct in stating that all of the main stakeholders have been closely following thisprocess through all of the previous workshops. Further, the current revisions to the documentdo not really change any of the primary findings, just clarifications of the conclusions. So mostof the stakeholders will probably focus on, the 'wording of the primary recommendations, ratherthan have'to plow through the entire do'cument.Hope this isnelpful. '

Thanks,

."Gordon

»> Diana Schwyzer 1/26/200912:24 PM »>Gordon,RelatedqLie9tion:can you remind me yvheri:we promisea to deliver the report to the legislature?Is the'Feb 11 busin'ess meeting our last chance to meetthe (extend,ed) deadline?Diana

»> Susan Brown 1/26/2009 12:20 PM »>Yes---from my perspective, there has been adequate outside}exposure in public workshops(both-staff\;led and Committee led)and.input from an advisory committee formed 'by 'Staff underthe legislation.---Susan

Susan J. BrownSpecial Advisor to CommissionerBoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916t65,4:;4?~1Fax (916r653~f219

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»> Susanne Garfield 1/26/2009 12:18 PM »>Susan, .,

Does the Committee feel that there will be adaquate outside review if it doesn't get posted untilMonday? Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications

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Sent: 1/26/2009 12:13:05 PMSubj~pt; ~~:A~~':~~~~i~,t~.!u~:~,,\, 'e'Ji'\\" (;~"'lh:c:nei'> ' ;·'nl ,:;:11 ~;)

91'6-654-4989 .~:'-:.-bfigiriaf Message----From:-.GQrdon.,SchrempGcz'Diaria:Schwyzer <[email protected]>Cc.,; JJrn.p.§ge [email protected]~ ..

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i$ftlt:r: ~~;;1 )~G:':;l9'i-:'~H';'1t):J::~', \t;f;ff~J-fC ,r:if j. ~() ,.:,nir;l{)\,·.l \3f;"; no aL;~)'!. s~ v1dsd\::~o ~~rt!'J ~~art.\<'j(ia-}\t:ria ;.ilJ: ;0AOK. We will wait to he~r ba,s~J(2M~Y2};1:~M¥§i·~~m~(~imX~8~~~~£II4~I~9!tX;(~Q?~~t<?m~r~r}gr~t~,~,~;ccomments and completing the document. . ,

Thanks,

Gordon

»> Gordon Schremp 1/26/2009 11 :02 AM »>Susan and Diana: .~;:,'. "2)§L~·,Y21~Ci~~~·~~~~E.~J;L:: :i4?:,;)-,j

. j';;; '~·!~,~,.4~;~, rr~ f'D\ ~:t:~ rJUs~ wanted to check in and see if we could ~eet with the two of you some ~tn~,!~!~6an,~~~p~n;to diSCUSS status of the AS 868 report, especially the languageofthe draft recommendations.We woul~ like" if~ossible, to P?st a final versiol),;~f.:tR.7~r~W0,;,~,b~:·SH§~yyeJ!1J'~~~~f~.~lt'!-V'i~.<,,<could walt ~ntll Friday to post, If necessary. WewlII find out more when we go to tne prel~f1lJ~~JY

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Regards,

Gordon

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1i::(3{4!2009) Diana Sch~er - R~~~AB 868 Statu~~ =From:To:CC:Date:Subject:

Mike,Smith ,,"" 0 ,

Gordon Schremp, Diana SchwyzerJim Page, Susan Brown, Susanne Garfield1/26/2009 2:00 PMRe: AB 868 Status



Diana:

The revised schedule, conveyed to Assemblyman Davis, is that the report will be delivered to theLegislature on February 12, 2009,(assuming,adoption at the February 11 Business:Meeting with.no majorrevisions). We should be able to meet that commitment if we keep the item on the Feb 11 agenda.

Susan is correct in stating that all of the main stakeholders have been closely following this processthrough all of the previous workshops. Further, the current revisions to the document do not really changeany of the primary findings, just clarifications of the conclusions. So most of the stakeholders will probablyfocus on the wording of the primary recommendations, rather than have to plow through the entiredocument. Hope this is helpful.

Thanks;"

Gordon

»> Diana Schwyzer 1/26/2009 12:24 PM »>Gordon,Related question: can you remind me when we promised to deliver the report to the legislature? Is theFeb 11 business meeting our last chance to meet the (extended) deadline?Diana

>>> Susan Brown 1/26/2009 12:20 PM »>Yes---from my perspective, there has been adequate outside exposure in public workshops (both staff ledand Committee led) and input from an advisory committee formed by Staff under the legislation.---Susan

Susan J. BrownSpecial~Advisor to Commissioner BoydCalifornia EnergyCommission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

>>> Susanne Garfield 1/26/200912:18 PM »>Susan,

1il3/4/~m09) Diana Schwyzer - Re; AB 868 Status Page.2'11

... ,

,.

Does the Committee feel that there will be adaquate outside review if it doesn't get-posted until Monday?Are they holding firm for Feb 11 biz meeting? Thanks,s' 'Susanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989---Original Message----From: Gordon SchrempCc: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Nick Janusch < [email protected] >To: Susan Brown < [email protected] >Cc: Claudia Chandler < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >


Susan:

A0K. We will,wait to near',back:fror7n\You 'guyS~s6me time :on 'Wedlilesday:~Look ,forward ,to the commentsand completing the' document. ,.<' . • ','" . , '

Thanks, .. ~......•. r

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Gordon "" '.

