Incentives vs. regulation: the controversy over cleaning up LA's polluted air

This week, staff members for the South Coast Air Quality Management District have been driving all over the L.A. basin, telling the public how their agency's revised air quality management plan will clean up the country’s dirtiest air.

At first glance, the revised plan appears to be a reversal from a controversial draft unveiled in June. That version, described as “a new approach,” largely ignored traditional command-and-control regulations that require emitters to make reductions or face fines. Instead it focused on “cost-effective alternatives" like voluntary cutbacks and financial incentives to reduce pollution. 

The air district says the revised draft has undergone "major revisions" that call for more traditional regulations than the previous draft. 

But a close look of the details reveals that AQMD is largely sticking with the controversial approach it released in June. And that raises a fundamental question: what's the best way to clean up L.A.'s polluted air, incentives or regulation?

The Los Angeles basin has among the worst air pollution in the country. Ozone pollution here is so bad, the region is one of only two in the country that is considered in “extreme non-attainment” with federal ozone standards.

Ozone is formed when emissions from internal combustion engines (cars, trucks, ships, etc.) and some natural sources, like trees, are baked by sunlight. L.A.’s geography, weather and huge number of vehicles makes us ground-zero for ozone pollution.

Ozone pollution (not to be confused with the ozone layer, which is different) makes it harder to breathe. When ozone levels spike, so do hospital admissions for things like respiratory infections and asthma. Children are especially vulnerable. One study found that children who live in areas with high ozone concentrations and play at least three sports are three times more likely to get asthma than kids who don’t play any sports.

Since 2000, ozone levels have decreased by 30 percent in the L.A. basin through a combination of local, state and federal efforts. But the region still doesn’t meet federal air quality standards. And as long as we fail to do so, every three to four years the AQMD has to write a phone book-sized plan detailing what they intend to do about it.

The AQMD was embroiled in controversy well before releasing this year’s air quality management plan. At the beginning of this year, the board that oversees the AQMD got a new Republican majority who made it clear they wanted policies that were more business friendly. In March, that same board fired long-time executive officer Barry Wallerstein because he was seen as too hard on businesses. 

When the first draft of the air quality management plan came out in June, it reflected the new industry-friendly bent of the board. The word “cost-effective” appeared 75 times in that draft, compared to only 33 times in the 2012 plan.

At the time AQMD’s Acting Executive Officer Wayne Nastri told reporters that the plan "focuses on available, proven and existing technology. And really, it provides cost-effective alternatives to traditional strategies.” 

The plan’s executive summary didn’t even have a section on new regulatory measures. Instead, it outlined the district’s goal to boost its incentive program to $1 billion a year over the next 15 years – a ten-fold increase from what AQMD currently offers. They ranged from incentives for clean burning heavy-duty truck engines to cutting emissions at ports and replacing boilers.

Environmentalists and public health advocates hated it.

“The plan is dripping with politics,” said Adrian Martinez of the environmental law firm Earthjustice in June. “There’s a lot of technologies out there to clean up this pollution. Those should be required.”

Critics also pointed out that sources for much of the incentive funding had not been identified. 

It's something deputy AQMD Executive Director Phil Fine acknowledged at the time. “It’s premature to know exactly how that funding is going to be secured,” he said.

So in October, after fielding all the public comments on the first draft, AQMD released the revised version, which it said had significant changes.

The plan now includes more references to regulations than before.  In the June version, the plan said it would “prioritize non-regulatory, innovative and ‘win-win’ approaches for emissions reductions.” The revised draft includes “enforceable regulatory measures” in that list.

There are major substantive changes in the new plan as well.  AQMD added some regulatory teeth to a few of its previous, incentive-only programs. It called for transitioning a market-based cap-and-trade program for nitrous oxide emissions (NOx) to a more traditional, command-and-control regulatory approach. And it set a one-year time limit on how long staff will work with the logistics and warehouse industries to develop a collaborative plan to achieve voluntary emissions cuts before asking the board to enact regulations.

But a look closer at where the emissions cuts are actually coming from shows that the revised plan isn’t all that different from the earlier one. For example, the earlier draft plan proposed cutting 2.3 tons of NOx emissions with regulatory measures; the revised plan ups that to 2.6 tons. Meanwhile, the earlier plan relied on incentives for 17.2 tons of emission reductions; now that’s down to 14.2.

For David Pettit, senior attorney at Natural Resources Defense Council, those numbers show that AQMD is still relying much more heavily on incentives than on traditional regulatory measures to meet air quality regulations. And for him, that’s a problem because many of the incentives still do not have funding.

But his objections to the incentive problem go deeper than the uncertainty about where the money will come from. “Conceptually, we’re taking public money to pay for industry to clean up its own mess," he said. "In my view, industry should pay to clean up its own mess. We, the taxpayers, should not.”

Phil Fine, AQMD’s deputy executive officer, defended this strategy by pointing out that AQMD has created a committee to study where the funding will come from. He also said AQMD firmly believes that by working with polluters, they can cut emissions faster than regulating them.

“But if the collaborative relationship is not working, we still need the emission reductions, we’ll immediately pivot and recommend to our board some [regulations],” he said. 

Fine said the regulatory approach has drawbacks because pollution rules are often challenged in court cases that can take years to resolve. 

Pettit said NRDC will likely sue over AQMD’s plan if the district doesn’t make more changes before the board votes on the final version in February. The final draft will be unveiled in December.

Pettit wants to see staff outline the regulations it would recommend to the board if the collaborative discussions with the warehousing and logistic industries fall through. He also wants the district to use its authority to regulate the owners of large truck fleets.

“The L.A. area has the worst ozone problem in the country,” Pettit said. “And so I think it needs the toughest plan to deal with that. And that’s not what we’re seeing. At least not yet.”

Fine, on the other hand, said this plan is the first time he’s felt optimistic about actually meeting federal ozone rules. Past plans have taken credit for vague, long-term strategies to reduce emissions, a strategy known as “the black box.” Fine says this plan banished the black box and instead, is trying to incentivize companies and individuals to switch out polluting technology for cleaner, currently existing technology.

“If we can raise this funding, it’s not only possible, it will happen,” he said.