Mary Nichols Was the Early Favorite to Run Biden’s EPA, Before She Became a ‘Casualty’

As the Biden administration wrestles with implementing a stack of executive orders on climate change, the president will be proceeding without someone environmentalists see as one of the most skilled and effective regulatory tacticians in the country: Mary Nichols. 

Nichols, the former two-time chairwoman of California’s powerful Air Resources Board, was initially rumored to be Biden’s top pick for EPA administrator.

But Biden instead chose North Carolina’s chief environmental official, Michael Regan, in a move some media reports attributed to a Dec. 2 letter written by Friends of the Earth and more than 70 other environmental groups, attacking Nichols’ record on environmental justice.

“The perspective I have for how we solve climate change, as a Brown woman, is different from how Mary Nichols from her worldview is going to try to solve climate change,” said Mari Rose Taruc, an environmental justice organizer who signed the letter. 

Whatever impact, if any, the letter had, key environmental leaders in California call the decision  unfair and unfortunate and see it as an early, potential rift between climate progressives and moderates in the Democratic party. Nichols’ exclusion, they said, was also a strategic mistake at a time when the stakes couldn’t be higher.

“She’s the proverbial whole package when it comes to public policymakers and environmental visionaries and environmental leaders,” said Richard Frank, director of California Environmental Law and Policy Center at University of California, Davis, School of Law.

Nichols’ champions also say that the dispute over her legacy, centered primarily on her role in creating California’s cap-and-trade program, highlights what can be an inherent tension in the environmental justice movement between the fight against pollution in specific communities and the fight to reduce greenhouse gas emissions more broadly.

Dan Sperling, who served on the Air Resources Board with Nichols and is now a professor of civil engineering and environmental science and policy at U.C. Davis, described the opposition to her as highly unfortunate.

“The country is coming to grips with the racism, the social injustices, the environmental injustices of the past,” he said. “And we are putting in place gradually, policies and laws and institutions to correct those wrongs of the past … Mary Nichols was a casualty of this process.”

Nichols doesn’t think the Dec. 2 letter had any bearing on her candidacy for EPA administrator.  But in a wide-ranging interview last week, Nichols said she “probably should have” seen the letter coming, given the events of the last year. 

“We live in an era where people are feeling frustrated, and they didn’t take to the streets, but they did write a very strongly worded letter, and I was the easiest target of attack because my name was out there,” she said. 

Shortly after the interview, Nichols announced she had taken a job with California-China Climate Institute, a climate-focused think tank at the University of California, Berkeley. Led by former Gov. Jerry Brown, the organization promotes cooperation with China. Nichols will step into a position as vice chairwoman. 

She expressed no bitterness during the interview, which she did via Zoom from her home in Los Angeles, and said that lawmakers need to act with a sense or urgency on climate. She left the clear impression that she considered this moment to be an enormous opportunity.

“We have clearly a huge majority of people in the United States who think action needs to be taken,” Nichols said. “I think it should be possible to mobilize all of that, to get support for something. And the big question is: Can we do something big enough, fast enough to really make a difference?”

Technocrat, Advocate and Power Broker

Nichols established her bona fides as a pollution fighter in the early 1970s when, as a Yale-educated public interest lawyer, she filed one of the first air pollution lawsuits in California under the federal Clean Air Act. 

She went on to serve in a number of civil service positions, from President Bill Clinton’s assistant EPA administrator to California’s secretary of natural resources. She also served for 21 years as chairwoman of California’s Air Resources Board under both Republican and Democratic governors. 

During Nichols’ career, California significantly reduced every category of air pollution, according to EPA data. Her effectiveness came, in part, from her eclectic background as a technocrat, advocate and power broker who could muster support from varying groups. 

“One of the ways you succeed in this is to not have everybody mad at you all at the same time,” she said. 

Her work has spawned a new age of clean energy in California and across the country, including renewable energy requirements and low carbon fuel standards, all while California’s economy has grown. 

As chairwoman of the Air Resources Board, Nichols met with overseas scientists and government officials wanting to replicate California’s air pollution regulatory scheme. “She brought stability and, more importantly, effectiveness, and she deserves a large measure of credit for bringing CARB up to the stature that it has nationally and internationally,” Frank said.  

