1993, 76pp.

By: MARK DRAYSE AND DANIEL FLAMING, ECONOMIC ROUNDTABLE

Purpose
The industrial and geographical distribution of jobs and establishments covered by South Coast Air Quality Management District (AQMD) regulations are analyzed in this report. The purpose of this analysis is to provide information to help communities, public agencies, and businesses achieve goals of improved air quality as well as economic development in the four-county South Coast Basin (Los Angeles, Orange, Riverside, and San Bernardino counties).

The 121 rules evaluated in this report apply to establishments in one or more designated Standard Industrial Classification (SIC) industries. Variations in location and concentration of different industries throughout the basin result in uneven sub-regional distributions of employment and establishments covered by any one rule. For example, the southeastern area of Los Angeles County is home to large concentrations of small and medium size establishments responsible for emitting pollutants from furniture manufacturing and metal plating. These communities are faced with a disproportionate share of the responsibility for reducing emissions from these industries while maintaining jobs. The problem is made more complex by the fact that most employees in these low-wage industries are ethnic minorities and/or immigrants who breathe some of the worst air in the basin, but whose livelihoods depend on the success of the same factories contributing to the pollution. Information in this report can be helpful in evaluating potential community economic impacts of complying with air quality regulations, as well as for identifying businesses in different communities most in need of assistance in complying with regulations.

Data Coverage
Two caveats need to be discussed at the outset. First, air quality regulations cover establishments that use a particular process, machine, or piece of equipment resulting in emission of one or more regulated pollutants. At any given time, within an industry covered by a rule, there are three groups of establishments: (a) those that use the process, machine, or equipment in question, and are not in compliance with the emission regulation; (b) those that use the process, machine, or equipment, and are in compliance with the emissions regulation; and (c) those that do not use the process, machine, or equipment in question, and therefore are not affected by the regulation; however, establishments in this group would be covered if they introduced the regulated process, machine, or equipment into their plants.

Therefore, although a rule such as 1146.1 (nitrogen oxide emissions from small industrial, institutional, and commercial boilers) is virtually ubiquitous in its coverage of industries (including almost all manufacturing industries), it only applies to those establishments in these industries that use the boilers, generators, etc., that are regulated by the rule. A subset of these establishments are not in compliance, while the rest are in compliance. The figures included in this report for establishment and employee coverage per rule should be considered in this light, as indicating the potential rather than the actual coverage of establishments and employment. (Detailed survey work is recommended to determine the actual coverage per rule; see the Recommendations section at the end of this report). The information compiled for this report shows the maximum number of establishments and employees that could be covered by a particular rule -- the potential coverage of a rule. The potential coverage of a rule such as Rule 1159 (Nitric Acid Units -- Oxides of Nitrogen), is negligible, as it applies to only 6 establishments employing a total of 235 workers. Attention should be given to those firms that might be affected by Rule 1146.1, and other rules that have a high potential coverage of employment and establishments, rather than the numerous, highly specific rules that apply to only a handful of establishments.

Jobs at Risk
This leads to a second note of caution: the concept of "jobs at risk". The development and application of air quality regulations is a political, economic, as well as environmental process. Some firms are more vulnerable financially than others to costs of complying with air quality regulations. Large corporations are much less vulnerable than small firms, due to greater financial resources and technical capabilities to bring their production processes into compliance. Their political clout is another factor, giving them opportunities to influence the application of air quality regulations that small firms lack. Many firms view air quality regulations as evidence of anti-business regulation, regardless of their ability to come into compliance. In the case of firms that close plants or relocate out of the region, it is tempting to argue that air quality regulations placed jobs "at risk", implying that jobs were lost because of air quality regulation. In fact, any attrition in employment, relocation, or closing of facilities is caused by numerous factors, varying in importance in each case, that are not reducible to the perceived difficulties created by air quality regulations. The potential coverage of establishments and employees by each rule should be viewed in a positive light. For each rule, it is important to ensure that the establishments under actual and potential coverage are aware of the compliance standards, technologies, and other factors associated with the rule, and are able to obtain financial, technical, and related assistance in complying with the rule, thus helping to ensure that goals of job growth and air quality are approached simultaneously. Assistance in complying with air quality rules is especially important for small businesses.

Scope of Report The report is divided into three sections. The first section presents information on the relation between rules and impacts on regulated industries in the South Coast Basin. The second section identifies the geographical coverage of rules by analyzing industry composition and rule coverage in each of the four South Coast Basin counties, and five areas within Los Angeles County. The discussion and analysis concentrates on manufacturing industries, which accounted for 66% of all industry emissions in 1990. Particular attention is given to manufacturing industries that are major employers, and those that have a high percentage of employees in small establishments. The third and final section includes a summary and recommendations for further research.