Why oil backed down from a ballot fight

With help from Blanca Begert, Alex Nieves, Adam Aton and Anne C. Mulkern

OIL’S SPILL: The California Independent Petroleum Association’s gambit to overturn drilling restrictions within 3,200 feet of homes and schools seems now like it was doomed from the start.

Gov. Gavin Newsom, environmentalists and lawmakers are taking a victory lap after CIPA’s announcement Wednesday night that it would withdraw the measure from the November ballot.

“Big Oil saw what they were up against — and they folded, again,” Newsom said in a statement today. “No parent in their right mind would vote to allow drilling next to daycares and playgrounds.”

It was always going to be a heavy lift for CIPA — polls over the past 6 months, including the group’s own, steadily showed the initiative falling short of the 65 percent threshold that ballot consultants generally say they need to move forward.

But the industry group’s decision last night to withdraw its challenge to the 2022 law also reflects the degree to which its star has fallen in Sacramento.

Two years ago, when CIPA collected enough signatures to qualify the challenge for the ballot, Newsom was just warming up what has become an all-out campaign against Big Oil (and Little Oil — CIPA represents independent producers, rather than the majors that are members of the Western States Petroleum Association).

He hadn’t yet sued five oil majors seeking damages for their role in climate change. He hadn’t proposed capping refiners’ profits. And he hadn’t taken to bashing oil in appearances from the Vatican to Tuesday’s State of the State speech.

Newsom came out against the measure in March — and environmental groups came in hard alongside him, raising nearly $30 million and running ads primarily in Sacramento to signal to lawmakers that there was a deep-pocketed counter to whatever resources CIPA might be able to muster.

“We wanted to make sure that they knew there was both a growing coalition and resources to back it up,” said Juan Rodriguez, a consultant with Bearstar Strategies, the firm that represented the campaign to keep the law (and also represents Newsom). “From our point of view, there was no need to negotiate and go backwards.”

CIPA also had more allies two years ago. The powerful State Building and Construction Trades Council joined CIPA in opposing the 2022 law, SB 1137, but stayed out of the ballot fight.

Also at work for the campaign on the labor front were people like Gerry Vaughan, a former political director at the Los Angeles County Federation of Labor, and Sandra Sanchez, who has worked with labor for two decades on state and local measures.

Sen. Lena Gonzalez, who wrote the 2022 law, said she thought the trades (who declined to comment today) “saw the writing on the wall” and decided to sit the fight out. She also pointed to a bill she worked on last year, SB 150, which bolstered pay for tradespeople working in green jobs benefiting from federal spending packages.

“We’ve been hopefully turning that attention with engaging on those really green future pieces of legislation,” she said.

Also claiming credit was Assemblymember Isaac Bryan, who did some negotiating of his own with a bill to fine oil companies $10,000 per day if they operate low-production wells within the zone. He said he committed to CIPA that he would narrow the scope of the bill — which faced some opposition this week from moderate Democrats in a Senate committee — to just his district.

“They were hoping this referendum process would create leverage in their favor,” Bryan said. “We found ways through the creativeness of the campaign and through bills like AB 2716 to create a counter-leverage that is ultimately what forced this conversation.”

Bryan was absent from descriptions of how the referendum was defeated by leaders of the keep-the-law campaign, who said the central players made no compromise.

“It was an unconditional surrender,” said Chris Lehman, the keep-the-law campaign’s general manager.

CIPA’s CEO, Rock Zierman, blamed the organization’s decision to withdraw on hostile legislators. “We pivoted our strategy because it was clear that even by winning in November, we would find ourselves in the same spot next year with new legislation,” he said in a statement.

But he resisted the assertion that the industry’s influence has waned.

“We’ve faced bills designed to shut us down every year I’ve been here, 22 years,” he said in a text relayed by a spokesperson. (He declined interview requests.) “There were over a dozen this year and most have died.”

The group said it plans to sue over the law; it hasn’t said yet when or where it will file. — WV

Did someone forward you this newsletter? Sign up here!

DEBATE NIGHT: The first presidential debate is tonight, and we know what you’re all wondering: Will former President Donald Trump attack California’s new zero-emissions forklift rule?

