Decades of air pollution control challenges are coming to a head simultaneously in California and Washington, D. C.
By yearend, it should become evident the extent to which the federal government will regulate how California, often the bellwether of U.S. environmental policy, meets federal clean air standards. Billions of dollars of petroleum industry capital will be affected by the debate.
The issues being decided in California in 1994 may at first seem parochial, for the state's pollution control problems are so extreme they can't be compared with most other areas in the nation. However, measures required in the nation's most populous state usually migrate elsewhere, under provisions in federal laws requiring the most stringent standards in place anywhere to apply everywhere.
Moreover, 12 states and the District of Columbia have opted for California specifications for reformulated gasoline (RFG). This could set a precedent to eventually press those states to follow California's example in other regulatory areas as well.
With California center stage, 25 years of pollution control policies are being put to severe tests on almost every level. Politically, who manages which portions of California's complex pollution control puzzle is now a tangled mess testing the authorities of the U.S. Environmental Protection Agency, the California Air Resources Board (CARB), South Coast Air Quality Management District (Scaqmd), and other agencies.
In the last few years, environmental regulators have become increasingly sensitive to their role in helping or hindering the state's recovery from a prolonged recession. Southern California, in particular, has an extremely high rate of business closures and companies leaving the state for greener economic pastures in which to do business. A major reason, many of those businesses assert, are the region's costly and complex environmental controls.
EPA AND FIPs
Despite the burden on California's economy caused by the state's massive regulatory yoke and frequent legal battles that has spawned, economic concerns have held little sway over environmental concerns in the court system over the years.
Decision after decision has ruled that EPA must bring California into compliance with the federal Clean Air Act (CAA), no matter the cost or difficulty.
Earlier this year, EPA-acting on a series of court orders handed down since the late 1970s-reluctantly proposed Federal Implementation Plans (FIPS) for the Los Angeles basin and the air quality regions surrounding Ventura and Sacramento. Under the 1990 CAA amendments, the three California regions must develop by Nov. 15 a plan to cut target emissions by 30-90% during 1999-2000 to bring them into compliance for ozone and Los Angeles for carbon monoxide (OGJ, Mar. 7, Newsletter).
The FIPs include some very severe measures. Specifically targeted are refineries, chemical plants, gasoline stations, as well as solvents and coatings. Virtually all engines in California-including farm and construction equipment, aircraft, pleasure boats, on and off road vehicles, and even garden equipment-may soon be subject to emission controls under the EPA proposal.
EPA's FIPs will come into play, either partly or fully, if regional and state pollution regulators can't quickly demonstrate that alternative approaches in their newest round of long range air quality plans will bring California into compliance with federal clean air mandates.
At present, the debate is playing out in southern California, where Scaqmd recently released its latest revision of a long range strategy for cleaning the Los Angeles basin's polluted air: the South Coast Air Quality Management Plan (AQMP).
SCAQMD'S NEWEST PLAN
In late April, Scaqmd issued a draft revision of its AQMP for controlling air pollution in a region that stretches from the Los Angeles basin's Pacific Ocean border east across Riverside and San Bernardino counties almost to the Arizona state line.
Last revised in 1991, the AQMP has come under fire from all quarters, and this N,ear promises to be no different, despite the agency's numerous accommodations for business interests. With a state economy that can't seem to pull out of a deep recession, Scaqmd has for years been pummeled as a prime cause of businesses routinely migrating to Mexico's maquiladoras (border factory towns) or adjacent states with less stringent requirements.
Businesses are already suggesting that Scaqmd's newest draft AQMP isn't realistic, but environmental groups have successfully challenged Scaqmd's air quality plans as not stringent enough since the late 1970s-and the latter keep winning, hands down.
In February 1994, acting reluctantly under a multiyear series of court orders, EPA handed down FIPs to Scaqmd and its counterparts in Sacramento and Ventura. Scaqmd has deferred to EPA's plan. Out of state equipment manufacturers and fuel suppliers hoping to continue serving these California markets will be significantly affected by that deference.
Some of the court orders that yielded the FlPs hearken to the Clean Air Act amendments of 1977 that created much of the regulatory infrastructure that dominates air pollution law today. While southern California has made great strides reducing air pollution since then, it still lives under the shadow of an old federal law that since has been amended, most recently with sweeping revisions in 1990.
Scaqmd's plan, now set for a vote by the district's board in July, must be approved or rejected by EPA this corning November. The process is snarled in turf clashes and the passage of time.