Most recently, Nichols showed her political prowess in convincing five of the major automakers to sign a voluntary agreement with California to lower their vehicle emission standards, bucking the Trump administration’s effort to unwind tougher Obama-era regulations—rules that she had helped negotiate. 

Cap-and-Trade’s Fraught History in California 

Over the course of Nichols’ nearly 50-year career, she cemented her legacy as the “queen of green,” championing progressive policies to clean up the nation’s air. That’s why when she was rumored to be Biden’s top pick to lead the EPA, the consensus was that opposition to her candidacy would come from lawmakers on the right, not from within her own party. 

The allegations made against Nichols focus on her role in implementing California’s cap-and-trade program, a market-based approach for setting limits on carbon emissions and selling permits to polluting companies. 

Typically, cap-and-trade programs set limits on the amount of greenhouse gases released by certain stationary sources, like refineries and power plants, and then require those polluters to obtain permits to cover their excess emissions. In California’s system, polluters can purchase a small percentage of their allowance in the form of “offsets,” or investments in tree farms or technologies that reduce greenhouse gases in the atmosphere. The cap on the state’s total amount of greenhouse gases gets smaller over time, forcing polluters to reduce their emissions or purchase additional offsets. 

Progressives hold Nichols responsible for the genesis of cap-and-trade, which they say has increased pollution in some poor communities.

According to progressives, Nichols, as the chairwoman of the Air Resources Board, should have steered the agency toward alternatives, like direct regulation of emissions, which they claim would have improved outcomes for disadvantaged communities. But the efficacy of cap-and-trade, and Nichols’ role in its selection, isn’t as straightforward as the letter suggests. 

Take the progressives’ claim that Nichols “staunchly pursued” the cap-and-trade program. In fact, much of the groundwork for the program had already been laid by the time Nichols arrived at the Air Resources Board in 2007.  

The Global Warming Solutions Act of 2006 required California to reduce its greenhouse emissions to 1990 levels by 2020, and was brokered between Democratic legislators and then-governor Arnold Schwarzenegger, a Republican, who had pushed for inclusion of cap-and-trade. The legislature subsequently extended the program to 2030. 

The law permitted the use of a market-based mechanism like cap-and-trade, but didn’t require one, and directed the Air Resources Board to evaluate policies and adopt regulations to achieve emission reductions. 

But less than two months after signing the bill into law, and before Nichlols arrived at the Air Resources Board, Schwarzenegger issued an executive order carving out the contours for “the development of a market-based compliance program,” and establishing a market advisory committee to help design that program. 

At the time, there was no other kind of market system being considered for greenhouse gas reductions other than a cap-and-trade program, according to Rajinder Sahota, a division chief at the Air Resources Board. 

Nichols described a fraught political landscape when she arrived at the Air Resources Board in 2007. It included a nation-wide financial crisis, industry opposition and an ongoing battle between the board and environmental justice advocates. “There were a lot of bruised feelings by the time I walked onto the scene that had to be dealt with,” she said.

Triangulating among politics, economics and advocates’ requests, the Board, by majority vote, came up with a portfolio plan with multiple policies and programs aimed at reducing greenhouse gas emissions. One of those policies was the cap-and-trade program, which was intended as a backstop to ensure the state met its emissions targets. Other policies included a renewable portfolio standard, a low carbon fuel standard and an advanced clean cars program. 

“We put together a program that seemed both equitable and effective,” said Nichols. “The governor was satisfied that he got his cap-and-trade program…people who hated cap-and-trade still hated cap-and-trade. People who wanted more of it still wanted more of it.”

Advocates from polluted communities didn’t see it that way. They had high expectations, based in part on the language in the Global Warming Solutions Act, which contained multiple references to environmental justice and explicitly stated that regulators’ actions could not disproportionately impact low-income communities. 

The Air Resources Board chose to impose direct regulations on some sectors, like transportation and the electricity sector. But in the industrial sector, the board relied mostly on cap-and-trade, with a few small exceptions. 

