[Federal Register Volume 89, Number 176 (Wednesday, September 11, 2024)]
[Rules and Regulations]
[Pages 73568-73588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-20349]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R09-OAR-2023-0494; FRL-11442-02-R9]
Air Plan Approval; California; South Coast Air Quality Management
District
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: The Environmental Protection Agency (EPA) is taking final
action on a revision to the South Coast Air Quality Management District
(SCAQMD or ``the District'') portion of the California State
Implementation Plan (SIP). This revision concerns the regulation of
emissions of oxides of nitrogen (NOX) and particulate matter
(PM) associated with warehouses as indirect sources that attract or may
attract mobile source emissions. The EPA is approving SCAQMD Rule 2305,
``Warehouse Indirect Source Rule--Warehouse Actions and Investments to
Reduce Emissions (WAIRE) Program,'' to regulate these emission sources
under the Clean Air Act (CAA or ``the Act'') as a SIP strengthening.
DATES: This rule is effective October 11, 2024.
ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-R09-OAR-2023-0494. All documents in the docket are
listed on the https://www.regulations.gov website. Although listed in
the index, some information is not publicly available, e.g.,
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available through https://www.regulations.gov, or please
contact the person identified in the FOR FURTHER INFORMATION CONTACT
section for additional availability information. If you need assistance
in a language other than English or if you are a person with a
disability who needs a reasonable accommodation at no cost to you,
please contact the person identified in the FOR FURTHER INFORMATION
CONTACT section.
FOR FURTHER INFORMATION CONTACT: La Kenya Evans-Hopper, EPA Region IX,
75 Hawthorne St., San Francisco, CA 94105; phone: (415) 972-3245;
email: [email protected].
SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us,''
and ``our'' refer to the EPA.
Table of Contents
I. Proposed Action
II. Public Comments and EPA Responses
III. EPA Action
IV. Incorporation by Reference
V. Statutory and Executive Order Reviews
I. Proposed Action
On October 12, 2023 (88 FR 70616) (``proposed rule''), the EPA
proposed to approve SCAQMD Rule 2305 as a revision to the SCAQMD
portion of the California SIP. Table 1 lists the SCAQMD rule addressed
by the proposed rule with the dates that it was adopted by the SCAQMD
and submitted by the California Air Resources Board (CARB).
TABLE 1--SUBMITTED RULE
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Local agency Rule No. Rule title Adopted Submitted
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SCAQMD............................. 2305 Warehouse Indirect Source 05/07/2021 08/13/2021
Rule--Warehouse Actions
and Investments to Reduce
Emissions (WAIRE) Program.
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As described in the proposed rule, the purpose of SCAQMD Rule 2305
is to reduce local and regional emissions of NOX and PM, and
to facilitate local and regional emission reductions associated with
warehouses and the mobile sources attracted to warehouses in the
SCAQMD, to meet State and Federal air quality standards for ozone and
fine PM (PM2.5).\1\ The rule applies within the jurisdiction
of the SCAQMD, which includes all of Orange County, the non-desert
portions of Los Angeles and San Bernardino counties, and all of
Riverside County (except for the Palo Verde Valley in far eastern
Riverside County).
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\1\ 88 FR 70616, 70617 (October 12, 2023).
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Through the adoption of the 2016 South Coast Air Quality Management
Plan (AQMP), the SCAQMD adopted certain ``facility-based mobile source
measures,'' including a measure under which the SCAQMD committed to
assess and identify potential actions to further reduce emissions from
emission sources associated with warehouse distribution centers.\2\ In
2019, the EPA approved the ozone portions of the 2016 South Coast AQMP,
including the commitment to develop facility-based mobile source
measures, including the measure focused on warehouse distribution
centers.\3\ The 2016 AQMP does not include an emission reduction
estimate for the facility-based mobile source measure related to
warehouses. In 2021, after assessing potential actions to further
reduce emissions associated
[[Page 73569]]
with warehouse distribution centers, the SCAQMD adopted Rule 2305 to
fulfill the commitment from the AQMP.
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\2\ SCAQMD, Final 2016 Air Quality Management Plan, March 2017,
pp. 4-25, 4-28 and 4-29. The 2016 South Coast AQMP designates the
warehouse measure as MOB-03 (``Emission Reductions at Warehouse
Distribution Centers'').
\3\ 84 FR 52005 (October 1, 2019).
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In the proposed rule, the EPA described the requirements
established by SCAQMD Rule 2305.\4\ Rule 2305 applies to owners and
operators of warehouses located in the SCAQMD with greater than 100,000
square feet of indoor floor space in a single building and who operate
at least 50,000 square feet of the warehouse for warehousing
activities. Warehouse operators are required either to earn points from
specified emission reduction activities or to pay a mitigation fee. The
points that warehouse operators earn are referred to as Warehouse
Actions and Investments to Reduce Emissions Points (WAIRE Points).
Warehouse facility owners or warehouse landowners may elect to opt in
to earn WAIRE Points and transfer these points to a warehouse operator
at the same site. Both warehouse facility owners and operators must
comply with certain recordkeeping and reporting requirements under the
rule.\5\
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\4\ 88 FR 70616, 70618-70620.
\5\ More specifically, warehouse owners are required to submit
Warehouse Operations Notifications (WONs), and warehouse operators
are required to submit Initial Site Information Reports (ISIRs) and
Annual WAIRE Reports (AWRs) to SCAQMD. The warehouse owner may
choose to comply with the requirement to submit ISIRs or AWRs on
behalf of the warehouse operator or may be required to submit the
reports if they are also the warehouse operator.
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The principal substantive requirement in SCAQMD Rule 2305 is the
requirement that each warehouse operator, or owner that opts in,\6\
meet an annual compliance obligation by earning WAIRE Points. The
annual compliance obligation, referred to as the WAIRE Points
Compliance Obligation (WPCO), for each warehouse operator, or owner who
opts in, is calculated based on Weighted Annual Truck Trips (WATTs)
multiplied by a stringency factor (0.0025 points per WATT) and an
annual variable (which accounts for the phased implementation of the
rule).\7\ Warehouse operators, or owners who opt in, are required to
earn WAIRE Points either: through the completion of specified actions
from the list of actions in the WAIRE Menu,\8\ through completion of
actions in an approved custom plan, through payment of a mitigation
fee, or through a combination of these three options.\9\
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\6\ Under SCAQMD Rule 2305, warehouse operators are required to
earn WAIRE points. Warehouse owners may choose to earn WAIRE points
on behalf of the warehouse operator.
\7\ SCAQMD Rule 2305(d)(1)(A) and Tables 1 and 2.
\8\ SCAQMD Rule 2305, Table 3.
\9\ SCAQMD Rule 2305(d)(1) and (2).
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In the proposed rule, the EPA described how it evaluated SCAQMD
Rule 2305 and the basis for the EPA's preliminary conclusion that Rule
2305 generally meets all applicable CAA requirements with certain
exceptions.\10\ In support of our proposed action, the EPA
preliminarily determined that:
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\10\ 88 FR 70616, 70620-70625.
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The SCAQMD and CARB met the procedural requirements for
adoption and submission of SIPs and SIP revisions under CAA sections
110(a)(1), 110(a)(2), 110(l) and 40 CFR 51.102;
The SCAQMD has adequate legal authority to implement Rule
2305 under State law, and that SCAQMD's implementation of Rule 2305
would not be preempted or prohibited by any State or Federal law. The
EPA noted that the SCAQMD's legal authority was the subject of
litigation in the U.S. District Court \11\ at the time of the proposal;
\12\
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\11\ California Trucking Association v. South Coast Air Quality
Management District, C.D. Cal., Case #21-cv-06341 (``CTA v.
SCAQMD'').
\12\ At the time of publication of the proposed rule, the legal
challenge to SCAQMD Rule 2305 in the U.S. District Court had not yet
been resolved, and because the Court had not ruled against the
SCAQMD, and because there was no injunction in place, there were no
known legal obstacles that would have precluded EPA's own analysis
and preliminary finding that the SCAQMD has adequate legal authority
to implement the rule. Since publication of the proposed rule, the
legal challenge has been resolved in SCAQMD's favor and against the
claims of preemption.
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SCAQMD Rule 2305 generally includes the elements necessary
to provide for legal and practical enforceability. This includes clear
applicability, recordkeeping, reporting, and exemption requirements
that are sufficiently specific so that the persons affected by the
regulation are fairly on notice as to what the requirements and related
compliance dates are. However, SCAQMD Rule 2305 has certain
deficiencies related to enforceability \13\ that are the basis for the
proposed approval as SIP-strengthening rather than a full approval;
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\13\ The proposed rule identified three specific types of
deficiencies related to enforceability: two ambiguous definitions,
the sunset clause and two instances of unbounded director's
discretion.
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Although the EPA did not find a sufficient basis to credit
Rule 2305 with achieving a specific amount of emissions reductions, the
EPA expects that SCAQMD Rule 2305 will achieve additional emission
reductions that will incrementally contribute to the overall reductions
needed to attain the Ozone and PM2.5 NAAQS in the South
Coast Air Basin and Coachella Valley;
The sunset clause in Rule 2305 purports to permit SCAQMD
to remove the requirement from the EPA-approved SIP without the process
required by section 110(l) at that time to support such removal.
Failure to follow that process could interfere with attainment or
reasonable further progress by foregoing emissions reductions needed
for attainment or maintenance of the NAAQS at that future point in
time; and
In light of adoption of SCAQMD Rule 316 (``Fees for Rule
2305''), the SCAQMD will have adequate personnel and funding to
implement Rule 2305.
For additional details on the SIP submission itself and the EPA's
proposed action and related rationale, please see our proposed rule.
In this final rule, for the reasons given in the proposed rule and
in the responses to comments provided in section II of this document,
we are affirming the preliminary findings from the proposed rule that
are listed in the previous paragraphs and are taking final action to
approve Rule 2305 as a SIP-strengthening measure of the SCAQMD portion
of the California SIP.
Since publication of the proposed rule, the U.S. District Court
resolved the challenges to the SCAQMD's legal authority to enforce Rule
2305 in a case we refer to as ``CTA v. SCAQMD'' that was brought by the
California Trucking Association (CTA or ``Plaintiff'') and Airlines for
America (A4A or ``Plaintiff-Intervenor'') and that was grounded in
alleged preemption under the CAA, the Airline Deregulation Act (ADA),
and the Federal Aviation Administration Authorization Act (FAAAA). More
specifically, in December 2023, the U.S. District Court denied motions
for summary judgment filed by CTA and A4A and granted summary judgment
to the SCAQMD with respect to the claims brought under the CAA, ADA,
and FAAAA.\14\ In January 2024, the Court entered judgment in favor of
the SCAQMD and dismissed on the merits the claims brought under the
CAA, ADA, and FAAAA.\15\ In a separate order, based on a joint
stipulation of the parties, the Court also dismissed with prejudice
CTA's and A4A's remaining State law claims that had been included in
the complaints.\16\ The time to file a notice of appeal of the judgment
expired
[[Page 73570]]
on February 20, 2024, and neither CTA nor A4A filed a notice of
appeal.\17\
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\14\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023.