Even Scaqmd admits the statistics used to underpin the newest plan are deficient. The magnitude of pollution from cars and other mobile sources appear to be grossly understated, possibly as much as by 60%, the agency's own plan concludes.
However, mobile source pollution is a job that belongs to CARB. The state agency has a new set of air quality modeling statistics due out early next year, but several plans that will decide pollution control strategy for years to come must be approved in 1994, according to federal law. Scaqmd's plan first will be folded into the state implementation plan (SIP). The SIP in turn will be passed on to EPA to determine the extent to which California will become subject to FIPS.
California refiners have recently been caught up in EPA turf wars. Last year, Chevron Corp. and Unocal Corp. found themselves in the bizarre spectacle of being in violation of EPA rules while trying to implement refinery projects to produce reformulated gasoline required under CAA. EPA issued notices of violation, declaring the work illegal and citing a lack of permits from Scaqmd, although the two companies were only conducting preliminary site preparation and following a Scaqmd interpretation of the law that its final permit was not required at that stage (OGJ, Nov. 15, 1993, p. 28).
BREAK FROM THE PAST?
This year's AQMP is different from past efforts in a number of respects.
For example, the new plan relies increasingly on market incentive regulations in place of the old command and control rules.
Boosted by its apparent success with the Regional Clean Air Incentives Market (Reclaim) program, Scaqmd increasingly wants to develop broader rules that will give businesses more leeway to decide which control measures to use, as long as they reduce sufficient amounts of criteria pollutants. Reclaim, intended to cut large emissions of NOx and Sox from large stationary sources, is seen as a blueprint for other plans across the U.S. to replace traditional "command and control" regulations with market based incentives for controlling regulations. When approved by Scaqmd's board last year, it was estimated Reclaim could save the petroleum sector as much as $162 million in air emissions regulatory compliance by 2000 (OGJ, Oct. 25, 1993, p. 35).
Another significant shift in the plan is that Scaqmd, facing sharp declines in fee collections, is handing more implementation problems back to EPA and CARB. EPA has authority to control pollution from vehicles used in interstate commerce, such as trains, boats, and aircraft, so Scaqmd defers to the FIP on these issues. The plan also acknowledges CARB's domain over regulations directly affecting off road mobile sources, such as construction equipment, and motor vehicles.
Yet power struggles continue to loom. In several places, Scaqmd is proposing measures beyond the FIP that it feels are necessary. For years, Scaqmd's hands have been tied here. The district can study new vehicle technologies and attempt to control traffic by encouraging and sometimes requiring carpooling. Yet the area's battered economy has forced Scaqmd to reconsider even this. Last year, Henry Wedda, the district's board chairman, proposed easing off on mandatory ridesharing for smaller businesses. Now, looming not very far on the horizon, is a much discussed tax on vehicle miles traveled, possibly to be levied when vehicles get smog checks.
OIL INDUSTRY CONCERNS
So much is up in the air about Scaqmd's newest plan that some petroleum industry officials seem to be largely deferring attention to details.
"I've barely cracked the book," admitted one analyst of district rules and policies. "The basic approach (of EPA and Scaqmd) is already different. There's a very disturbing Difference in strategy in how to seek attainment."
EPA's FIP, he pointed out, is premised upon a basin wide carrying capacity for Nox of 400 tons/day, and volatile organic compounds (VOCs) of 190 tons/day. In other words, daily emissions of VOCs, now at an estimated 1,800-1,900 tons/day, would have to be reduced to one tenth of that level to meet federal CAA standards.
Scaqmd's plan, on the other hand, would reduce VOC emissions to only 300 tons/day but calls for much greater NOx reductions, to about 250 tons/day. In other words, Scaqmd wants to seek the same air quality attainment goal by relying heavily on controlling NOx, while EPA wants to control more VOCs.
A prominent petroleum industry attorney raised similar concerns. With emissions from vehicles understated by as much as 60%, he finds a serious potential credibility problem with Scaqmd's plan. "(The current plan) is a vast improvement" from earlier efforts, he said but noted, "They seem to be delaying the inevitable. The debate is over whether the district can change and upgrade its emissions inventory" to reflect actual current conditions in the Los Angeles basin.
Scaqmd has tried. The new plan is based upon a 1990 emissions inventory used to establish baseline and future projections. This is the best the district feels it can do, with resource constraints and clear limits on its authority.
Yet even Scaqmd admits, "It is important to note that on-road mobile emissions are underestimated."
