CALIFORNIA REGULATORS UNDER GROWING PRESSURE AS ECONOMY WORSENS

Because California exports so many environmental trends to the rest of the U.S. and the world, changes in the state's political barometer are well worth watching by the petroleum industry. Regulatory agencies, including California Air Resources Board (CARB), South Coast Air Quality Management District (Scaqmd;l and the California Environmental Protection Agency, are under increasing pressure to consider the ramifications of their actions on the state's ravaged economy.

Aug. 30, 1993

3 min read

Because California exports so many environmental trends to the rest of the U.S. and the world, changes in the state's political barometer are well worth watching by the petroleum industry.

Regulatory agencies, including California Air Resources Board (CARB), South Coast Air Quality Management District (Scaqmd;l and the California Environmental Protection Agency, are under increasing pressure to consider the ramifications of their actions on the state's ravaged economy.

And it may prove a window of opportunity, for petroleum companies trying to cope with the state's bewildering and punitive regulatory regime.

SCAQMD TARGETED

A significant anti-regulatory backlash has taken particular aim at Scaqmd, which has been widely criticized for contributing to the exodus of businesses from the state while using funds from enforcement penalties on frills for itself.

Often cited as the most prominent symbol of its spending largesse is the agency's multimillion dollar, lavishly appointed headquarters office, which features expansive windows and patios overlooking nearby hills, an onsite day care facility for employees, a large underground print shop, and filling pumps for the agency's fleet of gasoline and alternative fuel vehicles.

Reflecting widespread concerns over regulatory excesses at Scaqmd and elsewhere, scores of bills are now before the state legislature that would trim the powers of regulators, require economic assessments of existing and pending rules, and cut the compliance costs of programs now under way. Significantly, the number of bills seeking to control the magnitude of regulation is keeping pace with the traditional environmental measures.

"I'm hesitant to say the tide is turning completely," said one refining company official. "The response is more from political pressure than economic recognition."

At best, the pressure upon regulators could provide a "window of opportunity" for refiners to get needed permits to meet upcoming regulations with more efficiency than in the past, he predicted.

PRO-ENFORCEMENT 'WHIPLASH'

It's notable that the anti-regulatory backlash in California has been countered by pro-enforcement "whiplash."

Scaqmd also is the target of criticism for not enforcing its rules stringently enough. And in response to complaints, CARB recently issued a report asserting, "...The recent reduction in the district's enforcement activities led to a decrease in compliance."

California's economic woes are a two edged sword that affects business and government alike.

Businesses insist that the state's excessive regulation is a major factor in shutdowns and moves from the state. Regulators say they've had to cut their programs and freeze hiring because they're collecting fines from fewer businesses.