THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, February 6, 1995 TAG: 9502060079
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY SCOTT HARPER, STAFF WRITER
LENGTH: Long : 167 lines
A real estate broker recently rushed into the local office of the Virginia Department of Environmental Quality with a potential bonanza on his hands.
Nucor Corp., the fourth-largest steelmaker in the nation, was interested in buying land in Portsmouth for a $450 million steel mill, and he had the inside track on the deal.
Then he discovered a little-known rule in the Clean Air Act called ``offsetting.'' Essentially, Nucor would have to pay other companies in Hampton Roads to cut their air pollution by more than what a new mill would pump into the sky.
The deal faded as quickly as the broker's smile. He knew the price and hassle of offsetting were too high.
Nucor is not alone. Offsetting has discouraged other businesses from moving here. The trend worries local officials, who are struggling to find a way to maintain jobs and a strong industrial base while satisfying air-pollution laws.
The conflict is even more difficult to accept, some business leaders and state officials say, because the air in Hampton Roads is not that bad.
Since 1990, when Congress passed the new Clean Air Act, smog levels have exceeded the federal standard on seven days, sometimes for not more than an hour. No violations were recorded in 1994, according to state statistics.
``It's a little baffling to us, too,'' said Frank Daniel, Tidewater director of the state Department of Environmental Quality. ``Sometimes you wonder if this is all is going too far.''
With urban centers such as Hampton Roads, Richmond and Northern Virginia under clean-air mandates, industry is increasingly heading for the country. But that raises another question:
Does it make sense to have a law that effectively channels polluting industries to the cleanest communities?
``No doubt, this all has been very damaging to industrial bases,'' said Shawn S. King, a senior environmental engineer with Virginia's air programs section. ``What it's really telling you is that it's OK to go out into the wilderness and pollute.''
Nucor, for example, has purchased an option to build its new mill on farmland in rural King William County.
The site is away from the city smog of Hampton Roads and Richmond, and, more important for Nucor, away from the environmental limits that new industries face in these polluted regions.
It also lies on the banks of the Pamunkey River, one of purest waterways left in Virginia, and is just downstream from an Indian reservation.
The Portsmouth site, by contrast, is along the Elizabeth River and near the Craney Island dredging landfill - arguably a more appropriate spot for a steel mill.
Nucor is not the only industry that the Clean Air Act has discouraged from settling here. Mercedes-Benz opted against Hampton Roads two years ago for a new manufacturing plant, instead choosing Tuscaloosa, Ala., and its cleaner-air, hassle-free climate.
And an Anheuser-Busch official recently commented that, although his company has no plans to expand its Williamsburg brewery, it certainly would think twice about doing so locally, given the current air-pollution laws.
Corporate officials stress that escaping environmental controls is just one reason they are looking more and more toward the country. Blue-collar labor, cheaper land and friendlier local governments are also factors.
``We think rural areas are great,'' said Kenneth Iverson, president and chief executive officer of Nucor, based in Charlotte.
``We looked in there (Portsmouth), but we backed off pretty quickly,'' Iverson added. ``It's too hard to get approval in there. And because of the hassle, yes, that's part of it, too.''
The clean-air conflict also has shifted the focus of economic development efforts.
Ann Baldwin, director of research for Forward Hampton Roads, the economic development arm of the regional chamber of commerce, said there have been instances in which local officials have not pursued the type of heavy industry that made Hampton Roads famous.
``We know we're not going to get a new ship-repair yard,'' she said. ``In those cases, we're just trying to keep what we have.''
Baldwin said air-pollution laws have pressed officials into trying to lure cleaner, service-type businesses to the region, such as banks and insurance firms.
But she was not ready to declare the Clean Air Act an industry-killer.
One New Jersey-based manufacturer was prepared to offset its pollution and install the right technology in moving to Hampton Roads. But it got a better tax incentive for a site in Georgia.
``We're concerned, but we're hardly giving up,'' she said.
How did the Clean Air Act come to apply to Hampton Roads? In the late 1980s, monitoring stations at three sites in the region picked up excessive smog readings.
As a result, federal regulators in 1990 declared Hampton Roads a ``marginal'' pollution zone, the mildest designation among five that EPA assigns to polluted cities.
Under the law, Hampton Roads governments had three years to reduce air pollution so that the region averaged no more than one day of smog violations a year. The area failed to meet the goal, averaging two days a year instead.
In response, the region was downgraded last month to a ``moderate'' pollution zone.
That's the same designation as Richmond and one step below Northern Virginia's ``serious'' classification.
The downgrade carries a requirement that the region reduce by 15 percent the two pollutants that produce smog, volatile organic compounds and nitrogen oxides, which come from paints, solvents, chemicals and burning fossil fuels. Hampton Roads has two years to meet the goal.
The new classification also mandates vehicle-emissions testing and special nozzles on gas pumps, among other items. These measures, however, must first be approved by the Virginia General Assembly.
For industry, the new designation means even tougher restrictions on new plants and large expansion projects. And herein lies much of the red tape and expense that officials say deters new development.
Under federal rules, a new plant that emits 100 tons or more of smog pollutants a year, or any expansion that adds 40 tons or more annually, must ``offset'' before applying for government approval to do business. That means plant owners have to contact other industries in the region and pay them to reduce pollution by 115 percent of what the new plants will discharge. Before the downgrading last month, the same projects would have required a 110 percent offset.
To make this process less cumbersome, Virginia will open a pollution bank. Within 18 months, officials hope to have a central place where business and industry can buy pollution credits from other firms.
In addition to offsetting, incoming companies also must install the best clean-air equipment available.
By contrast, companies that build plants outside of a polluted region are not required to offset emissions or install the best equipment, according to federal guidelines.
``Really, the rules are completely different,'' said Daniel, of the Department of Environmental Quality. ``And that means more dollars and time for anyone wanting to come here,'' to Tidewater.''
Although Hampton Roads has not attracted a new plant big enough to trigger offsetting, Richmond has seen two such transactions.
One case involved Quebecor, a printer, which wanted to add a new printing press at its facility, said Mark Williams, a state environmental engineer who oversaw the offset.
To win approval for the expansion, Quebecor bought pollution credits from Aqualon, a chemical company that was closing a section of its plant. Williams said Aqualon wanted to close the section anyway, and offsetting simply ``provided them a good opportunity to do so.''
In the second offset, Doswell Limited Partnership, which operates a power plant in Hanover County, acquired rights to emit 100 tons a year of volatile organic compounds.
To get the rights, Doswell paid one source, Eastern Shore Printing, to buy a cleaner printing press. Another company, Story's Transport, had already shut down old equipment and Doswell was able to get the pollution credits anyway, Williams said.
Although state officials say the rules allow that type of deal, it worries environmentalists.
``There's a danger of seeing increases in pollution because there's just not a good tracking system,'' said Nancy Summers, spokeswoman for the Virginia Consortium for Clean Air.
``It makes you wonder if we aren't compromising clean air in the name of so-called flexibility for business,'' she added. ILLUSTRATION: [Graphic by] JOHN CORBITT/Staff
CLEAN AIR ACT
HOW OFFSETTING WORKS
1. Acme Widgets, Inc. wants to build a plant that will release 100
tons of paint thinnner into the air each year.
2. If Acme moves to Hampton Roads, the Clean Air Act requires the
company to find other businesses willing to reduce comparable
pollution by 115 tons a year.
3.If Acme is like a lot of companies, it will forget Hampton Roads
and move to a rural area where the Clean Air Act doesn't apply.
KEYWORDS: POLLUTION ENVIRONMENT BUSINESS by CNB