»> Susan Brown 1/26/2009 12:02 PM »>Yes-we will have comments--I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talkwithhim first.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission151:6INir:ltl'i'Str;eeb",:"}i '1i" 'J: ;\U(,,:': ;,'j4 ';'

Sacramento, CA 95814-5512 " " .",'E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

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>>>,Gordon':Schremp'1126/2009~11:02 AM »> '.' "Susan and Diana:

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Just wanted to check in and see if we could meet with the two of YOl:l·semetir;neithis •.afternoOIil,to·discus~;·status of the AB 868 report, especially the language of the draft recommendations>We'would~like;iC'possible, to post a final version of the report by COB Wednesday. But we could wait untiLFridayito. post,'ifnecessary. We will find out more when we go to the preliminary Agenda reviewi:meeting:at4 PM todayc'

Regards,

Gordon


/Sus~~ '.~B';6~~ ,~~;'-;

. Di~ma SchwyZer; Gordon Schremp;1/27/20092:15 AMRe: AB 868 StatusSusan Brown.vcf

Jim Page; Mike Smith.. :'

Mike--we are still not in agreement on the recommendations presented in the Executive Summary on the Committee Draft.Diana and I need a meeting with Gordon and Jim ASAP if we are to meet your Friday releas~date. Beli~ve,it,qr now-"there are plenty of other pressing matters that are demanding our attention.

:';"~'~". , ~..,' .J' !;~;f..., ' ..<:......We'll do our best to wrap this up in the next couple of days.---Susan

Susan J. BrownSpecial Advisor to Commissioner Boydcalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Mike Smith 1/26/20092:00 PM »>Why the need to wait until Monday to post?-----Original Message-----From: Gordon SchrempTo: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Susan Brown <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <Sgarfie/@energy.state.ca.us>

Sent: 1/26/2009 12:55:23 PMSubject: Re: AS 868 Status

Diana:

'. ·It....

The revised schedule, conveyed to Assemblyman Davis, is that the report will be delivered to the Legislature on February .,12,2009 (assuming adoption at the February 11 Business Meeting with no major revisions). We should be able to meet thatcommitment if we keep the item on the Feb 11 agenda. ." '

:'":"

Susan is correct in stating ,that all, of the ;main;stakeholders have beenclQselyfollowi.ng this .proc:~ss,t~rough,all of theprevious workshops. Further, the current revisions to the document do not really change any of the primary findings, justclarifications of the conclusions. So most of the stakeholders will probably focus on the wording of the primaryrecommendations, rather than have to plow through the entire document. Hope this is he!pfuL. .,

Thanks,

Gordon

»> Diana Schwyzer 1/26/200912:24 PM »>Gordon,Related question: can you remind me when we promised to deliver the .report to the legislature? Is the Feb 1.1 businessmeeting our last chance to meet the (extended) deadline?Diana

»> Susan Brown -l/26/200912:20,PM»>.l ; .

Yes---from my perspective, there has been adequate outside exposure in public workshops (both staff led and Committeeled) and input from an adVisory committee formed by Staff under the legislation.---Susan

Susan J. Brown

Special Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (91?) 653-1279

>>> Susanne Gaifield 1(26/2009 12:18 PM >>>Susan, , ;:.~ .,',' .'", .-"Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday? Are they holdingfirm for Feb 11 biz meeting? Thanks, s ,;'Susanne GarfieldAssistant Executive Director " ';.Media and Communications ,,'916-654-4989-----Original Message-----From: GordonSchremp', ;Cc: Diana Sch~er < [email protected] > '. """"CC: Jim Page < [email protected] >CC: Nick Janusch < [email protected] >To: Susan Brown < [email protected] >CC: Claudia Chandler < [email protected] > ""'. ,:' ;' S l'; Ii :;, ;j'.CC: Mike Smith < [email protected] > ","O{>;" '1111 JIF,', ''0, , .'

CC: Susanne Garfield < [email protected] > ":)':' ',c-,:'


Susan:

AOK. We will wait to hear back from you guys some time on Wednesday. Look forward to the comments and completingthe document. OJ'::. '~;'. "

Thanks,

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»> Susan Brown 1/26/2009 12:02 PM »>:":',t,f " ",'., " ',; 1i,,',;I' ',j,;:, :""~" ;r,,',

Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need until Wednesday to getback to yoi.J)o Wefare~ver:Y1ftisYJhefe;tsige':Jiin:'istactingjChciir;· anCl'I·need;to!talk.with!hirrii'first.~~Susaii&~ :' -.;':\:,~ -

'. ,.,t ~-;'~~!i;r:~-;:: :Ml"'i~J;:~ 7\-tj '~"j '{n·, :Jf)f;fl1-; l{H~' ; j.-, ..[' nt. ".., ~';U:-,',>i"'l .: ~ ~ ~ ",' /;:'"01-;",; <';'-:--;.J.: \rL~ ,,;:::7'i.' ":Susan J. Brown' ':_"-, ,'\ :·f' '~ t,' ;1l)':';N, y~; ,:J ,_,,' ,0" ,':,'" ,;" ..

