Regulators, Businesses Clear the Air With Compromise

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How often does a fight between L.A. air quality regulators and small business result in a solution that protects both air quality and jobs?

Not often enough. However, a recent decision by the South Coast Air Quality Management District might point the way toward how the business community and air regulators can work together on the goal of retaining businesses and improving air quality.

The story goes back to 2008 when the air district was nearing completion on a rule required by a section of the federal Clean Air Act. This rule would have imposed more than $30 million in additional fees on more than 450 Southern California companies considered major stationary sources of emissions. For the layman, “major stationary sources,” at least in Los Angeles, essentially means businesses that can emit at least 10 tons a year of a particular pollutant.

This section of the law makes no sense for Los Angeles because the air district already has the strictest regulations in the country on stationary sources. Those regulations over the years have reduced emissions by more than 90 percent. Furthermore, imposing new and higher fees on businesses wouldn’t have any measurable impact on air quality because the vast majority of smog-forming emissions are from mobile sources, i.e., cars and trucks.

The targeted “major” sources of emissions included not only refineries and electric generators, but also hospitals, bakeries and small manufacturers. These entities already pay millions of dollars in fees to the air district, and have invested literally billions of dollars for emission control equipment.

One of these “major” sources was a small manufacturing company employing 26 workers that told the air district that it had invested in the best available control technology to comply with air regulations and paid an annual fee of $4,500. If the new fee went into effect, the business would be forced to pay an additional $63,000 a year. The company explained to the air district that it didn’t have $63,000 in the bank in the midst of the economic depression, and it would be forced to shut down and lay off its workers. Furthermore, the proposed rule was written in such a way that fees would increase as the economy recovered and companies had greater business.

Fortunately, about halfway through the rulemaking process, some members of the air district’s governing board, particularly Orange County Supervisor Bill Campbell, recognized the gross inequity of this section of the Clean Air Act and the implementing rule. It was approximately eight months prior to rule adoption when Chairman William A. Burke took a courageous stand and directed the agency staff to work with the U.S. Environmental Protection Agency, California Air Resources Board and others on a solution.

Much improved

Executive Officer Barry Wallerstein and his staff worked hard on a solution and at its February meeting the air district passed a different and much improved Rule 317, which would satisfy the federal Clean Air Act requirement through an alternative that would not create extra costs for L.A. employers.

Under the improved rule, businesses are credited for the contribution they’ve made to cleaner air, and can focus on economic recovery and job growth. The air district’s solution will save hundreds if not thousands of jobs, many of which are located in communities where there is high unemployment.

That’s very good news. But the fix is temporary, and some environmental groups have threatened to attempt to overturn the decision in court. Legal action would put these thousands of jobs at risk again with little or no environmental benefit in return.

There were many lessons learned over the past two years. First, it’s important for all sides to understand that air quality and jobs are not competing goals. For Los Angeles to flourish we obviously need both. Small businesses learned that if they made a case for common-sense regulation, there were decision-makers who would listen and act responsibly. Government regulators learned that some regulations have unintended consequences that must be addressed.

This was a win for all involved and for L.A.’s future.

Bill La Marr is executive director of the California Small Business Alliance, which is based in Anaheim and represents nearly 10,000 small businesses in Los Angeles.

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