(Reuters) - U.S. Environmental Protection Agency Administrator Andrew Wheeler gave Reuters a wide-ranging interview on Thursday at his office in Washington, discussing issues from climate science to automobile emissions and biofuels policies.

FILE PHOTO - U.S. Environmental Protection Agency (EPA) Administrator Andrew Wheeler arrives to testify before a House Energy and Commerce Environment and Climate Change Subcommittee hearing on the FY2020 EPA Budget on Capitol Hill in Washington, U.S., April 9, 2019. REUTERS/Yuri Gripas

The following is an edited transcript of the interview:

REUTERS: President Donald Trump gave you some work yesterday with executive orders to push states to speed energy projects. How do you plan to alter the state certification guidelines and how soon will you accomplish the task?

WHEELER: We’ve already started work, it may surprise you but we knew about the announcement before yesterday. We started working on it in advance, so we hope to have something out soon. I don’t know when we will go final on it though. I’m not sure of the timing on that. We can probably follow up. It’s to provide more clarity around the program and provide some direction on what states should be looking at when they are doing their 401 certifications. It’s a program that hasn’t been updated in decades. I don’t think when it was originally drafted people were really anticipating the need for these export terminals and some of these other national projects. I don’t think people really anticipated that some states would kind of go beyond what was intended for their review.

I’m not going to pick on anyone in particular, but Washington state, I don’t think they made their determination based on the impact of water in their state, they are trying to make international environmental policy. I don’t think section 401 was originally intended for states to make international environmental policy, I’m not just talking about U.S. policy. They’re trying to dictate to the world how much coal is used, and I think, outside the original intent of 401. So we’re going to put some more parameters around how 401 is used. We will follow the law though. The states will still have a lot of flexibility of course. Part of it is also on timeliness, the states should be issuing their decisions. Some of these decisions have taken years for the states.

REUTERS: Critics say there is no way EPA can take the veto of the states out. That has to be an act of Congress.

WHEELER: I’m not suggesting we’re taking the states’ veto out. What we want to do is provide more clarity around the program and provide the parameters on what states should review and how long that should take.

REUTERS: What are some of the most important energy projects for you to push forward?

WHEELER: Well, hopefully it would provide more direction to the states on looking at export terminals, LNG terminals, also some of the pipelines as well. I think it’s more than a shame. I don’t know how far I want to go, but it’s pretty awful that we are importing natural gas to New England instead of transporting it via pipeline, natural gas, into New England. We are producing it in large quantities in the Marcellus Shale. Instead of using that natural gas, which is produced in the most environmentally conscious manner anywhere in the world, we are importing Russian natural gas which is not produced in an environmentally conscious manner. If the states that are blocking the pipelines were truly concerned about the environment they would look to where the natural gas would be coming from, and they are forcing the New England states to use Russian-produced natural gas which is not as clean as U.S. natural gas. I think it’s very short-sighted.

REUTERS: What is the timing on EPA work on the executive orders?

WHEELER: I just don’t off the top of my head, I don’t remember the timing.

REUTERS: Maybe six months?

WHEELER: Again, I don’t want to put a date on the timing. Hopefully we will have our proposal out soon and go final shortly thereafter.

Can we get back to you on the timing? I just had three budget hearings and I have a lot of facts and numbers in my head and this is a new one, and off the top of my head I do not remember how long that Dave Ross (the assistant administrator for the Office of Water) told me it was going to take.

REUTERS: How do you respond to criticism that the Trump administration is setting policies that take aim at blue states or other states that focused on addressing climate change, or using permits to block projects they think are environmentally harmful?

WHEELER: We are the United States Environmental Protection Agency so we are trying to apply policies even-handedly across all 50 states. What the president announced yesterday was an updated process for all 50 states. On the CAFE side we can’t have a patchwork of automobile standards for some states and different standards for other states. This goes to WOTUS as well. We’ve had quite a few requests to extend the WOTUS comment period. And we’re not doing that for the primary reason that right now we have 22 states following one set of WOTUS regulations and 28 states following another. I really want to move as quickly as we can to finalize WOTUS so we have the same regulations applying to all 50 states.