The Controversy Over Offsets

One of the more pointed criticisms of Nichols deals with the design of the cap-and-trade program, specifically, that the program included carbon offsets, which critics say help create pollution hotspots. 

Offsets are intended to give polluters flexibility and California’s program allows them to purchase between 4 percent and 8 percent of their emission allowances in the form of offsets from carbon-reducing entities, like tree farms, an option that is often cheaper than cutting emissions. 

One of the polluting facilities covered by the program is a Challenge Dairy Products factory, located in South Fresno. The plant makes butter, which is sold in chain stores like Walmart and Albertsons, and emits greenhouse gases and toxic pollutants, affecting communities in adjacent and downwind neighborhoods.  

To comply with its emission cap between 2015 and 2017, the company purchased just under 8 percent of its limit in offsets from a U.S. Forest Service project run by the White Mountain Apache Tribe in Arizona. That project has brought in revenue for the Tribe, which itself is an environmental justice community. But for people in the South Fresno community, the Apache forest project hasn’t helped reduce local pollution in their neighborhoods. 

“The intent doesn’t matter when you look at the impact, and the impact is affecting people on the ground. Is it fair for all those Black and Brown folks who die at 50 or 52? Is it fair to their families and all of the children whose lungs are struggling to breath on a daily basis,” said Sandra Celedon, president and CEO of Fresno Building Healthy Communities. 

Celedon’s frustration is echoed by other environmental justice advocates who say they are angered by authorities’ lack of focus on fighting pollution in specific communities. Those communities are most often majority non-white populations, and researchers have found a connection between asthma rates in those areas today and redlining, a depression-era discriminatory government practice that categorized neighborhoods based on their racial makeup.

Researchers found that redlined neighborhoods, like Fresno, “have significantly higher rates of emergency department visits due to asthma, suggesting that this discriminatory practice might be contributing to racial and ethnic asthma health disparities.”

Sperling, Nichols’ colleague on the Air Resources Board, said he acknowledged the historical and ongoing environmental injustices perpetrated against California’s poor communities. But the Global Warming Solutions Act, and cap-and-trade, he said, were not designed to address local pollution. 

Cap-and-trade “is addressing a global problem,” he said. “This was a policy to do one thing, and they wanted a policy to do something else.” 

Still, climate change and air quality have an impact on each other and many greenhouse gas emitters also release air pollutants, making it likely that a change in carbon emissions will affect pollution emissions. At least one study looked at this relationship and found that California’s cap-and-trade program has not made pollution in low-income communities worse.  

In the paper, published in 2020 by the National Bureau of Economic Research, researchers found that the pollution exposure gap between disadvantaged communities and other communities fell by 21 percent to 30 percent,  after the 2013 introduction of the cap-and-trade program. Before the cap-and-trade program, disadvantaged communities experienced higher levels of pollution compared to other communities—the exposure gap.

After implementation of the program, disadvantaged communities still experienced significantly higher levels of pollution, but the difference between that group and everyone else had shrunk, indicating cap-and-trade may have changed the distribution of pollution in a more equitable manner. 

The researchers, Kyle Meng and Danae Hernandez-Cortes, were careful to note that market programs are agnostic toward where pollution goes and the “environmental justice gap” could have gone either way, meaning cap-and-trade could have increased the amount of pollution in disadvantaged areas. 

“A cap-and-trade market is designed for efficient, cost effective ways of reducing greenhouse gas pollution. It’s an unintended consequence if you will, if pollution exposure widens or narrows,” said Meng. “If you’re worried about climate change, have a climate policy like a carbon tax. If you’re worried about EJ, have an EJ specific program or policy that deals with that program. In economics, we often talk about, if you have two problems, you need two policies, you can’t have one policy trying to solve two problems.”

Other researchers have criticized Meng and Hernandez-Cortes’ work, saying there are data quality issues and problems with the paper’s methods. The Air Resources Board maintains there is no evidence that cap-and-trade has exacerbated local air pollution in disadvantaged communities, though in 2017, a state report said more data was needed to assess the program’s effects on disadvantaged communities.

