Clash of Rules for Air, Water Hits Business : Pollution: Emission regulations created a huge AQMD backlog of applications to replace leaky fuel tanks. Some firms say the lack of work could be fatal.

Bill and Kathleen Hall certainly have nothing against environmental regulations.

After all, their Gardena business was built on federal and state rules that require the upgrading of underground fuel tanks to protect against leaks that contaminate subterranean water. “We saw there was a need,” Kathleen Hall said, “and we invested heavily” seven years ago to start a company that installs tanks and treats polluted soil.

But another environmental bureaucracy, the Halls say, is ruining their industry, not to mention the campaign against groundwater pollution. The clean water program is imperiled locally, they say, by the region’s clean air plan.

The South Coast Air Quality Management District must approve any work that releases gasoline vapors into the air, which this construction can do, and must also review the type of tank being installed. And AQMD officials acknowledge a backlog of at least 1,200 applications for fuel storage and dispensing equipment since a complex air-toxics measure took effect in late 1990. That figure represents almost 20% of the 5,700 gas stations in the four-county region under the AQMD’s jurisdiction.

Because there seems to be no point in adding to the gridlock, oil companies have generally stopped commissioning new upgrades.

Authorities overseeing the water program worry that some tanks awaiting replacement permits may be leaking, their contents seeping into surrounding earth and aquifers. But oil company executives say their policy is to empty a tank immediately if they discover a leak.

More troublesome is the potential impact on the tank upgrade program and its deadlines if firms like the Halls’ go out of business during the permit slowdown.

“We rely very heavily upon contractors that have a track record and that have employees that have experience,” said Jim White, an Arco Products Co. executive who has been negotiating with the AQMD on behalf of several major oil companies attempting to get the permit process flowing again.

“We are very, very concerned about that,” White said.

With work at a standstill, layoffs have become common in what was once a growth industry and owners are starting to think reluctantly of shutting down.

“I’m hanging on by my fingertips,” said Herb Poeltler, who sells underground tanks. “In the next month or two, I’m going to have to make a hard business decision.”

Adds Peter A. Sokoloff, whose sales of leak detector equipment are off 30% from last year: “My business was growing, but I don’t have the big pocketbooks to wait this out.” He told a recent gathering of about 30 of his fellows: “All you guys can breathe the clean air, because I’ll have to go. I can’t make a living here.”

As for the Halls, revenues at their Hallmark Petroleum are down 65% from last year. They have furloughed 35 employees.

Like the owners, their vice president for sales, David Munson, is furious and frustrated. “There is a marketplace out there. Why are we dying on the vine? There are a lot of tanks out there that need to come into compliance.”

The U. S. Environmental Protection Agency and the state Water Quality Control Board have mandated that tank improvements be completed by 1998. The city of Los Angeles has a stricter deadline of 1994.

Authorities say that about half of the 150,000 tanks statewide have been upgraded since the program started in 1984. In the city of Los Angeles, about 6,000 of the 12,000 tanks have been upgraded.

This year’s lagging pace in the Los Angeles region has been noticeable to authorities charged with making sure the tanks get improved or replaced. And they are concerned about it.

“The slowing down of (contractors’) installing new tanks is naturally slowing down the progress of getting the old tanks out,” said Los Angeles City Fire Capt. Emile Mack, who heads the department’s underground tank enforcement unit.

“I would make the assumption that quite a few of those old tanks are leaking.”

Furthermore, Mack said, even if the process speeds up, “trying to get the (contracting) industry re-staffed could be quite a problem.”

The difficulties are “very real,” said William Fray, assistant to the AQMD’s operations chief. “I’m not extremely thrilled to have to tell you that.”

The AQMD has issued only about 70 permits in the past six months. In 1990, about 350 were approved.

Two new regulations are at the root of the backlog, Fray said. Enforcement of both began in the fall of 1990.

One regulation requires businesses that add carcinogens to the air to undergo a review of the health risk posed by their operation. Gasoline contains benzene, identified as a cancer-causing chemical.

Service station owners have supplied only about 35% of the information requested on the complicated new forms, Fray said.

Even the AQMD has had trouble complying. The district is building a new headquarters in Diamond Bar. Applications for a 10,000-gallon gasoline storage tank and another for methanol were submitted in January. It was April before the information on the documents was deemed complete, said AQMD spokesman Tom Eichhorn.

The other regulation says that any new business or new construction that causes an increase in smog-forming pollutants must guarantee that a commensurate amount of pollution is taken out of the region’s air by another operation that has shut down or changed to a cleaner process.

Previously, a gas station was generally considered too small a source of pollutants to come under that rule.

“There was a rush on all parts to complete applications before that regulation took effect,” Fray said.

“I’m not denying that,” said White, the Arco Products Co. executive. Service station owners, he said, foresaw trouble measuring the amount of emissions they must offset because gasoline sales--and therefore gasoline vapors--vary widely from day to day.

The combination of the stream of applications and the lack of information strained the two clerks and two engineers who were handling service station applications. “This was our first air-toxic rule. We paid the price in learning,” Fray said.

The staff was beefed up last week with the addition of three more engineers, Fray said, and they should start making a sizable dent in the backlog by this fall.

But the explanations and promises do not pacify the Halls, who now have 15 permits stalled at the AQMD. New orders are a memory from the past. Business has withered.

In recent weeks, the couple contacted colleagues and competitors to form the South Coast Coalition of Environmental Businesses for Clean Air.

The new group gathered two weeks ago in a rented meeting room in the industrial “shoestring” of Los Angeles that links the main part of the city to the port, and one by one, each member took a turn at the microphone to detail his woes.

Michael J. Buckmaster, vice president of a Riverside equipment company: “I have 41 jobs on hold.”

Craig Watkins, owner of a Long Beach contracting and engineering firm: “I’ve gone from 25 to 14 employees. One I spent $2,200 training and now he’s going to Ohio for work.”

John Carter, a sales representative for three equipment companies: “From January through the end of May, compared to last year, my business is down 45%.”

Six members of the group have met with AQMD officials, but worry still that relief may come too late.

“Adding a few people to the permit department will not solve the problem,” said Kathleen Hall, a toxicologist.

She calculates that the extra staff will mean “at the current backlog . . . you can expect your permit in 69 months,” she wrote in a memo to the members of her coalition.

For all intents and purposes, that would mean “you can expect your permit sometime in eternity,” she wrote. “Heaven help us.”