Approval of Smog Credits Is Suspended

Casting a new cloud over the future of a controversial air quality strategy developed in Southern California, the state Air Resources Board has decided to suspend the approval process for all pollution trading initiatives pending before it.

In a letter to air pollution control officials throughout California, the board said it was taking the action in the wake of legal challenges to pollution trading credits granted to several Los Angeles area oil companies.

In lawsuits against the oil companies and a civil rights complaint against the South Coast Air Quality Management District, environmentalists charge that under the trading system--which allows the companies to avoid installing certain pollution control equipment--the air quality of nearby minority communities is being sacrificed.

Under the AQMD’s “smog market” program, local manufacturers can buy and scrap old, high-polluting cars and, in exchange, receive credits that allow them to avoid cleaning up emissions from their own operations.

In recent years, the Clinton administration has looked upon the AQMD’s market in pollution credits as a model for industry nationwide, giving businesses choices in how they clean up air pollutants.

In their legal complaint, however, environmentalists have charged that, at least in some cases, the credit system works to the disadvantage of poor communities closest to companies exempted from cleaning up emissions.

While the lawsuit, brought by Communities for a Better Environment, does not target all forms of pollution credit trading, its impact with the Air Resources Board’s action is now being felt beyond Los Angeles and the specific companies named in the lawsuit.

All pollution trading proposals “now in the pipeline” are now on hold, said Jerry Martin, a board spokesman.

Until the legal controversy is resolved, Martin said, proposed new approaches to pollution trading will neither be approved by the board nor submitted to the U.S. Environmental Protection Agency for approval. Such proposals are pending from Los Angeles, the San Joaquin Valley, Sacramento and the Bay Area.

Local air quality districts still have the authority to authorize such pollution trading arrangements with higher approval. But it could be a risky strategy, experts said, for any company to take advantage of a local deal that does not have federal approval.

The risk is that a company could wind up spending money only to have the EPA eventually come back and say it is not a “valid approach,” said Ken Carmichael, policy director for the Coalition for Clean Air.

“For [the] time being, I think the [Air Resources Board] action could have a chilling effect by quelling the eagerness of the business community to invest more money in credits until this issue is resolved.”