Today's the day that thousands of California gas stations must meet a state-imposed deadline for new air quality equipment at pumps. By some estimates, half of the gas stations in Southern California won't meet that deadline. KPCC's Molly Peterson met with one owner to find out why.
Molly Peterson: About 11,000 gas stations in California are like this one on the corner of Fern Street and Garden Grove Boulevard in Garden Grove.
[Sound of beeping, credit card machine]
Peterson: This one has six pumps, parts of which, 12 nozzles, have to be changed out in favor of equipment that captures more of the vapor of gasoline that's released when you put the nozzle into your tank.
Peterson: This station is a 76 station, independently owned, not by Conoco-Phillips or 76, but by a guy named Dave Berri.
Dave Berri: If we don't get an extension on this deadline, then I'm going to be bankrupt.
Peterson: Berri owns seven gas stations. He's filling up his black Cadillac Escalade here at the first gas station he ever owned. He says he started to buy new nozzles – at a cost of 10 grand apiece. Then he ran into trouble last fall.
Berri: I've gone through all the necessary steps. I started my permitting early last year. I put down a 25 percent deposit on all the equipment, and when I went to go get money from a credit line I had the bank notify me that my credit line had just expired and they had no intention of renewing it.
Peterson: In a competitive market, independents like Berri say the profit margin on fuel is slim. He scrambled for credit at other banks – nothing doing.
Berri: Everybody says, "Gas stations?" They don't want to lend to gas stations right now. And plus our financials aren't that good anymore. You know, we're not making the money. They want to see certain debt ratios and it's just not there.
Peterson: So Dave Berri notified the South Coast Air Quality Management District that he couldn't finish on time. The district notified him he'll be fined.
Berri: They've given us fine structures anywhere from 1,500 to 3,500 a month per station. You're talking about 12,000 a month in revenue I just don't have.
Sam Atwood: All station owners knew that this was coming.
Peterson: Sam Atwood says he's heard these complaints before. He's with the South Coast Air Quality Management District – and he expects almost a third of the gas stations won't upgrade in time. But Atwood says the region needs new nozzles now for cleaner air.
Atwood: This is going to reduce the same amount of pollution in Southern California as would be reduced by shutting down one oil refinery, which is pretty significant.
Peterson: Chemicals in gas vapors help form ground level ozone – smog. That adds to global warming. Atwood says the gas vapors also can make people sick.
Atwood: Ozone levels have been tied to everything from short term effects of difficulty breathing all the way up to causing premature deaths. In addition, this is going to reduce the cancer risk to residents and workers in the area near gas stations.
Peterson: Stations and trade groups have lobbied hard for an extension, but legislation to grant a year's delay won't go to legislators until later this month. In an unusual move, Governor Schwarzenegger asked the state Air Resources Board for a delay.
He cited struggling businesses and the potential harm to working families. Dennis DeCota of the California Service Station and Auto Repair Association says his members are all feeling the pinch.
Dennis DeCota: It's really the perfect storm for the failure of this project to be kicked off on April 1.
Peterson: But the air board says only new regulation can change that date, so local districts must now decide on the governor's request. Sam Atwood says the South Coast air district will fine all stations not ready – including 500 or so that haven't even applied for upgrade permits.
Atwood: Essentially, to give a blank check and extension without any penalty is giving an economic advantage to those who have waited.
Peterson: Gas station owner Dave Berri sees no advantage. He wants to sell three of his stations, but he has no takers – and he has no backup plan.
Berri: We've been falling behind financially and using all our reserves just to stay afloat. The reserves that we might have used for this we've put in the business just to pay the bills.
Peterson: Berri's best hope is for a bailout, and it's not an empty hope. Northern California Assemblyman Ira Ruskin is pushing an emergency bill that would set aside $8 million in grants to help guys like Berri buy the nozzles they need.