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 Officials Release Study Outlining "Fundamental Problems"
 With Proposed Program;

Says District Failed to Adequately Address Region's Economic Climate
 RANCHO CUCAMONGA, Calif., Aug. 17 /PRNewswire/ -- A coalition of business, industry and economic development organizations today announced their opposition to the South Coast Air Quality Management District's Regional Clean Air Incentives Markets program, or RECLAIM, and urged the district's governing board to reject the proposed emissions trading credits program for the sake of the region's economic health.
 Representatives from Southern California Gas Co., the Economic Development Corp. of Los Angeles County/Community Air Quality Task Force, Schlosser Forge Co., Greater Riverside Area Chambers of Commerce and other business and economic development organizations said that if RECLAIM is adopted by the district's governing board on Sept. 10, "it would pose dire consequences for hundreds of businesses and industries in the South Coast Air Basin and for the already depressed Southern California economy."
 "If RECLAIM is implemented, it will make it more difficult to conduct business by adding more burdensome and costly regulations," said Anne Smith, vice president of The Gas Co. "Retaining, expanding existing and attracting new business and industries will prove to be an uphill battle under RECLAIM. Southern California, with its high unemployment rate and depressed economy, can't afford this program," she added.
 The district maintains that under RECLAIM, businesses have greater flexibility in meeting emission reduction goals and fewer jobs will be lost compared to the current air quality rules and regulations. However, according to a newly released study sponsored by The Gas Co., the district "displays a considerable amount of inflexibility in both developing RECLAIM and analyzing its impact."
 The study points out that the district's employment loss estimates are "insufficient" because of its broad and inappropriate assumptions, including that Orange, Riverside and San Bernardino counties followed the employment and economic patterns of Los Angeles County.
 "RECLAIM's soci-economic impact analysis -- based on unsupported assumptions and a complete failure of the district to assess the program's costs or benefits to Southern California beyond the year 2000 -- does not provide policy makers with sufficient information with which to make a decision on one of the most important regulatory programs ever proposed for the region," according to Steve Moss, an economist with M. Cubed, a San Francisco-based research firm that conducted the study.
 "Noticeably absent from the district's analysis is an examination of `what if' scenarios, such as `what if' RECLAIM doesn't work, `what if' credit prices are higher than the district assumed, `what if' technological advancements occur at a slower pace than the district predicted?" he added. "There are tremendous risks involved -- for business and the environment -- if these rules are implemented based on the district's analysis."
 "In fact," Smith added, "the M. Cubed study challenges the district analysis to such an extent that The Gas Co. questions whether implementation of RECLAIM would violate the spirit and letter of the state's Health & Safety Code (AB 1054)."
 "Since 1990, California has lost 750,000 jobs -- over one-half from Southern California," said William Huston, chairman of the Economic Development Corp. of Los Angeles County/Community Air Quality Task Force. "If RECLAIM is adopted with its burdensome rules and regulations, we're sure to lose more jobs and companies, and there certainly won't be new ones coming in to take their place."
 Art Pick, president of the Greater Riverside Area Chambers of Commerce, added: "While the Inland Empire's job losses aren't as severe as the Los Angeles area, we're concerned that this program will affect future growth and development."
 One of the more than 400 facilities to be impacted by RECLAIM's rules is Schlosser Forge Co., a 22-year-old, Rancho Cucamonga-based manufacturer of parts and components for aircraft engines, aerospace and advanced commercial products with 175 employees. "Under RECLAIM, our monitoring and reporting costs could increase 500 to 1,000 percent," said Irene DeHuff, human resources manager. "We're very concerned about how RECLAIM will affect any future plans we might have to expand and grow."
 If adopted, the district's program would replace the current method of regualtory agencies issuing technology-based standards for every type of equipment or process. Under RECLAIM, facilities that generate more than four tons of pollution annually would be given annual caps for nitrogen oxide and sulfur oxide emissions. Overall air quality improvements would be achieved by annually reducing the total emissions caps for the region.
 Facilities affected by RECLAIM -- which range from furniture makers to apparel, aluminum and glass manufacturers -- would then be required to reduce emissions to a given level. Facilities that reduce emissions below their allocation levels would be able to sell their credits to others who need them to stay within their emissions cap.
 The Gas Co. was one of the first companies to support the concept of allowing market forces to determine the most cost-effective means for achieving overall emission reductions. However, in working with the district on RECLAIM's rulemaking over the past two years, "we realized the intended purpose of the program -- to give facilities added flexibility in meeting their emission reduction requirements -- had been eliminated by more than 1,200 pages of overly complex and costly rules and regulations," said Smith.
 Among business' key concerns with RECLAIM is that it fails to provide the promised operations flexibility by imposing:
 Costly and unnecessary reporting and monitoring: RECLAIM calls for costly, complicated and unneeded reporting and monitoring of emissions. Facilities will be required to employ extremely prescriptive procedures to measure, monitor and report their emissions levels. Furthermore, facilities will now be required to report emissions levels on a monthly basis instead of the current yearly reporting requirements. These costly provisions do not contribute to cleaning up the air.
 Excessive enforcement penalties: Under RECLAIM, businesses that exceed their annual emissions cap would be fined for each day in the quarter during which a violation occurred, even if that violation occurred on the last day of that quarter. For smaller manufacturers, a slight exceedance of the annual cap could result in a costly financial penalty (Example: a $10,000 daily fine multiplied by 90 days would result in a $900,000 penalty, and these penalties could go as high as $4.5 million).
 Potential "re-regulation": Worsening air quality, whether it is caused by facilities operating under RECLAIM, mobile sources -- or even changing weather patterns or increases in population -- could result in implementation of the regulations that RECLAIM is intended to replace. This type of "re-regulation" is punitive and excessive and does not recognize the contributions to air quality improvement or degradation attributable to various non-RECLAIM emission sources. In fact, it could punish RECLAIM sources for increases in emissions from these other sources.
 Other organizations opposed to RECLAIM include: California Manufacturer's Association's Southern California Air Quality Alliance, Los Angeles Central Cities Association, Black Business Association, Latin Business Association, Asian Business Association, Concerned Citizens of South Central Los Angeles, Construction Industry Air Quality Coalition, California Asphalt Paving Association, San Gabriel Valley Economic Development Council, Pomona Economic Development Corp., United Chambers of Commerce of the San Fernando Valley, Valley Industry and Commerce Association of the San Fernando Valley, Orange County Chamber of Commerce, Industrial League of Orange County, Irvine Chamber of Commerce, Southern California Contractors Association, San Bernardino Area Chamber of Commerce and the Inland Empire Hispanic Chamber Association, among others.
 -0- 8/17/93
 /CONTACT: Vicki Cho Estrada of Southern California Gas Co., 213-244-3030/

CO: Southern California Gas Co.; South Coast Air Quality Management
 District ST: California IN: UTI ENV SU:

BP-LM -- LA009 -- 3580 08/17/93 13:02 EDT
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Publication:PR Newswire
Date:Aug 17, 1993

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