Special Advisor to Commissioner:'Boy'if" "';;'Caiifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

»> Gordon Schremp 1/26/2009 11:02 AM »>Susan'afldiOiana: '''-: ,.', '!c, "I

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Just wanted to check in and see if we could meet with the two of you some time this afternoon to discuss status of the ABH)868 report, especially the language of the draft recommendations. We would like, if possible, to post a final version of thereport by COB Wednesday. But we could wait until Friday to post, if necessary. We willfihd olit more when we go to thepreliminary ~genCla'revievn;,eetin!Hit 4PM'today.

Regards,

From:To:cc:Date:Subject:Attachments:

Diana SchwyzerGordon Schremp; Jim Page; Mike Smith

'·c.SusarlJ3rown>1/27/20093:48 PMAS 868 reportAS 868 Executive Summary 01-27-09.doc

Gordon, Jim, Mike,~Commissioners Boyd and :Dougias 'are':pleased with'the :A.B'868reportbutwoulcj JikE!:t6 .seetne,attacheq.changes:madetothe Executive'Summaiy. We have a meeting scheduled ilt"8:30 't6fnor'r"ow1:6 discuss these changes if necessary; please letus know if you feel that the meeting won't be needed. 'Thanks,Diana

EXECUTIVE SUMMARY

The issue of reduced volumes of gasoline or diesel when distributed athigh temperature, or"hot fuel," is not new. It is, however, a controversial subject that has created strong'anddivergent.opinions.Some stakeholders believe that if temperature compensation was practicedat retail stationS;';in:6t6riststhat purchase fuel at retail stations would realize significantmonet~beriefi~jnfuewarmer areas of the United States. Other stakeholders representingb~inessinter~tsbelieve that the costs to retail station owners will be significant.

This national debate has continued for several years but without any analysis being performedto determine if automatic temperature compensation (ATC) at retail stations would be a netbenefit to retail motorists. As a result of these activities and thelack ofanalysis, in October 2007the California Legislature passed and the Governor signed Assembly Bill868 (Davis), whichdirected the Energy Commission to conduct a cost-benefit analysis.

This report quantifies the benefits and costs associated with temperature compensation forretail sales of gasoline and diesel fuels in California. The cost-benefit analysis results arenegative (net cost to society) under all options examined, but when quantified in terms of centsper gallon the results are small. Further, it is unlikely that there are any plausible circumstanceswhereby some consumers could realize a small net benefit of ATCat retail in California. Theestimated annual recurring net costs to society, if completely passed through to consumers,could amount to between two hundredths (2/100) and 18 hundredths (18/100) of a cent pergallon.

. The piiriiary'iSsuesassociated with the ATC debate can best be characterized in a series of.q~e~tioris that foli~~ .in a summary of this report: '. '. ' ,

• If temperature compensation has been instituted for. mo~t .wh.olesaktransactions for purposes ofremoving the inequity of temperature variations from jinancialtransaction, why has that practicenot extended all the way to the California retail consumer?

