Column: Newsom learned from oil bill: Working with lawmakers is key to passing legislation

Governor Gavin Newsom did something new – for him. He aggressively engaged behind the scenes and negotiated with lawmakers. And it has paid off.

Personal, hands-on, face-to-face engagement—the kind uncharacteristic of this governor.

As a result, Newsom won a major political and political victory over Big Oil as he will undoubtedly remind Californians and tell all of America about it for years to come.

The governor didn’t get everything he originally asked for. The legislature spurned his original idea. But he wisely withdrew and settled for less.

Actually, what Newsom got was more practical and a lot better than what he first wanted.

“That’s ten times better,” he confirmed Tuesday at a formal signing ceremony in the rotunda of the state capitol.

“We proved we can actually beat Big Oil.”

“There’s a new sheriff in town. … We brought Big Oil to its knees.”

Among the liberal Democrats who run the California government, the oil industry has replaced Big Tobacco as the number one enemy. Tobacco has become so weak politically that there is little point in attacking it.

The California Democratic Party does not accept contributions from oil interests. But moderate Democratic candidates will. An independent committee funded by four oil companies spent more than $8 million on general elections in last year’s election. So the oil lobby still packs a punch in the legislature.

However, polls show that the public is increasingly concerned about climate change and greenhouse gas emissions from petrol cars.

The climate and record-high gas prices over the past year — coupled with the knowledge that at one point Californians were paying $2.60 more a gallon than the national average — offer strong public support in the Capitol for the fight against the oil industry.

But there wasn’t enough support for lawmakers to accept Newsom’s original request. In a typically passionate announcement in September, he called for “greedy big oil” to be punished with a “windfall” profit tax.

The T-word was eventually changed to “penalty” to make it seem more like a fee. A fee would merely require a simple majority of the legislative vote and not a two-thirds majority.

“They rip you off,” Newsom said. “With the legislature, we will pass a price-gouging penalty to hold Big Oil accountable.”

Not so fast. The legislature fought back. Neither she nor the governor had evidence that oil companies were drilling. And they didn’t have the expertise to determine when a win became an unjustified fluke.

“How do you make a profit tax? Nobody in the United States or anywhere in the world has been able to do that,” a senior legislative adviser told me.

But Democrats loyal to the governor wanted to give him some victory.

So Newsom switched gears and offered a better plan: Send it to the California Energy Commission.

Create a new independent investigative division, summon oil refiners to share long-hidden data with the unit, and let the experts determine if exploits and windfall profits are occurring.

The Energy Commission could then set a limit on reasonable profits and penalize refiners that exceed it. The penalty would likely be a fine — or a job-killing tax if you’re a Republican oil industry supporter.

After that, Newsom stopped preaching and ranting. He rolled up his sleeves and worked with skeptical lawmakers to write a completed bill.

This governor has earned a reputation for over-promising and under-delivering – making grandiose statements without acting on them. Throwing proposals into the legislature, but standing back aloof and not helping to get them through. That annoyed the legislature.

As he enters his final tenure, however, Newsom seems to recognize that time is running out if he is to achieve breakthrough success. This year and the next are crucial. Not much is likely to be accomplished in its lame final year, 2026.

“Newsom has taken a stand on this,” said Jamie Court, president of Consumer Watchdog, an activist organization that has campaigned heavily for legislation. “He met with more than a dozen advocacy groups.”

More importantly, he dealt with lawmakers.

“The governor has interfered for the first time on a level I’ve never seen him do,” said a senior legislative adviser, who asked not to be identified.

“He met with individuals, small groups, both factions of the Democrats. It was all his. He said, “This is mine. I want to go through with it.’

“He spent a lot of time. I’ve never seen this governor go all in like that. There were all hands on deck.”

Newsom wanted lawmakers to enact a penalty that would hit refiners from day one. The legislature refused. Now it could take up to a year to punish windfall profits, whatever they are. That was the main compromise. Getting that and that out of the Legislature’s hair.

The governor realized he was better off on the Energy Commission anyway. Finally, he appoints the five members.

The result: party line votes of 52 to 19 in the Assembly and 30 to 8 in the Senate.

“It’s a big step in the right direction,” said Severin Borenstein, UC Berkeley Energy Institute faculty director and gasoline production expert. “Offloading the debate about a penalty – or tax – to an organization that can actually do analysis is a much better way.

“You have to admire the governor’s fulcrum. … He positions himself as someone to take on the oil industry.”

He did so last year, signing legislation banning new oil drilling within 3,200 feet of a home, school or park. But the oil industry spent $20 million to qualify a repeal measure for the 2024 vote. So the fight is not over yet.

The recent anti-oil legislation meets what appears to be Newsom’s most important criteria for passing any policy: it is the first in the nation.

But for the governor in particular, it is a great win to start his second term.

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