California Assembly advances Newsom’s ‘price gouging’ bill

California state assemblymembers voted on Monday to advance Gov. Gavin Newsom’s (D) landmark legislation that seeks to penalize oil companies for “price gouging” at the pump.

The SBX1-2 bill, sponsored by state Sen. Nancy Skinner (D), passed 52-19 in the State Assembly after receiving the approval of the State Senate in an “extraordinary session” to fast-track the bill last week.

While media reports indicated that the bill could be receive Newsom’s signature as early as Tuesday, sources familiar with the matter told The Hill that the governor is expected to take action on the bill soon.

“Californians pay far more for gas than they should,” State Assemblymember Jacqui Irwin, who presented the bill, said on the assembly floor on Monday.

“The last spike in prices cost our constituents millions of dollars, while the oil companies were pocketing huge profits,” Irwin continued. “But inexplicably, even when we are not experiencing a spike, we pay higher prices than other states.”

Assuming the bill becomes law, it would allow the State Energy Resources Conservation and Development Commission to set a maximum gross gasoline refining margin — and then establish a penalty for any California-based refineries that surpass that margin.

The Commission would be required, however, to consider a refiner’s request for an exemption.

In addition to setting these limits, the legislation would require that all penalties collected be funneled into a “Price Gouging Penalty Fund” in the State Treasury.

Wind turbines turn on top of a dump next to the ‘BP Refinery Scholven’ in Gelsenkirchen, Germany, Oct. 22, 2022. (AP Photo/Michael Sohn, File)

The bill would also create a Division of Petroleum Market Oversight within the Commission, operating independently and providing guidance to the governor on issues linked to transportation fuel pricing and decarbonization.

Current law already requires California refineries to submit an activity report to the State Energy Resources Conservation and Development Commission within 30 days of the end of each calendar month — and subject to a civil penalty if they fail to do so.

SBX1-2 passed in both the Senate and the State Assembly in “extraordinary sessions” requested by Newsom, an expedited process that has angered the bill’s opponents.

Per California’s Constitution, the governor can request such a special session to address a specific issue by proclamation. Any bill approved by the legislature and signed by the governor after such an extraordinary session takes effect after 90 days, as opposed to the Jan. 1 date that applies to regular sessions.

Opponents of SBX1-2 have slammed the legislation for its rushed advancement, while accusing its authors of failing to include all Californians in the conversation.

During a Senate committee session last week, Zachary Leary, senior director for California policy at the Western States Petroleum Association, described the measure as an “unprecedented and untested experiment in the California fuel market.”

Nonetheless, environmental activists and other proponents of the bill lauded its passage through the assembly on Monday.

“This proposal will make it much harder for the state’s big oil refiners to rip off hardworking California families,” Bill Allayaud, the Environmental Working Group’s director of government affairs in California, said in a statement.

“By requiring these companies to disclose key information about supply chain costs, it will be a lot harder for them to do this again,” Allayaud added.