The owner of a Montebello waste hauler calls a state fine for diesel emission violations “extortion” and said the order to pay $250,000 has forced him to lay off six of his 40 employees.
Key Disposal Inc. and its president, John Katangian, were initially cited by the state Air Resources Board for failing to install diesel particulate traps on its waste-hauling trucks and for failing to keep adequate records of fleet inspections.
In a press release on the fine against Key Disposal, Air Resources Board Chairwoman Mary Nichols cited the health risks of diesel exhaust. “Any business that fails to take its responsibilities seriously or attempts to take short cuts can expect to pay a high price for its actions,” the release quoted.
Katangian told the Business Journal last week that he had ordered the diesel particulate traps but a shortage had created a huge backlog and thus a delay in receiving the traps.
As for the record keeping, he acknowledged his company’s practices “weren’t perfect.”
The Air Resources Board initially tried to negotiate a settlement with Katangian, but the talks stalled.
Board staff then took the case to the state Attorney General’s Office for prosecution. Before the case went to trial, Katangian agreed to a $500,000 fine. The court ordered that he pay $250,000 up front, with any future violations triggering payment of the remainder.
As part of the settlement, Key Disposal must immediately install diesel particulate traps on all remaining vehicles in its fleet and must enroll drivers in an emissions reduction compliance class at a local community college.
“I really had no choice but to agree,” Katangian said. “The state has very broad powers. It’s tough to fight the Attorney General’s Office. It’s really a form of extortion.”
Katangian said the up-front $250,000 payment has forced him to lay off six of his 40 employees and reduce medical benefits for the rest. “I didn’t want to do this, but I simply didn’t have the money. The state can now add the cost of unemployment and health care for these folks to its tab.”
EPA Leniency
Three L.A.-area companies have voluntarily disclosed to the U.S. Environmental Protection Agency that they were in violation of EPA rules and had taken steps to correct the problems, thereby avoiding tens of thousands of dollars in penalties that the agency could have imposed.
The three companies – tire-filling manufacturer Arnco Corp. in South Gate, vehicle air-horn maker Grover Products Co. in Los Angeles and heating equipment manufacturer Redman Equipment in Torrance – took advantage of an EPA policy that allows companies to avoid penalties by voluntarily disclosing violations and taking steps to correct them.
Arnco and Grover Products reported that they had exceeded permissible release levels for several toxic substances. They avoided fines of up to $35,000 and $58,000, respectively. Redman Equipment failed to submit all the proper paperwork for some of the copper it uses. It avoided a fine of up to $22,000.
“This is a win for communities and for the EPA,” said Enrique Manzanilla, the EPA’s Communities and Ecosystems Division director for the Pacific Southwest region. “Responsible businesses take it upon themselves to check for compliance and promptly disclose any environmental violations found. If they correct them quickly, these companies often see penalties reduced – in some cases to zero.”
SBA Sizes Up Program
The U.S. Small Business Administration wants to make 70,000 more businesses eligible for a popular loan program.
The boost in eligibility was announced last week as part of a wider effort. The SBA wants to increase eligibility in 71 business categories for a variety of loans, including its popular 7(a) loan guarantee program, which allows participating banks to give favorable interest rates.
The SBA had announced in May it was temporarily making bigger businesses eligible for 7(a) guarantees in order to combat the effects of the recession and credit squeeze. Last week’s announcement signaled the agency’s intention to make the changes permanent.
The SBA hasn’t overhauled its size standards for at least 25 years.
Under the proposal, businesses with a net worth of up to $8.5 million and an average two-year profit of $3 million would be eligible for 7(a) loans. The previous limit was $7 million in net worth for most retail and service companies. The limits for other industries varied.
Other SBA lending programs are being reviewed to make sure the business-size standards reflect current economic and industry conditions.
“This review and proposed changes will help make these critical programs available to more small businesses,” SBA Administrator Karen Mills said in a statement.
Staff reporter Howard Fine can be reached at [email protected] or at (323) 549-5225, ext. 227.
