What to know about California's controversial new law aimed at preventing gas price spikes

California Gov. Gavin Newsom (D) on Monday signed into law a controversial slate of plans to tighten fuel refinery storage rules in an effort to prevent future fuel shortages and price spikes at the pump.

The ABx2-1 bill, approved during a special legislative session by the California Assembly on Monday morning and by the state Senate on Friday, will allow state regulators to oversee the amounts of fuel that oil refiners keep in their inventories. The maintenance of these stocks will serve to avert deficits that end up raising gasoline prices, according to the governor's office. 

“What I’m so proud of is that we stood up, we didn’t step back. Everybody here had the courage of their convictions, and they stood tall,” Newsom said at a press conference after signing the bill into law. “Big oil does not have your back — period. Full stop.”

Although ABx2-1 ultimately earned the Legislature's favor to become state law, its advancement was neither unanimous nor without pushback — from oil companies, labor unions, Republican lawmakers and even some state Democrats.

Here's what you should know about the legislation.

What will the bill do?

When the bill takes effect in 90 days, a state regulatory agency, the California Energy Commission, will have the authority to set constraints on storage levels for each refiner, each fuel and each blending component, per the bill. The agency will also be able to adjust inventory minimums, as well as establish conditions under which refiners can draw down or rebuild reserves.

The legislation will also allow the regulator to ensure that refiners have resupply plans in place ahead of maintenance outages and to set criteria that must be met before such events occur. 

"This bill will protect Californians from surging gas prices by requiring refineries to plan for shutdowns and supply chain disruptions," ABx2-1 co-author and Assembly Majority Leader Cecilia Aguiar-Curry (D) said prior to Monday's final concurrence vote on the Assembly floor.

Why is it controversial?

The final concurrence on the legislation on the Assembly floor, required after the state Senate amended the initial text, concluded in a vote of 41 ayes and 16 noes.  

The Senate tally on Friday was 23-9, following a 44-18 Assembly floor vote on the initial version earlier in the month. Certain Democrats sided with Republicans in opposition, while many legislators chose to abstain from voting entirely.

Debate has mounted over both the terms of the bill itself and the need for the rushed gathering of a special legislative session, just as the regular session was ending, in order to pass it.

Per California's constitution, the governor can call for a special session — although doing so doesn't guarantee that the chambers will convene, according to CalMatters.

Measures approved and signed into law during such a session take effect after 90 days. As a basis of comparison, if lawmakers had postponed this bill until the next regular session, the earliest it could have gone into force would have been Jan. 1, 2026.

Newsom called for this session on Aug. 31, with his office explaining that "price spikes on consumers are profit spikes for oil companies, and they're overwhelmingly caused by refiners not backfilling supplies when they go down for maintenance."

The day before Newsom made the official proclamation, Assembly Speaker Robert Rivas (D) signaled his chamber's readiness to take on the legislation outside of the regular session.

"The Assembly has been ready to stop skyrocketing prices at the gas pump and deliver significant relief to Californians to lower their monthly energy bills," Rivas said in a statement at the time.

"We’re on the same page with Governor Newsom about the absolute urgency of getting this done," he continued. "If the Governor calls a special session, we’re going to do the work and deliver results."

Rivas stressed, however, that he was unwilling to "push through bills that haven't been sufficiently vetted with public hearings," adding that "doing so could lead to unintended consequences on Californians’ pocketbooks.”

Unlike the Assembly, the state Senate was not immediately on board. Just after Newsom called for the session, state Senate President Pro Tempore Mike McGuire (D) declared that his chamber would not hold a special session. He said that the Senate worked on a related package "for the better part of a year" and had been ready with sufficient votes to get it "across the finish line this legislative year."

"We won’t be convening a special session this fall, but we look forward to continuing conversations with the Governor and Speaker about this critical issue in the days and weeks to come,” McGuire said at the time.

Ultimately, however, McGuire agreed to convene a special session following the Assembly’s Oct. 1 passage of the initial text — clarifying that the state Senate planned "to work quickly and efficiently" to bring Californians relief at the pump.

The legislation faced opposition from both oil companies and labor unions.

After ABx2-1 received Assembly approval but before it went to the Senate floor, Chevron sent a letter to lawmakers describing the bill as "inaccurate and flawed," as first reported by local television station KRCA.

The letter warned that "economic fundamentals force prices up when demand outstrips supply" and that imposing further constraints on inventory would only result in price increases.

Another letter, sent from multiple labor unions last week, took issue with the fact that the California Energy Commission, an unelected, ratepayer-funded entity, would gain “unprecedented regulatory authority to bureaucratically dictate safety maintenance at in-state refineries.”

The writers warned that "leaving out the workforce with direct knowledge and insight into refinery operations and maintenance" could jeopardize the safety of their members.

"Fuel prices are currently down in California, and there is absolutely no policy reason that this issue could not have been raised in January," they concluded, referring to the start date of the next regular legislative session. 

State Sen. Brian Dahle (R) raised concerns last week that the plans would “create artificial shortages by limiting supply,” describing the legislation as “a scheme to collect money from oil refineries and consumers at the pump.”

Assemblywoman Esmeralda Soria (D) voted against ABx2-1 during the initial Assembly floor hearing due to her unwillingness to "take a risk on new regulations that could result in higher gas prices."

Stressing that she is a daughter of farmworkers and is familiar with the everyday struggles Californians face firsthand, Soria described the bill's measures as "unproven [and] risky," adding that it "could ultimately hurt the communities that can least afford it."

How did lawmakers address criticism of the bill?

The amended version of ABx2-1 passed by the state Senate on Friday, and then approved by the Assembly on Monday, did contain some changes that were more inclusive of workers.

The final text specifies that the Independent Consumer Fuels Advisory Committee — a watchdog for the California Energy Commission — will have a gubernatorial appointee who represents "a labor organization with experience in refinery operations." 

The amended text also maintains the authority of workers to conduct emergency shutdowns and necessary maintenance work for safety reasons, while prioritizing "the health and safety of employees, local communities and the public."

“The amendments taken in the Senate provide more protections for workers and the public,” Aguiar-Curry said prior to the Assembly floor vote. “This bill clearly states that no regulations will move forward unless there is a direct benefit to the California Gas consumers.”

Assemblymember Gregg Hart (D), co-author of the bill, touted the legislation for clarifying existing law in a way “that protects refinery workers' health and safety, including stop work authority for emergency and necessary maintenance shutdowns.”

“The amendments make it clear that any regulations issued under this bill will not modify skilled and trained workforce requirements at refineries,” Hart added.