Show me the money: Can the AQMD raise $1 billion a year to clean up the air?

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Just a month before the South Coast Air Quality Management District Board is set to vote on a controversial air quality plan, environmentalists remain fiercely skeptical of where the agency plans to get billions of dollars for pollution control incentives.

A new smog-reduction plan revealed last year calls for $15 billion in financial incentive to encourage polluters to cut emissions voluntarily. The approach would rely less on traditional "command and control" regulations that penalizes polluters for not complying with clean-air rules.

On Friday at the AQMD board meeting in Diamond Bar, environmentalists stepped to the microphone one after one to express concern that the agency didn’t have a back-up plan for what would happen if that money falls through. AQMD staff, meanwhile, are hopeful that they will get the money. If they don’t, they say they'll do what they’ve always done: push solving the region’s air problems a few years down the road.

The meeting is the latest development in a long-running debate about how how best to clean up the South Coast’s notoriously polluted air. The region is one of only two in the country that is considered in “extreme non-attainment” with federal standards for ozone, more commonly known as smog.

Ozone is formed when emissions from the burning of fossil fuels (cars, trucks, oil refineries, etc.) and some natural sources, like trees, are baked by sunlight. L.A.’s geography, weather, huge number of vehicles and massive shipping and logistics industry makes us ground-zero for ozone pollution.

In June 2015, the AQMD unveiled its latest Air Quality Management Plan, a document the agency is required to produce every three to four years as long as the region doesn’t meet federal air quality standards.

At the time, AQMD’s Deputy Executive Officer Phil Fine told reporters the agency had already done most of what it could do with traditional regulations to force stationary sources like refineries and power plants to cut their emissions. “The only feasible strategy to achieve all the necessary emission reductions needed to attain these standards must include a significant expansion of financial incentive programs," he said.

He noted that nearly 90 percent of the LA Basin’s ozone problem is due to mobile sources, things like cars, trucks, trains and ships, which AQMD has less authority over.

Environmentalists disagreed and said the AQMD could do more to force big polluters to clean up and to make ports and warehouses responsible for their vehicle emissions. Since June, the AQMD has added a few more regulatory measures, however the latest plan still expects to get about seven times as many emissions reductions from incentives as from regulatory cutbacks.

The agency promised it would study where to find the approximately $1 billion a year in incentives called for under the plan. And at its Friday meeting, AQMDs’ deputy executive officer Henry Hogo unveiled that list publicly.

It included a mixture of local, state and federal sources. On the federal side, the AQMD could ask the U.S Department of Energy, seek money from the Diesel Emission Reduction Act or ask Congress to create a new Clean Air Fund to assist regions with poor air quality. At the state level, possible sources include the $381 million Volkswagen emissions cheating settlement, the California Air Resources Board and bond measures. And locally, AQMD could seek a new property tax, sales tax or vehicle registration fee.

Environmentalists blasted these last ideas, calling them regressive and unfair.

“You’re asking low income people who bear the brunt of the pollution to clean it up,” said Evan Gillespie of the Sierra Club.

Others said the agency could do more to force polluters to clean up. Angela Johnson Mezaros of Earthjustice cited a recent study that found that emissions from refineries are up to 12 times higher than officially reported.

“You’re refusing to require that largest sources of air pollution install cost-effective, life-saving pollution control equipment. And instead you’re calling for a tax on ordinary folks for owning a car,” she said.

Others remained skeptical that the money for the incentives would come through. David Pettit of the Natural Resources Defense Council told the board that they needed a “Plan B” for what would happen if they they couldn’t raise the funds.

“We have absolutely no idea if any of those measures will come in or not,” he said. “You can’t calculate the odds.”

AQMD’s Deputy Executive Officer Phil Fine said he felt more hopeful than many of the environmentalists that the agency would raise the funds. But if it doesn't, he said, AQMD can do what it’s frequently done in these air quality management plans in the past: tell the Environmental Protection Agency it’ll figure it out how to cut the emissions later. Legally, the AQMD is allowed to do this under Section 182(e)(5) of the Clean Air Act, a rule known as “the black box.”

But Fine said the AQMD board asked staff to try to avoid the black box this time. The deadline for complying with federal ozone rules is 2022, which doesn’t leave much time to figure things out later. So staff sat down and calculated how much it would cost to implement all the new technologies needed to get the necessary emissions reductions, such as scrapping old cars, trucks and construction equipment and replacing them with cleaner ones.

“Obviously that’s expensive,” Fine said. “And obviously we’ve proposed quite a bit of incentive funding to help that along. If we don’t get incentive funding, we always have the alternative of (the Black Box). It’s allowed legally, but it’s not attractive to us.”

If the funding fails to come through, AQMD could also resort to what Fine described as “extremely draconian regulatory measures” that he said no one would be happy with, such as "no drive" days in the LA Basin.

“There’s simply too much equipment to change out in this short time period without providing some kind of incentive,” he said.

The AQMD board will vote on the plan in February.

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