Newsom's 'Big Oil Accountability' Bill Would Cost $7 Million

By Ria Roebuck Joseph | Center Square contributor, The Center Square California

March 28, 2023

(The Center Square) - "Gov. Newsom's proposal to 'hold Big Oil accountable for price gouging' will cost about $7 million a year," according to California Department of Finance testimony at a Senate Appropriations Committee hearing. Petroleum industry groups complain that the money would mostly come from fees on them.

The SBX1-2 Energy: Transportation fuels: Supply and Pricing: Maximum Gross Gasoline refining margin bill was authored by Senator Nancy Skinner to amend several sections of the Public Resources Code, relating to energy.

The senate bill would establish a new entity within the California Energy Commission. The Division of Petroleum Market Oversight will, among other duties, “provide guidance and recommendations to the Governor and the commission on any issues related to transportation fuels pricing and transportation decarbonization in California.”

The bill would also establish the Independent Consumer Fuels Advisory Committee, consisting of specified members, within the commission, and would require the committee to advise the commission and the division.

In addition to the two new entities, Senator Skinner also mentioned that another cost implication of the bill would come from “An ask to the state auditor’s office and a number of other things that would of course have costs some of them into the future, some of them currently but as I mentioned we’re working with the administration to try to use existing resources to bring those costs down.”

In her preliminary fiscal overview of the bill to the Appropriations Committee, Michele Perrault, legislative director at the California Department of Finance outlined anticipated costs for the bill’s execution.

For Fiscal Year 2023-2024 costs are expected to be around $7 million. Most of the cost assumptions she explained are associated “with staffing the energy commission to fulfill its obligations under the proposed statute and the developing staff outlined in the proposal.”

Perrault stated "the Independent division would operate at $2.5 million ongoing, to support 10 staff members. The energy commission would require $4.4 million consisting of $2.4 million for 14 staff and $1.6 million in contract dollars."

The commission is largely supported by special funds, and those are being evaluated to support some of the functions, as well as the commission “is looking at the ability to redirect some of their resources and staff to meet some of the new requirements laid out in the proposal.”

“Additional costs that are noted for 23-24 could consist of contracting costs of up to $1 million for the Air Resources Board. That’s to prepare the transportation fuels transition plan that’s called out for to be done by Dec. 31, 2024. And then, potentially ongoing costs of between $50k-250k annually for the California Department of Tax and Fee Administration to develop some processes to request required data that's also laid out in the proposed statute,” Perrault explained. “As the bill moves through the process there could be some amendments taken as it relates to the fiscal impact and so finance will continue to monitor the bill and update any financial impact as we see it move through."

Zack Leary on behalf of the Western States Petroleum Association stated “We have concerns about the costs related with this proposal the nearly $7 million ongoing likely from special funds which come from fees levied on the industry and then the $1 million to the cost of implementation fund at Air Resources Board also fees levied on the industry. Unfortunately, we have to remain opposed to this unprecedented and untested experiment in our market.”

“There is one point I would like to make and that is that we, meaning my office and the administration, are working to bring down the cost that is associated with the work product this bill has included in the bill to the Air Resources Board. We are also working to identify other cost savings that may be achieved,” Senator Skinner said.

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