Inslee’s oil transparency bill stalls in Legislature
(Washington State Standard) Gov. Jay Inslee’s drive to require oil companies to reveal more about their gasoline prices and profits ended Monday when a bill to impose new transparency rules on the industry lapsed in a Senate budget committee.
The legislation, a priority request of the governor in his final year, died in the Ways and Means Committee amid concerns over its $15 million cost and the state’s ability to shield confidential data collected from firms from theft by cyber criminals.
“The bill as drafted gets us in the right direction but also the right direction is very expensive,” said Sen. Joe Nguyen, D-White Center, the prime sponsor of Senate Bill 5062, who sought to steer it through a gauntlet of opposition from the industry.
“Obviously I care about the bill. The governor cares about the bill,” he said. “The policy itself is good. At the end of the day, there were valid concerns we would need to address in the bill. To do it right, that does take an amount of resources that we don’t necessarily have in this cycle.”
Inslee, Nguyen and a cadre of Democratic lawmakers revved up their calls for imposing new accountability requirements on the oil industry last summer when gas prices hovered at the $5 a gallon mark. They blamed surging prices on companies pursuing profits.
Critics of Washington’s Climate Commitment Act countered that the law’s cap-and-trade program – which requires oil firms to buy allowances from the state for the pollution they emit – was to blame for high gas prices, with companies passing on their expenses.
When Inslee rolled out his climate agenda in December, this policy was one of its pillars.
“They have been whipsawing us with these ridiculous gas prices,” Inslee said then. “We are going to pass a transparency law so we are no longer victimized by the big oil companies.”
The legislation sought “to unpack the black box of how oil companies set their prices,” said Becky Kelley, senior policy advisor on climate to the governor, at the outset of session.
‘A heavy lift for a short session‘
Modeled on an approach in California, the bill sought to mandate oil companies to report data on pricing, profit, and transactions to the Washington Utilities and Transportation Commission. It also would empower a new division in the commission to oversee oil industry pricing, and investigate allegations of market manipulation and price-gouging. Potential violations would be referred to the state Attorney General’s Office.
It also directed the commission to post on its website a comparison of retail gasoline prices and associated cost components in Washington and other jurisdictions. And it laid out cybersecurity standards and requirements applying to all state agencies that would have authorized access to information being collected.
All of those provisions came with a price tag.
An analysis of the bill’s projected costs found the Utilities and Transportation Commission would require $7.2 million to set up and staff the new division. Another $2.8 million would be needed by the state’s consolidated technology services agency to protect corporate data and other sensitive information.
On Monday, a spokeswoman for Inslee said he knew “a proposal like this would be a heavy lift for a short session, especially with the expense of setting up new state infrastructure.”
“We’ll continue watching California’s efforts and figuring out an approach that could work here,” Jaime Smith, Inslee’s executive director of communication, wrote in an email. “As we make the transition to clean fuels, transparency into oil pricing will only become more important for protecting consumers.”
In opposing the bill, representatives of the Western States Petroleum Association voiced cybersecurity concerns. They also questioned the value of the $15 million undertaking when the state Attorney General’s Office can already collect much of the information sought.
Greg Hanon, a lobbyist for the association, suggested to the Ways and Means Committee in a hearing Saturday that legislators update the report released in April 2008 by the attorney general that was produced following a yearlong investigation of gas prices.
On Monday, Jessica Spiegel, the association’s senior director for the Northwest region, said until the session ends, “no proposal is truly dead.”
“However, there are legitimate concerns about the structure, scope and costs of the new state agency SB 6052 would have created,” she said. “Once we move beyond this issue, the focus can be on the important work of reforming Washington’s cap-and-trade program.”
Environmentalists made the bill a top priority this session and plan to keep pursuing the concept.
“It’s a complicated bill. The issue of cybersecurity is one that emerged late,” said Clifford Traisman, lobbyist for Washington Conservation Action. “And the fiscal note was through the roof and I think these factors contributed to the challenges that the bill faced. We still have to design a mechanism to have transparency to protect the consumers.”
Meanwhile, two other pillars of Inslee’s climate agenda are still in play.
One is a bill preparing for the potential merging of Washington’s carbon market with California and Quebec. Another calls for using a slice of the state cap-and-trade revenue to provide low- and moderate-income families a one-time $200 credit for their home electricity bills.
The Legislature’s 60-day session ends March 7.