Apart from that, Timothy Cama, Garrett Downs and Nicole Norman from POLITICO’s E&E News broke down another climate-related question President Joe Biden will have to weigh: Should he brag about the record-high oil production that has gone on under his watch as a way to deflect Trump’s accusations that he’s wrecked American energy independence and driven up gas prices?

Or, as a heat dome settles across swathes of the country, will he stay mum and not risk further alienating young, progressive voters who already oppose his handling of Israel’s war on Gaza?

Biden won’t just have to counter Trump’s attacks on gas prices. We’ll also be watching for claims that wind turbines “drive whales crazy,” that Biden’s energy policies caused inflation and that EVs “don’t go far” and “are all made in China.” POLITICO’s Ben Lefebvre and Josh Siegel fact-checked Trump’s favorite energy lines of attack and more here. — BB

MAKE IT NINE: The California Air Resources Board is still waiting on permission from the feds to enforce eight of its emissions rules. It’ll soon be nine, after today’s vote to phase out most gas-powered forklifts.

The first-in-the-nation rules will end the sale of new internal combustion forklifts — which use propane, natural gas or gasoline — starting in 2026. Older models would be phased out between 2028 and 2038, with small fleets of 25 or fewer forklifts getting more time. CARB estimates it will cover the retirement of 95,000 forklifts through 2043.

Groups representing the propane industry and construction unions slammed the rule during the hearing in Riverside, arguing that CARB is vastly underestimating the number of forklifts that will need to be phased out and that electric models aren’t ready to be used at all job sites. CARB staff pushed back, saying they’re committed to offering exemption when operations raise legitimate concerns about the feasibility of using electric forklifts.

“I think this is a very fair approach,” said board member Hector De La Torre, executive director of the Gateway Cities Council of Governments. “I appreciate all of the testimony today. But again, the facts lead us in this direction, that it is time for us to take this action.” — AN

SPECIAL DELIVERY: California, like most states, is still figuring out what to do about declining revenues from its gas tax that fund its transportation infrastructure. (We talked about it at length with state Transportation Secretary Toks Omishakin last week.)

Washington lawmakers think a fee on doorstep deliveries could be a solution.

Washington state, home of e-commerce giant Amazon, is eyeing a decline of over $300 million in gas tax revenues by 2035, when all new cars will be required to be zero-emissions, reports Adam Aton for POLITICO’s E&E News.

Washington state lawmakers are weighing whether to introduce a fee for in-state delivery, after a study showed a 30-cent fee would generate between $59 million and $160 million by the end of the decade.

Colorado already has a similar fee, and Minnesota will phase one in starting in July. But it will be a rocky road in Washington, where business groups are already rallying against the idea.

IN OTHER OLYMPIA NEWS: Things are looking iffy for Washington’s fledgling carbon market, another option state officials lean on to raise revenue.

Investors are increasingly fearful that voters will approve a conservative-led ballot measure in November to abolish the program, reports Anne C. Mulkern for POLITICO’s E&E News. And at the most recent quarterly auction, it showed.

The state failed for the first time to sell all of the carbon market’s emissions allowances it offered investors, indicating pessimism about the market’s future. Prices were about half what they were a year ago and a growing number of investors are buying “short” positions, which become profitable if the market drops.

Market supporters remain optimistic. While about 60 percent of allowances that can be used post-2027 went unsold, allowances that polluters can use immediately sold out.

Isaac Kastama, spokesperson with advocacy group Clean and Prosperous Washington and principal lobbyist at Water Street Public Affairs, said if the ballot initiative was the primary factor driving the market, “you just wouldn’t be selling out” permits that are used immediately. — BB

PUT IT IN PARK: Uber wants Californians to cut the cord with their personal cars and is offering to pay drivers to test it out.

The ride-hailing company announced today that it’ll hand out $1,000 to 175 people in seven U.S. and Canadian cities — including Los Angeles and San Francisco — who volunteer to forgo driving for a month. That stipend includes $500 redeemable on Uber car rides, e-bikes and e-scooters; $300 for public transit; and a $200 voucher for car-rental or car-share services. The trial starts July 22.

Uber is framing the challenge as a way to reduce traffic and improve air quality, in line with California’s policy goals. — AN

— The Economist is totally bowled over by solar power.

— The Supreme Court just blocked the EPA from cracking down on smog-forming emissions that drift across state lines.

— The climate impacts of “carbon removal” look very different depending on how you calculate them.