Back on the CAFE. ... We are looking at this issue. California just looked at it in terms of energy efficiency. Having a separate standard for California, you are talking about a rounding error talking as far as the impact on CO2 worldwide. We are looking at more than energy efficiency. We are also looking at highway fatalities. There is other public policy interest that we have as a nation, that is I believe our responsibility. We are working with DOT jointly. Last week at the Washington Auto Show I said I hope California doesn’t sue us. Our final regulation is not going to be the same as our proposal. I can’t go into more detail because we are still reviewing the data and information, but we took comment and the final will not be the same. We have taken constructive comments, criticisms and concerns from a whole host of different interest groups, and I hope that our final regulation is something that everyone can get behind and support. It was 24 hours after I said I hope California doesn’t feel the need to sue us that they went ahead and sued us. In my mind this is so much more about politics in the state of California than it is protecting the environment.

REUTERS: The preferred option as you know, on CAFE, is a flatline. ... Is it safe to say that it is going to go up by some amount over a flatline? Is that how we should read your comments?

WHEELER: I really can’t say at this point what it’s going to look like.

REUTERS: There was a report out yesterday that you guys decided on a 1 percent per year increase. Is that accurate?

WHEELER: It’s different when you have anonymous sources making comments, but when the administrator of the EPA says what we’re going to do or not going to do it’s premature, and I really can’t say anything on the record yet about what exactly we’re going to do. But we’ve taken comments from a lot of different interest groups into account and we’re trying to come up with a final regulation that addresses a majority of concerns.

REUTERS: Do you think there was ever going to be a deal with California, given how far apart everyone was? The autos said, “Just, hey, pick a number anywhere in the middle as long as we have certainty about the program going forward.” It looks like we are headed for sort of years of litigation.

WHEELER: And I hope not and I really did hope that we could reach an agreement. You know it is interesting when the auto companies came in after our proposal came out, they told me that some of the out years -- our numbers are actually more stringent than the Obama numbers because Obama had more exemptions and offramps and flexibilities put in -- so that some of the offyears they told us that our numbers are more stringent. So that tells me that at the end of the day our proposals weren’t that far apart, but they, I think, use it more for social engineering and for politics and we’re looking at it more on the technical side as far as what is feasible, what can be accomplished. One thing Obama administration did not do in their mid-term evaluation was take into account real time data as far as what Americans was purchasing. The length of age of cars on the road. I think they were still looking at 2000 data saying that average age of an automobile is 8 years old, when it’s actually now 12. It makes a big difference. By lowering the price of a car, we’re hopefully going to get some of the older cars off the road. Getting the older cars off the road improves public safety as well as environment. The midterm evaluation by the Obama administration was a rush job. It was absolutely a rush job. They started it November 2016 after the election, they did a 15-day notice in comment and they finalized it before Jan. 20th. You just can’t review all the data and inputs in that sort of time and they didn’t. They didn’t look at the most recent data and information.

REUTERS: Do you think that the Obama administration was trying to disfavor fossil fuels and favor EVs?

WHEELER: Oh absolutely. The only way you could comply ultimately with Obama numbers is to have 30 percent electric vehicles and that’s not what American consumers are buying. Right now we’re...2 percent electric vehicles. I don’t think this country is going to turn the fleet over to get to 30 percent electric vehicles by 2025. I just don’t think that’s possible. The automobile companies are paying a record number of fees for non-compliance. In 2016 - is the last year of data we have - I believe it was $100 million that they paid in 2015 or 2016 for non-compliance with the standards and it’s projected to get up to $1 billion...if the Obama regs were left in place. By the end of Obama CAFE standards. It was projected close to $1 billion that they’re paying each year for inability to comply with Obama standards. We’re trying to have realistic standards. ... There’s certainly a marketplace for automobile manufacturers to go above and beyond CAFE standards. ... There is a market for people that went above and beyond. We don’t think, number one, we’re not using this for social engineering, we think we should have realistic regulations that companies can comply with. There’s only three companies this year that are able to comply with Obama regulations. We’re still keeping the regulations in place, we still have two years of complying but companies are not able to comply.

REUTERS: Some of the critics say, ‘Hey you’re doing this for the oil industry,’...Because oil consumption will go up.

