Running On Empty: Regulations First, Californians

“Actions have consequences,” the old saying goes, and it is as true in California as anywhere else.

For years, the Golden State has promulgated regulations, compliance structures, and environmental rules on everything from dry cleaners to nail salons and from ballpoint pens to video games.  Most of the time, we endure this or that government directive (SB 1918: “No driving that Segway Human Transporter at night, mister!”) with little more than a bemused shake of the head.
And then there’s what is about to happen on, appropriately, April Fools Day.

Several years ago the California Air Resources Board (CARB) adopted regulations requiring gas stations to install new equipment to reduce air pollution levels – a laudable goal that many of us strongly support as a concept as well as a practice.

However, due to bureaucratic delays, excessively high fees and widespread confusion about exactly how to comply, barely one in five gas stations statewide have so far been able to fulfill the CARB mandate.  So, at the beginning of next month, the board is set to bring down its regulatory hammer and effectively close more than 6,000 gas stations statewide.

Obviously, a decrease in competition among providers will automatically result in increased gas prices.  But the secondary effects will be even worse: thousands of Californians will lose their jobs, air pollution will increase due to longer drive times, and the State will see an instantaneous drop in the $3 billion in gas tax revenues taken in every year.

Adding to this challenge is the present worldwide financial crisis that has severely restricted access to needed financial capital for small business owners to be able to finance the necessary upgrades – a major barrier that even CARB has acknowledged is an enormous problem in the effort for compliance.

But another major hindrance is perhaps the most inexcusable of all: A complete shortfall of certified regulators and the compliant equipment needed for gas stations to obey the new rules.

That’s right.  It was not until October of last year – six months prior to the implementation deadline – that CARB finally certified an alternative system that helped minimize major obstacles that services stations were encountering at the local level.

As a result of the deadline, equipment costs have soared from $17,000 to as much as $85,000 per station for compliance, a full 500 percent increase.

And yet the news gets worse: Even if every single station in the state could secure financing, obtain the necessary approvals, contract for installation and locate a certified compliance professional, more than 200 systems would need to be installed each and every day to achieve compliance.  This is an impossible task.

The remedy for this crisis is simple – to allow all service stations a one-year extension for compliance – an action that is not unprecedented and one that ensures that station owners ultimately comply.  So far, CARB seems determined to put its regulations first, and reality somewhere after that.  No one seems to know what to do.

Governor Schwarzenegger and his Air Resources Board should quickly recognize the only and obvious move here – grant an extension before it is too late.  The fact that we are less than three weeks from a doomsday scenario shows just how far this idea has careened out of control and what it seemingly takes for a regulation to bump up against an arbitrary deadline and give way to reality.

In every way, this is the flip side of trying to achieve better living through government decree.  What started as an earnest and well-meaning idea to decrease toxic emissions is on the verge of becoming a crippling financial burden on small business and another economic blow to the state guaranteed to – at least in the short term – increase pollution.

If the governor and his regulators do nothing or refuse action in the name of regulatory purity, Californians will surely suffer the unintended consequences of a high-minded state government that is intellectually and creatively truly running on empty.