Industry urges Sacramento to step on AQMD's brakes.

Companies gripe agency's zeal is clobbering business

Industry, with small businesses in the lead, increasingly is prodding the state Legislature to rein in the South Coast Air Quality Management District. Industrialists say they're unhappy with the smog police's efforts at regulatory relief, and want Sacramento to curb the agency.

Already this session, state lawmakers have penciled 13 bills that would scale back AQMD's clout to police and enact new rules for 30,000 Southland polluters. Last year only five bills dealing with the AQMD were introduced, and only one was introduced the year before.

Fueling Sacramento's AQMD-bashing trend this year is the stagnant economy, the aerospace bust and charges that local bureaucracies, including the AQMD, have done little to reform a business climate perceived as callous to employers' plight.

"Elected officials are really seeing the net effect of AQMD decisions on jobs and there's a realization there needs to be a shift balancing environmental protection and the economy," said Assemblyman Richard Polanco, D-Los Angeles. "It's not about politics, it's about people out of work and on welfare" as companies succumb to hard times and what they perceive as heavy-handed government.

What makes the torrent of Sacramento bills significant, many warn, is the timing. They are being pushed at the same time smog officials are pursuing overall emission cuts of 5 percent annually, as required by state law, while they simultaneously move to thaw out their often-chilly relations with business.

Last November, for instance, the district trumpeted a reform package, called "New Directions," to radically reduce permit-processing time, allow limited self-monitoring and shift its scrutiny to product manufacturers, rather than end users.

But despite those changes and the crafting of a pioneering smog exchange, which will enable big industrial polluters to buy and sell emission "credits," many critics say the "New Directions" do not go far enough, making dilution of AQMD power at the state level the only logical avenue for change.

The AQMD board's Aug. 7 rejection of nine of 44 measures that would have reduced polluters' cost of air-quality compliance reignited the skirmish among the AQMD, environmentalists and the private sector over air pollution gains vs. job protection. The 35 measures that were passed represented relatively minor concessions to polluters, critics charged.

Among the nine measures rejected were proposals to exempt first-time offenders from penalties and the creation of an in house business ombudsman.

"Vows by the district to be more sensitive to business needs are just that -- only vows. They remain a single-purpose agency without any countervailing force," said attorney Tom McHenry McClintock, Weston, which represents defense companies, furniture makers and aluminum platers on AQMD matters. "It makes sense they (Southland polluters) are seeking relief from the Legislature."

Unlike past years -- when the state legislators mainly weighed bills that would change the way AQMD board members were appointed or scrap district authority over large real estate development -- this session has centered on a broader mix of issues. One focus is the AQMD's Regulation 15, the 1988 law mandating companies with 100 or more employees to provide worker-rideshare plans and mass-transit subsidies.

Earlier this year, Assemblywoman Gwen Moore, D-Los Angeles, inked a bill that would have allowed unions to determine whether their collective bargaining agreements were being undermined by the rule. The legislation eventually lied, however, when state Sen. Charles Calderon, D-Montebello, rewrote it to strip the AQMD of all control over trip-reduction plans.

Still, a bill by Republican Orange County Sen. John Lewis to prevent Regulation 15 from being applied to companies with fewer than 100 employees, as the AQMD wants, has been written and is being refined in conference committee. To block passage of what would be a major setback to district muscle over so-called mobile sources, a compromise to prevent broadening of Regulation 15 to smaller companies until 1996 or 1997 is being sought.

A sample of other bills in the hopper:

* Polanco has authored legislation that would force the district to specifically study socioeconomic impacts on small business, and not just large companies, before new rules are presented. To bolster California's fledgling transportation industry, Polanco is also pushing a bill to make the AQMD "fast-track" permits for projects associated with electric and alternative-fuel cars.

* A bill by state Sen. Ken Maddy, R-Fresno, would allow California's Environmental Protection Agency to step in and issue permits if local smog control districts delay issuing or rebuffing them. In addition to SP1596, Maddy has authored another measure exempting oil refiners from certain state and AQMD environmental reviews if they modernize their plants to produce cleaner-burning gasoline.

"There's no question business is getting a sympathetic audience (from state politicians) because of the recession and all these studies saying government is the reason for business flight," said Lori Jablonski, a legislative analyst for the AQMD's Sacramento lobbyist, V. John White Associates. "We've been able to kill many of the bills but, as one assemblyman was overheard saying, 'The district is the whipping boy of this year's session.'"

Some believe local smog officials have successfully pre-empted even more drastic rollbacks of their power, primarily by launching New Directions and deciding to abandon adoption of 24 relatively minor rules to work on the smog exchange, known as RECLAIM. Yet, late last year Southland legislators like Polanco began holding hearings to listen to small companies' gripes that they were under siege by regulators and lacked the ability to hire the sort of expensive environmental attorneys, consultants and lobbyists that the region's biggest polluters -- the giant oil companies, utilities, chemical and food producers and military contractors -- are fielding.

Cody Cluff, director of business retention for Los Angeles County's Economic Development Corp., said the reforms have been "too little too late," and that many of the 35 rule changes adopted 10 days ago were already on the district books, like ones lowering record-keeping rules and expanding technical assistance centers.

"Big business can cut deals with the board, but the small guys can't," Cuff added. "Every time we've tried to negotiate in good faith, we've been shut down."

District Board Member Larry Berg, though, said the spate of bills is to be expected, as the agency moves to increasingly smaller pollution sources now that the major companies are fully regulated and poised to become part of the nation's first smog exchange.

"It's not an easy shift, going from regulating Arco and Northrop to Joe and Sally's metal-plating business," said Berg.

The hundreds of district rules, which cover the smog-producing habits of companies in Los Angeles, Orange, Riverside and San Bernardino counties, are believed to cost industry between $2 billion and $5 billion annually, though debate rages over the economic burden and what jobs have been lost because of them.

In an interview last week, AQMD Executive Director James Lents acknowledged the district has come under fire up north, though he said the ultimate test is in the number of bills that actually pass. Moreover, he said he is baffled by lingering hostility toward his agency after a streamlining campaign last year produced quicker permits, less paperwork and fewer inspections and fines.

"Anybody who says our board doesn't 'get it' is absolutely wrong. We've made a valiant effort to become sensitive to industry while trying to get all the filth out of the air. That doesn't mean we don't realize there are efforts in Sacramento to weaken our authority."

One continuing complaint by smaller polluters, particularly restaurants, dry cleaners and manufacturers, is the cost of high-tech pollution control equipment. Attorney McHenry said one of his clients is an electrical-components maker that recently had to pay $500,000 for equipment that is yielding only minimal smog reductions. Attempts to get the AQMD to allow companies flexibility in meeting overall emission-cutting goals -- instead of more traditional "command-and-control" limits on individual pieces of equipment -- have been thwarted, he said.

Too, even the AQMD's harshest critics concede the fight over the cheapest path to clean air remains a complicated one. If the AQMD backs off too much, the federal government could force it to enact even more Draconian laws so Southland air -- the nation's dirtiest -- is brought up to national health standards by 2010.

The recession and widespread sentiment that government has been slow to protect jobs muddy that point, according to Karen Lindh, who tracks air-quality issues for the California Manufacturers Association.

"The AQMD recognizes that when times are good, Sacramento says we need all the environmental protection we can get, that industry has deep pockets. But when you get these massive layoffs, especially among the poor, there's risk" for both smog regulators and politicians facing an electorate jittery about job security, she said.