WHEELER: I have not met with a single oil company over CAFE standards since I’ve been in this job. The first person who told me that I was trying to do this for the oil companies was Senator Markey. When I met with him, it actually kind of threw me. There is on that I don’t remember as company, was a trade association. What they’ve lobbied with me over the last year was RFS. And there was one meeting when one of them was in the room, as they were leaving they said, “I don’t want this to be a totally negative meeting, we like what you’re doing on CAFE.” We’re not doing it for the oil industry, that’s the extent of conversations I’ve had with the oil industry on our CAFE proposals. It wasn’t immediate in my mind why they like it but this is nothing to do with the oil industry. We’re not doing it for the oil industry, I’m not doing it for the oil industry.

REUTERS: That meeting about RFS did go badly, and that CAFE ended up being the only positive thing, as you just said it.

WHEELER: That was like last summer. The RFS program... I was hoping that I could get everybody to like what we’re doing. At this point I am just hoping everybody dislikes me equally. We’re moving forward with the E15 and RIN market reforms in our proposal. We hope to have those finalized by May 30th, in time for the summer driving season. Seriously, there are things in that that are for both sides to be very happy about. The RIN price mechanisms should help bring down and keep the price of RINs lower and stable, which the oil industry likes. And the E15 is something that the ethanol industry likes. So hopefully we are helping both sides and moving forward with some policy that everyone can get behind and like.

REUTERS: So there are no plans to separate them (E15 and RIN market reform)?

WHEELER: No, they’ll come out at the same time.

REUTERS: What’s your contingency plan in case it gets sued and a court would issue a injunction that would stop the implementation of E15?

WHEELER: I don’t look for that to happen, I think we’re on very solid legal ground with E15. I do try to anticipate court action but we can’t regulate based on what we might fear from courts. I think legally we’re on solid ground with E15.

REUTERS: USDA has suggested that there could be a discretionary enforcement. Once Secretary Perdue mentioned it as well. Is that still a contingency plan?

WHEELER: We will have it ready in time for summer driving season. We won’t have to do anything like that.

REUTERS: On the small refinery waivers, which is the big issue, we’ve heard people like Senator Grassley and Senator Ernst almost openly saying that they expect EPA under your leadership to change tack from how your predecessor was issuing the SREs. What is your response to that?

WHEELER: We have already changed tack in the sense that we’re being much more transparent. We’ve created the dashboard last fall where we’re putting our information out in real-time on the small refinery waivers program and we’re being more upfront about what we’re doing and why we’re doing it. So we have changed tack. But the small refinery exemption program is authorized under the law. EPA was not implementing it, and we were sued three times and we lost three times. And we received appropriations language directing us to implement the small refinery exemptions program and we are. We will continue to, we will continue to follow the law. Under the way the process works is that they apply to Department of Energy first, and DOE reviews the information and determines whether or not there’s a hardship, an economic hardship for the refineries. And they submit their recommendations to us, we review the information, we look at it, we compare it with the data that we have and we go forward with a yes or no with the small refinery waiver.

REUTERS: Should the market expect fewer? There is the (possibility of) full waivers, partial waivers and simply fewer waivers.

WHEELER: You don’t get a small refinery exemption for the life of your refinery. It is based on economic data from year-to-year. Just looking at it from where I sit, and I have not reviewed the information from DOE yet, but the RIN prices have been relatively low and relatively calm since last spring so that would tell me that there should be less economic harm in the refining industry right now than there was a year ago. There’s more than just the price of RINs for economic harm, but just by that factor alone, I’d think maybe there would be fewer refinery exemptions because of that. Because we certainly do take a look at real-time data on the economic harm imposed on the small refineries. So that’s certainly one and that’s only one of the economic indicators, but it’s an important one. Last spring the RIN prices got up over a dollar and they remained under 20 cents since then. Most of the time they’ve been around 10-12 cents a credit. I’m not an economist but I would think that would factor into whether or not there’s an economic harm for a refinery.

REUTERS: Has this process been slowed because of the political considerations? The market was expecting 2018 decisions before March 30.

WHEELER: We still have not received the DOE recommendations yet. I’m told we might start receiving by the end of this week but we haven’t received them yet. We have not held up anything. We had a couple that were left over from 2017. We processed most of 2017. But we had a couple that came in late, one that required a little more analysis, but we haven’t physically received. We got a list from the Department of Energy a couple weeks ago of the 2018 universe but they haven’t actually forwarded their recommendations to us yet.

