California Code, Public Resources Code - PRC § 6815.2

(a) Notwithstanding Section 6815.1, the commission may take any oil, gas, or other hydrocarbons taken in kind by it, pursuant to any lease or agreement, and exchange it, by competitive bidding, for refined products which shall be allocated to state agencies and to other public agencies, if the State Energy Resources Conservation and Development Commission, established pursuant to Division 15 (commencing with Section 25000), after a public hearing, finds, in its judgment, that such retention and allocation is necessary to alleviate fuel shortage conditions or will effect a substantial cost saving to the state.

(b) The commission may make and enter into contracts or agreements for exchange of such oil, gas, and other hydrocarbons taken in kind for finished products required for use by state and other public agencies.  Such contracts or agreements shall be entered into by competitive bids.  The commission may reject all bids, if it determines that they are not in the public interest.

(c) The commission shall charge the state or other public agencies allocated refined products the current market price of these products including all applicable taxes.  This price shall not be less than the value of the oil, gas, or other hydrocarbons which would have been received by the state if not taken in kind.  The revenue shall be subject to the terms and conditions enumerated in Section 6217.  The taxes generated by these sales shall be distributed according to applicable provisions of the Revenue and Taxation Code.

(d) The refined products obtained from such exchange contracts or agreements shall be allocated to state agencies and to other public agencies in accordance with the regulations which shall be adopted, after a public hearing, by the State Energy Resources Conservation and Development Commission.

(e) Notwithstanding Section 6815.1, if the commission determines that it is in the best interests of the state, it may allow another state or public agency to take in kind oil, gas, or other hydrocarbons acquired by the commission.

The commission shall charge the state or other public agencies allocated in kind oil, gas, or other hydrocarbons the current market price of these products, including all applicable taxes.  This price shall not be less than the value of the oil, gas, or other hydrocarbons which would have been received by the state if not taken in kind.  The commission may also charge for any transportation, treatment, or other costs associated with taking the in kind royalty.  The revenue shall be subject to the terms and conditions enumerated in Section 6217.  The taxes generated by these sales shall be distributed according to applicable provisions of the Revenue and Taxation Code.