Hawaii is the only state in the nation that has adopted a form of temperature compensation atretail outlets. This occurred when thestate increased the size of their gallon from the u.s.standard of 231 cubic inches to a larger Ha~aiian gallon of about 233 cubic inches. Canada, too,has adopted regulations and standards for ATC at retail. Even though ATC at retail is voluntaryin Canada, more than 90 percent of the retail stations have converted to using the equipment.Most of the time in Canada, the temperature of the fuel is colder than the reference standard of60 degrees Fahrenheit. The ATC dispensers compensate for colder fuel temperatures bydecreasing the average size of the liter dispensed to motorists in that country.

~~~ot;;;peratorh~'eleCtedfOillitanATC.:re'~~~tsinCalifu;hU;:~~\:inclear whelbi.~ilie~vol~t¥i;u~e_o!pe~si;;'eb:Qfu#!~) use:.Q!;a~to!!:\a~Be_r~~

1

• Is the temperature ofgasoline and diesel fuel sold to C(jliforn.ia,c9nsUrrters.warmer, on five/;!lge, .tlJa!J··the 60 degree Fahrenheit reference standard?

California is considered a warmer stat~ reg~dJr1gjue~ tE!~p'~.!'~W!e.'atretail sta~9m!:;,~.§I§~g,onthe results of a recent survey of retailcs@'I:!9.ns.,~the:!!\T~r_ag~t~~p~.!I!tt!r~;of;r.~~?I'l~,!d~~"s.gasoline during the base period from April:2007·throughJM!ll"ch,2008~as,<iP()ut71-4E!grees""

Fahrenheit. Diesel fuel was a little warmer with an average temp~ratp.t;~o~·AeiU'ly:73 4!,!gr~E!s

Fahrenheit.

• IfATC was mandated at retail stations in California, howwoul.4 businesses and consumers beaffected?

California retail station owners would ~xpeD.enCE!A~tdi,~OtWJ,~)q?~~fqr 11:l1~,Aif<;:,'r~.t;r:qfj.tr " .:.

equipment and slightly higher inspection:t~§"G.aWQ~IrE!WlmQ!Qqs~~ll.!'~~~I!~!e4~to·rE!~ejye"slightly larger gallons (as measured in cu .. s ~tb.at V insize!.~thcP.an es,m:"temEerature.

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'l _a!i!o~~J~~,~o!~F~!S~~~:~2~..£e£l:_E!g!q~e.s~~;y~~~·l.~ _.~:._additional benefit due to increased price transparency, estimated at approximately:$7?§,000per. ,year,

California businesses would be required to~navenew electt'onlc'componentS'ilistiilled'ii\'1Heir .;,fuel dispensers at a total initial cost of 17etWeeril$103:8'1riiI1ionlana:$:t27:4mnlion;""ol"D~tweenM ',.

$10,704 and $13,136 per retail outlet. Recurring costs for more expensive ATClready'diSpensef§';""maintenance, and higher inspection fees would amount to between $7.4 million and $20,6million per year, The initial ATC retrofifcostS'iii'cOmbiilllnoriWith the recUrriifg'arIDuaJ:n ;f..-;1 i:.J

expenses would average between eight huh&edfus (8iHIO):arid '18'hUridtedths (18/l00)'ofci'i:ent ' ,per gallon, assuming retail station owners pass along an of the retrofit'expenses by r~mg retail! .fuel prices alone over a period of 10 to 1'5'year~.;;f"" . !; .. r ..' .. ,,;::1,

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Unlike the colder fuel temperature dyx{anrlcurdiiili.a.a}A.TC'deviCes 'would iiidJust'for warmer: ;"' 'fuel temperatures by slightly increasing thesfze'of tne' giillori'af,p~ed;t3 eciliformaoonsiiIDers: .(in cubic inches), The adjustment for the motorist woulalDe;appraXiihatewn:;eri:en:tf6f''ev~tY'-;'.15 degree Fahrenheit increase in the temperature of gasoline greater than the reference standardof 60 degrees Fahrenheit. The slightly largeiand·vanaDie~ii~aig~ons'(iricubicinchestw(l1.ild;"~',

2

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not have changed the total amount of fuel consumed in the state as measured in cubic inches,, but would have reduced the actual number of net or adjustE!d gallons purchased,by motorists,

If ATC had been in effect at retail gasoline stations during the study period, the quantity of netgasoline gallons sold would have beenap.proximately'l~.508billionor about 117 million gallonsless compared to status quo (no ATC.at retail outlets)be<;:ause,thefuel was warmer(71.1 degrees Fahrenheit) than the 60 degree Fahrenheit-reference standard.

Under the ATC scenario, the quantity of net dieselfuelgallons sold would have beenapproximately 3.037 billion or about 19 million gallons less compared to the status quo (no ATCat retail) of 3.056 billion because the fuel was also warmer (72.9 degrees Fahrenheit) than the 60degree Fahrenheit reference standard.

,'; The}ep~~seI1~~ye,v.a}~~of the reduced qu~?ty ?! gallons that consumers would not have" purchased:iftA:n= had,been in place at retail 'stations in California during the study period was

calculated at about $437.5 million ($376.4 million fo'r gasb'li.ri~ 'and about $61.1 rniliion for dieselfuel).

• Wouldf~tairstatiJn owners charge the same price after ATC equipment began to dispense slightly,larger sizedgallons. when fuel is warmer than the 60 degree Fahrenheit standard? If so, what wouldbe the impactonthe'expected benefits ofretaii~~tonsts?

