CFCA 2025 Legal Briefing
Standing Up to Overregulation in California: Advocacy in the Courts
When policies cross the line from effective governance into harmful overregulation, CFCA steps in.
In 2025, our association went to bat for fuel marketers, common carriers, and retailers across the state, engaging in strategic litigation to challenge burdensome mandates, defend common-sense policies, and protect the long-term viability of our industry. These legal efforts are not undertaken lightly; they are targeted, deliberate actions intended to uphold regulatory balance and prevent policies that threaten operational viability.
This commitment was reflected in the following key litigation efforts on behalf of our members.
MARCH 2025
CHALLENGING CALIFORNIA’S HEAVY DIESEL EMISSION STANDARDS
CFCA joined a multi-state coalition of businesses and trade associations in filing a Petition for Review in the U.S. Court of Appeals for the Ninth Circuit challenging the U.S. Environmental Protection Agency’s decision to grant California a waiver for its latest heavy-duty diesel emission standards.
Under the Clean Air Act, California had been permitted to seek federal waivers allowing it to implement vehicle emission standards more stringent than national requirements. Because 17 states and the District of Columbia have incorporated California’s standards into their own plans, these policies carried nationwide implications for fuel supply chains, trucking fleets, and the broader economy.
CFCA joined the litigation due to the significant cost pressures the standards would have imposed on our fuel marketer and common carrier members who transport fuel. Accelerated fleet turnover requirements and increased equipment costs threatened to disrupt supply chains and drive up costs for businesses and consumers alike.
In June 2025, President Trump signed congressional resolutions revoking California’s Clean Air Act waivers, effectively nullifying the heavy diesel emission standards at issue in the case. The resolutions, passed by both chambers of Congress with bipartisan support, represent a decisive federal check on California’s far-reaching vehicle mandates and their nationwide impact.
MAY 2025
COALITION LAWSUIT TO HALT SANTA CRUZ BEVERAGE TAX
CFCA joined a coalition of grocers, retailers, beverage distributors and restaurant owners in a lawsuit in Sacramento County Superior Court to halt an illegal tax on beverages that narrowly succeeded by ballot measure in Santa Cruz in November 2024.
The lawsuit asks the court to declare the tax unenforceable and order the city to refund all money collected from taxpayers.
The measure clearly violates the statewide "Keep Groceries Affordable Act," approved by the state legislature and signed into law in 2018. The law, which polls have shown is supported by more than 70% of Californians, bans cities and towns from enacting local taxes on groceries, including beverages, and ensures working families are not hit with punishing regressive taxes on their everyday groceries.
The Santa Cruz City Council recognized that moving forward with the tax would violate the text of the Keep Groceries Affordable Act and be challenged in court. Despite this, the council moved ahead.
Many Santa Cruz residents and businesses opposed the tax and joined the Coalition to Keep Santa Cruz Affordable, warning that the tax would hurt working families, the local economy and jobs. The tax is especially harmful to lower-income families because it places a larger share of the tax burden on those who can least afford it. Contrary to claims from supporters, several studies have found beverage taxes do not improve public health.
Elizabeth Graham, CEO, California Fuels & Convenience Alliance:
"Convenience stores are often the last line of access to affordable food, fuel, and beverages-especially in underserved communities," said Elizabeth Graham, CEO of California Fuels and Convenience Alliance. "This illegal beverage tax in Santa Cruz not only threatens our members' ability to operate sustainably, it also punishes working families who are already struggling with rising costs. We are proud to join this legal challenge to overturn this harmful tax, which undermines state law and places an unfair burden on both small businesses and consumers."
This litigation remains ongoing, and CFCA remains actively engaged in pursuing a favorable outcome for our members and consumers.
OCTOBER 2025
UPDATE ON CFCA LAWSUIT AGAINST THE CALIFORNIA ENERGY COMMISSION OVER SBX1-2 EMERGENCY RULEMAKING
As you will recall, Governor Newsom created a new agency called the Department of Petroleum Marketing Oversight (DPMO) in an eight-day special session in the fall of 2023, with accusations of the oil industry “price gouging”. In February 2024, the new DPMO started enacted “emergency” regulations over three-day holiday weekends to impose enormous daily reporting requirements on our members.
CFCA filed a lawsuit to challenge this roughshod process that avoided public input, the procedural requirements of important safeguard laws such as the APA and CEQA, among other problems.
As of February 2026, CFCA has been in settlement negotiations to lessen the burden of reporting on our members, particularly removing the potential for severe fines and penalties for honest mistakes or foot faults in the daily reports, as well as continuing the pressure to reign in the overreach of this new DPMO agency.
Current Status
As of February 2026, CFCA approved the terms of the draft settlement and transmitted the draft to the CEC who is currently reviewing it. There may be minor revisions or clarifications for the parties to address before both parties can execute the agreement and settle the litigation.
Settlement Negotiations
CFCA’s offer focuses on removing the risk of enforcement penalties from errors in daily submissions and the reduction of reporting burden via consolidation of reporting fields. The draft settlement agreement between CFCA and the CEC includes the following key provisions:
- CFCA members will be able to make good-faith corrections on its daily reports, and be able to provide notice and the opportunity to cure prior to imposing penalties.
- CFCA members who miss data in time for the daily morning report will be able to submit corrected in the next day’s report.
- CEC will provide guidance on certain fields in the Form M782B issue.
- CFCA members who wish to use their own data collection tools, systems or reports to streamline and make reporting more efficient rather than enter the data in the CEC online system may enter into a data submission pilot program regarding alternative methods of reporting.
Regulatory Revisions
In conjunction with our advocacy, the CEC has made two changes to its regulations that reduce the burden on the industry.
- CEC has announced that it is not seeking a margin cap for at least five years.
- CEC framed this as “reprioritizing its work away from developing a cap on gross gasoline refining margins . . . to promote continued investment in refinery assets and encourage safe and reliable refinery operations.”
- CEC implicitly recognized that a refining margin cap would discourage industry participation in the California fuel market.
- While CEC could return to the misguided concept of a margin cap, it has decided to avoid that catastrophic change for now.
- CEC clarified that non-California transactions are excluded from the fuel regulations.
- CEC’s PIIRA reporting instructions state: “Any participant that trades transportation fuel to be later resold to retail and is to be delivered on the spot within the California fuels marketis subject to this reporting requirement.”
- This provides crucial clarity regarding what transactions must be reported, and limits impacts on transactions outside of California.