AQMD will shift burden from users to suppliers.

New regulations give agency fewer culprits to police

Already hit by the recession and already strict regulation, local manufacturers and suppliers are bracing for a new threat -- air quality regulations designed to aid business.

The regulations are part of a sweeping reform package proposed this month by regional air quality officials stung by criticism and pressure from the business community. Tucked amid the talk of faster permit approvals and market pollution control incentives is a major shift in the focus of the South Coast Air Quality Management District, which regulates air quality in Los Angeles, Orange, Riverside and San Bernardino counties.

Most small and mid-sized businesses in Southern California would see no further increases in direct regulation as officials instead go after the manufacturers and distributors of products containing smog-forming chemicals.

This shift, already under way in some sectors, has upset some manufacturers. They see higher product costs and limits on how much they will be able to sell into the region. Eventually, they say, the limits will raise product costs to users, including the same small businesses the AQMD's new policy is designed to help.

"Everyone here gets paid on the volume of coatings that we sell," said Don Fogerty, regional manager for Chem Central Inc., a Chicago-based solvent and coatings manufacturer. "If we are limited in the amount of coating we can sell in the Los Angeles basin, then what am I supposed to tell my employees? Tell them to sell less? To take pay cuts? To find other jobs?

Officials at one of Fogerty's customers, Garden Grove-based Laminating Co. of America, predicted their costs for coatings would double or even triple if they must be reformulated to meet AQMD's new policy.

Alternative coating products, even though not as expensive as reformulated coatings, do not perform as well, said Darrell Palma, the firm's environmental, health and safety coordinator.

AQMD officials countered the reforms would affect far fewer businesses than are now feeling the heat from regulations.

"We know there is going to be heat by going after the materials suppliers," said AQMD Executive Director James Lents. "Yet we feel this takes the regulatory burden off of small business. Instead of 10,000 little businesses being regulated, we have chosen to focus on 500 suppliers."

Not only will fewer firms be affected but the lower number of regulated business means AQMD would have a far better grasp of what is actually being emitted, Lents said.

The focus of the new policy is the group of materials -- mainly coatings and solvents -- that release volatile organic compounds (VOCs) into the atmosphere. VOCs are believed to contribute to the formation of low-level ozone, one of the primary components of the smog that frequently blankets the Los Angeles basin.

Currently, AQMD regulates the concentrations of the compounds as they are emitted into the atmosphere. Those concentrations are usually stated in terms of units per gallon or per pound of air.

For example, AQMD inspectors can sample the air at an auto body shop to see if the concentrations exceed the allowable limit. To comply with the limits and receive an operating permit, the firm could choose several options, ranging from recycling the contaminants to using less polluting alternatives.

Since the AQMD adopted a tougher stance against polluters three years ago, the number of businesses affected by these and similar regulations has grown exponentially. With each business waiting for permits to operate their equipment, the backlog of paperwork at AQMD has grown, sometimes reaching two years.

As Lents and other officials announced a series of steps this month to combat the backlog directly, including automatic permitting of certain types of standard equipment, they hoped that targeting fewer businesses will cut down the backlog even more.

Under the proposed system, each manufacturer or supplier of VOC-emitting products would be limited to a total number of compounds they could sell into the Los Angeles basin. The manufacturers -- even those outside the state -- would be able to meet that overall limit in a variety of ways: reformulating coatings or solvents, finding alternative coatings, or curtailing production of some high-VOC-content coatings in favor of lower content coatings.

After the system is in place, AQMD would set up a declining cap on the total amount of VOCs a manufacturer can sell into the basin -- probably at a rate of 5 percent a year.

Critics of the proposal argue that, in the short term, manufacturers will be hit disproportionately hard.

"The AQMD may have to ratchet down more on manufacturers than they would have because the burden is being removed from the users, who have more flexibility," said Alan Stazer, an environmental attorney.

Eventually, critics say, as the total VOC cap declines, all users of products containing VOCs would face the same choices that they face under the current system.

"What if the manufacturers are not quite up to speed in their product reformulation?" asked Laminating Co.'s Palma. "If sales of their products are stopped, where are we supposed to get our coatings and resins from?"

Another potential pitfall revolves around the ability of AQMD to regulate manufacturers of VOC-containing products outside the state.

"Out-of-state manufacturers are sure to challenge the AQMD's jurisdiction under interstate commerce laws," Stazer said. "That could tie up regulations in the courts for years."