California achieved its 2000 greenhouse gas emission reduction target four years early and has set a more ambitious target for 2030. Opposition to the program, and criticism that it doesn’t do enough to reduce greenhouse gases, persists. Critics argue that the cost of allowances, around $17 per metric ton, has been too low, allowing polluters to stockpile allowances and discouraging innovation and decarbonization. 

Indeed, industrial sector greenhouse gas emissions have remained relatively constant in recent years. But Alice Kaswan, an expert on climate change and environmental justice, said that doesn’t tell a full story. “You also have to look at what emissions might have been without the program. We have an economy that’s been growing. If we’ve held industrial emissions flat during that time, it’s better than it might have been without the program,” she said.

To date, the cap-and-trade program has generated over $14 billion in revenue, with about half that spent on environmental justice communities, according to Air Resource Board data.

Nichols’ Authority Only Went So Far 

Much of the progressives’ frustration with Nichols appears to stem from larger systemic failures and ideological disagreements. In an environment of scarce resources, progressives want to see those resources focused on combating local air pollution in areas affecting the state’s most vulnerable citizens. 

Sperling said that many of the complaints levied at Nichols are for issues outside her authority. 

“Most of these facilities were and are under the jurisdiction of the local air quality districts, not CARB, not Mary Nichols,” he said. 

In California, local, regional and state governments all play a role in regulating pollution. The state controls greenhouse gas emissions and other statewide sources of pollution, including vehicles and fuels. Regional air boards control permitting decisions for stationary sources of smog-causing pollution and toxic contaminants. And cities and local governments are charged with making land use and zoning decisions. 

The puzzling array of regulatory bodies has frustrated some advocates, who say they want to see the state take more control after the perceived failure of local and regional officials to curtail pollution.

“When you hear the word San Joaquin Valley Air Pollution Control District, you’re supposed to be controlling the air pollution…but you’re being governed by older white men, who mostly are pro-agriculture and pro-oil industry. So where do we go with that?” said Ivanka Saunders, policy advocate at Leadership Council for Justice and Accountability in Fresno. 

Acknowledging that local officials have little desire to “stomp on local businesses,” Nichols said she agrees that the state needs to insert itself more at the local level. “There is a history on the part of activist groups thinking that the next level of government up can solve a problem and should solve the problem,” she said. “And, that’s how we got the federal Clean Air Act.”

Before the Air Resources Board could do more about air pollution, it needed authority from the legislature. It came in 2017, when lawmakers passed Assembly Bill 617 authorizing the board to develop plans for reducing pollution exposure in communities most impacted by air pollution, like South Fresno. 

“We embraced AB 617 and that whole approach to inserting ourselves at the local level,” Nichols said, referring to the legislation allowing the board to target highly polluted communities. 

The program has been slow to roll out, largely due to bureaucratic processes, which state officials say are necessary to accurately identify pollution sources without unnecessarily sacrificing local jobs. 

“We’re probably out at least one to two or three years, before we have sufficient data to understand what’s going on,” said Sahota, the Air Resources Board division chief.

Advocates say the new program has brought progress, but change isn’t happening fast enough. 

“It’s been a learning process, just like we’ve seen with our whole country, the discussion about environmental racism has come to the forefront…but is that progress fast enough? And are you doing all that you possibly can do as a state agency to move it further?” said Saunders. 

‘We Need Bold and Courageous Action’

The incremental pace of change has been a flash point for advocates focused on securing better outcomes for their communities. They are now looking to the Biden administration to implement what they hope are sweeping systemic changes. 

“We need bold and courageous action right now to defend environmental justice communities who are on the frontlines of receiving the brunt of the air pollution and emissions,” said Martha Dina Arguello, executive director at Physicians for Social Responsibility in Los Angeles. “At the end of the day, the policies have just never gone far enough in terms of prioritizing environmental justice communities.”

It remains to be seen how the Biden administration will balance the fight against climate change, a global problem, while addressing local pollution, keeping energy prices low and creating high quality jobs. 

One thing working in Biden’s favor, according to Nichols, is that he can build on the work many cities and states have done to reduce emissions over the past several years, including California.

“Almost every single element of what California has experienced in putting together our climate program is now being lived out,” she said.