Support for Smog Swap Plan Fades : Pollution: An environmental group believes the proposal to buy and sell emission permits would enrich big business at the expense of smaller operations.

After nine months at the conference table listening to discussions of a proposed “smog exchange” that would allow polluters to buy and sell permits for emissions, the Coalition for Clean Air does not like what it’s been hearing.

Initially, the environmental group’s officers had cautiously supported the radical concept, which would replace many of the region’s strict air-quality regulations by issuing “shares” that symbolize the right to pollute a certain amount. Companies or governments that did not need to use all of their shares could sell the extra emissions rights.

But now the advisory process is nearly over and after hearing more details, the coalition’s executive director is blasting the still-emerging proposal as “windfall profits for big business” which will also hurt small businesses.

The program also could create greater concentrations of toxic air contaminants in the eastern portions of the Los Angeles region, coalition director Tim Little charged.

Officials of the South Coast Air Quality Management District, along with other environmental activists and industry representatives, said the program is still taking shape and is expected to address all of these concerns.

“It’s a bit premature,” AQMD spokesman William Kelly said of Little’s criticisms. “There are a lot of issues that have to be sorted out which we are sensitive to. . . . We’re not tied to a program now.”

About 50 representatives of large industries, small businesses and environmental groups, including Little’s, have convened monthly to hear progress reports from the AQMD staff.

On Friday, the staff issued the last of five so-called “working papers” outlining the main points being thrashed out.

The AQMD has postponed consideration of the smog exchange concept from the February meeting of its governing board until March 6, in part to give the staff more time to design the market system.

The concept was pushed by industry. In exchange for more flexibility under the market program, business would accept a yearly devaluation of the shares, in theory forcing a cleanup of the region’s smoggy skies. The proposal is being closely watched nationwide.

Still, industry and environmental groups alike have some reservations--albeit different ones--about the specific system the AQMD staff is creating.

“We fear that the program will be compromised,” said Robert A. Wyman, an attorney representing several large companies in the area under AQMD jurisdiction--Los Angeles, Orange, Riverside and San Bernardino counties. “This is not the kind of thing that you can compromise on and still have it work.”

The AQMD staff “plainly needs to do a lot of work,” said Mary Nichols, chairwoman of the environmental caucus on the advisory committee. She is senior attorney for the Natural Resources Defense Council.

“I’m not ready to embrace it, or to blast it, until we’ve had the opportunity to work through a number of these issues,” Nichols said.

Little is the most upset.

“We think we’ve reached general alarm status,” he said Monday.

According to the most recent staff paper, the biggest savings in a pollution market would be realized by the oil industry, public utilities, chemical manufacturers and makers of wood products. These businesses would spend about $630 million less over the next decade than they would under a system of regulations.

Costs of a “smog exchange” would increase the most for smaller businesses, such as gas stations, car dealers, wholesalers and suppliers of building materials. They would spend about $389 million more over the next decade than under AQMD rules.

The staff, however, is thinking of cutting smaller businesses out of the “smog market,” Kelly said. “There may be other ways to deal with that,” he said.

Whether producers of toxic pollutants would be part of the exchange is also still under discussion.

Wyman said the coalition’s active opposition could hurt the chances that the smog exchange becomes reality. “I am concerned that the district and industry will back off,” he said. “The more people try to politicize it, the more likely it will fail.”

But, Kelly said, “Even with some criticism, it’s going to be hard to walk away from this. It’s one of those things that’s been controversial since the beginning and it’s going to remain controversial right up to the time that it’s resolved, one way or the other.”