PRUITT UNDER ATTACK FOR PAY RAISES, CONDO-GATE: The negative headlines are piling up for Environmental Protection Agency Administrator Scott Pruitt, as the Atlantic reported Tuesday morning that he gave two of his top aides big pay raises after the White House said no, and the White House said it is investigating Pruitt for living in a Washington condo co-owned by the wife of an energy lobbyist last year.

Pruitt paid $50 per night for a single bedroom in a condo near the Capitol, only paying on the nights he actually slept there, an amount significantly under the market rate.

• Deep dive: The White House has started a review of Pruitt’s activities to “dig a little deeper,” a White House official told the Wall Street Journal Monday.

The official said the White House was not content with the EPA’s response to the controversy, after the agency’s ethics office issued a retroactive determination that the agreement did not break federal ethics standards and was a “reasonable market value.”

• Lobbyist link? Meanwhile, during Pruitt’s time as a tenant of the condo, the EPA approved a Canadian energy company’s pipeline expansion plan, a project promoted by the firm of the lobbyist linked to the condo, the New York Times reported late Monday.

“Any attempt to draw that link is patently false,” said Liz Bowman, a spokeswoman for Pruitt.

• Favored hands: For the pay raises, the embattled EPA administrator used an obscure agency provision, known as the Safe Drinking Water Provision, to give big raises to two of his long-time, closest aides, the Atlantic reported. He acted after the White House declined to approve the raises.

• Environmentalists smell blood in the water: The environmental group Friends of the Earth has hired a truck carrying the digital message “Stop the Corruption. #FirePruitt,” starting at noon Tuesday.

“Pruitt is so arrogant that he’s trying to outsmart Trump, giving massive raises to his loyalists. This end run around ethics laws has to stop. Congress must step up and fire Pruitt,”  said Lukas Ross, the group’s climate and energy campaigner.

The truck will circle EPA headquarters, Congress and the condo where Pruitt rented his bedroom. The truck also will carry the message, “Scott Pruitt spent $200k+ of your taxes on his lavish lifestyle.”

TRUMP TELLS PRUITT ‘WE GOT YOUR BACK:’ President Trump reportedly called Pruitt Monday night and told him “we got your back.”

An administration official told reporters Trump told Pruitt, “Keep your head up. Keep fighting. We got your back,” according to reports.

White House chief of staff John Kelly then called Pruitt Tuesday morning and echoed Trump’s words. Politico reported that Kelly had once contemplated firing Pruitt.

• Pruitt speaks: Pruitt on Tuesday hosted a press conference announcing his decision to reject strict vehicle emissions standards imposed by the Obama administration. While he did not address the recent negative stories, he seemed to direct his messaging at the president.

“This is another step in the president’s deregulatory agenda,” Pruitt said. “The president has shown tremendous courage to say the American people will be put first.”

Welcome to Daily on Energy, compiled by Washington Examiner Energy and Environment Writers John Siciliano (@JohnDSiciliano) and Josh Siegel (@SiegelScribe). Email [email protected] for tips, suggestions, calendar items and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email and we’ll add you to our list.

DEMOCRATS WANT HEARINGS ON PRUITT’S, ZINKE’S AIR TRAVEL: A pair of Democrats on the House Oversight and Government Reform Committee are calling for hearings to examine the travel habits of top Trump administration officials in the wake of reports numerous Cabinet secretaries have been taking flights aboard private and military aircraft.

Reps. Elijah Cummings, D-Md., and Raja Krishnamoorthi, D-Ill., sent a letter to committee Chairman Trey Gowdy, of South Carolina, on Tuesday and said a hearing was needed to examine whether the Trump administration has implemented “adequate controls” to protect taxpayer dollars regarding administration officials’ travel.

Both Pruitt and Interior Secretary Ryan Zinke are facing inspector generals’ probes for their travel habits.

PRUITT KILLS OBAMA AUTO RULES, HUGE FIGHT COMING: Pruitt announced Monday he is scrapping former President Barack Obama’s strict new fuel-efficiency and greenhouse gas rules for cars and light trucks.

Pruitt said the Obama administration’s rules that set a 54-mile per gallon standard by 2025, up from the current average of 38.3 mpg, were “not appropriate” in light of lower oil prices and soaring popularity of pickup trucks and sport-utility vehicles, a trend that he says has reduced demand for more-efficient cars.

• Fight for your right: The decision sets up a fight with California and 12 other states that had adopted the tougher Obama standards as a way of reducing man-made greenhouse emissions that most climate scientists say contribute to climate change.

The states that follow California, including New York and Pennsylvania, account for roughly a third of the nation’s auto market.

• Waive the waiver? Pruitt said he is still examining whether to allow California to keep its waiver, permitted by the federal Clean Air Act, to force the state and others to follow weaker standards, but he seemed to suggest which way he’s leaning.

CORN ETHANOL INDUSTRY SEES OPPORTUNITY IN PRUITT’S CAR REG ROLLBACK:  The ethanol industry’s top trade group is calling on Pruitt to make changes to fuel-efficiency regulations that would benefit higher blends of corn ethanol.

The Obama administration made it harder for ethanol-fueled vehicles, called flex-fuel vehicles, to be counted toward meeting the clean-vehicle rules. But the Renewable Fuels Association sees Pruitt’s move to roll back Obama’s program as an opportunity to carve out a new road for ethanol-powered vehicles.

