California's oil industry including the operators of six refineries in L.A. County is challenging the state Air Resources Board's aggressive mandate requiring all gasoline sold in the state to contain at least 10 percent ethanol by 2010.


Back in June, the air board enacted the standard as part of Gov. Arnold Schwarzenegger's strategy to move toward a lower carbon fuel standard. Schwarzenegger said that requiring the ethanol blend would improve air quality and reduce the state's dependence on foreign oil. Refineries that don't meet the deadline must fund other programs to reduce the number of highly polluting vehicles on the state's roads or face penalties.


But the Western States Petroleum Association, the trade group representing California's oil interests, says this mandate is unrealistic and has filed a petition with the air board seeking to extend the deadline at least an additional two years.


And, in an ironic twist, the association is citing the need to comply with other environmental regulations as the chief reason for not being able to meet the 2010 deadline.


"We're not asking the board to change the new fuel specifications," said Cathy Reheis-Boyd, chief operating officer for the trade association. "But our companies need a reasonable time frame to build the required facilities given the lengthy process to comply with numerous state and local regulations."


Complying with the California Environmental Quality Act and obtaining permits for changes to refining facilities can take more than four years for each facility, she said, noting that it took 51 months to meet a 1996 mandate to formulate cleaner-burning gasoline.


L.A. County is home to six major refineries, including BP plc's Carson refinery, Chevron Corp.'s El Segundo refinery and the former Shell Oil refinery in Torrance that was acquired earlier this year by Houston-based Tesoro Corp. Pipeline and distribution terminal operators that blend fuels could also be impacted.


The air board has 30 days to respond to the trade association's petition, which was filed on Aug. 10.


Diesel Truck Rules

The Air Resources Board will conduct a workshop in El Monte on Wednesday to begin crafting regulations to reduce diesel emissions from heavy-duty on-road trucks.


The meeting comes just weeks after the board passed a landmark and hard-fought regulation limiting diesel emissions from an estimated 180,000 off-road construction vehicles.


The on-road diesel regulation is expected to be even more far-reaching; it would apply to all trucks with a gross vehicle weight exceeding 14,000 pounds. The goal is to reduce diesel emissions by the year 2014 to levels that can be achieved on 2004 model engines that have diesel particulate filters on them. Currently, only a small fraction of trucks on the road have these filters.


In a parallel series of hearings, the air board is trying to determine how many of the hundreds of thousands of diesel trucks using the state's roads and highways should be subject to the rule. To give some idea of the potential scope, in its hearing notice, the agency states: "This regulation includes, but is not limited to: long and short haul truck-tractors, construction-related trucks, agricultural trucks, wholesale and retail goods transport trucks, tanker trucks, and package and household goods transport trucks."


Whatever regulation does come forward, it's certain to meet stiff resistance from truckers and from the wide array of industries that rely on diesel trucks to transport their goods.


The hearing is scheduled to start around 10 a.m. Aug. 22 at the Air Resources Board Auditorium at 9534 Telstar Ave. in El Monte. For more information, log onto the board's Web site at arb.ca.gov.


New Biz Tax Credits?

The city of Los Angeles is considering granting business tax discounts to companies that locate facilities in the state-designated enterprise zones within L.A. city limits.


Los Angeles City Council President Eric Garcetti and Councilwoman Wendy Greuel proposed a motion late last month to consider waiving most of the business taxes for businesses locating in any of the city's three enterprise zones. The proposal builds on existing business tax waivers and credits for the city's federal empowerment zone. Currently, businesses locating within this zone receive a business tax waiver of $500 and have taxes frozen at the current rate for five years.


The motion directs city Chief Legislative Analyst Gerald Miller to survey other major cities to see what business tax incentives they offer. Final council action on this proposal is expected in the fall. This move follows approval by a council committee to reduce the gross receipts tax an additional 4 percent effective Jan. 1, 2008, as mandated by a 2004 reform package.


Staff reporter Howard Fine can be reached at (323) 549-5225, ext. 227 or at hfine@labusinessjournal.com

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