\15\ CTA v. SCAQMD, Judgment, Dkt. 168, January 18, 2024.
https://docs.justia.com/cases/federal/district-courts/california/cacdce/2:2021cv06341/827779/168.
\16\ CTA v. SCAQMD, Order Re Joint Stipulation and Consent
Motion to Dismiss with Prejudice (Dkt. 166), Dkt. 167, January 18,
2024.
\17\ CTA v. SCAQMD, Defendents' Request for Publication of Order
Denying Plaintiff and Plaintiff-Intervenor's Motion for Summary
Judgement, Dkt. 169, March 5, 2024.
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II. Public Comments and EPA Responses
The EPA's proposed rule provided a 30-day public comment period.
The EPA received a total of 14 comment letters or submissions in
response to the proposed rule. Five comment letters were supportive of
our proposed action.\18\ Two comment letters were generally supportive
but include objections to certain aspects of our proposed action or
rationale.\19\ Six comment letters or submissions opposed our proposed
action,\20\ and one submission is not germane to our action.\21\ All
the comment letters or submissions can be found in the docket for this
rulemaking. In the sections that follow, we summarize the significant
adverse comments that oppose or object to certain aspects of our
proposed action or rationale and provide our responses.
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\18\ Supportive comment letters were submitted by the CARB,
Clean Energy, Consumer Reports, a group of environmental and
community groups, and certain members of Congress.
\19\ SCAQMD and the Center for Community Action and
Environmental Justice (CCAEJ) submitted letters that generally
support the proposed action but also include comments that object to
certain aspects of the proposed action or rationale. SCAQMD also
submitted a late comment that addresses some of the objections
raised by CCAEJ, and SCAQMD's outside counsel in the CTA v. SCAQMD
case submitted a late comment consisting of the Court's order
denying the plaintiff's and plaintiff-intervenor's motions for
summary judgment and granting summary judgment for the defendants.
\20\ Airlines for America (A4A), a group of trucking and
business associations (collectively referred to herein as
``California Trucking Association'' or ``CTA''), the Port of Long
Beach (POLB), International Warehouse Logistics Association (IWLA),
a representative of a third-party warehouse business (``BAR
Logistics''), and a private citizen (``Private Citizen'') submitted
comments that oppose EPA's proposed action.
\21\ A private citizen submitted a comment that refers generally
to the poor air quality conditions found in California but does not
provide comments that directly relate to our proposed action.
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A. SCAQMD Comments and EPA Responses
SCAQMD Comment #1: The SCAQMD requests the EPA to clarify that Rule
2305, proposed as SIP strengthening without SIP credit, is fully
federally enforceable.
EPA Response to SCAQMD Comment #1: The EPA agrees that SCAQMD Rule
2305 will be federally enforceable, upon EPA approval of the rule as
part of the SIP. In our proposed rule, the EPA indicated that we had
preliminarily found that the rule would not be ``fully enforceable,''
based on certain deficiencies that we had identified in Rule 2305, such
as certain ambiguous definitions, instances of impermissible director's
discretion, and the sunset clause. The EPA noted that these specific
deficiencies related to enforceability warrant a SIP-strengthening
approval, rather than a full approval, and preclude the Agency from
assigning SIP credit for the reductions resulting from Rule 2305 until
the deficiencies are resolved. The EPA did not mean to suggest that
Rule 2305 would not be federally enforceable by the SCAQMD, the EPA,
and citizens pursuant to CAA section 304 once the EPA approves it as
part of the SIP. Rather, we were referring to features of Rule 2305,
such as the absence of necessary definitions, that may interfere with
enforcement under certain circumstances, as discussed in more detail in
EPA responses to SCAQMD Comments #2, #3 and #4.
SCAQMD Comment #2: The SCAQMD requested clarification of the EPA's
statements in the proposal concerning the sunset clause in Section (h)
of Rule 2305. SCAQMD asserts that Rule 2305's ``sunset clause'' does
not render the rule unenforceable prior to the time when the clause is
invoked and the Rule's requirements expire. In addition, the SCAQMD
disagrees with the EPA's finding that the sunset clause could interfere
with attainment or reasonable further progress of the NAAQS under CAA
section 110(l). The SCAQMD asserts that the sunset clause would never
go into effect without an analysis by the SCAQMD of the potential need
for the rule for attainment of a new standard or for maintenance of an
existing standard. The Executive Officer will then give a
recommendation to the SCAQMD's Board on whether to retain or remove the
sunset clause.
EPA Response to SCAQMD Comment #2: In the EPA's proposed rule, we
identified the sunset clause in Rule 2305 as a deficiency related to
enforceability and as a feature of the rule that could interfere with
attainment or reasonable further progress by foregoing emissions
reductions that may be needed for attainment or maintenance of the
NAAQS.\22\ The EPA affirms those statements in this final rule.
However, the EPA is clarifying that its concern is not that the sunset
clause implicates enforceability prior to the time the District invokes
the sunset clause and the requirements of the rule expire. We
understand that, until invoked, the sunset clause has no effect on
enforceability. However, after it is invoked, the rule is no longer
enforceable at all; hence, our concern in terms of enforceability. In
this context, our use of the term ``fully enforceable'' refers to
enforceability of a rule as an enforceable SIP requirement unless and
until the EPA were to approve a SIP revision removing the provision
from the SIP, in compliance with the procedural and substantive
requirements applicable to such a SIP revision. For example, any future
elimination of Rule 2305 from the SIP would have to entail an analysis
under section 110(l) at that future point in time to assure that its
removal would not interfere with attainment or reasonable further
progress requirements for any relevant NAAQS or be inconsistent with
any applicable requirements of the CAA at that future time. The EPA
cannot approve a SIP provision with a sunset clause that would sidestep
the applicable procedural and substantive requirements of the CAA and
purport to predetermine such an outcome. The current sunset clause in
Rule 2305 does not provide for that required process.\23\
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\22\ 88 FR 70616, 70624.
\23\ Memorandum dated September 23, 1987, from J. Craig Potter
(EPA) to Addressees, Subject: ``Review of State Implementation Plans
and Revisions for Enforceability and Legal Sufficiency,'' subsection
titled ``Effect of Changed Conditions.''
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The SCAQMD also asked for clarification with respect to the EPA's
concern that the sunset clause is a feature of the rule that could
interfere with attainment or reasonable further progress because SCAQMD
could potentially invoke it at a time when the emissions reductions
associated with the rule would still be needed for such purposes for
one or more NAAQS at that future point in time. To find the sunset
clause acceptable at this time for this rulemaking, the EPA would need
to determine that the sunset clause would not interfere with attainment
or reasonable further progress or any other requirement of the CAA
when, sometime in the future, it is invoked. But the EPA has no basis
to make such a determination at the present time because we have no
basis for knowing the precise conditions relative to CAA requirements
that will exist in the South Coast Air Basin in the future when the
District may seek to invoke the sunset clause. The EPA acknowledges the
internal safeguards that SCAQMD has imposed upon itself in the sunset
clause to prevent such interference. But we conclude that unilateral
action on the part of the SCAQMD itself as contemplated in the sunset
clause does not suffice to meet procedural and substantive requirements
that would be
[[Page 73571]]
applicable to a revision of the SIP to eliminate Rule 2305, including a
determination that rescission of the rule would not interfere with
attainment or reasonable further progress of the NAAQS at that future
point in time. To resolve this issue, the SCAQMD must remove the sunset
clause and then, in the future, if the SCAQMD chooses to rescind Rule
2305, follow the normal course of action in rescinding rules from the
SIP, i.e., through a SIP revision and EPA approval in accordance with
applicable procedural and substantive requirements, including CAA
section 110(k) and section 110(l).
SCAQMD Comment #3: The SCAQMD does not agree with the proposed rule
with respect to where the EPA finds that instances of director's
discretion in the Custom WAIRE Plan option may impair enforceability of
the rule. The SCAQMD contends that Rule 2305 does not grant the
District's Executive Officer ``unilateral and unbounded'' discretion to
determine Rule compliance. The SCAQMD states that Rule 2305 sets forth
detailed, objective requirements for all aspects of Custom WAIRE Plans,
including the contents of the application for such a plan, the
District's review and approval of the application, and the tracking of
the applicant's progress in completing the actions approved as part of
the Custom WAIRE Plan.
The SCAQMD stated that Rule 2305 includes provisions that authorize
the Executive Officer to make only two limited determinations regarding
Custom WAIRE Plans. The SCAQMD contends that in neither case is the
Executive Officer's discretion ``unilateral and unbounded.'' First, in
directing the Executive Officer to assess whether the emissions
reductions associated with a Custom WAIRE Plan are ``quantifiable,
verifiable, and real,'' the SCAQMD states that the Rule articulates
well-understood criteria of the kind that the EPA has already approved
for inclusion in the SIP many times before. The SCAQMD also notes that,
under Section (d)(4)(B)(v), it also must make Custom WAIRE Plans
available for public review for 30 days before the Executive Officer
can approve them, during which time interested parties, including the
EPA, can comment on whether a proposed plan satisfies the Rule's
criteria.
Second, the SCAQMD notes that the provision of Rule 2305 that
directs the Executive Officer to determine whether a warehouse operator
is ``making adequate progress'' to complete an approved Custom WAIRE
Plan also requires that the District provide 30 days' notice to the
owner or operator and an explanation of any deficiencies in
implementation before the District can rescind the Custom WAIRE Plan.
If the warehouse operator or owner ultimately withdraws the Custom
WAIRE Plan, the warehouse operator must comply with Rule 2305 via the
WAIRE Menu or the mitigation fee options, neither of which involves
Executive Officer discretion. Thus, the SCAQMD contends that any
exercise of discretion in this instance can only serve to protect air
quality by requiring the warehouse operator to comply with other
options; it would not grant the operator any flexibility not provided
expressly in Rule 2305. In short, in SCAQMD's view, nothing about the
Custom WAIRE Plan provisions impairs the Federal enforceability of the
Rule.
EPA Response to SCAQMD Comment #3: In EPA's proposed rule, we
identified two specific instances of director's discretion provisions
in connection with the Custom WAIRE Plan option under Rule 2305 and
preliminarily concluded that these provisions are impermissible because
they would give unbounded authority to SCAQMD to make changes that the
EPA cannot evaluate the impact of and because they may impair
enforceability of the rule.\24\ The EPA has reviewed the SCAQMD's
comment on this issue and the related citations provided by the SCAQMD.
The EPA's evaluation of these comments has caused the agency to revise
its view of one of the two provisions and also identified an additional
potential impermissible director's discretion provision within Rule
2305.
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\24\ 88 FR 70616, 70619.
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Based on that review, for reasons given below, we affirm our
finding that the Executive Officer's discretion to determine whether
WAIRE Points from a Custom WAIRE Plan are ``quantifiable, verifiable,
and real'' is insufficiently bounded, but we now agree that the
Executive Officer's discretion to determine whether a warehouse owner
or operator is making adequate progress to complete an approved Custom
WAIRE Plan is appropriately bounded in a way that the EPA can approve.
