California eyes penalties for oil companies’ big profits

Dec 4, 2022, 7:03 AM | Updated: Dec 5, 2022, 5:57 pm
Assemblymember Dr. Jazmeet Bains, center, of District 35, and other assembly members take the oath ...

Assemblymember Dr. Jazmeet Bains, center, of District 35, and other assembly members take the oath during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)

(AP Photo/José Luis Villegas, Pool)

              Assemblymember Dr. Jazmeet Bains, center, of District 35, and other assembly members take the oath during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblyman Christopher Ward, is accompanied by his partner Thom Harpole, and children Betty and Billy as he is sworn in as Speaker Pro Tempore during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblyman Anthony Rendon holds his daughter Vienna as he is accompanied by his wife Annie Lam and father Tom Rendon while he is sworn in as Speaker of the Assembly by California Supreme Court Justice Patricia Guerrero during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas Pool)
            
              Assemblyman Anthony Rendon walks with his daughter Vienna before being sworn in as Speaker of the Assembly during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Sen. Monique Limón, D-Santa Barbara, pledges allegiance in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              New Democratic state Sen. Steve Padilla walks through the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              New Democratic State Sen. Steve Padilla is sworn in the Senate chambers during the opening of the legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol Monday to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Sen. Shannon Grove, R-Bakersfield, takes a photo with her granddaughter in the Senate chambers during the opening of the legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol Monday to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Senate President Pro Tem Toni Atkins speaks in the Senate chambers during the opening of the California Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Newly-elected legislators stand to be sworn in in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Diane Dixon, of Newport Beach, representing the 72nd District gives a thumbs-up during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Pilar Schiavo, left, of District 40, embraces Malia Cohen, California Controller during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Gail Pellerin, of District 28, celebrates after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Stephanie Nguyen, center, of District 10 celebrates Assemblyman Kevin McCarty of District 7 after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              California Gov. Gavin Newsom takes his seat on the dais in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. At right is Senate President Pro Tem Toni Atkins. California lawmakers briefly returned to swear in new members and elect leaders for the 2023 legislative session. But this year, Newsom also has called lawmakers into a special session for the purpose of approving a penalty for oil companies when their profits pass a certain threshold and then returning the money to drivers. (Martin do Nascimento/CalMatters via AP, Pool)
            
              California Gov. Gavin Newsom walks through the assembly chamber with California Controller Malia Cohen during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Dr. Jazmeet Bains, center, of District 35, and other assembly members take the oath during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblyman Christopher Ward, is accompanied by his partner Thom Harpole, and children Betty and Billy as he is sworn in as Speaker Pro Tempore during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblyman Anthony Rendon holds his daughter Vienna as he is accompanied by his wife Annie Lam and father Tom Rendon while he is sworn in as Speaker of the Assembly by California Supreme Court Justice Patricia Guerrero during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas Pool)
            
              Assemblyman Anthony Rendon walks with his daughter Vienna before being sworn in as Speaker of the Assembly during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Sen. Monique Limón, D-Santa Barbara, pledges allegiance in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              New Democratic state Sen. Steve Padilla walks through the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              New Democratic State Sen. Steve Padilla is sworn in the Senate chambers during the opening of the legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol Monday to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Sen. Shannon Grove, R-Bakersfield, takes a photo with her granddaughter in the Senate chambers during the opening of the legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol Monday to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Senate President Pro Tem Toni Atkins speaks in the Senate chambers during the opening of the California Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Newly-elected legislators stand to be sworn in in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Diane Dixon, of Newport Beach, representing the 72nd District gives a thumbs-up during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Pilar Schiavo, left, of District 40, embraces Malia Cohen, California Controller during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Gail Pellerin, of District 28, celebrates after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Stephanie Nguyen, center, of District 10 celebrates Assemblyman Kevin McCarty of District 7 after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              California Gov. Gavin Newsom takes his seat on the dais in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. At right is Senate President Pro Tem Toni Atkins. California lawmakers briefly returned to swear in new members and elect leaders for the 2023 legislative session. But this year, Newsom also has called lawmakers into a special session for the purpose of approving a penalty for oil companies when their profits pass a certain threshold and then returning the money to drivers. (Martin do Nascimento/CalMatters via AP, Pool)
            
              California Gov. Gavin Newsom walks through the assembly chamber with California Controller Malia Cohen during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Dr. Jazmeet Bains, center, of District 35, and other assembly members take the oath during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblyman Christopher Ward, is accompanied by his partner Thom Harpole, and children Betty and Billy as he is sworn in as Speaker Pro Tempore during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblyman Anthony Rendon holds his daughter Vienna as he is accompanied by his wife Annie Lam and father Tom Rendon while he is sworn in as Speaker of the Assembly by California Supreme Court Justice Patricia Guerrero during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas Pool)
            
              Assemblyman Anthony Rendon walks with his daughter Vienna before being sworn in as Speaker of the Assembly during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Sen. Monique Limón, D-Santa Barbara, pledges allegiance in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              New Democratic state Sen. Steve Padilla walks through the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              New Democratic State Sen. Steve Padilla is sworn in the Senate chambers during the opening of the legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol Monday to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Sen. Shannon Grove, R-Bakersfield, takes a photo with her granddaughter in the Senate chambers during the opening of the legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol Monday to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Senate President Pro Tem Toni Atkins speaks in the Senate chambers during the opening of the California Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Newly-elected legislators stand to be sworn in in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. California lawmakers briefly returned to the State Capitol to swear in new members and elect leaders for the 2023 legislative session. (Martin do Nascimento/CalMatters via AP, Pool)
            
