A reasonable extension would cost state no money, protect jobs and balance environmental needs with economic realities
The Current Situation – Urgent action is needed to give small businesses owners more time and to protect 3 Billion Tax Dollars used for state highways and by local government to build roads.
• Big oil no longer owns local gas stations - The majority of California gas stations are independently owned and operated
• Air Resources Board (ARB) regulations require vapor recovery systems (EVR) to be installed at gas station by April 1, 2009 to help reduce air pollution.
• Only three systems have been approved for use – the cheapest and most efficient was approved by the Air Resources Board in October 2008
• Installing an EVR system requires replacing current equipment with new gas nozzles and installing a vapor processors that are EVR compliant.
• Because of a shortage of available technology, the nations credit crunch and a patchwork of local regulations, only 22% of California’s gas stations have been able to meet the challenge
• With less than 60 days before the deadline, to fully comply, approximately 200 new systems must be installed every work day – that’s one new system every 2 ½ minutes. This is an impossible task when you factor in long waits for permits and inspections, the lack of available financing, shortage of inventory and available manpower.
Compliance Challenges for Small Business Owners
Limited Availability of Enhanced Vapor Recovery Equipment: Only three equipment systems have been certified, creating limited equipment and contractors to service over 10,000 stations needing installation by April 1st, 2009. The most recent equipment, Veeder-Root ISD, was certified in October 2008.
High and Rising Costs of EVR Equipment: Costs range from $17,000 to as much as $85,000 per station for compliance. Equipment companies recognize the mandated demand and have recently raised prices further. Even the most affordable system, Veeder-Root, is experiencing significant price increases.
Lack of Financing for Small Business Owners: Due to the current economic crisis and freeze in the credit markets small business owners have few if any financing opportunities for compliance expenses. Assuming the average station has 6 pumps and needs the In-Station Diagnostic equipment, it can cost upwards of $4,372 per pump, and for average 12 pump stations, upwards of $7,100 per pump.
Dried Up State Reimbursement Funds: Reimbursement funds, including the RUST Fund, that formally were allocated for compliance expenses are no longer available to small business owners.
Added Costs and Permit Delays by Local Government: Adding to the already high costs of compliance, local governments have added additional red tape – conditional use permits, onerous landscaping regulations and building requirements. Not to mention, local permits can take up to 2 months for approval.
Unintended Consequences of Compliance
Hardship on Minority Owned and Small Businesses: Major oil companies have divested most of their service stations to minority and small businesses. Without an extension of the compliance deadline, these small businesses will be adversely affected.
Closure of Service Stations Serving Inner City and Rural Areas: Many small businesses operate at very slim profit margins in both inner-city and rural areas. Increased operating costs could force service stations to close leaving a void in those inner-city and rural areas of affordable fuel.
Loss of Revenue for the State: Service station closures will further aggravate an already dismal budget situation for the State. This would cost the State desperately needed money from the revenue created by the sales and transportation taxes.
Proposed Solution
• A 1-year extension of the current EVR Phase II regulations moving the compliance date to April 1, 2010.
• This delay allows for more affordable equipment to become available on the market, additional financing opportunities for small business owners to secure, time for local county permitting and possible RUST funds to be available for reimbursement of compliance expenses.