Newsom Signs Suite of Energy Bills Into Law
Energy package is seen largely as a compromise between the need to address rising energy costs, the reduction of greenhouse gas emissions, and the continued need for fossil fuels.
On September 19, 2025, Governor Gavin Newsom signed a package of five climate and energy bills aimed at stabilizing the gasoline market and reducing electricity prices. The bills aim to increase oil and gas production, extend the state’s cap-and-trade program, authorize California to join a regional energy market, establish air pollution monitoring programs in heavily polluted communities, and replenish and revise the state’s wildfire liability fund.
The compromise energy package is seen largely as a compromise between the need to address rising energy costs, the reduction of greenhouse gas emissions, and the continued need for fossil fuels. Legislators and the governor agreed to the legislation on September 10, 2025 after last-minute negotiations.
Ease regulations to increase oil production
SB 237 streamlines approvals to drill up to 2,000 new oil wells a year in Kern County through 2036. The law does this by deeming a Kern County environmental impact report sufficient for full compliance with the requirements of the California Environmental Quality Act (CEQA). This ends the ongoing legal challenges since 2015 against the county’s the county’s oil and gas rezoning ordinance. The bill also increases oversight for offshore drilling. Lastly, the bill allows the governor to suspend the state’s lower-emissions summer gasoline fuel standards if prices increase substantially over a 30-day period.
Extend cap and trade
Newsom signed into law AB 1207, which extends California’s cap-and-trade program, now called “cap-and-invest,” through 2045. The bill also changes how the California Air Resources Board (CARB) distributes allowances. He also signed SB 840, which revises spending from the program’s revenue, including $1 billion for high-speed rail each year, $1 billion for spending through the budget, and $1.7 billion for various safe drinking water, fire prevention, transportation, and clean air programs.
Join a regional electricity market
Newsom signed into law AB 825, which allows California to participate in a Western regional electricity market by expanding partnerships with other states. This law provides the groundwork for developing a Western market and is intended to promote the inter-state trading of solar and wind power. The bill is intended to reduce electricity costs, improve grid reliability, and increase the use of renewable energy.
Air pollution monitoring programs
Newsom signed SB 352, which establishes air pollution monitoring programs in heavily polluted communities. The law requires the California Air Resources Board (CARB) to select the locations, and the program must be in place for at least five years with optional five-year extensions.
State wildfire liability fund
Newsom signed into law SB 254, which provides $18 billion in new funding for the state’s wildfire liability fund. The bill would, among other things, deems the financing of projects related to the clean energy projects funded by the Clean Air Bond Act of 2024 to be in the public interest and eligible for financing by the California Infrastructure and Economic Development Bank. The bill also requires electrical utilities to submit a wildfire mitigation plan to the office for review at least once every 4 years.
The California Energy Journal will publish more details and analysis of key bills over the coming weeks.