Air quality regulator fees fund fancy trips as consumer costs increase

Good morning. Happy Hump Day!

Ready for the final presidential debate tonight? Don’t worry, it’ll all be over soon. Before we get to things to watch for tonight, we swing by the Bay Area, where fee increases by the local air quality regulator get passed on to consumers — and the directors enjoy the surplus funds.

Not even a month after sending two dozen people on a pricey trip to New Orleans, a member of the board of directors of the Bay Area’s air quality regulator boasted that the agency was “flush” with cash.

In July, the Bay Area Air Quality Management District was considering whether to hire additional staffers to assist with administering a new regulation when board member Shirlee Zane boasted “this air board, quite frankly, is flush.”

“We can more than afford to hire … extra help to do the assessment,” said Zane, a Sonoma County supervisor.

“We have plenty of money,” Zane added — a sentiment echoed by Katie Rice, a board member and Marin County supervisor.

While the rosy perception of the district’s finances may have been isolated to just a few board members, the willingness to spend on additional staff and a lavish New Orleans trip coincided with what’s become a routine increase in fees charged to those local businesses considered stationary sources of air pollution — costs which experts say are then passed onto consumers. 

CalWatchdog has more. 

In other news:

• Capital Public Radio gives four things to watch in the debate tonight. 

• “In a scathing sentencing position filed late Tuesday with the U.S. District Court in Los Angeles, federal prosecutors requested five years’ imprisonment in their corruption case against former state Sen. Ron Calderon,” reports The Sacramento Bee. 

• The Orange County Register give four ways the county can “help its homeless.”

• “A California-based tribe’s recent loss at the National Labor Relations Board could reignite interest in controversial legislation affecting Indian casinos and union workers nationwide,” reports The Sacramento Bee. 

Legislature:

• Gone till December.

Gov. Brown:

• No public events announced.

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New follower: @PaulParmley

In July, the Bay Area Air Quality Management District was considering whether to hire additional staffers to assist with administering a new regulation when board member Shirlee Zane boasted “this air board, quite frankly, is flush.”

“We can more than afford to hire … extra help to do the assessment,” said Zane, a Sonoma County supervisor.

“We have plenty of money,” Zane added — a sentiment echoed by Katie Rice, a board member and Marin County supervisor.

While the rosy perception of the district’s finances may have been isolated to just a few board members, the willingness to spend on additional staff and a lavish New Orleans trip coincided with what’s become a routine increase in fees charged to those local businesses considered stationary sources of air pollution — costs which experts say are then passed onto consumers. 

New Orleans

Two months prior to Zane’s comments, Jack Broadbent, the district’s executive director, sent a letter encouraging all board members and staff to attend the Air and Waste Management Association’s 109th annual conference in “vibrant” New Orleans, to “witness the rebirth of this spectacular region of the Gulf Coast.”

The conference was an opportunity to “address environmental issues that can best be approached in a collaborative setting,” wrote Broadbent, who sits on the association’s Board of Directors.

Twenty-five people took advantage of Broadbent’s offer, costing the district $54,000, which included a $2,300 dinner for everyone. All of this was absorbed by an out-of-state travel budget that more than doubled this fiscal year. 

The conference’s website included a packed schedule, but also highlighted the many tourist attractions available, like carriage tours, shopping opportunities, cooking classes, art museums and steamboat cruises. 

District spokesperson Kristine Roselius said the trip’s average of $2,160 per person was an “appropriate” cost for the level of training received, which included “the opportunity to learn from air quality experts and learn the latest academic research, innovative approaches to measurement and quality science from engineers and scientists from all over the world.”

Fee increases

The district aims to have 85 percent of expenses covered by fees associated with things like equipment permitting and inspection, while the rest comes mostly from Bay Area property taxes. However, the district is only recovering about 81 percent of its costs through fees, with the gap costing around $8 million. 

Fees have increased each year for some time, as have general expenses. Roselius said the travel budget is still rebounding from the cost-cutting days of the last budget crisis, and that the district considers the effect on consumers when increasing fees, adding that there’s a state-imposed, 15 percent cap on annual increases.

“We look at the impact on the business/facility through our detailed socio-economic analysis,” Roselius said. “This helps us weigh this against the cost recovery percentage and what percentage the fees will increase.”

Someone’s gotta pay

While power plants, chemical plants and petroleum refineries fall under the district’s jurisdiction, so do smaller businesses like gas stations, dry cleaners, auto body shops and manufacturers of all sizes. Even boilers at schools, hospitals and apartment buildings are subject to the districts fees and regulations.

Some businesses may be situated to absorb higher fees. But most of the time, an increase in expenses will get passed through to consumers with higher prices for goods and services.

