AQMD Budget in Fine Shape, but Critics Fume at Spending

A big power plant near Long Beach spewed more than a million pounds of excess pollution into the sky last year, so air quality regulators fined operator AES Pacific Inc. a record-setting $17 million and required installation of add-on controls to protect the environment.

However, when officials of the South Coast Air Quality Management District got their hands on the cash, they doled out millions to pet projects. The agency is prospering as never before, thanks largely to fines collected from energy companies, but the newfound wealth is raising questions about whether the money is being used to make big reductions in smog or for political gain.

The entire $17 million from AES Pacific was spent on a hodgepodge of projects, all in the name of clean air, but with little apparent effort at determining how the money could have the greatest benefit for the most people.

For example, $500,000 was spent for a railroad overpass on Ramona Avenue in Montclair, in western San Bernardino County, where traffic congestion is expected to become a problem. Montclair Councilman Leonard Paulitz, a member of the AQMD governing board, lobbied for the project.

An additional $1.5 million will be used to hire a consultant and run a program to educate the black, Asian and Latino communities about the dangers of smog and about ways minority neighborhoods can participate in policy debates about air pollution.

The Jurupa Unified School District in Riverside County received $3 million to help pay for 24 alternative-fueled school buses--the only district among 129 in the region to receive funds from the AES settlement. Riverside Mayor Ron Loveridge and attorney Jane Carney, both members of the AQMD board, were instrumental in securing those funds for the school district. Carney said haze is so thick in the Inland Empire that new, clean buses are needed to protect children’s lungs.

But David Walthall, director of transportation for the Ontario-Montclair School District and president of the Orange County chapter of the California Assn. of School Transportation Officials, complained that no one else had access to that money.

“In many previous meetings it never came up that that money could be accessed by any other school district. It [the AQMD board] can do whatever it wants with that money,” Walthall said.

San Bernardino County Supervisor Jon Mikels, an AQMD board member since 1991, voted against many of the recent expenditures. He said they enrich local communities, but do little to clean the air or offset the big pulse of pollution that AES released into the sky.

“They were trying to spend the money as fast as they could,” Mikels said. “The AES settlement was simply a pork barrel proposition. The money appeared to be being wasted to me.”

A number of pollution control projects were not funded that critics like Mikels believe would have provided more bang for the buck.

Among them: a $1-million proposal to help cut energy consumption in Los Angeles-area office buildings; alternative power sources to reduce soot from idling diesel trucks; cash incentives to replace portable diesel-powered generators and pumps; and subsidies for microturbines, which produce electricity with substantially lower emissions than backup diesel generators. The generators are being pressed into service during the state’s energy crisis.

Board Chairman William Burke maintained that the AQMD board’s funding choices represented “a consensus judgment that was the best way to spend it.”

“Is there a better way to spend it? Maybe. But the programs we funded are very good programs. The board does not act capriciously,” he said.

Under Burke’s leadership, the AQMD is asking the Legislature to waive a provision in state law that requires audits of the district’s operations every three years. AQMD officials say the change will save money and free staff to perform more pressing duties. Environmentalists say the audit helps ensure money is well spent.

In the Los Angeles region, local smog-fighters estimate that they will collect up to $119 million this year just from energy companies, plus another $64 million from other sources--nearly twice the revenue in the AQMD’s $96-million annual budget.

New Revenue Is Nearly Twice Agency’s Budget

The AQMD is not the only smog-fighting agency to find itself awash in new money. From San Francisco to San Diego, regulators are beginning to reap tens of millions of dollars from fines and fees as power plants emit tons of extra pollutants in a furious attempt to keep the lights on.

In San Diego, air quality officials estimate they will collect as much as $18 million this year from power plant fines--50% more money than their total budget for this year. In the Bay Area, revenue from one energy company alone could translate into a $1.2-million windfall. California’s energy crisis has had the ironic twist of enriching local regulatory agencies and expanding their power during a time when Congress and the White House appear intent on scaling back the reach of environmental bureaucracies.

The newfound wealth is extending the clout of the local air agencies beyond smokestack industries to fleets of ships, trucks and buses. Those sources were once beyond their jurisdiction, but the extra money is enabling air quality agencies to help mobile sources pay for cleaner technology.

In some cases, smog-fighting agencies are beginning to act more like venture capitalists than regulators, wielding their windfalls in a more business-friendly manner, providing incentives and pursuing partnerships with industry and relying less on regulatory edicts.

The agencies are using the money to promote emergent technologies ranging from ship-based fuel cells to low-polluting boilers to alternative-fueled cars.

“The districts are morphing into agencies that serve the functions of goal-setting, accounting and enforcement. The role of technology catalyst or investor is an appropriate role too,” said Bob Wyman, attorney for the Regulatory Flexibility Group, which represents the region’s major industrial polluters.

Environmentalists are more skeptical.

“This is the trend over the last few years, to depend more on incentives and rebate-type programs to help industry comply,” said Tim Carmichael, director of the Coalition for Clean Air, a Los Angeles advocacy group. “Command-and-control is not well liked by the polluters, so these programs are easier from a political perspective because it is using public money to subsidize cleanup. This needs watching closely.”

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Pots of Money

More than $182 million in new revenue is pouring into the South Coast Air Quality Management District during the energy crisis. The money augments the agency’s $96-million annual budget. Most of the new funds are designated to cut vehicle exhaust in Los Angeles, Orange, San Bernardino and Riverside counties. Here is a breakdown of new revenues:

* $50 million, paid by new power plants to offset smoke.*

* $38 million, paid by power plants for excessive gaseous emissions.*

* $28 million, given by the state to clean diesel-powered trash trucks, urban transit buses and agricultural irrigation pumps.

* $22 million from the state to replace diesel school buses.

* $17 million in penalties from AES Pacific Inc. for excessive power plant emissions.

* $14 million in penalties from the Los Angeles Department of Water and Power for excessive power plant emissions.

* $10 million from a vehicle registration surcharge to fund clean-vehicle research.

* $3.6 million paid by businesses in lieu of carpool programs.

* Projected revenues for 2001

Source: South Coast Air Quality Management District