If one assumes that the industry of retail station owners and operators will continue to growand remain profitable, the conclusion is that retail station owrie~s will in fact raise their fuelprices to compensate for selling fewer units, all other things being equal. As such, expectedbenefits for retail motorists resulting from a conversion from gross to net gallon retail fueltransactions wiifbe' essentially zero.

• IfATC was mandated, would the overall costs to businesses and governmental agencies to implementand oversee the program outweigh any potential benefits?

The results of the ATC retrofit cost-benefit analysis (CBA) show net costs of between $205million to $530 million over 20 years. If measured in terms of retail gallons of gasoline anddiesel fuels, the CBA net costs would average between five hundredths (5/100) and 14h~<ir~dfhs (14/uiO) ot'a cent per gallon over the same period.

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•


• Ifa new reference temperature was mandated, wouldthe overall costs 'to businesses and governmentalagencies to implement and oversee the program outweigh any potential benefits?

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Establishing a new statewide reference temperature. or different regional refe~~~e"temperatures for the state. would not successfully address temperature compensation at the

If the Legislature chooses to allow voluntaO' ATe. it should consider legi§lationrequiringthe California Division of Measure'mertt St;md~d~ t~"de~~ibp stan'da;ds'~d~~ssh;'g',, .. ,eQ!lipment approval, certification testing. compliance enforcement const'uri~~'i~beifu'~,~d: '"timing provisions for voluntar.y: ATC at retail stations. Until that process has been. ..,. .

'':,.''~, "I --r; ,'~•• ). '~'-.i_· ~7j;: 'f n~"" '. )·-~l' J -:1'-- 1'),,111,.£' I:,!(n .... , ,-completed. it is recommended that the Legislature prohibit the use of ATC on a voluntim'

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basis.

The estimated costs of a new referencetemperamre and'assocrafed-Iarger'giillorl'size'(in'Clibicinches) could amount to between $9.0 million and'$27;9'n'iilli6h'oif'rom>$925;to'$2~879per1retati': ·station. On a per-gallon basis these additional expenses incuri;ed'byretailstatioil oWh'ets:wauldequate to between five hundredths (5/100) and 15 hundredths (15/100) of a cent per gallon foronly one year. After the modifications were completed, therew6tild be 'no additloi\al'rea:iiTingJ ' '.

costs for businesses or consumers. . " '.' ·ifFf(O OJ

•

• The Legislature should consider whether the v~lue ;fili~,public p~rceptio~ '$'ke"~'th,e~¥al:+·,l-a~'·~',j.j ."".~ 'I" .. :l.:,'·u ..r-,.~ ..' .:...:~ •. ~~'-'.} ,':;Jl'J~;h, •.L}""'i.1n.u:r.. ll·.\,;11,i~1:j

Ret eese ts ssciety are S8 lew, less thaR tws teRtfls (2/1Q) sf a seRt peF gallt;l!'l' at H;lsst,!!~ ,'.1'\,.";".1..11)\,1 :1,.t, '< 1'.; .t"

Fees_eRded that the State's LegislaRife e8RSidef tfie "altle of increased fairness, accuracy,and consistency of fuel measurement. in addition to the benefits guantified in the cost- ,,' ,benefit anal;)!:sis. jus~ mandating\ffi.~"··'''''' '_"":',,•..'..,:~ .•"......:~., .tr: 0'. ~~:~,:.~ ..:...q ..., •. ~"" ';?:;'~j~'

• : P ~.~'-""~-~" ~.:~: " ·....,::.;"'t;.-r~f .\;f..-""... ~V"\(~.;'i!f:{':.iJ....~,~~~,:t::'f"~:~:,.:f;~';·l,t{:'f,~ ~:.t.9..'.c-:!JLo'lRiIDdated use of ATC at Califonua·retailstati . " " : '.: ·t··... ,'. .' .:,

;Jf' :;;~~:::;;~·~.:~:·i,*,l"i-,{j,".>~, ;~~;:~,r~;~~:~~~~:;~,:~(:~~~&j~~;~:;• If the Legislature chooses to mandate theuse·o'fATc.al·retail s~tionidWoiop·ti6ns·are;~:;.~~o'.. , ,available:·'(lt:i'equire~the simultaneous ~failatr~if&i~~cti\7itiBit'~rx;TC'li~Vl.~s:,.ttt~llil'f~-tail~'

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·"stati6ns,or' (2).a'Rhase~in approach. in which new and refurbisHed stations are reQ!lired to'

'iili@~;b~t'nbt':actiVaf~?~TC devic~s".~~~~•.a,-~~~¥.~,~r.B;.ri.?~ur~TI'~.;7S?,a,~~~r,~f ~'~;:}~i' ".stations would be required to install ATC .d~vi~.es dUring the fiftR xear...~~ alls~ti~~ "

.l...-:LJ.. ,l~~ ,C,;Ir..!~I.J!:;: .. l.,.lJ,lI..! ..~.:-.J......... t:;1";;.!;.!J'J j • .-.~_ ..,:..;~ .Ul.)-..l .... t ...~., i;J _,

would activate their devices at the end of that year. Such a phase-in approach is ,the least-L"';JJ~'·~II"•.:;; "'Lj .. ' .... t:.(\ .d.)I,.l:No',}' ;'~Jt:::..r'.J ~rl~LJr..1 .'3~.'-tf, 1,:1,;"" l!~J';

cost option for mandator.y: ATe. thouiW it.would still result iri'a net cost to sodeb'. " .. ,.~ ;\ '<I~I":Ii J"J'll~~' • "'~ '" r.;r' ,~:~ "1" :-~·-'1,,>.J f. 1 •.

•

"'f"','~'-_. , •.." __ ·1 ,;.

"',


-

. " '::-=""::-'"",--,..,----,-,....",-..,,--=-=--..,..=-..,..--,------'

+~:;);~rl;:;:!~~;;~·~~:~~:?~~~··:.~;";~;t.·:,',~:~'" '..',,' ,.. : Formatted: Indent: Left: 0", Bulleted + Level:

'-. 1 + Aligned at: 0.25" + Indent at: 0.5"The value of increased price transparenc;y associated with ATe as calculated in this report,should be refined through further research on the fuel temperature variation betweenadjacent retail stations.

