California Debates Whether Smog Regulations Foul Business Climate

CALIFORNIA, the nation's petri dish for devising new ways to control smog, is seeing a growing effort to limit the powers of state and local agencies charged with fighting air pollution.

The move comes after three years of recession and persistent hand-wringing over the state's business climate.

It is cheering corporate interests but worrying others, who are concerned it will set back the drive to clean up the nation's most polluted skies. "I think this is a landmark year for air quality in California," says Tom Soto of the environmentalist Coalition for Clean Air, referring to the looming battle in the Legislature.

The balance between economic development and environmental regulation is always a delicate one in California. It not only affects jobs and the air residents breathe, but it also sets the tone for similar debates across the country.

Because of the gravity of the smog problem here, regional and state air-pollution agencies are usually in the forefront of minting new approaches to cleaning up the skies.

They have often led the way in controlling emissions from conventional sources, such as cars and refineries, as well as unconventional ones, such as hair sprays and underarm deodorants.

The focus of this year's fight in the Legislature - where a bevy of bills has been introduced - isn't to roll back strictures, but to curb the power of the agencies that implement them. While air-pollution authorities are always a target of some groups in Sacramento, the issue this year is receiving more consideration from both sides of the aisle.

"I don't know if there are more bills, but they are getting more attention," says Bill Sessa, a staff member with the California Air Resources Board, which regulates air pollution in the state. "The Legislature is responding to the public debate."

Coming under particular scrutiny is the South Coast Air Quality Management District (AQMD), the agency that oversees air quality in the four-county Los Angeles basin. More than a dozen measures take aim at this body alone.

One bill, sponsored by state Sen. John Lewis (R) of Orange, would require the AQMD to hire an ombudsman to serve as a business advocate. It would also create an independent board to review companies' appeals of fines and other agency decisions.

Another bill would do away with the agency's often-criticized requirement that companies give incentives for car-pooling and reduce the number of car trips to and from work. A third measure, sponsored by Assemblyman Richard Polanco (D) of Los Angeles, would give the state the power to set the agency's budget.

"I don't see a move toward making regulations less stringent," says Valerie Nera, a lobbyist with the California Chamber of Commerce, which backs many of the measures. "We want to streamline regulations that are overlapping or conflicting."

Behind the push is a dispute over whether environmental rules are choking off economic development. Irritation at the AQMD has grown as regulations have extended to smaller and smaller companies. The pique has peaked in the recession.

Pollution-permitting and other rules are often cited by the business community as a prime reason for corporate flight to other states. By one estimate, 700 manufacturing plants have relocated or expanded outside California in the last five years.

"A lot of times the [environmental control] technology being looked at is not viable," says Jack Kyser, chief economist at the Economic Development Corporation, a nonprofit group here. "If you're pushing the envelope, you need to be practical about it."

ENVIRONMENTALISTS and air-quality officials, who say many of the issues raised in the bills have already been addressed, see things differently. California's woes, they argue, are the result of a national recession and restructuring in defense and other industries.

Companies that have left California have done so more because of high land, labor, and housing costs and other factors. Any slowdown in cleaning up the state's skies, they say, will further impair the quality of life here - ultimately undermining economic growth.

"There is this misperception that air-quality regulations are in some way responsible for the recession," Mr. Soto says.

It is too early to tell what might happen. Some of the more far-reaching measures probably will not make it. Others may be intended only to send a message to smog regulators. But certainly there is receptivity in the Legislature this year to improving the business climate - something district officials are aware of.

"My guess is there are some things that environmental districts need to do," says AQMD board member Larry Berg.

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