• Rather than curse the darkness: As environmentalists slammed Pruitt’s decision, the Renewable Fuels Association was encouraging the EPA and National Highway Traffic Safety Administration “to strongly consider the role of high-octane fuels,” which means blends of ethanol of 15 percent and higher to meet the needs of high-compression, turbo-charged engines that will be needed to make cars more fuel efficient in the 2022-2025 timeframe.

• Fueling regulations: “For too long, our light-duty vehicle fuel economy and [greenhouse gas] emission regulations have focused exclusively on the vehicle,” said Bob Dinneen, RFA’s president and CEO.

“Fuels and engines work as integrated systems, and we have provided mounds of evidence that high-octane, low-carbon ethanol blends in optimized engines would be the lowest-cost means of achieving compliance with future fuel economy standards.”

TRUMP TARIFFS COME BACK TO HAUNT ETHANOL: China on Monday imposed a 15 percent tariff on ethanol imports, as it retaliates for Trump’s tariffs targeting the country.

Dinneen said the Chinese will find their government’s move will hurt their consumers, while prodding Trump to look for a quick end to the protectionist actions.

• Multi-sided harm: “This one-two protectionist punch will ultimately harm Chinese consumers who are being denied access to the lowest-cost, highest-octane and cleanest fuel on the planet,” Dinneen said. “But it will also hurt farmers in the U.S. who have worked to build value-added markets for their commodities here and abroad.”

• Hoping for a quick fix: Dinneen urged the administration to work “aggressively to have this latest attack on America’s rural economy removed as quickly as possible.”

CALIFORNIA THREATENS TO SUE AFTER EPA REJECTS AUTO RULES: California Democratic Attorney General Xavier Becerra said Monday he is “ready to file suit” over Pruitt’s rejection of the Obama administration’s auto efficiency rules.

• Go your own way: Mary D. Nichols, the chairwoman of the California Air Resources Board, which regulates tailpipe emissions in the state, vowed to continue to apply California’s tougher standards, regardless of the EPA’s move to weaken the national rules.

“California will not weaken its nationally accepted clean car standards, and automakers will continue to meet those higher standards, bringing better gas mileage and less pollution for everyone,” Nichols said.

• But, process matters: The EPA, in rejecting Obama’s standards, pointed out that that Monday’s determination isn’t a final action and thus can’t be sued over. Lawsuits can’t be filed until the agency concludes its rulemaking, meaning after it sets new standards.

TRUMP MEETINGS FOLLOWED BY NATURAL GAS DEALMAKING: Trump’s meetings Tuesday with the heads of three eastern European countries — Estonia, Latvia and Lithuania — will be followed by the signing of natural gas export deals with U.S. energy companies.

The visit comes as the three countries celebrate the 100th anniversary of their independence from Russia.

The day includes the Eastern Europeans meeting with Trump in the morning followed by a trip to the Chamber of Commerce, where they will spend the afternoon in panel discussions with industry leaders and listening to a speech by Commerce Secretary Wilbur Ross, according to the U.S. Energy Association.

The event will be topped off by Lithuanian President Dalia Grybauskaite signing two memorandums of understanding between Texas-based Freeport LNG and Lithuania’s Klaipedos Nafta for cooperation on liquefied natural gas terminals. Another will be signed between Freeport LNG and Lithuania’s natural gas supply and trading company, Lietuvos Duju Tiekimas, for LNG supplies.

ZINKE TO RECONSIDER RATE HIKES AT NATIONAL PARKS: The Interior Department is looking to back off proposed admission price hikes at 17 national parks after a deluge of public protest.

Interior officials said the agency is not planning to scrap the increases altogether, but will be looking to reduce them significantly after the agency received tens of thousands of public comments protesting the changes.

The agency shared the comments with the Washington Post on Monday, with officials telling the newspaper it now plans to modify the proposal.

JUSTICE DEPT. SUES CALIFORNIA TO DEFEND ZINKE’S RIGHT TO SELL OFF LAND: The Justice Department is suing California over a state law that blocks the Trump administration from selling public lands to private companies, arguing that the state is violating the U.S. Constitution.

“The Constitution empowers the federal government — not state legislatures — to decide when and how federal lands are sold,” Attorney General Jeff Sessions said in a statement. The Justice Department announced the lawsuit Monday, filing it in federal court in Sacramento.

CYBERATTACK SHUTS DOWN COMMUNICATIONS SYSTEM FOR PIPELINE NETWORK: A cyberattack on Monday hit the electronic communication system used by a major pipeline network.

The electronic data interchange used for Energy Transfer Partners’ pipeline system was attacked and will be shut down until “further notice,” Energy Transfer said in a note to shippers obtained by Bloomberg. The attack did not affect the transport of natural gas through the company’s pipeline system.

What was affected: Energy Services Group operates the communications system that was attacked, which facilitates transactions of oil and gas moving through the pipelines.

It conducts its business through a computer-to-computer exchange of documents with customers.

RUNDOWN

New York Times Pruitt had a $50-a-day condo linked to lobbyists. Their client’s project got approved.

Reuters China tariffs on U.S. ethanol to cut off imports in short-term

Axios Investors stunned over oil producer’s climate-change exemption

Bloomberg Microsoft continues clean energy buying spree

Washington Post Ten percent of Antarctica’s coastal glaciers are now in retreat, scientists find

CNBC Japan sees opportunity in Southeast Asia’s energy markets, looks to export LNG

Quartz The biggest obstacle to deploying solar energy in Africa is skepticism in high places