The value of the perceived fairness, accurac;y, and consistenc;y benefits of ATe toconsumers, which was not included in this analysis, should be estimated through focusgroups and survey methods that assess consumers' willingness to pay for such benefits.

retail level and is not recommended. The OptiOfi of a fie'", refereflce temperature flOt bepursued as a potefltia:l reIfled)' to address temperature eompeflSatiofl at the retaille'lel.

•

Research in the following areas is recommended to supplement the cost-benefit analysispresented in this report.

•

"'... "

5

From:To:Date: ,.'Subject:

Susan

Mike SmithSusan 'Brown, ~Diana_Schwyzer, Gordon Schremp, Jim Page1i27/20098:28JAMHe: AB 868 Status-

I am not going to be in today so you will need to meet with Jim and Gordon ASAP. Also, just to be clear,we delivered the report to you on January 15. Our sheduled release date was to be today - 10 workingdays in advance of the business meeting

Mike.-----Original Message----From: Susan BrownTo: Diana'Schwyzer <[email protected]>To: Gordon Schremp <[email protected]>To: Jim Page <[email protected]>To: Mike Smith <[email protected]>

Ser:lt:112712009 2:15:26 AM '.Subject:Re: AB 868 Statlis .

Mike--we are still not in agreement on the recommendations presented in the Executive Summary'on theCommittee Draft. Diana and I need a meeting with Gordon and Jim ASAP ifwe are'to,meet your. Friday '.release date. Believe it or now---there are plenty of other pressing matters that are.demanding ourattention.

We'll do our best to wrap this up in the next couple of days.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-551'2E-mail: [email protected]. (916) 654-4741Fax (916)653-1279

»> Mike Smith 1/26/20092:00 PM >>>Why the need to wait until Monday to post?-----Original Message-----From: Gordon SchrempTo: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Susan Brown < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >

Sent: 112612009 12:55:23 PMSubject: Re: AB 868 Status

Diana:

The revised schedule, conveyed to Assemblyman Davis, is that the report will be delivered to theLegislature'on February 1,2; 2009 (assuming adoption atthe February 11 Business Meeting.withno majorrevisions). We should be able to meet that commitment if we keep the item on the Feb 11 agenda.'

Susan is correct in stating that all'of1the main stakeholders have,been.c1oseIYfollowing,thi~f.process

through all of the previous workshops. Further, the current revisions to the' document do'not really change;' .any of the primary findings, just clarifications of the conclusions. So mostof'the stakeholders will probably.focus on the wording of the primary recommendations, rather than have to plow through the entiredocument. Hope this is helpful.

Thanks;,

Gordon

»> Diana Schwyzer 1/26/200912:24 PM »> .F",'"

Gordon,Related question: can you remind me when we promised todelivert~e:;r:epQrtto,ttile legislatur:er?lstheFeb 11 business meeting our last chance to meet the (extended;) deadlin~~,'Diana ,.~' ...., ':J I .' , :\/.,.,

. '

" .»> Susan Brown 1/26/2009 12:20 PM »>Yes--from my perspective, there has been adequate outside exposure in public Workshops (both staff led, 'and Committee led) and input from an adVisory committee formed by Staff under .tbe~legislatiori.~Susalilo,...

Susan ~k.::Browr:l " .' y.': _,:;: /.-:' ,: ' /'

Special'AavisortoGommissior:ler BdyCl~

California .Energy,Gommission " ','1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

... ,_ ,-, - I-.,.' "

, ....} ~. t

»> Susanne Garfield 1/26/200912:18 PM »> :,0. ,~, .,?-,J .;

Susan, ,""'r:', t ,' .• ~;;

Does the Committee feel that there will be adaquate outside review if it doesn't get:posted;urttil~Monday!? j("

Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989---Original Message----From: Gordon SchrempCc: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Nick Janusch < [email protected] >To: Susan Brown < [email protected] >Cc: Claudia Chandler < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >


Susan:

.. -~ .:" ~ .,.' - ,'-

,.......u·,. ,

j; .• '," .. ~

• ,""C,-": /,._" ..1 ,~'.

AOK,:,wewillwait to hear back from yOUigUyS some time on Wednesday. Look forward to the comments.and completing the document.

Thanks,

Gordon

>>> Susan Brown 1/26/2009 12:02 PM »>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk withhim first.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741 .Fax (916) 653-1279

»> Gordon Schremp 1/26/2009 11 :02 AM >>>Susan and Diana:

Just wanted to check in and see if we could meet with the two of you some time this afternoon to discussstatus of the AB 868 report, especially the language of the draft recommendations. We would like, ifpossible, to post a final version of the report by COB Wednesday. But we could wait until Friday to post, ifnecessary. We will find out more when we go to the preliminary Agenda review meeting at 4 PM today.

