Breaking up with Big Oil is hard to do

Politico

4 hours ago

IT'S COMPLICATED: California still wants to break up with Big Oil — but it needs a ride first.
California Energy Commission Vice Chair Siva Gunda outlined his much-anticipated plan on Friday to keep gas prices from spiking as the state weans itself off of oil. TLDR: Support in-state crude oil production, boost imports of refined oil — and pause a profit cap on refineries passed by the Legislature and signed by Gov. Gavin Newsom in 2023.
Newsom had already previewed the pivot when he asked Gunda to redouble efforts to keep in-state refineries operating profitably in April after two of them announced plans to close amid a long-term decline in demand. The recommendations on Friday not only mark a softening of the state's fight against the oil and gas industry, but also a recognition that attacks from Republicans on gas prices are sticking.
'The gist is, 'We get it,'' Natural Resources Secretary Wade Crowfoot told reporters Friday.
California's climate officials are now on the tightest of political tightropes. For example, Gunda recommended the Legislature waive some environmental review rules to streamline further oil extraction from oilfields in Kern County — while also expanding limitations on new offshore oil and gas development and codifying a ban on well stimulation treatments.
Meanwhile, the California Air Resources Board stuck by its hot-button emissions trading program for transportation fuels, announcing Friday that their changes to the low-carbon fuel standard will take effect early next week despite fears that tightening the restrictions on the carbon intensity of fuels could cause a spike in gas prices.
Senate Democrats are already girding for a fight with the agency. They introduced a bill backed by Senate Pro Tem Mike McGuire on Tuesday to freeze credit prices that encourage the switch to electricity, hydrogen and other non-fossil fuels, cutting the legs out from under the program.
For a deeper dive into the LCFS fight, read our exclusive Q&A with CARB Chair Liane Randolph below. — CvK, AN
Did someone forward you this newsletter? Sign up here!
CARB'S COUNTER: Randolph isn't taking Senate Democrats' attempt to weaken the LCFS quietly.
The state's top air quality official pushed back against the bill, SB 237, in an interview Friday, saying the proposal 'is just irresponsible' after the Trump administration already revoked the state's power to enforce its electric car and heavy-duty truck mandates.
POLITICO spoke with Randolph about the heated LCFS debate. Read the full interview on POLITICO Pro for her thoughts on California's climate disclosure law and what's next for discussions with automakers.
This interview has been edited for length and clarity.
What are you concerned about as the news of the LCFS changes taking effect becomes public, and what are you trying to get ahead of?
It's super important to be proactive, to remind people about the importance of this program. It is designed to provide a cost-effective path to support the transition to lower-carbon fuels and to zero-ignition infrastructure that reduces greenhouse gas emissions, right? And so in all of this conversation about cost, I don't want people to forget about the incredible benefits of the program and the fact that it's generated $4 billion in annual private sector investment in the clean transportation sector.
It attracts dollars. It attracts investment in the state. It delivers, under our estimate, $12 billion in health-related savings, and California businesses will see increased revenue of $6 to $8 billion from LCFS credit generation sales through the life of the program. It's really important to emphasize that this program has clear economic benefits.
This news is coming against the backdrop of SB 237, a new bill that would weaken the LCFS program. Do you regret at all how the rulemaking was done and the initial estimate that LCFS would raise gas prices up to 47 cents? Has that put you in the crosshairs of lawmakers?
The LCFS rulemaking was an incredibly robust process. There were multiple workshops, tons of stakeholder engagement, two public hearings in front of the board. So the idea that there was not a robust public discussion about all the pros and cons of all of the complexities of the program is just inaccurate. And we had multiple briefings with legislative staff, outreach from members that we responded to. So it was an absolutely robust public process.
The second thing I'll say is that in this era, when the federal administration is literally taking away every tool that they can think of, the idea that we as a state would attempt to cripple programs that have been effective, that have resulted in economic development and better air quality, cleaner fuels, reduced greenhouse gas emissions, is just irresponsible.
SB 237 is endorsed by Senate President Pro Tem Mike McGuire. How seriously do you take it, have you talked to the governor about this, and what could result from a proposal like this even if it doesn't move forward?
It is a proposal that has the potential to set California back. And I think that it's really important for our elected leaders to be thinking about all the different aspects of how we achieve our air quality and climate goals, and to recognize that we as Californians really should control our own destiny as much as we possibly can. — AN
SEE YA, CEQA: Newsom is asking lawmakers to approve an overhaul of one of California's landmark environmental laws before he signs off on this year's budget.
A trailer bill introduced Friday carves out sweeping exemptions from the California Environmental Quality Act, which mandates environmental reviews of construction and has drawn the ire of pro-building and Republican voices accusing it of slowing down key projects.
Under the bill, environmental review of housing projects would be limited, and many wildfire mitigation projects, including fuel breaks near homes and vegetation thinning near evacuation routes, would no longer need to be reviewed. Improvements to certain community water systems as well as some construction on the state's high-speed rail project would also be exempted.
The exemptions got immediate praise from the California State Association of Counties on Friday.
'No longer will CEQA be leveraged to stall critical county wildfire, water and housing projects,' said CSAC President and Inyo County Supervisor Jeff Griffiths.
They were panned, however, by environmental groups. 'The trailer bill 131 is the worst rollback of environmental and public health protections that we've seen in decades,' said Matthew Baker, the policy director at the Planning and Conservation League, in a press conference Friday.
The bill is expected to be approved Monday in the statehouse and then signed into law by the governor. — CvK
BYE BYE, LOCOMOTIVES: CARB officially repealed its rule to phase out diesel locomotives Thursday night.
Board members voted unanimously to revoke the in-use locomotive rule, six months after the agency announced that it had withdrawn the emissions standard from consideration for an EPA waiver, once it became clear approval wouldn't happen before former President Joe Biden left office.
The rule, approved in April 2023, was projected to reduce 386,300 tons of smog-forming nitrogen oxides by 2050, making it CARB's most impactful vehicle emissions standard.
The loss compounds the blow from car and truck rules being axed, and means regions like Southern California and the Central Valley are all but guaranteed to be out of compliance and face the threat of federal sanctions. — AN
BILLABLE HOURS: A Sacramento County Superior Court judge gave Attorney General Rob Bonta the green light late Thursday to keep his big climate lawsuit against oil and gas companies in the hands of an outside firm, Lesley Clark of POLITICO's E&E News reports.
The decision to outsource the headline-grabbing lawsuit to the San Francisco law firm Lieff Cabraser Heimann & Bernstein got Bonta in a tussle with his own employees. Their union, the California Attorneys, Administrative Law Judges and Hearing Officers in State Employment sued over the decision, arguing in-house lawyers were capable of handling the complex work themselves.
But Judge Shelleyanne Chang wrote in her preliminary ruling that there was not enough evidence of that and that hiring an outside firm was well within state law.
As Lesley has previously reported, the state's contract with Lieff Cabraser Heimann & Bernstein lawyers shows its lawyers billing up to $1,241 an hour; lawyers with another outside firm, Sher Edling, hired to help with the work are making up to $625 an hour. — CvK
— A California appeals court struck down one of the state's largest planned communities for not analyzing its greenhouse gas emissions impacts enough.
— The San Diego region's water wholesaler approved a rate hike of 8 percent amid declining demand and high fixed costs.
— Western states have had relatively cool temperatures this summer, but a national heat surge is coming.