First, with respect to the Executive Officer's discretion to
determine whether WAIRE Points from a Custom WAIRE Plan are
``quantifiable, verifiable, and real,'' we note that the language in
Rule 2305(d)(4)(A)(iii) gives the Executive Officer of SCAQMD the sole
authority to determine whether emissions reductions are valid, does not
impose specific standards or parameters for such a determination, and
thus potentially impedes the EPA and the public from enforcing this
provision in the event either were to disagree with the District's
conclusion about the validity of the emission reductions.\25\ We
acknowledge Section (d)(4)(B)(v) of Rule 2305 as providing for public
review of Custom WAIRE Plan applications prior to the SCAQMD approval,
but we do not find the public process provided on individual
applications to be a substitute for provisions in the rule that limit
the Executive Officer's exercise of discretion within adequate specific
boundaries. Moreover, without such boundaries and without an analysis
of the potential impacts that exercise of this discretion could have,
the EPA cannot evaluate the consequences of this director's discretion
feature of Rule 2305 and what that could mean in terms of stringency,
emission reduction credit, and other important considerations for
approval of a SIP provision. Thus, this provision contains
impermissible director's discretion that is inconsistent with CAA
requirements.
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\25\ A potential remedy would be to remove ``as determined by
the Executive Officer'' from the provision and add definitions in
Rule 2305 for the terms ``quantifiable,'' ``verifiable,'' and
``real.'' Also, both Sections (d)(4)(A)(ii) and (d)(4)(A)(iii) in
Rule 2305 rely on the WAIRE Program Implementation Guidelines to
determine the WAIRE Points for a given action under a Custom WAIRE
Plan. As such, to fully address the issue of insufficiently bounded
director's discretion in Rule 2305, the SCAQMD should adopt and
submit the WAIRE Program Implementation Guidelines to the EPA as a
SIP revision.
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In its comments, the SCAQMD asserted that the terms ``quantifiable,
verifiable, and real'' are, ``well-understood criteria of the kind that
EPA has already approved for inclusion in the SIP many times before''
and cites SCAQMD Rule 1309, ``Emission Reduction Credits,'' Bay Area
AQMD Rule 2-2-605.1, ``New Source Review,'' and San Joaquin Valley
UAPCD Rule 2201, ``New and Modified Stationary Source Review Rule.''
These rules pertain to the pre-construction New Source Review (NSR)
permitting program that generally requires that offsets needed under
the program are real, quantifiable, surplus, permanent, and federally
enforceable. However, for example, SCAQMD's definitions rule for its
NSR program, Rule 1302, defines ``quantifiable emissions,''
``permanent,'' and ``federally enforceable.'' These definitions are not
applicable to SCAQMD Rule 2305, and, notably, ``verifiable'' is not a
term commonly used in the NSR program. Thus, the EPA disagrees that the
ostensible understood meaning of these terms negates the director's
discretion concerns about Section (d)(4)(A)(iii).
[[Page 73572]]
The provision would authorize the Executive Officer unilaterally to
make key determinations that would bind the EPA and other parties and
potentially interfere with enforcement of the requirements of Rule
2305.
Second, with respect to the Executive Officer's discretion to
determine that a warehouse facility owner or operator is not making
adequate progress to complete an approved Custom WAIRE Plan as provided
in Rule 2305(d)(4)(D), after consideration of SCAQMD's comments on the
proposal we find that this is not an impermissible director's
discretion provision. Based upon additional explanation in SCAQMD's
comments, we now agree that the discretion within this specific
provision is sufficiently bounded and that the consequences of exercise
of the authority can be adequately understood and evaluated by the EPA
at the time of this approval. SCAQMD has explained that the scope of
this discretion is limited to the issue of whether or not the regulated
party has made sufficient progress to complete a Custom WAIRE Plan.
Although there are no specific regulatory definitions or other
guideposts to specify what would constitute sufficient progress, the
EPA concludes that in this instance the scope of discretion is itself
limited in a way that does not functionally authorize SCAQMD to revise
Rule 2305 without meeting proper procedural requirements or interfere
with potential enforcement of the requirements of Rule 2305. In the
event that the Executive Officer were to conclude that a warehouse
facility owner or operator is not making adequate progress to complete
an approved Custom WAIRE Plan (``Plan'') and rescinds approval of the
Plan, then the warehouse owner or operator must still comply with Rule
2305 under the remaining options provided in the rule. Thus, at the
time of this approval the EPA can evaluate the boundaries on the
exercise of discretion and can anticipate what the potential impacts
would be on Rule 2305 were the Executive Officer to exercise this
particular form of discretion.
Further, we note that, under Section (d)(4)(E), Rule 2305 provides
that, if the expected WAIRE Points from an approved Custom WAIRE Plan
are not earned during the applicable compliance period, the warehouse
facility owner or operator whose Custom WAIRE Plan was approved shall
be in violation of this rule unless the owner or operator demonstrates
that they have met their Warehouse Points Compliance Obligation by the
date that they submit their Annual WAIRE Report using WAIRE Points
earned through completion of actions listed in the WAIRE menu or
through mitigation fees. Thus, Rule 2305 provides for consequences for
failure to complete an approved Custom WAIRE Plan even if the Executive
Officer fails to exercise discretion where warranted to make the
determination under Section (d)(4)(D) of Rule 2305 that a warehouse
facility or land owner or operator is not making adequate progress.
Finally, the EPA's review of Rule 2305 in light of SCAQMD's
comments concerning the director's discretion issue caused us to
examine the provisions of the rule again more closely. In the proposal,
we had noted that Section (g)(3) provides that the Executive Officer
can grant full or partial exemptions from compliance with the WAIRE
Points requirements of Rule 2305 under certain circumstances.\26\ In
the event of unforeseen circumstances that are beyond the control of
the owner or operator, the owner or operator may apply for a partial or
full exemption. Although Section (g)(3) imposes some boundaries on this
authority, it would nevertheless operate to allow the Executive Officer
unilaterally to excuse violations of Rule 2305.
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\26\ 88 FR 70616, 70618.
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The State and District have adopted Rule 2305 applicable to owners
or operators of warehouses to achieve emission reductions to help
provide for attainment and maintenance of the NAAQS. To the extent that
Rule 2305 is a SIP emission limitation, it must meet the definition of
that term in CAA section 302(k), which provides that it must be
continuous. If a SIP provision is an emission limitation, to be
continuous it could not include an exemption for malfunctions, such as
that provided in Section (g)(3), including ad hoc exemptions that the
Executive Officer might grant through exercise of director's
discretion. Such exemption decisions would be binding on other parties
and thus impede potential enforcement actions by the EPA or others that
may not agree with the decision of the Executive Officer, thereby
interfering with enforcement by the EPA and other parties and imposing
the enforcement discretion decisions of the Executive Officer on the
EPA and other parties.
SCAQMD Comment #4: The SCAQMD acknowledges that the definitions in
Rule 2305 for the terms ``Near-Zero Emission (NZE) Trucks'' and ``Zero-
Emission (ZE) Trucks'' rely on sections of the California Code of
Regulations (CCR) that are not part of the SIP but disagrees that such
reliance may make the terms ambiguous, which in turn may have
implications for enforceability.
EPA Response to SCAQMD Comment #4: In EPA's proposed rule, the EPA
noted that two critical definitions in Rule 2305 rely on cross-
references to CCR sections that are not approved as part of the SIP,
and thus, the definitions could be ambiguous for the purposes of
enforcement of the SIP. As a basic principle, the EPA believes that all
SIP provisions should be clear and unambiguous to assure that regulated
entities, regulators, and courts can have a common understanding of the
requirements. Failure to incorporate into the SIP definitions of key
terms can lead to unintended and unnecessary ambiguities in a SIP
provision that may only come to light later. It is possible that, in an
enforcement proceeding for SIP requirements, a court may judicially
notice CCR sections that are not part of the SIP but that a SIP rule
cross-references, to interpret the terms at issue. However, case law
warrants caution in the context of reliance on out-of-SIP materials in
a SIP enforcement proceeding.\27\
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\27\ El Comit[eacute] Para el Bienestar de Earlimart v.
Warmerdam, 539 F.3d 1062 (9th Cir. 2008) (CAA enforcement by citizen
group of requirements precluded because, while cited in connection
with the EPA's approval of the SIP, the specific requirements were
not incorporated into SIP).
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The EPA acknowledges that the existing cross references to CCR
provisions outside Rule 2305 do provide definitions of these terms, but
this fact also raises a different issue. Because the CCR sections at
issue are not part of the approved SIP, the EPA is concerned that CARB
could revise these defined terms outside of the statutory SIP revision
process thereby potentially amending Rule 2305 (through the cross-
reference to the CCR sections) unilaterally also outside of the SIP
revision process. Inclusion of necessary definitions within the SIP
provision itself, or otherwise submitting them for inclusion in the
SIP, obviates these potential problems. Thus, the EPA affirms our
statements in the proposed rule as to these two definitions. However,
the EPA anticipates that CARB will be submitting the CCR definitional
sections on which Rule 2305 relies for inclusion into the SIP and that
the issue will be resolved upon the EPA's approval of the definitions
as part of the SIP.\28\
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\28\ 88 FR 70616, 70623. On August 8, 2023, CARB submitted the
Advanced Clean Trucks Regulation, which includes one of the two CCR
sections, 13 CCR section 1963, to the EPA for approval as a SIP
revision.
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SCAQMD Comment #5: The SCAQMD comments that the proposed rule
incorrectly describes the WAIRE Program Online Portal (POP) as
[[Page 73573]]
providing the public information about how warehouse operators and
owners are complying with Rule 2305 and how WAIRE Mitigation Program
funds are spent. SCAQMD clarifies that the function and purpose of the
WAIRE POP is to collect information from regulated entities (warehouse
owners and operators), not to provide or distribute information about
the WAIRE Program to the public. The SCAQMD indicates that it has
created a separate web page to provide information on the WAIRE Program
to the public. That page hosts links to various resources related to
the WAIRE Program, including the WAIRE Program's annual report. The
SCAQMD indicates that it is evaluating a proposal to include additional
WAIRE Program data, including aggregated information about compliance
obligations and completed compliance actions, in its Facility
Information Detail (``FIND'') tool.
EPA Response to SCAQMD Comment #5: The EPA appreciates the
clarification by the SCAQMD regarding the function and purpose of the
WAIRE POP. The EPA understands that a separate web page created by the
SCAQMD provides the public with certain information about the WAIRE
program. In addition, the public may request access to WAIRE data not
available on-line from SCAQMD, such as the periodic reports that
warehouse owners and operators are required to submit to the SCAQMD
under Rule 2305, through the California Public Records Act requests
under State law.\29\ While there is no CAA requirement that such data
be made available on-line, the EPA notes that making such data
available on-line would allow the public to access the information in a
more timely manner than making a request under the California Public
Records Act.
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\29\ The California Public Records Act is a State law that
provides the public the right to inspect and the right to promptly
obtain copies of ``public records.'' The California Public Records
Act does not provide for creation or preparation of a record that
does not exist at the time of the request. The California Public
Records Act can be found at California Government Code sections
7920-7931.
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B. The Port of Long Beach (POLB) Comments and EPA Responses
POLB Comment #1: Referring to the CTA v. SCAQMD case, the POLB
asserts that it is improper for the EPA to issue a rule interpreting
SCAQMD's legal authority to adopt and implement an indirect source
review (ISR) rule while a legal action brought by CTA concerning the
validity of the rule is pending. The POLB contends that the EPA should
defer taking action until the judiciary resolves the pending
litigation.