Regards,

Gordon

.:,


;':'S'~san Brown },'oi~lnaSchWyZer; Gordon Schremp;1/27/20092:15 AMRe: AB 868 StatusSusan Brown.vcf

Jim Page; Mike Smith" 'l.·

Mike--we are still not in agreement on the recommendations presented in the Executive Summary on the Committ~e Draft.Diana and I need a meeting with Gordon and Jim ASAP if we are to meet your Friday release date. Believelitor ,noVV".--there are plenty of other pressing matters that are demanding our attention. . , .,'

- "' ....'.~



»> Mike Smith 1/26/2009 2:00 PM »>Why the need to wait until Monday to post?-----Original Message-----From: Gordon SchrempTo: Diana Schwyzer <[email protected]>Cc: Jim Page <[email protected]>Cc: Susan Brown <[email protected]>Cc: Mike Smith <[email protected]>Cc: Susanne Garfield <[email protected]>


Diana:

, ,j

" :.

'--'t4 , •• , ..

The revised schedule, conveyed to Assemblyman Davis, is that the report will be delivered to the Legislature on February12, 2009 (assuming adoption at the February 11 Business Meeting with no major revisions). We should be able to meet thatcommitment if we keep the item on the Feb 11 agenda.

Susan is correct in stating t,hat all of the main ~keholders ;have been closely following this process through all of theprevious workshops. Further, the current revisions to the document do not really change any of the primary findings, justclarifications of the conclusions. So most of the stakeholders will probably focus on the wording of the primaryrecommendations, rather than have to plow through the entire document. Hope this is helpful.

Thanks,

Gordon

»> Diana Schwyzer 1/26/2009 12:24 PM »>Gordon,Related question: can you remind me when we promised to deliver the report to the legislature? Is the Feb 11busi[lessmeeting our last chance to meet the (extended) deadline?Diana~:: ' ,

»> Susan Brown 1/26/2009 12:20 PM »> c '. , .

Yes---from my perspective, there has been adequate outside exposure in public workshops (bot~ staff le(j and,.cor:nmitt!,!e,.:,led) and input from an advisory committee formed by Staff under the legislation.---Susan .

Susan J. Brown

Special Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA. 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1~79

-' '"':

. r- I,_~. I

,1.,: ,-(i~~ _)

>>> Slisanne Galfield'1/26/200"9 11:18 PM >>>Susan,"~"!:f'-

Does the Committee feel that there will be adaquate outside review if it doesn't get posted until Monday? Are they holdingfirm for Feb 11 biz meeting? Thanks, s 'Susanne GarfieldAssistant Executive DirectorMedia and Communications916-654-4989-----Original Message----From: Gordon SchrempCc: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Nick Janusch < [email protected] >To: Susan Brown < [email protected] >Cc: Claudia Chandler < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >

•••~ , • c", t.' ' i


Susan: . , '.,.·1...,t···

AOK. We will wait to hear back from you guys some time on Wednesday. Look forward to the comments and completingthe document. : ~~_~';',::: ::':;i;:~ ~j': 'i,

<. ,'C" ~":',: t: ,"

Thanks,

Gordon'-', , ,'; ",i' ·';t: . . ','

, '. f ,I .~ t : '"to

»> Susan Brown 1/26/2009 12:02 PM »> I;, -'c': 1, ,_ ",i c:~'·' "'-! " :,.',. '

Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need until Wednesday to getback to YOI!J:I(~,Weiare~v~fy bi.iSyll1ere;Lsincre'!!Jim,'ls~adingiGtiairfaild (Prieet:l!tOitalk'with~himtfirst.~~~Susaii" i r, 1')'0;,:.,·· ',,~l:

;: J: ,~:.!: ;~)f"":~ ,{"'·~-f'· <~ ,.-': t.;", '{T'6 :.:<:nf~d.::. ~I:.~tl' . ;C, ....L:~ . .....- ;~" ~'!,." ~'r~'" u -'. '/ .

Susan J. Brown {';eo'" l~',{ ,,:~, -c." :n~;Vi" :~, '; ',' r'. :- ' "Ct.' '

Special Advisor to Commissioner: Boyer :1CH

California Energy Commission1516 Ninth StreetSacramento, CA. 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916) 653-1279

"';~. ,", ~. lr_, •"'l

. '~"jl '. ,.

»> Gordon Schremp 1/26/2009 11:02 AM »>Susan'aiicfDiana: ,~ .. .'.. '}'~'. I \'t' ,.; t,: •

.;: .. (.,- ,

Just wanted to check in and see if we could meet with the two of you some time this afternoon to discuss status of the AS868 report, especially the language of the draft recommendations. We would like, if possible, to post a final version of thereport by COB Wednesday. But we could wait until Friday to post, if necessary. We will'findo(it mofe·when wecgB to:thepreliminary"A"genoa review meetingafA';PM today:-" ' " " . '.I'" "'~",', , . -, '. ',' ". 'r'

Regards,

Gordon


Mike Smithi:<SusanBrowh, Jim Page, Gordon Schremp, Diana Schwyzer~-Craudiachari'dier

1/27/2009 '8:35 AMRe: AB 868 Status ";,,1":.';

What is the nature of the difficulties with the recommendations?-----Original Message-----From: Susan BrownTo: Mike Smith <[email protected]>

Sent: 1/27/20098:31 :20 AMSubject: Re: AB 868 Status

, .. ~ (

