Central Valley

$29M pollution penalty looms

FRESNO — Businesses from Stockton to Bakersfield are on the hook for a penalty that will start at $29 million a year because the valley missed an air-pollution cleanup deadline.

The penalty will begin in 2012, unless the valley manages to achieve the unlikely goal of just a few ozone violations over the next three years. Deciding how to pay it will be the biggest issue of the year for the San Joaquin Valley Air Pollution Control District, officials say.

Businesses say the penalty — which would be spent on air cleanup measures in the valley — is unfair because they have invested billions of dollars over two decades to reduce their emissions.

So, the air district is considering a plan to pass 80 percent of the tab to motorists — in an extra $10 vehicle registration fee.

Vehicles create 80 percent of the valley's ozone problem, officials said.

"It's a question of fairness," said Seyed Sadredin, the district's executive director. "We don't want to further penalize the businesses, especially in this economic climate."

Environmentalists, however, say the penalty should be pointed at businesses because it is structured in such a way that it provides an air-cleanup incentive. The more businesses reduce pollution, the lower the penalty becomes.

The air district will schedule public meetings over the next few months to discuss the options. A decision is expected in the next year.

Ironically, the penalty is coming because the valley missed a deadline to achieve a standard that is obsolete.

The valley is among the country's worst offenders for ozone, a corrosive gas that forms in warm weather when exhaust from vehicles combines with fumes from paint, gasoline or dairy waste. It can trigger lung problems, such as asthma.

Each air basin is judged on an eight-hour average of ozone readings; a standard set for one-hour readings was abolished in 2005.

But because the U.S. Clean Air Act forbids backsliding on any abolished standard, the valley faces penalties for missing the cleanup deadline this year.

The valley never has achieved the one-hour standard, but violations have decreased over 20 years. There are fewer than five violations each year, compared with an average of 50 in the early 1990s, officials say.

Unlikely to avoid violations

The region can escape the $29 million penalty by having no more than one violation in each of the next three years. But air district officials consider that unlikely.

If the air district's governing board doesn't come up with an approach to pay the money by 2011, there will be federal sanctions on top of the $29 million penalty.

The sanctions would include freezing billions of dollars in federal road-building funds and raising costs for new and expanding businesses. In addition, penalty money would be collected and kept by the federal government, instead of being spent locally to clean the air.

What would the penalty mean to businesses? They would have to pay about $8,000 for each ton of ozone-making emissions above a threshold set by law. That would amount to an estimated $29 million in the first year, but would decline as businesses reduce their emissions.

Some companies would benefit from the penalty. The district would spend the money helping businesses replace diesel trucks, buses and off-road vehicles, such as tractors, Sadredin said.

Under the alternative plan the district is considering, businesses that have aggressively pursued cleanup measures wouldn't pay any penalty. Other businesses, however, would share the penalty along with motorists.

Here's how it would work: The air district, which has the authority to levy an extra fee on vehicle registration, would get about $23 million of the penalty from motorists. The remaining $6 million would come from businesses that need to improve their pollution control.

Environmentalists say some businesses are not doing as much as possible to reduce pollution. They say the law was intended to make all businesses as efficient as possible in reducing pollution.

Lawyer Paul Cort of the legal watchdog Earthjustice, based in Oakland, said giving businesses a credit on previous work would undermine the collective incentive for all businesses to reduce pollution.

"Instead of looking for ways to give businesses a break, the district should focus on keeping those incentives in place and adding more for mobile sources," such as vehicles, Cort said.