EPA Response to POLB Comment #1: The EPA disagrees that it is
improper for us to take action on a SIP submission in a situation where
the State or local rules submitted for approval into the SIP are
subject to a pending legal challenge. First, CAA section 110(k)
requires the EPA to take action on submissions no later than 12 months
after the EPA finds the submission complete or it becomes complete by
operation of law. If the EPA does not act within the prescribed period,
the EPA may be subject to a deadline lawsuit to compel that action. The
CAA does not provide additional time for EPA action on a submission
merely because there is a pending legal challenge related to some
aspect of the SIP submission.\30\
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\30\ In this instance, SCAQMD Rule 2305 was submitted to the EPA
as a SIP revision on August 13, 2021, and was deemed complete by
operation of law on February 13, 2022. In July 2023, we were sued
for failure to take action within the prescribed period. See Center
for Community Action and Environmental Justice v. EPA, 23-cv-03571,
U.S. District Court, Northern District of California.
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More importantly, however, EPA separately considered the legal
authority issue involved in the then pending litigation to which the
commenter referred. Pursuant to CAA section 110(a)(2)(E), a necessary
part of the EPA's evaluation of a SIP submission is whether the
submission includes necessary assurances that the State (or District,
in this case) has adequate authority under State law to carry out such
SIP submission and is not prohibited by any provision of Federal or
State law from doing so.\31\ For this rulemaking action, the EPA needed
to address the issue of whether the State and District have adequate
legal authority under State law to implement SCAQMD Rule 2305, and
whether the State or District was prohibited by any Federal or State
law from implementing Rule 2305, as part of the basis for proposing
approval or disapproval of SCAQMD Rule 2305 under CAA section 110(k).
The mere fact of a pending judicial challenge does not impede EPA from
making a determination that the State and District have provided
necessary assurances that they have adequate authority. The EPA set
forth its evaluation of the State and District's explanation of their
authority for Rule 2305 in the proposal rule.\32\
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\31\ See CAA section 110(a)(2)(E).
\32\ 88 FR 70616, 70620-70623.
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Lastly, the EPA notes that, in any event, the CTA v. SCAQMD case to
which the POLB refers has been resolved in favor of the SCAQMD, and we
have taken the Court's actions into account in finalizing approval of
SCAQMD Rule 2305 as a revision to the California SIP.\33\ In short, the
court's actions confirmed the EPA's view that the State and district
are not prohibited by any Federal law from carrying out Rule 2305 and
thus have provided the necessary assurances of adequate legal authority
for Rule 2305 for the purposes of CAA section 110(a)(2)(E).
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\33\ As noted previously in this document, in December 2023, the
U.S. District Court denied motions for summary judgment filed by CTA
and A4A and granted summary judgment to the SCAQMD with respect to
the claims brought under the CAA, ADA, and FAAAA. Subsequently, the
Court has entered judgment in favor of the SCAQMD and dismissed on
the merits the claims brought under the CAA, ADA, and FAAAA, and by
separate order, the Court also dismissed with prejudice CTA's and
A4A's remaining State law claims that had been included in the
complaint. No appeal was filed in this case.
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POLB Comment #2: The POLB objects to the EPA's evaluation in the
proposed rule of the legal authority of the SCAQMD to implement Rule
2305 and asserts that SCAQMD Rule 2305 is preempted because, although
styled as an ISR rule, it directly regulates mobile sources and
``compels the manufacturer or user to change emission control design of
mobile sources or creates incentives so onerous as to in effect be a
purchase mandate.'' The POLB states that Rule 2305 does both of these
and is, therefore, preempted by the CAA.
EPA Response to POLB Comment #2: As to the issue of whether SCAQMD
Rule 2305 represents a legitimate ISR rule as authorized by CAA section
110(a)(5), we considered whether Rule 2305 represents a de facto
purchase requirement for ZE or NZE trucks and thus whether it might be
preempted under CAA section 209(a).\34\ In the EPA's proposed rule, we
preliminarily concluded that, in adopting Rule 2305, the SCAQMD has not
adopted or attempted to enforce any standard relating to the control of
emissions from new motor vehicles or new motor vehicle engines
preempted by CAA section 209(a).
---------------------------------------------------------------------------
\34\ 88 FR 70616, 70622-70623.
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The EPA based its preliminary conclusion, in part, on the
similarities between SCAQMD Rule 2305 and the ISR rule at issue in the
National Association of Home Builders v. San Joaquin Valley Unified Air
Pollution Control District, 627 F.3d 730 (9th Cir. 2010) (NAHB v.
SJVUAPCD) case, including the design of Rule 2305 to regulate at the
level of the indirect source, not at the level of mobile sources the
indirect source may attract. In Rule 2305, ``[t]the `baseline' amount
of emissions, and the required reduction in emissions from that
baseline, are both calculated in terms of the [indirect
[[Page 73574]]
source site] as a whole.'' \35\ This ``site-based'' approach to
regulating emissions ``is precisely what allows the Rule to avoid
preemption under section 209(e)(2).'' \36\ That Rule 2305 is properly
characterized as an ISR program under CAA section 110(a)(5)
distinguishes it from the vehicle purchase mandate at issue in the
Supreme Court EMA case.\37\
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\35\ 88 FR 70616, 70622, citing NAHB v. SJVUAPCD, 627 F.3d 730,
737.
\36\ 88 FR 70616, 70622, citing NAHB v. SJVUAPCD, 627 F.3d 730,
739.
\37\ Engine Manufacturers Ass'n v. South Coast Air Quality
Management District, 541 U.S. 24655 (2004) (``EMA''). In EMA, the
Supreme Court held that a ``standard'' under CAA section 209(a),
which the Court described as ``a requirement that a vehicle or
engine not emit more than a certain amount of pollutant, be equipped
with a certain type of pollution-control device, or have some other
design feature related to the control of emissions,'' is preempted
under Section 209(a) whether applied to manufacturers through a
sales mandate or to buyers through a purchase mandate. EMA, at 253-
255.
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In addition, the EPA considered that Rule 2305 lacks the indicia of
a de facto regulation of either motor vehicles or nonroad vehicles or
engines. As explained further in the proposed rule, Rule 2305 applies
to warehouse operators and provides multiple options for meeting the
annual WPCO, a metric that is based not on truck emissions but on truck
trips. The number of truck visits is used in Rule 2305 because it is
representative of the total activity at, and emissions associated with,
a warehouse. The various options available (WAIRE Menu, Custom WAIRE
Plan, or Mitigation Fee) to warehouse operators that do not involve
acquisition of, or contracting for, ZE or NZE trucks to earn WAIRE
Points further support a conclusion that in Rule 2305, the SCAQMD has
not adopted or attempted to enforce any standard relating to the
control of emissions from new motor vehicles or new motor vehicle
engines preempted by CAA section 209(a).
Regardless of the commenter's assertions about alleged preemption,
in the months following publication of the proposed rule, the U.S.
District Court entered judgment in favor of the SCAQMD in the CTA v.
SCAQMD case and dismissed on the merits the claims brought against
SCAQMD's adoption of Rule 2305 under the CAA, ADA and FAAAA.\38\ For
this final rule, we have reviewed the decision \39\ of the District
Court and find that it supports our preliminary conclusion set forth in
the proposed rule that the SCAQMD is not prohibited from implementing
Rule 2305 under the CAA. Moreover, we are aware of no other legal
challenge to Rule 2305 that might prevent SCAQMD from carrying out Rule
2305. Therefore, the EPA affirms in this final rule our conclusion
that, in adopting Rule 2305, the SCAQMD has not adopted or attempted to
enforce any standard relating to the control of emissions from new
motor vehicles or new motor vehicle engines preempted by CAA section
209(a).
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\38\ CTA v. SCAQMD, Judgment, Dkt. 168, January 18, 2024.
\39\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023), pp. 19-29.
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POLB Comment #3: The POLB further asserts that the EPA's reliance
on the decision in National Association of Home Builders v. San Joaquin
Valley Unified Air Pollution Control District, 627 F.3d 730, 737-738
(9th Cir. 2010) is misplaced because the ISR regulation at issue in
that case applied to new sources whereas SCAQMD Rule 2305 applies to
both new and existing warehouses. Moreover, the POLB states that the
omission of the word ``existing'' in CAA section 110(a)(5)(D) indicates
that Congress intended to exclude existing sources from ISR.
EPA's Response to POLB Comment #3: With respect to the issue of
whether ISR programs as described in CAA section 110(a)(5) may apply to
existing as well as new or modified indirect sources, the EPA first
notes that the EPA did not rely on the decision in NAHB v. SJVUAPCD in
evaluating this particular issue. Instead, in the proposed rule, the
EPA discussed how the Agency considered this particular issue by
evaluating the statutory language in CAA sections 110(a)(5)(D), (E) and
116.\40\ More specifically, the EPA acknowledged that the language of
CAA section 110(a)(5) does not explicitly answer the question whether
States may include both existing and new sources and cited, as an
example, the statutory language in CAA section 110(a)(5)(D) cited by
the POLB.
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\40\ 88 FR 70616, 70622.
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As explained in the preamble to the proposed rule, CAA section
110(a)(5)(D) in relevant part defines an indirect source review program
as one ``including'' such measures as new or modified sources. The EPA
does not, however, read this definition to restrict States from having
such programs that extend to existing sources if they elect to do so.
Instead, the use of the term ``including'' preceding the reference to
``new or modified indirect source'' indicates that regulation of new or
modified indirect sources is illustrative of the scope of this
provision, not limiting. The EPA also noted the statutory language in
CAA section 110(a)(5)(C), which defines ``indirect source'' more
broadly to encompass both existing and new sources, and CAA section
116, which explicitly provides that States retain authority to regulate
more stringently in SIP provisions than otherwise required by Federal
law, except where preempted from doing so. The EPA continues to find
that the best reading of this language is that States may include
existing sources as a permissible category within a CAA indirect source
program. The POLB does not address the EPA's discussion of either CAA
section 110(a)(5)(D) or CAA section 116 in its comments.
Moreover, as the Ninth Circuit observed in NAHB, the purpose of
Congress's enactment of the indirect source review provisions in
section 110(a)(5) was ``to return power to states and localities'' over
indirect source programs.\41\ This purpose further corroborates EPA's
view that the best reading of the Act does not preclude a State's
ability to adopt an indirect source review program that covers existing
sources.
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\41\ 627 F.3d at 738 (citing Sierra Club v. Larson, 2 F.3d 462,
467 (1st Cir. 1993)).
---------------------------------------------------------------------------
In the EPA's proposed rule, upon its review of CAA section
110(a)(5), the EPA acknowledged that the statutory language does not
clearly indicate whether Congress actually intended the definition of
``indirect source program'' to function as a restriction on the ability
of States to adopt an indirect source program that extends to existing
sources as well as new or modified sources and for the EPA to have
authority to in turn approve such a program into the State's SIP. The
EPA indicated that the EPA did not consider such a restrictive reading
of the provision to be reasonable or logical, absent a clearer
prohibition.\42\ That is, read in light of the above-described
statutory context and purpose, the best reading of the statute is that
States may establish indirect source programs for new and modified
sources, as well as existing sources.