REUTERS: So if the DOE input arrives by the end of the week then what are we looking at timing-wise?

WHEELER: Our technical guys then take a look what DOE sends us. If they send us 30 of them in one day, it may take us a while to process all of them. If we get one or two...it would be a little bit easier to process them if they’re scattered, but I don’t know how DOE plans on sending them over. So I can’t hazard to guess on how long it’s going to take us until we see what the universe is and the amount of data we have from the DOE.

REUTERS: Co2 emissions have gone up by the largest amount in eight years. According to some studies, Co2 emissions would go up under your proposed ACE (Affordable Clean Energy Rule). This would suggest stronger regulation is needed. What do you define as strong regulation?

WHEELER: Strong regulation is legal regulation. The CPP (Clean Power Plan)... I get accused of rolling back the CPP by environmentalists and Democrats on the Hill. My simple answer to that is you can’t roll back a regulation that never went into effect. The CPP was stayed by the Supreme Court. It is rare for the SCOTUS to stay a regulation in the environmental legal arena. I think that is very noteworthy. There was a lot of criticism at the time that it went beyond the Clean Air Act. You go back to the MATS decision. After EPA lost the MATS decision the administrator at the time said it didn’t really matter since everyone has already complied with it anyway. When I read the MATS decision at the time I think I said in a blog post somewhere I thought Justice Scalia...he was writing toward the case he hadn’t received yet, the Clean Power Plan. ... I was not completely surprised by the SCOTUS stay of the CPP. I think what is effective regulation is one that follows the law and will be held up in courts. So we took a hard look at where we believe the Obama administration was wrong on CPP and what was outside the bounds of the CAA and the fact they went outside the fenceline. I think that was one of the main sticking points and the rationale for the stay. What we did was to put forward a proposal that follows the authority Congress has given us. I believe the ACE regulation is going to stand up in court. It is going to give real reduction. We are projecting a reduction of 34 percent in the electric power sector over the life of the regulation. I think that is the responsible thing for the agency to do. I don’t think it’s responsible with our form of government with three branches, I don’t think it’s EPA’s job to write the legislation on its own. We have to follow the statutory constraints Congress has given us, and I think we are doing that under the ACE proposal. I believe we are on a course of getting meaningful Co2 reduction. I think that’s the responsible thing for a regulatory agency to do.

REUTERS: EPA scientists recently published a report looking at the impacts of climate change across 22 sectors and said early adaption could reduce its worst impacts. Some of your scientists internally continue to believe more stringent action is needed to address climate change. You have said in a hearing that climate change is not the greatest problem facing us right now. Do you trust your internal scientists?

WHEELER: I trust my internal scientists. I trust my career scientists. That study is not an EPA study. We encourage our scientists, we have some of the leading scientists in the world working on a number of environmental issues. We encourage our scientists to publish. But just because our scientists publish something in a journal doesn’t mean that that’s agency policy or all the other scientists at the agency agree with that particular study. There is a process for statement from the agency. There is a process where we go through intra-agency review where we have a review by all the offices. Then governmental review. Those studies were not EPA studies. We all encourage our scientists to conduct research, but I don’t think you should confuse a study published by one of our scientists as official EPA policy. I have not read that article, I just saw a news a clip about it, but I haven’t read it and I haven’t talked to the scientist that wrote it. But I have had several briefings from our career scientists on climate change and asked questions about climate change and that informs the decisions that I make. I can’t just look at the science in a vacuum. We are not a science academy making proclamations about science. We are a regulatory agency. We have to take the science we have developed and apply it to our regulatory constraints that we have and regulatory authorities that we have and move forward. I said before I took this job that I believe in climate change and man has an impact on climate change. But I believe the number one issue facing our planet today is water. I’ve been saying that for a number of years. I said that at a climate conference at MIT back in the early 2000s. It wasn’t well received then and it’s not always well received now. But it’s the truth. When you have a thousand children that die a day from lack of drinking water, that’s a crisis and that’s a crisis that we - we collectively as the world - know how to solve that problem. We know what it takes but we haven’t had the will internationally to solve that problem. And we do a number of pilots around the world and a number of other organizations both public and private and international do pilot programs and they work with the community on drinking water here and there. What we need to do is take those pilots to the next generation. We have a good story to tell in the United States. Our water is not perfect but 92 percent of our water systems meet the EPA standards every day. We are working on a lot of innovative ways to provide safer drinking water to the American public. Innovative financing ways. In addition to the SRF we have the WIFIA (Water Infrastructure Finance and Innovation Act) program. It’s the second year of that. We’ve only issued eight grants under WIFIA loan program. We just announced the next round of grants. We just published it last Friday and communities have until July 5 to give us a letter of intent for the next round for WIFIA loans. If you could work that in, that would be great so the public knows it’s out there.

