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RECLAIM IS UNFAIR AND COSTLY TO SMALLER BUSINESSES; GAS CO. CHALLENGES SCAQMD TO MAKE PROGRAM VOLUNTARY

 LOS ANGELES, Sept. 3 /PRNewswire/ -- The Gas Co. has maintained that adoption of the South Coast Air Quality Management District's RECLAIM program would unfairly hurt smaller businesses and further weaken the region's economy, and has urged the District's Governing Board to reject the long-delayed emissions credits trading program as currently designed.
 Today, however, the company challenged the District to make the program voluntary to ensure fairer treatment to all businesses.
 "RECLAIM's complex and costly requirements would pose tremendous uncertainties and risks and unfairly hurt smaller businesses while larger facilities, which produce greater emissions, would receive the lion's share of the program's benefits," said Anne Smith, vice president of environment & safety at The Gas Co.
 "A fairer, more equitable approach would be to make the program voluntary. Since RECLAIM is an attempt at a market-based approach to cleaning up the air, let the market decide. If facilities find it more cost-effective to operate under RECLAIM, let them voluntarily participate. If not, they should be able to continue to operate under current air quality requirements. Air quality improvements can still be achieved with a voluntary program where everyone can share in the benefits," Smith added.
 By the District's own projections, almost 90 percent of the $93 million average annual cost savings would go to oil refineries, aerospace companies and electric utilities. Meanwhile, several other industries would face higher costs under RECLAIM, for example, the hotel industry and air transportation industry's ground facilities, which would see an annual cost increase in compliance of 23 percent and 600 percent, respectively.
 "The promise of RECLAIM was to give all businesses -- not a selected few -- a more cost-effective and flexible program to meet clean air goals," she explained. "RECLAIM does not deliver on that promise, and we believe the program must be rejected as currently designed. A voluntary program would ensure fair treatment of all businesses," Smith said.
 Under RECLAIM, more than 400 facilities, ranging from furniture makers to printing companies, would be allocated a number of credits for two groups of pollutants they emit -- nitrogen oxides and sulfur oxides. Those that cannot meet their emissions targets must buy credits from others that have achieved extra reductions. The intent is that a market would emerge for buying and selling the credits, and the incentive would encourage businesses to further reduce emissions.
 The Gas Co. was one of the first companies to support the market- based idea. However, in working with the District over the past two years, "we realized the intent of the program -- to give facilities a more cost-effective and flexible alternative to current regulations -- got lost in the 1,200 pages of complex rulemaking," Smith said.
 Other key concerns with the program include:
 -- RECLAIM requires that new and expanding businesses purchase emission credits from the excess reductions of existing businesses each year, unlike current rules which require only a one-time purchase. If excess credits are not available each year, growth will be impossible.
 -- RECLAIM requires many participating facilities to reduce their emissions below Best Available Control Technology (BACT), which is the lowest level of emissions technically and economically feasible. Reductions beyond BACT are not required anywhere else in the nation, putting the region at a competitive disadvantage.
 -- RECLAIM requires monthly and certified quarterly and annual reporting of emissions for many facilities -- a dramatic increase in administrative costs that could be better spent in achieving actual pollution reductions.
 -- Under RECLAIM, neighboring states could provide added incentives to lure companies away from California by purchasing RECLAIM trading credits.
 Almost as troubling as the onerous rules and regulations is that the District failed to properly assess the impact of RECLAIM upon the region's economy. "The District failed to project the program's costs and benefits beyond the year 2000 and failed to run sensitivity analyses, leaving decision-makers without information to judge the true potential impact of the program," Smith said. "In short, we have no way of knowing -- based on the District's analysis -- what to expect if RECLAIM is implemented.
 "We believe the health and livelihood of our region is too important to risk on an unknown and flawed program," she added. "That's why we -- along with more than 100 companies and business and community organizations, including the District's own Ethnic Advisory Council, numerous chambers of commerce and the Black Business Assn. -- are urging the District's Governing Board to reject RECLAIM as currently designed.
 "The District should make RECLAIM a voluntary program. If RECLAIM is as great as the District maintains, let companies choose to participate. It would pose fewer risks and would be a fairer approach to all businesses -- and the region's air quality can still continue to improve," Smith said.
 -0- 9/3/93
 /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:


JB-LM -- LA022 -- 8895 09/03/93 14:39 EDT
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Publication:PR Newswire
Date:Sep 3, 1993
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