“Anytime you move on fees, somebody’s going to pay the price,” said Tom Scott, the National Federation of Independent Business’ executive director for California. 

Most industries in the state are subjected to some kind of regulatory costs, though those considered to have a higher environmental impact are often hit the hardest — this can have a lopsided effect on the overall economy.

The Bay Area has enjoyed a consistent hiring surge in the past few years, with gains primarily in technology, health care and leisure and hospitality. Meanwhile, statewide manufacturing job creation — long considered the backbone of the American middle class — lags far behind the national average. 

Moving on up

Based on an internal study, the district aims to keep a reserve fund of at least 20 percent of the annual budget, which comes to around $15 million. 

At least $9 million of the reserve fund will be used as a down payment on a new office space. This year the district moved out of a building it owned in San Francisco to a new location nearby, which it will share with the Metropolitan Transportation Commission and the Association of Bay Area Governments.

BAAQMD has plans of purchasing the new space for somewhere around $29 million. The prior building, which was owned by the district, sold for around $16 million. 

The new building is supposed to improve communication between the organizations, while the old building was outdated and needed $30 million in renovations, according to BAAQMD documents. 

Currently, the reserve fund is projected to have around $7 million more than the desired minimum, which no doubt aided Zane (and Rice) in her willingness to spend. But she wasn’t looking at the whole picture, said Roselius.

“The statement by one board member about the state of the Air District finances did not take into account what will be paid out soon when the Air District puts its down payment toward the cost of the new building,” Roselius said.

By Katy Grimes

Lawmakers are notorious for responding to tragedies and accidents with often unnecessary legislation. It’s a Kodak moment none seem to be able to resist, especially over environmental issues.

It happened again Wednesday in the Senate Environmental Quality Committee. Several bills were passed by the committee, including SB 691 by state Sen. Loni Hancock, D-Berkeley, a bill targeting large businesses for air quality accidents.

Despite facing legitimate legal and technical challenges, the committee ignored protocol, and allowed the bills to move on with the proviso that work would continue to be done on the bills.

Penalizing business over accidents

Taking aim at Chevron over the August 2012 refinery fire, SB 691 is put forth as the solution to a big problem. It would dramatically increase fines and penalties for businesses which have pollution accidents and air quality violations. Hancock said the bill would “incentivize” air quality compliance. And she added, “incentives are better than mandates.”

Hancock’s bill would quadruple the civil penalties large polluters must pay for air quality regulation violations. But what Hancock did not explain is that local air quality districts will be able to fine businesses for violations to air quality regulations, then pocket the money. The “incentives” appear to be on the side of the government.

“I am introducing this bill because current penalties are far too low for polluters who cause thousands of people to suffer,” Hancock said in a news release.

Under current law, penalties are assessed per day. Hancock said her concern was that, for a one-day violation like the Richmond fire, Chevron may only face a minimal fine.

“Single-day violations of air quality regulations that affect entire communities lack adequate financial consequences,” she explained. “Current penalties are simply inadequate to ensure compliance with the law from large polluters.”

Sponsored by the Bay Area Quality Management District and Breathe California, SB 691 would only “increase the penalty ceiling, and not necessarily the penalty,” Hancock said.

“One-day violations disrupt entire communities,” Tom Addison with the BAQMD said. He concurred that only the penalty ceiling would be increased, not the penalties.

Nuisance or dangerous?

Ed Manning, representing the Western States Petroleum Association, challenged Hancock’s charge of malicious negligence by large companies when an industrial accident occurs.

Specifically, Manning took issue with this wording of Hancock’s bill:

“Prohibits a person, except as specified, from discharging air contaminants or other material that cause injury, detriment, nuisance, or annoyance or endanger the comfort, repose, health or safety to any considerable number of persons, or to the public.”

“Nuisance is not non-compliance,” Manning said. He explained what constitutes a “nuisance” is different in every air quality management district in the state. A “triggered event” can be as small as one household complaining, he said. And air quality districts do not have to prove there was a violation for an official “nuisance” to have occurred.

“The reason nuisance penalties are so low is because the burden of proof is so low,” Manning said. Nuisance claims triggered by a complaint also are a problem for small businesses. “Penalties up to $10,000 are difficult for very small businesses.”

Sen. Ted Gaines, R-Rocklin, asked Hancock, “What about a real accident?” He explained that financially penalizing a business for an actual accident, which is not deliberate or intentional, is not right.

Hancock largely ignored Gaines’ question and Manning’s concerns, and instead just repeated, “It’s a huge public safety problem.” She claimed there appeared to be consensus on the bill. “I look forward to working with the opposition as the bill moves forward,” she said. “I think the bill is really needed, very, very much.”