REUTERS: Jumping onto PFAS, the kind of process how EPA addresses PFAS and PFOA, ... why didn’t EPA set the maximum contaminant level?

WHEELER: This is a process under the law of setting the MCL and we started the process. I’ve actually been surprised by the heat we have taken regarding the PFAS and PFOA management plan. That was a career staff document and remains the most comprehensive action plan this agency has ever developed for an emerging chemical concern. We had people from all of our program offices working on that. What I tasked everyone with was to go back and be creative and look at the authorities we have and figure out how many different ways we can address this issue and what we can do with the American public to make sure we are addressing PFAS and PFOA. And they came back with some really creative ideas. And we are moving forward. And we’re moving forward not only on the MCL side but on other - on TRI, the Superfund program, the CERCLA program. We are addressing it through all of our staff. And at the time, we are conducting more research. Since the report came out we’ve had this incident in New Mexico with cows and we’re now working with the USDA, trying to do some cutting edge research there. I’ve visited three of our labs that do PFAS and PFOA research. I was just in our Cincinnati lab and they do PFAS and PFOA research there. There is a misconception out there that we know what the problem is and we know how to fix it. There are thousands of PFAS and PFOA chemicals out there - there’s long chain and short chain. We are still trying to figure out which ones are the most harmful to the public. I was under the misconception that the same treatment will work for any of the PFAS PFOA substances but it doesn’t. Some of the treatment technologies work for some and they don’t work for others. We have a lot of research to do. We are doing more research on identifying up front through our chemicals program as far as taking a look at significant new uses before anybody could start putting into commerce new PFAS and PFOA compounds, whether or not they pose a problem to environmental or public health. We’re looking at how to detect when they are in the water easier and when to test for them. It’s not the same test for all of the compounds either. At the same time we haven’t slowed down on enforcing. We have taken eight enforcement actions and in addition we provided technical assistance to a couple of dozen other enforcement actions by states and local governments around the country. So some of the communities and members of Congress have complained that our state is having to clean this up without EPA assistance. Actually no, we are providing the technical assistance so they know how to clean it up, we are providing the technical assistance so they know how to detect it. We are also doing some really innovative imaging - GIS - to figure out where the problems might be before they are detected. We know where the chemicals were produced. We know where they were manufactured. We also know to some certainty where they were used the most ... airports and firefighting ... so we are able to use our GIS mapping to overlay that with the water systems and aquifers to go out to the communities and test before people there realize it. We are using some innovative GIS technology to try and anticipate where the next problem may occur. We are really at the forefront of this. I just applaud our career staff, many of them...pulled all-nighters to get everything together.

REUTERS: A lot of young people look at what your EPA is doing on emissions... and they look at your comments that climate is not the most important environmental problem...

WHEELER: But it’s important and we are addressing it.

REUTERS: But they point out water issues are part of the climate change problem, especially with drought.

WHEELER: Oh sure, and I’ve said that, that climate impacts water. But the problems we are having with water have been around long before climate was an issue. We’ve had problems on water infrastructure, on waste in the oceans, and in drinking water for a hundred years.

REUTERS: Do you worry that concern about a lack of leadership on climate change will spur a movement that will get Democrats elected next year?