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\42\ 88 FR 70616, 70622.
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POLB Comment #4: The POLB also states that the EPA does not have
the experience or expertise to interpret the ADA or the FAAAA, and its
opinion regarding preemption concerning these laws is outside the EPA's
purview.
EPA's Response to POLB Comment #4: Under CAA section 110(a)(2)(E),
the EPA must evaluate SIP submissions to ensure that the State has
provided necessary assurances that the State (or District, in this
case) is not prohibited by any provision of State or Federal law from
carrying out the SIP or SIP revision (in this case, Rule 2305). The SIP
[[Page 73575]]
submission for SCAQMD Rule 2305 includes the District's documentation
of comments submitted during the District's rule adoption process and
the District's responses to those comments. Through the EPA's review of
this material, the EPA was made aware of the claims regarding possible
preemption under the ADA or FAAAA, and thus, in accordance with section
110(a)(2)(E), we made a preliminary judgment about possible preemption
(in the context of assuring that no Federal or State law prevented the
carrying out of the SIP) to provide an appropriate basis to propose
approval of SCAQMD Rule 2305 under CAA section 110(k).
Regardless of the commenter's assertions about alleged preemption,
in the months following publication of the proposed rule, the U.S.
District Court entered judgment in favor of the SCAQMD in the CTA v.
SCAQMD case and dismissed on the merits the claims brought against
SCAQMD's adoption of Rule 2305 under the CAA, ADA and FAAAA.\43\ For
this final rule, we have reviewed the decision \44\ of the District
Court and find that it supports our preliminary conclusion set forth in
the proposed rule that the SCAQMD is not prohibited from implementing
Rule 2305 under the ADA or FAAAA for the purpose of CAA section
110(a)(2)(E). Moreover, we are aware of no other legal challenge to
Rule 2305 that might prevent SCAQMD from carrying out Rule 2305.
Lastly, we note that we consulted with the U.S. Department of
Transportation on our responses to comments related to ADA and FAAAA
preemption in this final rule. Therefore, the EPA affirms in this final
rule the conclusion that the SCAQMD is not prohibited from implementing
Rule 2305 under the ADA or FAAAA.
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\43\ CTA v. SCAQMD, Judgment, Dkt. 168, January 18, 2024.
\44\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023), pp. 29-34.
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POLB Comment #5: Citing the Supreme Court's decision in West
Virginia v. EPA,\45\ the POLB also states that the EPA's view that
SCAQMD Rule 2305 should be upheld absent a ``clearer prohibition'' in
the CAA conflicts with the ``major questions doctrine'' in which an
executive agency cannot regulate unless it can ``point to clear
congressional authorization'' to do so.
---------------------------------------------------------------------------
\45\ West Virginia v. EPA, 597 U.S. 697 (2022).
---------------------------------------------------------------------------
EPA's Response to POLB Comment #5: The POLB raises this particular
objection to the EPA's proposed approval in a single sentence and fails
to elaborate on how the EPA's action conflicts with the major questions
doctrine. In any event, the EPA does not believe the major questions
doctrine is applicable here.
The major questions doctrine provides that in extraordinary cases
involving statutes that confer authority upon an administrative agency,
the ``history and the breadth of the authority that [the Agency] has
asserted,'' and the ``economic and political significance'' of that
assertion, provide a ``reason to hesitate before concluding that
Congress'' meant to confer such authority.\46\ In such cases, the
agency must point to ``clear congressional authorization'' for the
authority it claims.\47\ As an initial matter, the POLB's comment fails
to address with specificity why it believes the major questions
doctrine applies at all. For example, the POLB's comment does not speak
to the economic or political significance that would result from the
approval of Rule 2305 into the SIP, much less allege that such impacts
rise to a level that could implicate the major questions doctrine. Nor
does the POLB explain how the EPA's approval of a local government rule
in a SIP that meets the requirements of the CAA amounts to a
transformative expansion of Federal regulatory authority. The absence
of these factors refutes the idea that the major questions doctrine is
implicated by this final rule. The interpretation of CAA section
110(a)(5) set forth in the proposed rule and again in this final rule
does not broaden EPA's authority to any degree. Rather, the conclusion
that Rule 2305 is an ISR program entails only that the SCAQMD may
exercise its traditional police powers in this area.\48\
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\46\ Id., at 700, citing FDA v. Brown & Williamson Tobacco
Corp., 529 U.S. 120, 159-160 (2000).
\47\ Id., citing Utility Air Regulatory Group v. EPA, 573 U.S.
302, 324 (2014).
\48\ See CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023), at 34 (``Even if this argument has not been waived, the
major questions doctrine, as applied by the Supreme Court, applies
to the balance of power between Congress and Federal agencies, not
the balance of power between the Federal Government and the States.
Moreover, the premise for the major questions doctrine suggests that
Congress could not effectively preempt the States' traditional
authority to regulate indirect sources of air pollution unless it
used clear language to that effect.'').
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In any case, Congress has spoken clearly regarding this issue. As
explained above, the text of section 110(a)(5), in light of statutory
context, purpose, and history, indicates that Congress may approve
State indirect source review programs that extend to existing sources.
For the reasons set forth here and in the proposed rule, the EPA
affirms the conclusion that the District is not precluded from
regulating both existing and new warehouses in Rule 2305, and thus,
this poses no impediment to approving the rule into the SIP.\49\
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\49\ Our conclusion is further supported by the decision in the
CTA v. SCAQMD case. See, CTA v. SCAQMD, Order Re: Plaintiff's Motion
for Summary Judgment as to Plaintiff's Complaint for Declaratory
Judgment and Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor
Airlines for America's Motion for Summary Judgment (Dkt, 73), Dkt.
162, December 14, 2023, p. 28 (``Nothing in the text, structure, or
purpose of the indirect-source-review provision suggests that this
phrase limits indirect source reviews to those based on new and
modified indirect sources'').
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POLB Comment #6: The POLB asserts that SCAQMD Rule 2305's
mitigation fee is an unlawful tax under State of California's
Proposition 26. Proposition 26 amended the State Constitution to state
that ``levy, charge, or exaction of any kind imposed by a local
government'' is a tax except for certain exceptions. The POLB asserts
that the mitigation fee in Rule 2305 does not fall under any of the
exceptions and is intended to generate revenue rather than recoup costs
associated with a regulatory program and is therefore unlawful unless
the District secures voter approval.
EPA's Response to POLB Comment #6: As to the issue of whether Rule
2305's mitigation fee is an unlawful tax under State law, the EPA
relied upon a legal analysis from the State Attorney General's Office
\50\ that was submitted as part of the SIP submission package and that
concludes that the mitigation fee is not an unlawful tax under the
California Constitution because, as a compliance option, the fee is not
compulsory.\51\ The legal analysis from the State Attorney General's
Office specifically addresses the issues raised by Proposition 26.\52\
[[Page 73576]]
The POLB does not acknowledge the EPA's reliance on the legal analysis
from the State Attorney General's Office or address the rationale
presented therein for the conclusion that the mitigation fee is not an
unlawful tax under State law.\53\
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\50\ Letter dated May 6, 2021, from Robert Swanson, Deputy
Attorney General, California Department of Justice, to Ellen Peter,
Chief Counsel, CARB, included as an enclosure to a letter dated May
6, 2021, from Ellen M. Peter, to Wayne Nastri, Executive Officer,
SCAQMD.
\51\ See 88 FR 70616, 70621. The POLB notes that the decision in
National Association of Home Builders v. San Joaquin Valley Unified
Air Pollution Control District, 627 F.3d 730 (9th Cir. 2010) (``NAHB
v. SJVUAPCD'') was decided before Proposition 26 amended the State
Constitution to provide for voter approval of certain levies or
charges as a tax except for certain enumerated exceptions. The EPA's
evaluation of the issue of whether the mitigation fee represents an
unlawful tax under State law does not rely on the decision in NAHB
v. SJVUAPCD but relies instead on the legal analysis from the State
Attorney General's Office.
\52\ Letter dated May 6, 2021, from Robert Swanson, Deputy
Attorney General, California Department of Justice, to Ellen Peter,
Chief Counsel, CARB, included as an enclosure to a letter dated May
6, 2021 from Ellen M. Peter, to Wayne Nastri, Executive Officer,
SCAQMD, pp. 12-14.
\53\ As noted previously in this document, in the CTA v. SCAQMD
case, the Court dismissed with prejudice CTA's and A4A's remaining
State law claims that had been included in the complaints. The State
law claims that were dismissed include claims that Rule 2305
mitigation fees constituted an unlawful tax under State law.
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POLB Comment #7: The POLB asserts that sources controlled by SCAQMD
Rule 2305 will be, and are, controlled by rules adopted by other
agencies. To support this assertion, the POLB notes that emissions from
heavy-duty trucks are currently heavily regulated by CARB. In addition,
the POLB states that a newly-adopted CARB regulation, the Advanced
Clean Fleets Regulation, will result in the turnover of trucks with
combustion engines to trucks with zero emissions powertrains throughout
the State. Trucks traveling between warehouses, ports, or intermodal
railyards (such as drayage trucks) must be retired once they meet their
statutory life beginning on January 1, 2025, and all drayage trucks
must be ZE by 2035. Non-drayage trucks maybe covered by the High
Priority Fleets portion of the regulation that results in the
transition to ZE fleet by 2042. The Advanced Clean Fleet Regulation
will result in a transformational shift in the on-road transportation
sector towards zero emission by 2036.
EPA Response to POLB Comment #7: SCAQMD Rule 2305 applies to owners
and operators of warehouses located in the SCAQMD with greater than
100,000 square feet of indoor floor space in a single building and who
operate at least 50,000 square feet of the warehouse for warehousing
activities. Thus, contrary to POLB's assertions, the sources controlled
by SCAQMD Rule 2305, i.e., warehouses, are not the sources controlled
by CARB or district regulations referred to by the commenter. The EPA
does recognize that CARB has adopted regulations that establish
emission limits and other requirements related to control of emissions
from new heavy-duty trucks, including CARB's Advanced Clean Fleets
Regulation. In developing SCAQMD Rule 2305, the SCAQMD was also aware
of CARB's regulatory efforts and designed Rule 2305 to enhance those
efforts by accelerating emission reductions in the South Coast Air
Basin that would otherwise occur over a longer period under CARB's
rules. SCAQMD Rule 2305 focuses the reductions in areas
disproportionately affected by emissions from indirect sources
associated with warehouses. In addition, the SCAQMD adopted Rule 2305
to fulfill a commitment in the 2016 South Coast AQMP to assess and
identify actions to further reduce emissions associated with emission
sources operating in and out of warehouse distribution centers.
The EPA understands the POLB's comment to imply that SCAQMD Rule
2305 is unnecessary given the rules adopted by other agencies that will
result, over time, in reductions in emissions from heavy-duty trucks.
