Businesses and environmentalists would buy and sell rights to pollute under a "smog exchange" program being drawn up by Southern California authorities.

Under the plan being developed by the South Coast Air Quality Management District, 23 rules restricting pollution output would be scrapped.Instead, the board would sell the rights to produce limited amounts of nitrogen oxide and hydrocarbons, the key components of smog.

Businesses could trade shares to expand those limits or to get rid of unused capacity. Environmentalists could buy up shares and keep them out of circulation to lessen pollution.

Each share would permit 5 percent less in emissions each year in order to meet the board's air quality improvement goals.

Environmentalist said they have mixed feelings about the plan.

"If a market doesn't work, this will be the S&L failure of air quality," said Tom Soto, president of the Coalition for Clean Air.

The plan was inspired by a similar trading program in the federal Clean Air Act, which was passed last year.

If approved by the board and the federal Environmental Protection Agency, regional trading could begin in two years, said Patricia Nemeth, who heads the committee developing the plan. The board is expected to make its recommendation this fall.

The proposal would affect more than 16,000 businesses.