BILL NUMBER: SB 1131	CHAPTERED  10/10/99

	CHAPTER   956
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	PASSED THE SENATE   SEPTEMBER 10, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 9, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN SENATE   JUNE 9, 1999

INTRODUCED BY   Senator Burton
   (Principal coauthors:  Senators Bowen and Karnette)
   (Principal coauthors:  Assembly Members Machado and Villaraigosa)
   (Coauthors:  Assembly Members Shelley and Wiggins)

                        FEBRUARY 26, 1999

   An act relating to motor vehicle fuel industry practices, making
an appropriation therefor, and declaring the urgency thereof, to take
effect immediately.

      (Approved by Governor October 10, 1999.  Filed with
Secretary of State October 10, 1999.)

   I am signing Senate Bill No. 1131, encouraging the Department of
Justice to investigate the practices of the motor vehicle fuel
industry related to the production, distribution and pricing of
gasoline and diesel fuel.
   However, I am deleting the $1 million General Fund appropriation
from the bill and instead ask the Attorney General to implement the
provisions of SB 1131 within existing resources.  The 1999 Budget Act
contains $3.2 million for the Department of Justice's Antitrust
workload, which includes a $667,000 General Fund augmentation to
address such expected workload increases.
                                                 GRAY DAVIS, Governor


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1131, Burton.  Motor vehicle fuel industry practices:  prices:
mergers:  investigation.
   Existing law provides that the Attorney General is the head of the
Department of Justice, and has charge of all legal matters in which
the state is interested, including antitrust matters, except as
specifically provided.
   This bill would appropriate $1,000,000 from the General Fund to
the Department of Justice for the purposes of investigating industry
practices relevant to the production, distribution, and pricing of
gasoline and diesel fuel, and reviewing pending mergers between major
oil companies, and would make legislative findings and declarations
in this regard.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature hereby finds and declares the
following:
   (a) The conduct of modern society relies on gasoline and
diesel-powered motor vehicles.
   (b) Geographic and environmental considerations make California a
unique and isolated market for petroleum products.
   (c) Because gasoline demand is inelastic and gasoline supplies are
tight, even a small decrease in supply can cause significant price
increases.
   (d) Motor vehicle fuel prices in California rose steeply in the
spring of 1999.  The commonly held belief is that a series of
refinery production problems, and resultant market speculation,
caused the price increases.  To date, the nature of the production
problems has been neither fully nor publicly disclosed.
   (e) Motor vehicle fuel prices continue to be high even though the
refinery production problems have been abated for weeks.
   (f) These price behaviors have raised questions about competitive
conditions in the motor vehicle fuel industry in California.
   (g) Two proposed mergers of four large, integrated oil companies
have recently been announced.  In addition, news reports indicate
that two other large, integrated oil companies are discussing a
potential merger.  Each of these potential mergers could have a
significant impact on competitive conditions in the motor vehicle
fuel market in California.
   (h) The recent dramatic increase in motor vehicle fuel retail
prices has cost California residents and businesses hundreds of
millions of dollars and the pending mergers may cost California
consumers even more if they lessen competition.
   (i) Because of the timing of these proposed mergers, the pending
investigations of the federal antitrust enforcement agency, and the
unnecessary cost to consumers of the recent motor vehicle fuel price
hikes, it is essential that the California Attorney General conduct
investigations into these matters.
   (j) The demands of these investigations require additional
resources beyond those provided in the annual budget of the
California Department of Justice.
   (k) Therefore, the Legislature hereby declares that adequate funds
should be immediately appropriated from the General Fund to the
California Department of Justice for these purposes.
  SEC. 2.  The amount of  one million dollars ($1,000,000) is hereby
appropriated from the General Fund to the Department of Justice for
the purpose of supporting first-year costs of investigating industry
practices relevant to the production, distribution, and pricing of
gasoline and diesel fuel.  The funds appropriated by this section may
also be used to support first-year costs related to reviewing
pending mergers between major oil companies that also impact the
consumers of California.
  SEC. 3.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to provide for an immediate investigation or review of
possible anticompetitive practices and mergers that could be harmful
to consumers and the general economy of the state, it is necessary
that this act take effect immediately.