Wooden Nichols

When Governor Arnold Schwarzenegger fired California Air Resources Board chairman Robert Sawyer last month, he set off a chain reaction that exposed an agency badly shaken. Within weeks, ARB executive director Catherine Witherspoon resigned, and Capitol testimony by her and Sawyer revealed unprecedented interference by the governor’s staff over the ARB’s implementation of last year’s Global Warming Solutions Act.

Schwarzenegger tapped Mary Nichols to head the board. Her nomination was seen as a shrewd recovery; Nichols’ qualifications—chairwoman of the ARB under Governor Jerry Brown and administrator with the U.S. EPA under President Bill Clinton—seemed beyond doubt.

But while some critics question whether Nichols will be able to effectively curb emissions within the industry-beholden Schwarzenegger administration—“I don’t think anybody should be under the illusion that appointing Mary Nichols completely solves all of the problems at ARB,” offered Sierra Club’s Bill Magavern, who gingerly supports her nomination. “It’s a first step.”—others fear she’ll be part of the problem.

Their evidence? Nichols’ performance at the U.S. EPA and her role in enforcing 1990’s Clean Air Act amendments, which they contend casts doubts on her ability to effectively fight global warming in California.

“I am under the impression that Mary has been wired to the major corporate agenda for decades,” argued Charlie Peters, a longstanding smog-check and environmental activist who heads up the New Jersey-based Clean Air Performance Professionals. “She’s being put in there because she does what the corporate agenda wants.”

Nichols’ tenure at the national EPA marked a decided shift in U.S. policy for establishing and enforcing emissions reductions. A June 2000 report by D.C.-based nonprofit Public Employees for Environmental Responsibility documents that Nichols, then-EPA assistant administrator for air and radiation, played an instrumental role in undermining regulations and compliance.

According to the PEER report, Nichols in 1995 touted open-market trading as the “new paradigm for market-based control,” referring to a paper by attorney Richard Ayres of the O’Melveny and Myers law firm as inspiration for the new direction.

But there was a conflict of interest: Nichols’ husband, attorney John Daum, who represented Exxon in the infamous Exxon Valdez oil spill case Baker v. Exxon, was an employee of O’Melveny and Myers.

In July 1994, Nichols had issued a permanent recusal that forbid her to participate “in any EPA matter in which the law firm of O’Melveny and Myers is providing representational services.” Her support for the Ayres concept of open-market trading in 1995 seemingly violated the recusal, but the EPA ignored the apparent conflict.

In 1995, the report says Nichols “directed EPA regional administrators to de-emphasize the Clean Air Act’s deadlines for attainment plans [or emissions-reductions goals] and instead shift to an emphasis on what she described as ‘market-based alternatives.’” This gave states the green light to initiate carbon-credit-trading programs without a national cap on overall emissions or “quantification protocols,” which would have established a common currency for trading.

The Clean Air Act Corporation, an O’Melveny and Myers client, later would become the nation’s largest broker of these open-market-trading credits.

A 1996 EPA inspector general report challenged the validity of Nichols’ plan, citing “invalid credits or weaken[ed] enforcement.” But Nichols and fellow EPA officials were unconcerned. “Mary Nichols and I remain committed to developing a model rule which minimizes the federal government’s involvement in the day-to-day operation of the market for these trades,” stated John Seitz, director of the EPA’s Office of Air Quality Planning and Standards.

In 1997, Nichols testified before Congress that greenhouse-gas emissions are “especially well-suited to be addressed through emissions trading because the problem is caused by cumulative emissions well mixed in the atmosphere.”

PEER executive director Jeffrey Ruch explained the folly of this approach to SN&R: “You were trading one type of pollutant for another, and you didn’t have any kind of way to ensure you were getting apples for apples,” he said. “In many cases you were trading apples for the promise of a future guava.” Essentially, the carbon credits being traded were illusory; they didn’t necessarily have any net environmental benefit.

Nichols left the EPA in 1997, but her “new paradigm” de facto policy remained—and proved disastrous.

“She was a midwife to a stillborn in a sense that she wasn’t around when [the open-market trading] collapsed,” beginning in New Jersey in 2002, Ruch explained. A 2003 Department of Environmental Protection report observed that New Jersey’s Open Market Emissions Trading program failed to establish an emissions cap, did not verify the validity of credits and allowed facilities to build compliance strategies entirely on the prospect of using emission credits without the guarantee of finding a seller.

“Instead of being a trial balloon, it turned into a trial buffoon,” Ruch quipped. “This was sort of looked upon as the next new wave in air-pollution control, and it collapsed under its own weight.”

Experts are conflicted as to what this means for California and the implementation of last year’s Global Warming Solutions Act.

“I’m not sure that I had high expectations to begin with,” Ruch admitted. “In a sense, you have a governor that’s just cleaned out the Air Resources Board under circumstances that seem highly unusual and controversial.” He views Nichols as “somebody who’s promising independence but certainly understands that there’s some requirement of flexibility.”

“I think her appointment helps bring some stability back to the agency” and alleviates a “major problem” for the governor, said Sierra Club’s Magavern.

“To me, the cornerstone of [the global-warming act’s] implementation is direct emissions reductions,” Magavern continued. “You can’t put market mechanisms in place just by having the governor’s office, through back channels, dictate that to the Air Board.”

The question now is whether Nichols will share this priority—and take a stand against Schwarzenegger’s interference.