              Diane Dixon, of Newport Beach, representing the 72nd District gives a thumbs-up during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Pilar Schiavo, left, of District 40, embraces Malia Cohen, California Controller during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Gail Pellerin, of District 28, celebrates after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              Assemblymember Stephanie Nguyen, center, of District 10 celebrates Assemblyman Kevin McCarty of District 7 after being sworn in during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              California Gov. Gavin Newsom takes his seat on the dais in the Senate chambers during the opening of the Legislature in Sacramento, Calif., on Monday Dec. 5, 2022. At right is Senate President Pro Tem Toni Atkins. California lawmakers briefly returned to swear in new members and elect leaders for the 2023 legislative session. But this year, Newsom also has called lawmakers into a special session for the purpose of approving a penalty for oil companies when their profits pass a certain threshold and then returning the money to drivers. (Martin do Nascimento/CalMatters via AP, Pool)
            
              California Gov. Gavin Newsom walks through the assembly chamber with California Controller Malia Cohen during the opening session of the California Legislature in Sacramento, Calif., Monday, Dec. 5, 2022. The legislature returned to work on Monday to swear in new members and elect leaders for the upcoming session. (AP Photo/José Luis Villegas, Pool)
            
              California Gov. Gavin Newsom said on Friday, Oct. 7, 2022, that he will call a special session of the state Legislature on Dec. 5, 2022, to pass a new tax on oil companies in response to high gas prices, while talking to reporters in Sacramento, Calif. (AP Photo/Rich Pedroncelli)
            
              Gas prices are advertised at over eight dollars a gallon at a gas station Thursday, Oct. 6, 2022, in Los Angeles. California lawmakers are preparing to return to work for a special session on gas prices. State lawmakers are scheduled to convene on Monday, Dec. 5, 2022, to swear-in new members and elect leaders for the 2023 legislative session. (AP Photo/Marcio Jose Sanchez)

SACRAMENTO, Calif. (AP) — California could become the first state to fine big oil companies for making too much money, a reaction to the industry’s supersized profits following a summer of record-high gas prices in the nation’s most populous state.

Gov. Gavin Newsom and his Democratic allies in the state Legislature introduced the proposal Monday as lawmakers returned to the state Capitol in Sacramento for the start of a special legislative session focused solely on the oil industry.

But the proposal was missing key details, including how much profit is too much for oil companies and what fine they would have to pay for exceeding it. Newsom’s office said those details would be sorted out later after negotiations with lawmakers. Any money from the fines would be returned to the public.

Gas prices are always higher in California because of taxes, fees and environmental regulations that other states don’t have. But in October, the average price of a gallon of gasoline in California was more than $2.60 higher than the national average — the biggest gap ever.

Newsom said there was no good way to justify that.

Speaking to reporters, Newsom compared the actions of oil companies to price gougers charging more for hand sanitizer during the pandemic. He said the goal of the penalty is to prevent gas prices from shooting up similarly in the future, calling it “a proactive effort in order to change behavior.”

“We’re burning up. We’re choking up. We’re heating up because of these folks,” Newsom said, referring to the oil industry and its impact on the environment. “And people are barely able to pay their bills because of these folks.”

It could be a popular proposal with voters, who have been paying more than $6 per gallon of gasoline on average for much of the year. But that doesn’t mean it will be easy to get it through the state Legislature, where the oil industry is one of the top spenders on both lobbyists and campaign contributions.

Crucially, the proposal classifies the fine as a “civil penalty” and not a tax. That means only a simple majority would be needed for passage, instead of the two-thirds majority that is required to raise taxes.

“Whatever Gov. Newsom wants to call it, this is a tax and it’s going to have the same impact that all taxes do on consumers, and that is to raises costs, not bring them down,” said Kevin Slagle, spokesperson for the Western States Petroleum Association. “We think the governor should be honest about what this is and let the legislators vote on a tax and sell it to the California public as a tax and see how people feel about it.”

The California Legislature is in session most of the year, typically considering hundreds of bills. The governor can call lawmakers into a special session limited to discussing issues he specifies. Newsom said he called the special session on gas prices because it would help lawmakers focus on the issue.

But legislative leaders don’t appear in any hurry to pass the bill. Lawmakers convened in a special session for mere minutes Monday, long enough to adopt rules and appoint leaders. They won’t reconvene again until January.

Many lawmakers said they had no idea what Newsom was proposing. A few senators joined reporters at Newsom’s news conference outside Senate chambers just to hear what he had to say.

“I don’t think anybody objects to (oil companies) having a business model that makes a profit, but the extent to which they’re taking advantage of people really does appear to be unfair,” said state Sen. Ben Allen, a Democrat from Santa Monica, expressing general support for Newsom’s concept.

Republicans, who don’t have enough votes to influence legislation, denounced the proposal.

“The last thing that we need to do is increase the cost on Californians who are already paying far too much,” Assembly Republican Leader James Gallagher said.

Adding to the uncertainty is an unusually high number of newly elected lawmakers about to take seats for the first time. Roughly a quarter of the Legislature’s 120 members are new, with two close races still unresolved.

Among the new state senators is Angelique Ashby, a Democrat who narrowly won election after an intense campaign. The oil industry spent hundreds of thousands of dollars on radio and TV ads supporting Ashby’s campaign, a trend noticed by critics who tried to use it against her.

Ashby said she hasn’t been approached by lobbyists or others from the oil industry asking how she would vote on a potential penalty. She noted the oil industry spent the money as “independent expenditures,” meaning she had no control over that spending during the campaign.

“Campaign slogans and strategies of my opponent are a thing of the past,” said Ashby, whose district includes Sacramento. “I’m fixated on the people of Senate District 8 and I will make my decision based on what is in their best interest.”

___

Sophie Austin is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Austin on Twitter: @sophieadanna

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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California eyes penalties for oil companies’ big profits