However, the SCAQMD adopted Rule 2305 to accelerate the emissions
reductions within the District to focus the reductions in the areas
most affected by indirect source emissions associated with warehouses
and to fulfill a commitment made by the SCAQMD in connection with the
2016 South Coast AQMP. Finally, the EPA notes that CAA section
110(a)(5) provides States with specific authority to adopt ISR rules
that by design provide another means to achieve greater emission
reductions, notwithstanding that there may be other regulatory
requirements applicable to the mobile sources that are associated with
the regulated entities under such an ISR rule. In this instance, the
SCAQMD has availed itself of this authority and made the policy choice
to adopt and implement a warehouse ISR rule.
POLB Comment #8: The commenter states that the EPA's finding that
Rule 2305 is not fully enforceable, without SIP credit, undermines the
purpose of the rule to assist in meeting the State and Federal air
quality standards for ozone and PM2.5.
EPA Response to POLB Comment #8: The EPA disagrees that the
determination that Rule 2305 is not fully enforceable due to certain
deficiencies undermines the purpose of SCAQMD Rule 2305. The stated
purpose of SCAQMD Rule 2305 is to reduce local and regional emissions
of NOX and PM2.5, and to facilitate local and
regional emission reductions associated with warehouses and the mobile
sources attracted to warehouses, in order to assist in meeting State
and Federal air quality standards for ozone and PM2.5.\54\
The issue of whether SCAQMD Rule 2305 qualifies at the present time for
SIP credit through approval by EPA of a specific amount of emissions
reductions attributable to the rule is different from whether SCAQMD
Rule 2305 assists in meeting State ambient air quality standards and
the NAAQS for ozone and PM2.5.
---------------------------------------------------------------------------
\54\ SCAQMD Rule 2305(a).
---------------------------------------------------------------------------
As explained in the proposed rule, the EPA has concluded that
SCAQMD Rule 2305 is generally enforceable for the purposes of CAA
section 110(a)(2)(A), but with certain deficiencies that prevent the
EPA from approving a specific amount of emissions reductions from the
rule in any attainment or rate of progress/reasonable further progress
demonstrations.\55\ Although the EPA is not crediting Rule 2305 with
achieving a specific amount of emissions reductions at this time, the
EPA's evaluation of Rule 2305 indicates that the rule will in fact
achieve additional emission reductions that are needed in the area for
purposes of the ozone and PM2.5 NAAQS.\56\ The EPA noted
that these additional reductions will incrementally contribute to the
overall reductions needed to attain the NAAQS in the South Coast Air
Basin and Coachella Valley air quality planning areas. The EPA also
anticipates that SCAQMD will take action to resolve the identified
deficiencies in Rule 2305 so that the EPA may provide SIP credit for
it.
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\55\ 88 FR 70616, 70623, 70625.
\56\ 88 FR 70616, 70624.
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C. A4A Comments and EPA Responses
A4A Comment #1: Citing the proposed approval of Rule 2305 and a
news release issued at the time the proposal was signed, A4A expresses
concern that the EPA may have predetermined the outcome of its proposed
action on SCAQMD Rule 2305 before considering public comments. A4A
asserts that the EPA must follow due process and the law by
meaningfully considering the comments it receives--including the
arguments as to which Federal law preempts Rule 2305.
EPA Response to A4A Comment #1: The EPA disagrees that the news
release cited by the commenter indicated that the Agency had
predetermined the outcome of this rulemaking.\57\ A proper reading of
the entire statement by the Region IX Regional Administrator reveals
only her recognition of the need for additional emissions reductions in
the South Coast Air Basin and Coachella Valley, especially in
communities with minority populations and low-income populations that
continue to experience relatively higher concentrations of pollutants.
The statement does not
[[Page 73577]]
suggest that the EPA would approve Rule 2305 regardless of the comments
submitted in response to our proposed approval, and in a later
paragraph, the news release notes that ``if finalized as proposed,''
Rule 2305 will become federally enforceable. The phrase ``if finalized
as proposed'' conveys the possibility that the EPA may not finalize
approval, as proposed, for example, in response to adverse comments the
Agency receives on the proposal. Moreover, the EPA has fully evaluated
the comments submitted on the proposed action and taken those into
account, as evidenced in this final rule.
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\57\ EPA Region IX, New Release titled ``EPA Proposes Approval
of Groundbreaking Rule to Reduce Southern California Air Pollution
Driven by Warehouse Operations,'' October 12, 2023.
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A4A Comment #2: The A4A conveys concern that the EPA has proposed
to find that SCAQMD Rule 2305 is not preempted under the CAA, ADA and
FAAAA notwithstanding an ongoing legal challenge to Rule 2305 grounded
in preemption claims under those same statutes. The A4A is also
concerned about the EPA's statements regarding possible actions the
Agency might or might not take in the wake of a decision in the
litigation finding Rule 2305 to be preempted but issued after final EPA
approval of the rule.
EPA Response to A4A Comment #2: The EPA disagrees with the
commenter's characterization of the Agency's evaluation of the SCAQMD's
authority to adopt Rule 2305 and the Agency's evaluation of its own
obligations to consider SCAQMD's authority in accordance with CAA
section 110(a)(2)(E). The EPA fully considered these questions as
explained in the proposal notice for this action. The commenter also
took issue with the EPA's acknowledgement of the then ongoing
litigation concerning claims of preemption and in particular with the
EPA's statements that were the court to conclude that SCAQMD was
preempted or otherwise precluded from adopting or implementing Rule
2305 the Agency would take that into account as appropriate. This did
not indicate that the EPA was ``rendering a verdict without a record.''
This reflected a frank acknowledgement that a court decision contrary
to the EPA's own analysis would of course require the agency to revisit
that issue, as appropriate.
More importantly, as noted previously, since publication of the
proposed rule, the U.S. District Court has addressed the challenges to
the SCAQMD's legal authority to enforce Rule 2305, that were brought by
CTA and A4A and that are grounded in preemption under the CAA, ADA, and
the FAAAA, and dismissed on the merits the claims brought under those
statutes.\58\ Neither CTA nor A4A have filed a notice of appeal.\59\
The EPA has taken the Court's decision into account in this final rule,
and because we are taking final action after resolution of the legal
challenges, the A4A's comment concerning actions that the EPA might or
might not take if the decision were to be issued after final EPA action
on Rule 2305 is moot.
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\58\ CTA v. SCAQMD, Judgment, Dkt. 168, January 18, 2024. In
addition, the Court dismissed with prejudice CTA's and A4A's
remaining State law claims that had been included in the
complaints--see CTA v. SCAQMD, Order Re Joint Stipulation and
Consent Motion to Dismiss with Prejudice (Dkt. 166), Dkt. 167,
January 18, 2024.
\59\ CTA v. SCAQMD, Defendants' Request for Publication of Order
Denying Plaintiff and Plaintiff-Intervenor's Motions for Summary
Judgment, Dkt. 169, March 5, 2024.
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A4A Comment #3: The A4A contends that the ADA preempts Rule 2305
because Rule 2305 impacts the price, route, or service of air carriers
and that its ADA arguments apply equally to the FAAAA. To support these
contentions, the A4A presents a review of relevant case law and its
evaluation of Rule 2305 in light of the law and relevant case holdings.
Further, the A4A objects to the EPA's preliminary conclusion to the
contrary to be superficial and unsubstantiated.
EPA Response to A4A Comment #3: The EPA disagrees that the ADA or
the FAAAA preempt Rule 2305. In the proposed rule, the EPA indicated
that we do not consider the requirements under Rule 2305 as relating
directly to the ``price, route, or service' '' of any air carrier or
common carrier. But we recognized that an indirect effect on price is a
foreseeable consequence of the additional costs borne by warehouse
owners or operators to comply with the annual WPCO.\60\ We
preliminarily concluded that Rule 2305 is not preempted under either
the ADA or F4A because any price effect is indirect and remote. Our
preliminary conclusion in this regard was based on our review of the
SCAQMD's Final Staff Report for Rule 2305, which was included in the
SIP submission and includes the SCAQMD's responses to comments
submitted during the District's rulemaking process that raise
preemption objections to Rule 2305 under the ADA and FAAAA, and the
filings in the CTA v. SCAQMD case. Moreover, we took into consideration
that, in adopting Rule 2305, the District is acting under its delegated
police powers to protect public health in a way that is explicitly
authorized under CAA section 110(a)(5) and CAA section 116, and that
acting in that capacity weighs against a finding of preemption under
the ADA and FAAAA.
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\60\ 88 FR 70616, 70623.
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In the CTA v. SCAQMD case, the Court considered the same arguments
related to ADA and FAAAA preemption that A4A includes in its comments
on our proposed rule. After considering the arguments and related case
law, the Court observed that Rule 2305 contains no express reference to
the services, rates, or routes of air carriers and is thus not
expressly preempted. The Court concluded that the A4A had not shown
that the effect of Rule 2305 on the integrated air delivery system is
more than ``tenuous, remote and peripheral.'' \61\
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\61\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023, p. 33.
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To reach this conclusion, the Court considered the general
applicability of Rule 2305. The court noted that Rule 2305 ``operate[s]
one or more steps away from the moment at which the firm offers its
customer a service for a particular price;'' \62\ does not affect any
air carrier's routes because it treats all truck visits the same, no
matter which course of travel the air carrier chooses for these trucks;
does not bind an air carrier to offer particular services and does not
control the prices, schedules, origins and destinations offered by air
carriers to their customers beyond affecting the compliance costs of
those air carriers.\63\ Lastly, the Court noted that the ADA and FAAAA
were enacted to ensure that airlines would be operated as private
businesses rather than public utilities and that A4A had made no
showing that Rule 2305 would materially alter this plan.\64\
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\62\ Id., citing S.C. Johnson & Son, Inc. v. Transp. Corp. of
America, Inc., 697 F.3d 544, 558 (7th Cir. 2012).
\63\ Id., p. 33.
\64\ Id., p. 34.
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For this final rule, we have reviewed the decision \65\ of the
District Court and find that it supports our preliminary conclusion set
forth in the proposed rule that the SCAQMD is not prohibited from
implementing Rule 2305 under the ADA or FAAAA, for the purposes of CAA
section 110(a)(2)(E). Moreover, we are aware of no other legal
challenge to Rule 2305 that might prevent SCAQMD from carrying out Rule
2305. Lastly, we note that we consulted with the U.S. Department of
Transportation on our responses to comments related to ADA
[[Page 73578]]
and FAAAA preemption in this final rule. Therefore, the EPA affirms in
this final rule the conclusion that the SCAQMD is not prohibited from
implementing Rule 2305 under the ADA or FAAA and concludes that neither
the ADA nor the FAAAA present an obstacle to the District in carrying
out Rule 2305 for the purposes of CAA section 110(a)(2)(E).
---------------------------------------------------------------------------
\65\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023), pp. 29-34.
---------------------------------------------------------------------------
A4A Comment #4: Citing statements by the District, A4A asserts
that, in adopting Rule 2305, the SCAQMD is seeking to regulate diesel
truck emissions.
EPA Response to A4A Comment #4: The EPA presumes A4A's comment is
intended to imply that the District's true purpose in adopting Rule
2305 is to adopt and enforce vehicle standards that are preempted under
CAA section 209(a). The EPA disagrees and finds that Rule 2305 is
structured as a valid ISR rule that involves a facility-by-facility
review and that takes a site-based approach to encourage and
incentivize actions to reduce emissions associated with warehouse
operations. Those actions may include reducing truck-related emissions,
or emissions from other sources, that are associated with warehouse
operations but does not constitute a mandate for purchase of ZE or NZE
trucks (see EPA Response to POLB Comment #2).