WHEELER: I can’t look at the politics of this, that’s just not my job. I can’t look at the politics and how this is going to impact elections. I have to address the environmental issues and problems as I see them and as they are presented to me by the people here at the agency. Yes, climate is an issue and we are working to address it, but I think water is a bigger issue and I talk about both and continue to. But there hasn’t been enough talk about water. The previous administration focused all their energies on one issue and that was climate change. You take a look at the website that we are accused of taking all the climate change information off the website. We didn’t. It’s on there, it’s archived, but it’s on there. But that’s not the only environmental issue the world faces. I do fear that because so many people only talked about climate change, you’re right, there could very well be a new generation coming up saying that’s the only environmental issue. And it’s not. I am going to have to be very careful in how I say this, because I don’t want to be misrepresented here. If I could go off on plastic straws for a second. Yes, it’s important to get all plastic out of the waste stream. Are plastic straws the be-all and end-all of this? No. By definition of the size of the straw and the amount of waste the straw makes up. My biggest concern is that in switching away from plastic straws that people are going to think that that problem is solved because they are no longer using a plastic straw. And that doesn’t solve the problem. We have the same issue on recycling. We have a huge recycling crisis right now, there are not enough products for recycled material to go into. We are just stockpiling recycled materials in warehouses. When I say “we” it’s not the EPA. Recycled products are being stockpiled in warehouses and loading docks around the country because China quit accepting the materials a few years ago. But most Americans think if I put my stuff in the recycling bin at the street corner the problem is solved. That doesn’t solve the problem. We hosted a recycling summit last fall, the first time the agency ever did that. We brought in the people from the entire value chain, from the manufacturers of the raw virgin materials through the manufacturers of the goods, to the packagers, to the people who collect the recycle materials, to the end users who take the materials and turn it into new products, and we gave them four charges to work on, and we’ve had continuing meetings with the groups since then and we are going to have another summit this fall. I have a real concern and this is part media, part politician, people talk about this issue du jour and that’s all people focus on and they don’t realize that that’s not solving all the problems that are out there.

REUTERS: For your policies to be effective, you would need Trump to win.

WHEELER: He’s going to. I’m looking at a five-and-a-half-year planning horizon at this point. I’m going to have five-and-a-half years to complete everything we are trying to do. And it’s why I continue to talk about water and the importance about doing something for water.

REUTERS: You guys told the autos on a call that you were targeting May or June to finalize rule. Is that still the case?

WHEELER: What I said in the auto show last week was I’m targeting late spring, early summer. And I do that because seasons last lot longer than people realize. We hope to get it as quickly as possible. We’re working with DOT. It’s a complex rule-making. We hope to get it out as quickly as possible.

REUTERS: On diesel, you’ve gotten aggressive on enforcing the diesel cases. Do you think that the auto community got the message that you’re going to catch cheating?

WHEELER: I hope so. Because we are. If there is cheating we are going to catch it. It’s not just the automobile manufacturers, it’s the after-market defeat devices. We’ve taken a lot of enforcement action to get defeat devices off the roads. It’s not just setting standards, you have to enforce the laws, too. And we’re doing much more enforcement than we’re given credit for.

REUTERS: How are you going to accommodate the oil states and corn states under the RFS (Renewable Fuel Standard)?

WHEELER: RFS is a very important program. I worked on the legislation in 2004 and 2007. I was the staff director for both of those energy bills on the environment committee. This was an issue that went on to the environment committee. It was not in the jurisdiction of the energy committee, it’s the jurisdiction of environment committee. But it’s a very important program. The way it was set up, we’re going to have rule-makings every year. We have to do the RVO (Renewable Volume Obligation) every year. We’ve done another thing on certainty, which the oil industry was very happy that we did, was to get the RVO out on time the last two years. It’s the first time that’s ever happened. Providing more certainty, more transparency helps the program and we’re hoping to do that. We’re being very transparent on what we’re doing on the E15 and the RIN price mechanisms. So I think the fact that the RIN prices have been low for almost a year shows that program is working and there’s transparency and the market is stabilized. It’s when you have uncertainty, regulatory uncertainty, congressional uncertainty that can ripple through the RIN price markets.

The program does expire and people are going to have to start talking about and thinking about what the next generation of RFS looks like. But we’re not there yet. Again, I’m focused on transparency, I’m focused on certainty, and I think that’s what we’re doing by announcing we’re going to have the E15 on time for driving season, by announcing that we’re going to do the RVOs on time, by putting the information out on our dashboard on small refinery exemptions. The more upfront and open we can be I think the better the program is...I think we can have a program where both sides can look at and say this is what the Congress wanted, this is what they intended and EPA is doing that upfront and above board and that’s my goal.