For Immediate Release May 29, 2026
Contact: Hilary McLean, 916-203-7274, Hilary@ALZAmedia.com
Katie Valenzuela, 916-508-6040, kbvale@gmail.com
Despite Massive Opposition, Newsom’s Air Regulators Approve Billions of Dollars of Giveaways to Big Oil
While Big Oil Cashes In, Communities Lose $8 Billion for Housing, Transit, Clean Air and Water
Sacramento, CA – Despite overwhelming opposition from stakeholders across California—including local governments, air districts, agriculture, housing and transit groups, and impacted communities—the California Air Resources Board succumbed to pressure from the fossil fuel industry to approve changes to the Cap-and-Invest program that include billions of dollars in giveaways to Big Oil while cutting funding for housing, transit, and clean air and water.
“This is a huge step backwards for California. Newsom’s air regulators are handing billions to oil executives at the expense of our climate, health, and affordability for working families in a rushed process that has shortchanged meaningful public participation,” said Bahram Fazeli, Policy Director with Communities for a Better Environment. “With incomplete information and analysis by staff, the Board decided to advance a half-baked proposal to give additional subsidies to the very same oil companies that are gouging Californians at the pump and making windfall profits due to the war in Iran. We expect our air regulators to protect communities — not the industries who are polluting our air and accelerating climate change.”
Opponents of the CARB proposal point out that the rule change would dramatically increase the percentage of oil refinery greenhouse gas emissions covered by free industrial allowances, and give oil refiners access to a new subsidy, the “Manufacturing Decarbonization Incentive” (MDI). Between the additional free industrial allowances and the new subsidy, oil refineries could see up to 156% of their greenhouse gas emissions, concentrating even more pollution in frontline refinery communities.
The Board rejected a proposal to remove the MDI from the program amendments as introduced by Board Member Takvorian, seconded by Board Member Limón, and supported by Board Members Hopkins and Stigler-Granados. The Board adopted symbolic resolution language to request basic analysis of program impacts and potential amendments, but moved forward with rolling out the $4 billion dollar subsidy program for oil refineries and other big polluters.
“These regulations will gut the very programs that cut emissions AND reduce housing, transportation, and healthcare costs for working families—handing billions instead to oil and gas companies already reaping record profits,” said Laurel Paget-Seekins, Senior Policy Advocate, Transportation Justice at Public Advocates. “Whether it’s a student getting to school, a family living near reliable transit, or improvements to local air quality, these are investments that make California’s climate commitments work for people.”
The Legislative Analyst’s Office estimates that the CARB proposal would result in $2 billion annual funding losses for public transit, safe drinking water programs, clean air, and affordable housing. Cuts would severely impact the Affordable Housing Sustainable Communities (AHSC) Program, which funds the creation of 2,000 new, affordable homes each year, and the Transit Intercity Rail Capital Program and Low Carbon Transit Operators Program which has reduced over 35 million metric tons of climate-warming emissions since 2014.
Nearly 30 state legislators voiced opposition to CARB’s proposal, as well as members of the Senate and Assembly Budget Committees, the League of California Cities, multiple representatives from local air districts, and many other locally elected officials and stakeholders across California. Despite this broad and vociferous opposition, the Board approved the program changes by a vote of 9-3, with Board Members Sanchez, Eisenhut, Guerra, Pacheco-Werner, Rechtschaffen, Santiago, Shaheen, Silva, and Stigler-Granados voting to approve the oil giveaway. Board Members Hopkins, Limón, and Takvorian voted no, echoing a powerful statement from Board Member Hopkins in solidarity with impacted communities.
BACKGROUND: The 100 biggest oil and gas companies have collectively raked in an extra $30 million per hour since the war on Iran began. In just the first month of the conflict, Big Oil made $23 billion in windfall profits, and the industry is projected to haul in an additional $234 billion by year’s end if oil prices stay high. In the first quarter of 2026, the oil and gas industry spent record amounts lobbying in California in an attempt to blame high gas prices on environmental regulations and gut California’s climate and health protections.
Quotes from key organizations:
- Dr. Catherine Garoupa, Executive Director, Central Valley Air Quality Coalition (CVAQ): “While fundamentally opposed to market based mechanisms that perpetuate inequity by design, members of CARB’s Environmental Justice Advisory Committee worked diligently over several years to provide specific recommendations on how to better protect our communities. CARB not only disregarded those recommendations, they did the opposite—they allocated more allowances to the industrial sector, which data shows historically has not significantly reduced emissions. They have sliced the allowance pie in a way that cuts programs that provide direct benefits to frontline communities, once again leaving poor places like the San Joaquin Valley behind.”
- Alma Martinez, Center on Race, Poverty & the Environment (CRPE): “If CARB’s goal is to truly cut emissions and boost affordability for the state, this decision does the exact opposite. GGRF investments made in transportation, housing and in the most vulnerable pollution-burdened communities amount to real dollar savings, cleaner air and healthier lives for the most most vulnerable Californians. Giving a tax-payer funded handout to the oil industry has never trickled down to taxpayers and will not do so now.”
- Mariela Ruacho, Senior Policy Advocate, Leadership Counsel for Justice and Accountability: “We are deeply disappointed with the CARB Board and staff for approving a Cap and Invest rule that weakens California’s climate ambition and will actually harm Californians in many ways, from air and water pollution to failing to advance affordability and public health.”
- Nayamin Martinez, Executive Director, Central California Environmental Justice Network (CCEJN): “Today’s decision by CARB board members, prioritizing industry profits over public health, is evidence that the values of Equity and Respect listed in the CARB’s website are empty statements, leaving thousands of Environmental Justice communities without access to clean air, clean water, and resiliency programs that are Tier 3 funded programs, and that represent a lifeline for residents overburdened by pollution and social vulnerability.”
- Ana Gonzalez, Executive Director of the Center for Community Action and Environmental Justice (CCAEJ): “We are deeply disappointed and frustrated by the CARB board’s irresponsible decision today. While corporate polluters continue to rake in record-breaking profits, our frontline communities are left fighting for the bare minimum: the right to breathe clean air, drink clean water, and simply make ends meet. This backward decision is a betrayal of environmental justice communities and yet another broken promise from a state supermajority that constantly brands itself as a global leader in climate resilience. Industry profit has once again been prioritized over human lives.”
- Nile Malloy, Climate Justice Director, California Environmental Justice Alliance (CEJA): “We are deeply disappointed that CARB has chosen to prioritize the interests of the oil and gas industry over the health and wellbeing of the communities most burdened by pollution. After years of promises, the MDI represents a fundamental betrayal of the Cap-and-Invest program’s core mission and cuts the investments for housing, transit, air quality and quantifiable climate solutions that benefit the frontline community that was told this program would invest in them.”
- Kaya Allan Sugerman, Director of Health & Environment Programs, Physicians for Social Responsibility – Los Angeles (PSR-LA): “Communities across California spent years in AB 617 processes fighting for cleaner air in neighborhoods overburdened by industrial pollution. They built community air monitoring, local emissions reductions, and hard-won public participation — all of it now at risk because the fossil fuel industry operates with complete impunity. CARB’s mandate is to protect public health – not subsidize Big Oil. This decision diverts billions from programs that directly deliver clean air, affordability, and health, and hands that money to polluters who refuse to do the right thing.”
- Lesley Beatty, Director, ClimatePlan: “The consequences of this decision will fall hardest on the Californians who can least afford them: people who depend on safe, reliable, affordable public transit to get where they need to go; who need affordable housing close to jobs and daily necessities; and who live in communities where polluted air and water make them sick and cut their lives short.”
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