California Small Business Gets Enviro Rules Review

By William J. Kelly

SACRAMENTO, California, January 23, 2003 (ENS) - A little reported directive by Governor Gray Davis in his recent state of the state address has unleashed what may become a broad review of California's environmental regulations.


California Governor Gray Davis (Photo courtesy Office of the Governor)
Under a commitment to dig the state out of its fiscal mess by creating "jobs, more jobs, and even more jobs," Davis charged Sonya Blake, his small business advocate, with "rejecting all regulations that unfairly impact small business."

"I will also ask her to review existing regulations and identify changes that promote growth and new jobs," the governor said.

Soon after the speech, Blake chaired a "regulatory reform hearing" of the Governor's Small Business Task Force in San Diego and immediately identified two areas for potential reform - standards for controlling pollution in storm water runoff, and the lack of an in-state disposal site for low-level radioactive waste.


Sonya Blake is the first small business advocate within the California's Governor's Office. (Photo courtesy Office of the Governor)
San Diego's burgeoning biotechnology industry is concerned that without reform current state requirements for controlling these environmental hazards could stymie its growth, according to Blake.

Next month on a date to be determined, the task force will invite small businesses in the San Francisco Bay area to raise concerns about existing and proposed regulations at a hearing in Palo Alto.

"The U.S. Small Business Administration says that 40 percent of regulations on the federal level are environmental in nature," said Blake, who expects that the situation is much the same with state regulations in California. "Environmental regulations are a significant issue to contend with for certain small businesses. Governor Davis has asked me to look at existing regulations and what might be repealed for economic reasons. We're at the very beginning of the process."

Underscoring the importance Davis places on potentially reforming environmental regulations to bolster small business, Davis earlier this month appointed California Environmental Protection Agency Secretary Winston Hickox to the task force. He coordinates the six offices charged with controlling pollution in California, many of which are governed by semi-autonomous appointed boards. Other heads of state agencies sit on the task force, along with numerous representatives of business.

The task force is planning to produce a report by the end of the year recommending regulatory reforms it believes are needed to improve the economic climate for small businesses. The group will look at how to coordinate California's environmental regulations "vertically" from the federal, to the state, and local levels, Blake said, and "horizontally" across the environmental media of land, water, and air.

Meanwhile, the group already has begun reviewing new regulatory proposals and will be advising the governor on whether they are small business friendly. "The governor is instituting a review process prior to that [rulemaking] process. He will review and reject ideas before they are proposed if they do not meet the standard of no unfair adverse impact on small businesses," said Blake.

While the task force may make recommendations on proposed regulations, this early regulatory review process will be conducted through a separate interagency task force and will be considered internal, according to Blake.

The small business advocate also will keep an eye on regulations developed by local environmental agencies, such as California's air districts. Recently the office urged the South Coast Air Quality Management District not to ban use of the toxic cleaning solvent perchloroethylene used by Los Angeles area dry cleaners. Its call ultimately went unheeded.

The regulatory review comes as news to environmental and public interest groups, which are concerned that the public may be shut out of the process. "Its definitely a major concern whenever you have any movement toward giving special interests a larger voice," said Sujatha Jahagirdar, clean water advocate for the California Public Interest Research Group. She was unaware that the Governor's office is looking into potential reform of storm water rules.

In its initial foray into environmental rules, Davis' task force is zeroing in on issues raised by BIOCOM/San Diego, a trade association for the city's biotech industry. The review comes shortly after the departure of small business task force member Tina Nova, who chaired BIOCOM/San Diego during 2001-02. Nova is president and chief executive officer of Genoptix, Inc., a San Diego biotech company that has developed a laser based method of analyzing and isolating cells for a wide range of applications - from drug development to stem cell isolation. The company has attracted venture capital and recently won a contract award from the U.S. Defense Advanced Research Projects Agency aimed at developing a way to quickly identify germs used in potential bio-warfare attacks.

"Biotech companies are essentially small businesses," said Joe Panetta, executive director of BIOCOM/San Diego. Most of the firms have small staffs and limited resources, yet face continually new environmental regulations, he said.

"Storm water regulations will require these companies to collect and treat their storm water before it's released," said Panetta. "These are regulations that are going to be significantly costly."


San Diego water discharge pipe carries storm water to the ocean. (Photo courtesy Port of San Diego)
However, an official with the San Diego Regional Water Quality Control Board said that biotech companies are not likely to be required to install expensive treatment systems for runoff because their activities generally take place inside. Even storage of chemicals or waste outside could be protected with a simple corrugated structure to prevent rain from coming into contact with chemicals, according to John Phillips, senior water resource control engineer with the board. Any parking lot runoff filters that may eventually be required potentially could be installed for under $10,000, he added, and ultimately would be the responsibility of the building owner, in the case of those firms that lease space.

Biotech companies also are concerned that California has not gone forward to open a low-level radioactive waste disposal site. "We were very disappointed that the governor signed legislation this fall that prevents Ward Valley from becoming a low-level radioactive waste site," he said. Davis signed two bills on radioactive waste, one which prevents development of a disposal site and the other which tightens record keeping and reporting standards for producers of low level radioactive waste.

Biotech firms use small quantities of radioactive isotopes in their laboratories and must dispose of the material and the containers, gloves, tubes and other devices into which it comes into contact, explained Panetta. Companies now ship the waste out of state, which is more expensive than if it could be disposed of in-state. They also have turned to using isotopes with shorter half livesThis allows the waste to degrade enough while in storage at biotech facilities that it can qualify for disposal in some landfills in California.

The biotech industry is one segment of a California small business sector that encompasses 98 percent of all businesses, employs 7.5 million people, and produces more than half of the state gross product, according to the small business advocate's office.

Biotech companies have grown into an industrial cluster in San Diego that is challenging Boston and San Francisco for geographic dominance in the expanding industry, says a Brookings Institution report issued last year. Since 1995, membership in BIOCOM/San Diego has grown from 50 firms to more than 400 companies that employ some 30,000 workers earning an average salary of $65,000 a year. In the past few years, major pharmaceutical companies - such as Merck and Pfizer -- have purchased interests in San Diego biotech firms and companies have wooed more venture capital than the leading biotech industry clusters around San Francisco and Boston.

San Diego

San Diego is an emerging biotech center. (Photo credit unknown)
The San Diego companies have developed numerous drugs and technologies and are beginning to make a transition to production, which will boost employment, according to Panetta. "We want to see this industry grow from research and development into a manufacturing industry, but that's not going to happen unless things change," he said. "Our concern is that we don't see the kind of public policy that's conducive to keeping and attracting small businesses."

San Diego water board engineer Phillips said that there is an understandable "apprehension" on the part of biotech companies and other businesses. "They don't want to have more regulations. However storm water is a very serious issue. Just go down to one of our bays after a storm and look at the water."

Often, he said, businesses look at the "extreme case" when it comes to the cost of complying with environmental regulations. "They get the impression its going to be horrible and most often it's not."

{Published in cooperation with California Environment Report, published via e-mail 22 times a year by Southland Reports, P.O. Box 1022, South Pasadena, CA 91031; phone: 626-441-2112; e-mail:; website:}