Preliminary studies indicate that mobile source emissions may be as much as 60% higher in reactive hydrocarbons and VOCs and twice as high as previously thought in carbon monoxide, the plan declares at the outset. CARB, Scaqmd notes, is in the midst of a series of long term research programs aimed at better quantifying these emissions. The statistics are so shaky that one page of the printed document was later overlain with pie charts showing relative contribution by source category to the emissions inventory.
PLAN SPECIFICS
Notably, this year's long range air quality plan is much toned down from the stridency of the past.
In 1991, Scaqmd defined near term measures as Tier 1. Tiers 2 and 3 reflected longer term measures for which technology did not yet exist. A major proportion of pollution cuts relied on these unknown technologies.
This year, the plan is divided into short and long term measures. Short term measures include promoting "fuel neutral" vehicle improvements to reduce emissions, increased emphasis on transportation control measures (TCMs)-such as evaluating a tax on vehicle miles traveled-technologically feasible controls on stationary sources as well as process and application changes, and allowing EPA and CARB to work out how to control pollution from off road mobile sources.
For the longer term, Scaqmd relies more heavily on reduction of NOx emissions through EPA's control of off road sources. Previously, the district admitted, 1989 and 1991 plans relied heavily upon technological breakthroughs to achieve VOC reductions.
Another new twist in Scaqmd's plan is greater reliance on public outreach and education programs. The district, in partnership with the business community, wants to launch public awareness campaigns aimed at getting smaller firms to use less polluting alternative products, techniques, and processes and modifying equipment to pollute less, without mandates.
Still, the petroleum industry will experience a major new regulatory onslaught in the form of a number of comprehensive rulemakings in 1995-96.
They would step up controls already in place on fugitive emissions, floating roof tanks, and more (Table). In addition, the industry would be subject-although less directly-to virtually all of about 65 new rulemakings slated for adoption during 1994-97.
Scaqmd is increasing its emphasis on TCMs, which would reduce the number of vehicles on the road through greater use of mass transit or other means.
But that runs up against the extreme hostility Scaqmd meets locally whenever it tries too hard to get car-happy southern Californians to try other options, and Los Angeles still has a long way to go. An impressive new subway and train system still enjoys only spotty ridership even after the Jan. 17 Northridge earthquake crippled high volume traffic routes. Smaller businesses are being told they may no longer have to grapple with mandatory ridesharing plans. And some major traffic corridors are still largely unserved by effective public transit.
SETTING THE PACE?
Since the 1969 Santa Barbara oil spill, California has clearly been the mover and shaker for the rest of the nation and even the world on the environmental front.
Today, California is in an economic shambles and still plagued with pollution but beginning to rethink its regulatory zeal. Last year, in a marked shift from the past, the volume of state legislation calling for tempering the authority of pollution control authorities come close to rivaling measures to further reduce emissions. In 1993, Scaqmd adopted Reclaim, despite criticism that the benefits of market incentive regulation went largely to oil and aerospace industries. There are few people in this state who don't know someone who's lost a job in one of these industries, or the many other ones, such as real estate and retail, that relied on steady employment in oil and aerospace more than they thought.
As 1995 approaches, the refiner/marketers in California will be preparing to begin putting the newest phase of ultraclean gasoline on the market. Twelve other states have opted to follow suit on California's gasoline specifications. That momentum continues despite the debacle CARB and state refiner/marketers encountered last year when new clean diesel specs could be met only after CARB relaxed the timetables for a majority of refiners (OGJ, Aug. 30, 1993, p. 21).
And that's with expectations that there are likely to be problems for California refiners in coping with dual federal and CARB rules for reformulated gasoline (RFG) (OGJ, Jan. 24, p. 17). CARB sees conflicts over refiners being able to supply RFG comparable to the problems with new spec diesel (OGJ, Feb. 14, Newsletter). Some petroleum industry analysts say flatly that time has run out for state refiners to build the facilities needed to produce allowable RFG components (OGJ, Feb. 7, Newsletter).
Several other refiners have gone to court, for they don't want to keep investing at a furious pace in extensive refinery modifications under the current law, if they can get breathing room later. Assuming the reformulated gasoline specs and timetables hold, California refiners may have to brace for a whole new round of refinery upgrades to further restrict emissions under the newest Scaqmd plan.
Will other states eventually have to follow suit? That's not clear. One analyst pointed out that "best available control technology" has historically been set by the state with the toughest standards. Whether California is an isolated case or the standard setter for years to come will begin to become clear later this year. If EPA's plans largely overtake the state's best efforts, this will be a precedent with significant implications for the petroleum industry elsewhere.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.