The EPA further notes that States retain significant authority
under the Clean Air Act to regulate emissions associated with mobile
sources, notwithstanding the CAA Title II preemption provisions. In
addition to the indirect source review programs described in section
110(a)(5), the Act also identifies various other ways in which States
can address and reduce mobile source emissions, such as transportation
control measures, vehicle inspection and maintenance programs, in-use
regulations, and emission standards.\66\
---------------------------------------------------------------------------
\66\ See, e.g. CAA sections 108(f), 177, 182, 209.
---------------------------------------------------------------------------
A4A Comment #5: The A4A states that the EPA should reject SCAQMD's
attempt to regulate vehicle emissions standards and decline to open the
door to a patchwork of local restrictions that Congress intended to
avoid in enacting the CAA's mobile source provisions.
EPA Response to A4A Comment #5: The EPA acknowledges that, in
enacting section 209 of the CAA, Congress intended to avoid a patchwork
of different State and local emissions standards for new vehicles and
new vehicle engines that manufacturers would be required to meet.
However, the EPA does not agree that, in Rule 2305, the SCAQMD has
adopted or attempted to enforce any standard relating to the control of
emissions from new motor vehicles or new motor vehicle engines or from
any nonroad vehicles or engines preempted by CAA sections 209(a) and
209(e) because, among other things, Rule 2305 does not apply to vehicle
or engine manufacturers but, rather, to warehouse owners and operators.
Moreover, warehouse owners or operators may comply with Rule 2305
through a variety of measures, not just through purchase of a ZE or NZE
vehicle (also see EPA Response to POLB Comment #2). Thus, we do not
believe that approval by the EPA of Rule 2305 as part of the California
SIP will open the door to the patchwork of local vehicle or engine
standards that Congress intended to avoid in enacting the mobile source
provisions of the CAA. Moreover, we believe that ISR programs described
in CAA section 110(a)(5) represent an important tool for the States and
local air districts to address air quality problems, that the CAA
preemption provisions under CAA section 209 should be read together
with the ISR provisions in CAA section 110, and that, read together,
CAA section 209 does not necessarily preempt ISR programs that address
emissions from mobile sources that are attracted to an indirect source.
By contrast, the EPA notes that States have considerable discretion
to adopt and submit SIP provisions to the EPA for evaluation and, if
approved, inclusion into that State's SIP. So long as the State has met
all applicable statutory and regulatory requirements, the EPA will
approve those provisions into the SIP in accordance with CAA section
110(k) and other applicable requirements. Among the approaches that a
State has authority to elect to adopt is an ISR as contemplated in CAA
section 110(a)(5). The mere fact that only some States may elect to
adopt such a SIP provision, while others do not, also does not create
an impermissible ``patchwork'' of requirements. It is a hallmark of the
SIP program that States may follow different approaches to attaining
and maintaining the NAAQS based on local facts and circumstances, so
long as they meet applicable SIP requirements.
A4A Comment #6: The A4A contends that SCAQMD Rule 2305 creates
incentives sufficiently burdensome as to be, in effect, a purchase
mandate and is thus, under the reasoning of Engine Mfrs. Ass'n v.
SCAQMD,\67\ a mobile source emissions standard preempted under CAA
section 209. The A4A acknowledges the decision in NAHB v. SJVUAPCD
upholding an ISR rule against a CAA preemption challenge but
distinguishes SCAQMD Rule 2305 from the SJVUAPCD ISR rule on three
grounds. First, A4A cites language from the NAHB decision that ``[a]n
emissions limit calculated by reference to a fleet of engines or
vehicles is as much a `standard' as an emissions limit calculated by
reference to an individual engine or vehicle,'' and argues that Rule
2305, as a ``fleet'' standard rather than an ISR rule, is preempted
under the CAA. Second, A4A asserts that Rule 2305 is distinguishable
because it mandates ZEV equipment or imposes penalties if ZEV equipment
is not used. Third, A4A asserts that Rule 2305 is distinguishable
because it does not allow regulated entities to retrofit existing
equipment or switch fuels to achieve compliance, based upon which A4A
further asserts ``the only way to avoid punitive mitigation fees is to
purchase ZEV/NZE vehicles.''
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\67\ Engine Manufacturers Association v. South Coast Air Quality
Management District, 541 U.S. 246, 253-55 (2004) (``EMA'').
---------------------------------------------------------------------------
EPA Response to A4A Comment #6: In the EPA's proposed rule, we
considered the issue of whether Rule 2305, while structured as an ISR
program, represents a de facto purchase mandate for ZE or NZE trucks
and is thus preempted under CAA section 209(a) under the principles of
the EMA case.\68\ As explained in the proposed rule, we found that Rule
2305 lacks the indicia of a de facto regulation of either motor
vehicles or nonroad vehicles or engines.\69\ In support of this
preliminary finding, we noted the various options available (WAIRE
Menu, Custom WAIRE Plan, or Mitigation Fee) to warehouse operators that
do not involve acquisition of, or contracting for, ZE or NZE trucks to
earn WAIRE Points. The EPA acknowledged in the proposed rule
information from the SCAQMD's final socioeconomic impact assessment for
Rule 2305 that ZE/NZE non-acquisition (or contracting) scenarios are
generally 4 to 5 times more costly (in terms of average annual dollars
per square foot) than the ZE/NZE acquisition (or contracting) scenarios
so as to incentivize acquisition and use of ZE/NZE trucks over the non-
acquisition options.\70\ However, we also noted that the scenarios in
the socioeconomic impact assessment were developed to identify the
widest range of possible costs assuming that warehouse owners and
operators would only comply with a single scenario approach from 2022
[[Page 73579]]
through 2031. As a practical matter, the EPA expects warehouse
operators will select multiple points-earning actions or investments
along with mitigation fees to meet the annual compliance obligation.
Recent data on compliance with Rule 2305 bears out this expectation.
For Year 2023, for example, warehouse operators reported WAIRE Points
primarily from hostler usage (53%), solar panel installation and usage
(15%), and NZE truck usage (14%). Mitigation fee point purchases
represented approximately 2% of the total reported WAIRE Points for
2023.\71\ Moreover, these selections may change over the years in light
of the ever-changing circumstances of individual businesses and the
composition of vehicle fleets. As such, we find that Rule 2305 is not a
de facto purchase mandate and is thus not preempted under CAA section
209(a) consistent with the EMA case.
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\68\ 88 FR 70616, 70622-70623.
\69\ 88 FR 70616, 70623.
\70\ 88 FR 70616, 70623, footnote #55.
\71\ See SCAQMD, Hybrid Mobile Source Committee Meeting, Agenda,
March 15, 2024, p. 18.
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As part of our evaluation of this issue, we also compared Rule 2305
to SJVUAPCD Rule 9510, the ISR rule at issue in the NAHB v. SJVUAPCD
case (i.e., SJVUAPCD Rule 9510), and preliminarily found that Rule 2305
is similar in relevant respects to the ISR program the Court determined
in NAHB was not preempted.
Most critically, we noted that Rule 2305 regulates at the level of
the indirect source, not at the level of mobile sources the indirect
source may attract. In Rule 2305, the annual compliance obligation for
any particular warehouse operator reflects the number and type of truck
trips visiting the warehouse. It is reasonable to assume that other
non-truck mobile sources attracted to or associated with the warehouse
would be proportional to the number of truck trips. Therefore, the use
of trucks trips in Rule 2305 as a proxy for all attracted mobile
sources means that, contrary to the A4A's contention otherwise, Rule
2305 is premised on a facility-by-facility review of all ``attracted''
sources. This site-based approach to regulating emissions is precisely
what allows Rule 2305 to avoid preemption under section 209(a) just as
SJVUAPCD Rule 9510 avoids preemption under CAA section 209(e)(2).
A4A claims that the annual compliance obligation under Rule 2305
(the WATT) represents a ``fleet'' standard under the CAA. However, the
WATT is a facility-based metric in that it reflects truck visits to or
from a warehouse and is a proxy for all mobile source emissions
associated with warehouse operations. The truck visits to or from a
warehouse do not represent the type of fleet that is implicated by CAA
section 209. Fleet-based standards that may be subject to CAA section
209 preemption relate to vehicle manufacturers, owners, or purchasers,
not to operators or owners of facilities to which vehicles are
attracted. The same was true for the SJVUAPCD rule at issue in NAHB v.
SJVUAPCD.\72\
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\72\ See NAHB v. SJVUAPCD, 627 F.3d 730 at 740 (9th Cir. 2010)
(``We agree that Rule 9510 escapes preemption not merely because
Rule 9510 affects groups of construction equipment rather than
individual engines or vehicles. An emissions limit calculated by
reference to a fleet of engines or vehicles is as much a
``standard'' as an emissions limit calculated by reference to an
individual engine or vehicle. Rather, Rule 9510 escapes preemption
because its regulation of construction equipment is indirect. Rule
9510 does not measure emissions by fleets or groups of vehicles; it
measures emissions on a ``facility-by-facility'' basis. 42 U.S.C.
7410(a)(5)(D). Its unit of measurement is the indirect source, not
the fleet. It regulates development sites directly, but as the term
``indirect source'' implies, it regulates mobile emissions only
indirectly. For that reason, the fleet-based regulations are not
analogous to Rule 9510.'')
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With respect to A4A's assertion that Rule 2305 is distinguishable
from Rule 9510 because it mandates ZEV equipment or imposes penalties
if ZEV equipment is not used, as further explained above, Rule 2305
does not mandate ZEV equipment or impose penalties if ZEV equipment is
not used. Rather, Rule 2305 provides warehouse operators (and owners
who opt in) various options (WAIRE Menu, Custom WAIRE Plan) for
compliance that do not involve acquisition of, or contracting for, ZE
or NZE trucks or paying the mitigation fee.
We also disagree with A4A's assertion that Rule 2305 does not allow
regulated entities to retrofit existing equipment or switch fuels to
achieve compliance. These specific types of actions could be used to
earn WAIRE points under a Custom WAIRE Plan under Rule 2305 if they
meet the requirements for such actions under SCAQMD Rule 2305(d)(4).
These compliance options, as well as others described herein, refute
A4A's contention that the only options for compliance are payment of
mitigation fees or purchase of ZEV/NZV vehicles.
Lastly, we note that the Court in CTA v. SCAQMD considered but
rejected arguments that Rule 2305 is preempted because it relates to
the control of emissions from vehicles and engines and is a
``standard'' because its purpose and effect is to mandate the purchase
of ZE and NZE trucks.\73\ The Court also determined that neither the
purpose nor the effect of Rule 2305 is to compel the purchase of ZE or
NZE.\74\ As such, we find the Court's decision as supportive of our
preliminary conclusion in the proposed rule that, in Rule 2305, the
SCAQMD has not adopted or attempted to enforce any standard relating to
the control of emissions from new motor vehicles or new motor vehicle
engines preempted by CAA section 209(a). We affirm that conclusion in
this final action.
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\73\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023, p. 24.