Will do. I'm working this out with Karen's office since we're not yet on the same page. Susan-----Original Message-----From: Mike SmithTo: Diana Schwyzer <[email protected]>To:'G6rcdri,Schremp <[email protected]>To: Jim Page <;Jpage@energy:state:ca:l:Js>J';' : 'To: Susan Brown <[email protected]>

'I , ~,

,Sent: 1/27/2009,8:28:51 AMSubject:, Re:~'AB868 Status

Susan

.,', ";'..:'~

.", ...: ;\:,-'

I am not going to be in today so you will need to meet with Jim and Gordon ASAP. Also, just to be clear,we delivered the report to you on January 15. Our sheduled release date was to be today - 10 workingdays in advance of the business meeting ,

Mike.-----Original Message----From: Susan BrownTo: Diana:SchWyzer <[email protected]>To: Gordon Schremp <[email protected]:cc~r:us>

To: Jim Page <[email protected]>To: Mike Smith <[email protected]>

Sent: ii2?/2009 2:15:26 AMSubjectRe: AB 868cStatus

. " '.. "

Mike--we are still not in agreement on the recommendations presented in the Executive Summary on theCommittee Draft. Diana and I need a meeting with Gordon and Jim ASAP if we are to meet your'Fridayrelease date. Believe it or now---there are plenty of other pressing matters that are demanding our,attention. ,'''''';,'


Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento: CA95814-5512E-mail: [email protected]. (916) 654-4741

;';1 .

Fax (916) 653-1279

»> Mike Smith 1/26/20092:00 PM >>>Why the need to wait until Monday to post?--Original Message----From: Gordon SchrempTo: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Susan Brown < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >

Sent: 1/26/200912:55:23 PMSubject: Re: AS 868 Status

Diana:

The revised schedule, conveyed to Assemblyman Davis,jsJh~j::lh_e':'lElRoJi!Will~~tte,idEl!iv.er.e(H()'ithe,. i

Legislature on February 12, 2009 (assuming adoption at tbeJ1~bJL!~.liY,r1~1'tI~t~~iD~s.stMeeJiflg W.i!tr,nQ)rnajorrevisions). We should be able to meet that commitment if we keep~tnetltE~JT1.JQn.JPe1Ge,t.?I~:1·C!gen9Ci.,

" ;::¥ '~r-"':"~C7~;.~,1~P~i3Ctd~~{h.v·~·i·jt~~-: '\\;/o':E~ .. ~ '.. ) T

Susan is correct in stating that all of the main stakeholders have been closely following this processthrough all of the previous workshops. Further, the current revisions to the documentlqo':r:Jpl.r.eCilly'cnange, ,any of the primary findings, just clarifications of the conclusions. So most of the stakeh0Iders~will' probably, '.focus on the wording of the primary recommendations, rather than have to plow through the entiredocument. Hope this is helpful.

-,-. ~ ....

Thanks, '"

Gordon

'. :-J'.1

. ;'!'(. -,""j":

>>> Diana Schwyzer 1/26/200912:24 PM »> . ~';}S~-dri,'~':<:';;:')'

Gordon, :;\,.,'1)",/3 i, ,.~",'

Related question: can you remind me when we promised ito deIiYiElr,the3rE!l>p.rlLto,;th~;Iegisl~twe?~,J~ .theFeb 11 business meeting our last chance to meet the:(extende,d)~eadlifl~i?;r,"~)~;i·..,» ':':"'''': ")2, ,:-:,-.. ,Diana ~. ~~-..~~::. :~~=:\r;); \(P"'i0i·U·l''61C1qS~~~~,.··· '~.::'R'-- :~'i..

>>> Susan Brown 1/26/2009 12:20 PM >>>Yes-from my perspective, there has been adequate outside exposure in public worls~JJPPS":(P9!1:u>t~ff led.·and Committee led) and input from an advisory committee formed by Staff under theJegis!C!tiQ!il.-~SuS!3.n:

Susan d",Brown ,.,:.,. 'I., .''t ' ., 'j ., .... ""'",,>'

Specj~L'Aqvj;Q~ tQ'~C;rD;ni'~§i'9ner a~yd)' .. ,California!e;ntlrgy:eornmissiQr:lI~t., . "."1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916)654-4741Fax (916) 653-1279

- . "

,"1

": 1\

»> Susanne Garfield 1/26/2009 12:18 PM >>> j' "'H' ~

Susan, ",[<; .,':

Does the Committee feel that there will be adaquate outside review if it doesn't get posteguntil Menday?,Are they holding firm for Feb 11 biz meeting? Thanks, sSusanne Garfield

Assistant Executive DirectorMedia and Communications916-654-4989----Original Message---From: Gordon SchrempCc: Diana Schwyzer < [email protected] >Cc: Jim Page < [email protected] >Cc: Nick Janusch < [email protected] >To: Susan Brown < [email protected] >Cc: Claudia Chandler < [email protected] >Cc: Mike Smith < [email protected] >Cc: Susanne Garfield < [email protected] >


Susan:


Thanks,

Gordon

»> Susan Brown 1/26/200912:02 PM >>>Yes--we will have comments---I have been coordinating with Karen Douglas' Office but will need untilWednesday to get back to you. We are very busy here, since Jim is acting Chair, and I need to talk withhim first.---Susan

Susan J. BrownSpecial Advisor to Commissioner BoydCalifornia Energy Commission1516 Ninth StreetSacramento, CA 95814-5512E-mail: [email protected]. (916) 654-4741Fax (916)653-1279


Just wanted to check in and see if we could meet with the two of you some time this afternoon to discussstatus of the AB 868 report, especially the language of the draft recommendations. We would like, ifpossible, to post a final version of the report by COB Wednesday. But we could wait until Friday to post, ifnecessary. We will find out more when we go to the preliminary Agenda review meeting at 4 PM today.

Regards,

Gordon