Arco protests air pollution assessment for three past years.

Arco protests air pollution assessment for three past years

Oil giant Atlantic Richfield Co. is warring with regional air quality officials over nearly $550,000 in extra pollution fees Arco has paid -- under protest -- for emissions into the air at its Carson refinery, the Business Journal has learned.

The South Coast Air Quality Management District confirmed last week it has accused Arco of under-counting sulphur dioxide emissions at its huge Carson refinery by one ton a day, on average, for three years.

The AQMD's action against Arco is the first time ever the district has retroactively demanded fees from an oil refiner for emissions generated in previous years.

The Los Angeles-based Arco paid $545,523 "under protest" to the AQMD in August for disputed amounts of sulphur dioxide discharges at the Carson plant.

Arco spokesman Al Greenstein said the payment -- made on top of routine emission payments -- was "unjust" and that Arco was deciding "what further steps" to take.

"Arco considers this retroactive surcharge to be unfair and has been paid under protest," Greenstein said. "We have adhered to the regulations and there is no question we have followed AQMD instructions of the last 15 years in reporting emissions."

Sulphur dioxide is one component of particulate matter which causes both respiratory and visibility problems in the polluted Southland area. Large refiners, under district law, must pay the AQMD a certain amount a ton to legally emit sulphur dioxide, a component of refinery gas. Last year, for example, Arco paid the district $325,000 to emit 1,205 tons of sulphur oxide.

Arco claimed the AQMD, without notification to local oil companies, changed the way it calculated sulphur dioxide emissions, inflating the amount of pollution generated.

AQMD officials rebutted Arco's charges.

"There is nothing to negotiate," district spokeswoman Paula Levy said. "They underestimated in their annual reports what they knew their actual emissions were."

A random AQMD audit program begun in February found the Carson refinery generated 628 tons of sulphur dioxide last year compared to Arco's reported annual total of 264 tons, a difference of 364 tons -- or nearly a ton a day.

"Arco's testing was inconsistent with their own monthly reports," Levy added. "But we take the position this was an honest error and they paid their dues." Arco's refinery, the second-largest in the South Coast basin, was not the only company forced to pay revised emission fees going back several years, though it was the only one that complained, according to Levy. Shell paid the district $89,701, Mobil shelled out $55,555 and Texaco paid $63,414.

In total, the revised emission fees will add $758,670 to AQMD coffers. Emission fees, not including the revised payments, will generate roughly 38 percent, or $39.5 million, of the district's record $101.4-million budget.

Beside the dispute over actual emissions and reporting methods, Arco claimed the district overcharged the company. Greenstein said the AQMD charged Arco 1989 rates for 1988 and 1987 emissions, costing the company $230,000.

"We contend they overbilled us even using the revised numbers," Greenstein said.

The district, however, retorted by saying that AQMD law allows it to charge back fees based on more current charges.

AQMD figures show the Arco refinery emitted an average of 421 parts of sulphur for every 1 million parts of gas between 1987 and 1989.

The AQMD's new auditing program coincided with the introduction of the Operation Blue Sky, a $14.4-million surprise-inspection campaign aimed at the areas's biggest polluters: oil companies, aerospace contractors and chemical manufacturers.

The first companies targeted by Operation Blue Sky were Powerine Oil Co.'s refinery in Santa Fe Springs and Texaco's plant in Wilmington. Arco, Mobil and Chevron will be targeted in the future.

Emissions of particulate matter in Los Angeles are nearly twice the national average. As part of the district's 20-year Air Quality Management Plan, levels of particulate matter will be slashed from 2,426 tons a day to 1,408 tons daily. Nearly 84 percent of all particulate matter spewed into the air is generated by industry.