Wilson Denounces--but Doesn’t Change--Diesel Rule : Environment: The governor accuses agencies of ‘regulatory indifference,’ plans probe into damage caused by cleaner fuel.

Stopping short of ordering a change in the state’s clean-diesel rule, Gov. Pete Wilson on Friday lambasted the California Air Resources Board and U.S. Environmental Protection Agency for an “arrogant regulatory indifference to the marketplace and to people’s livelihoods.”

Fuel shortages, price hikes and reports of engine malfunctions followed introduction of the less-polluting fuel Oct. 1. Wilson’s comments came as he endorsed the findings of a task force he set up to look into complaints from the trucking industry and agribusiness.

“California has no choice but to clean up the air emissions from mobile sources, and suspension of the CARB rule is inconsistent with that goal,” Wilson wrote in a letter to the task force’s head. He added that he wanted to allow the diesel market to “regain equilibrium--a goal best achieved by not switching fuel regulations.”

Also Friday, Wilson appointed James M. Strock, head of the California Environmental Protection Agency, to lead a new task force to investigate reports of mechanical damage to engines from the new fuel and assess whether compensation for such damage should be made.

Wilson noted, however, that the findings of the first task force suggest “that the CARB fuel standards can ultimately be implemented safely.”

The California Trucking Assn. expressed disappointment that Wilson did not suspend the clean-diesel rule.

“But we’re pleased that Wilson is going to form an independent group to investigate the mechanical problems associated with the fuel,” said Dave Titus, spokesman for the association. “We can prove beyond a shadow of a doubt that the fuel is responsible for equipment failures.”

Denny Zane of the Coalition for Clean Air said: “We’re certainly pleased that the governor is retaining the rule, but we think he is mistakenly pointing the finger at the ARB for the uproar over prices. The finger should be pointed at the price gougers.”

The disruptions that followed introduction of the new diesel formula have importance beyond the moment because a far more ambitious plan to require reformulated gasoline for all California autos goes into effect in 1996.

The controversial ARB rule, adopted five years ago, required that the state’s diesel fuel be reformulated to contain lower levels of health-endangering aromatic hydrocarbons. On the day the rule took effect, diesel had to meet tougher federal standards for sulfur content. A 4.3-cent-per-gallon federal fuel tax hike also took effect.

California refiners had estimated that it would cost only 6 cents more a gallon to meet the ARB rule, assuring state officials that supplies would be plentiful, according to the ARB.

The board also relaxed the deadline for some refiners, boosting diesel supplies.

But spot shortages--reportedly from hoarding as well as other problems--quickly developed, particularly in Northern California. Prices soared by up to 40 cents a gallon in some areas.

Truckers at first blamed only the California diesel rule. But as similar price hikes spread across the country, independent truckers staged wildcat strikes in several states, including California.

Nevertheless, truckers, farmers and fuel wholesalers complained to Wilson’s task force that the ARB rule had caused most of the hardship.