\74\ As to effects, the court notes that the District presented
evidence that warehouses would not have to shutter their operations
or relocate unless compliance costs exceeded approximately $1.50 per
square foot per year, leading the court to observe: ``That none of
the models predicted compliance costs exceeding that amount,
suggests that the effects of the Rule were not sufficient to compel
warehouse owners to purchase ZE or NZE trucks. Also, for a typical,
500,000 square foot warehouse, the compliance costs would be 0.5% on
the low end to 3.2% on the high end of the warehouse's existing
annual operating costs. Dkt. 107-3 ] 135. These amounts are quite
small, and do not show that the District has provided warehouse
operators with a demand to purchase ZE or NZE trucks that cannot
practically be refused.'' Id., p. 26.
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A4A Comment #7: The A4A asserts that the CAA only permits the EPA
to approve into SIPs ISR rules that apply to new or modified sources,
not existing sources. In support of this assertion, the A4A contends,
based on statements by the EPA published in 1973, that the EPA has
historically interpreted ISR rules to refer to new or modified sources,
rather than existing sources. The A4A also asserts that State law (i.e.
California Health & Safety Code section 40440) limits the SCAQMD's
authority with respect to ISR rules to new or modified sources, and
that State law preempts Rule 2305 because it constitutes a land use
restriction. Lastly, the A4A asserts that CAA section 110 limits the
EPA's authority to approve ISRs only to the extent they regulate new or
modified, and not existing, facilities.
EPA Response to A4A Comment #7: First, we disagree that ISR
programs as described in CAA section 110(a)(5) apply to new or modified
sources exclusively and not to existing sources. Please see EPA
Response to POLB Comment #3. Moreover, the statements made by the EPA
in 1973 to which the A4A refers, come from a proposed rule in which the
EPA proposes certain amendments to the EPA's regulations establishing
SIP content requirements that ``would require, with respect not only to
`stationary sources,' in the traditional sense, but also certain other
types of facilities, an assessment of both direct and indirect effects
on air quality prior to their construction and
[[Page 73580]]
modification and a determination as to whether there would be
interference with maintenance of any national standard.'' \75\ In other
words, the statements by the EPA in 1973 describe amendments that the
Agency was proposing to extend certain SIP requirements with respect to
new source review to certain indirect sources, but they do not speak to
the issue of State authority to regulate existing indirect sources nor
do they establish a long-standing interpretation by the EPA that ISR
programs refer exclusively to new or modified indirect sources.
Further, the 1973 statements preceded Congress's enactment of the
indirect source provisions in section 110(a)(5) in 1977. The commenter
fails to explain with specificity why a prior agency statement on a
different topic governs the interpretation of a subsequently enacted
statute.
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\75\ 38 FR 9599 (April 18, 1973).
---------------------------------------------------------------------------
Second, the EPA disagrees that SCAQMD Rule 2305 is unenforceable
under State law. In the EPA's proposed rule, we considered the question
of the SCAQMD's authority to adopt Rule 2305 and preliminarily
concluded that SCAQMD has the authority to adopt the rule under
California Health & Safety Code section 40440. This authorizes the
SCAQMD to provide for indirect source controls in those areas of the
District in which there are high-level, localized concentrations of
pollutants or with respect to any new source that will have a
significant effect on air quality in the South Coast Air Basin.
In its Final Staff Report, the SCAQMD presents information
concerning high-level, localized concentrations of air pollutants in
the vicinities of warehouses.\76\ Such information provides support for
the SCAQMD's authority to adopt Rule 2305 under California Health &
Safety Code section 40440. The A4A cites the same section of California
code as disallowing Rule 2305, but the A4A focuses solely on the second
part of the authority granted in section 40440, which refers to new
sources, whereas the statute provides two different bases for the
authority, either of which is sufficient, and the EPA has simply relied
on the first one, which does not distinguish between new or existing
sources.
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\76\ SCAQMD, Final Staff Report, pp. 16-17.
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Third, as to the A4A's claim that SCAQMD Rule 2305 constitutes an
unlawful land use restriction under State law, we note that the SCAQMD
responded to similar comments made during the District's rulemaking
process. In its response to comments, the SCAQMD explained that Rule
2305 ``does nothing to interfere with local governments' ability allow,
disallow, or control the use of land for warehouse purposes or dictate
where warehouses may be built. Like every other air district rule, it
merely limits emissions from particular sources--here, indirect
sources.'' \77\ The A4A points to the truck-trip-based compliance
obligation and the options set forth in Rule 2305 (e.g., installation
of changing equipment, solar panel systems, and use of such systems) to
meet the obligation as ostensible evidence of the land use regulation
character of Rule 2305. However, the A4A does not explain how the
compliance obligation or the options for compliance set forth in the
rule could interfere with local governments' ability to control land
use for warehouse purposes or dictate where warehouses may be built.
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\77\ SCAQMD, Final Staff Report, Supplement to Agenda Item #27,
Board Meeting of May 7, 2021, Supplement Number Two-Response to
Letter from Airlines for America, dated May 4, 2021 (Attachment A).
---------------------------------------------------------------------------
Fourth, in the proposed rule, the EPA preliminarily concluded that
the District's decision to regulate both existing and new warehouses in
Rule 2305 is consistent with CAA section 110(a)(5). As explained in the
proposal, we considered this question in light of the definitions of
the term ``indirect source review program'' in CAA section 110(a)(5)(D)
and ``indirect source'' in CAA section 110(a)(5)(C) and in light of CAA
section 116, which explicitly provides that States retain authority to
regulate more stringently in SIP provisions than otherwise required by
Federal law, except where preempted from doing so.\78\ The A4A
disagrees with EPA's interpretation but did not provide a persuasive
explanation based on the statutory language.
---------------------------------------------------------------------------
\78\ 88 FR 70616, 70622.
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Lastly, we note that the Court in CTA v. SCAQMD also considered
this issue and found that ``Nothing in the text, structure, or purpose
of the indirect-source-review provision suggests that this phrase
limits indirect source reviews to those based on new and modified
indirect sources.'' \79\ The EPA has reached this same conclusion based
on the text, structure, and purpose of CAA section 110(a)(5), and thus
the court decision confirms the agency's own view.
---------------------------------------------------------------------------
\79\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023, p. 28.
---------------------------------------------------------------------------
In this final rule, for the reasons given in our proposed rule and
in light of the Court's decision, the EPA affirms our conclusion that
the District's choice to regulate both existing and new warehouses in
Rule 2305 is consistent with CAA section 110(a)(5).
A4A Comment #8: Citing CAA sections 110(a)(5)(B) and 110(c), the
A4A asserts that the CAA authorizes only the EPA, and not the States,
to adopt airport-related ISRs. As such, the A4A contends that Rule 2305
cannot regulate airport-based warehouses. Further, because the
preemption principles of the ADA extend to an air carrier's trucking
operations, A4A contends that the prohibition on States' authority to
adopt airport-related ISRs extends to all airport-related warehouses.
EPA Response to A4A Comment #8: CAA section 110(a)(5)(B) narrows
the authority that the EPA would otherwise have to promulgate ISR
programs as part of a Federal Implementation Plan (FIP) under CAA
section 110(c) to a specific set of indirect sources, namely ``only to
federally assisted highways, airports, and other major federally
assisted indirect sources and federally owned or operated indirect
sources.'' The use of the word ``only'' in CAA section 110(a)(5)(B)
refers to the types of indirect sources over which the EPA retains
authority when promulgating a FIP and simply does not address what
sources States may elect to regulate in an ISR. CAA section
110(a)(5)(B) does not speak to any limits on States in developing ISRs
and thus it does not present an obstacle to the SCAQMD's legal
authority to carry out Rule 2305 throughout the District or to the
EPA's approval of the rule as consistent with the requirements of CAA
section 110(a)(2)(E). Lastly, because the commenter's premise is not
supported by the CAA, the commenter's extension of the premise to
airport-related warehouses (i.e., those physically located off-airport)
is also not supported.
D. BAR Logistics Comments and EPA Responses
BAR Logistics Comment #1: BAR Logistics contends that enforcement
of Rule 2305 is premature at this point in time because of the relative
unavailability of Class 8 electric trucks.
EPA Response to BAR Logistics Comment #1: In reviewing SIP
submissions, the EPA's role is to approve State choices, provided that
they meet the minimum criteria set in the CAA or any applicable EPA
regulations. Thus, considerations such as whether a District rule may
be economically or technologically challenging cannot form the basis
for
[[Page 73581]]
EPA disapproval of a rule submitted by a State as part of a SIP.\80\
---------------------------------------------------------------------------
\80\ Union Electric Company v. EPA; 427 U.S. 246, 265 (1976).
---------------------------------------------------------------------------
The EPA acknowledges the challenges for warehouse operators in
meeting the requirements of Rule 2305. The EPA notes that warehouse
operators have three basic options, or any combination of these
options, through which to earn or obtain points sufficient to meet
their WPCO and that all these options provide for points to be earned
toward the WPCO from actions that do not involve ZE/NZE trucks. With
respect to ZE/NZE trucks, in response to comments on proposed Rule
2305, the SCAQMD indicated that there are commercially available, or
expected to be available, options to acquire or use ZE/NZE trucks
within the first compliance year.\81\ At the time of adoption of Rule
2305, the SCAQMD had funded over 1,200 NZE trucks that are currently
operating in the commercial sector.\82\ The SCAQMD also noted that NZE
engines are available in two sizes, 8.9 and 11.9 liters, and are
offered by major truck manufactures in different truck classes
including Class 8 long haul and/or drayage trucks. The ZE truck market
is still growing with many major manufacturers announcing plans for
commercialization of battery-electric and hydrogen fuel cell electric
trucks.\83\ SCAQMD further noted that there are expected to be 62
models of medium duty (e.g., Class 4-7) ZE trucks commercially
available during 2021.\84\
---------------------------------------------------------------------------
\81\ SCAQMD, Final Staff Report, ``Proposed Rule 2305--Warehouse
Indirect Source Rule--Warehouse Actions and Investments to Reduce
Emissions (WAIRE) Program and Proposed Rule 316--Fees for Rule
2305'', May 2021, ``SCAQMD Final Staff Report'', Appendix F, Master
Response 2d.
\82\ Id.
\83\ Id.
\84\ Id.
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BAR Logistics Comment #2: As a third-party logistics (3PL)
warehouse operator, BAR Logistics asserts that the company owns no
trucks, and, thus, mitigation options under SCAQMD Rule 2305 are
extremely limited. BAR Logistics further contends that, as to 3PLs, the
mitigation fee functions as a tax and is unfairly imposed on 3PLs
because companies with much greater resources and with trucks that
transport goods to and from the warehouse are not subject to the
requirements of Rule 2305. BAR Logistics states that the tax 3PLs will
pay will go to larger companies from the WAIRE program, resulting in a
``regressive tax.''
EPA Response to BAR Logistics Comment #2: As noted in EPA Response
to BAR Logistics Comment #1, in reviewing SIP submissions, the EPA's
role is to approve State choices, provided that they meet the minimum
criteria set in the CAA or any applicable EPA regulations. Thus,
considerations such as whether a District rule may be economically or
technologically challenging cannot form the basis for EPA disapproval
of a rule submitted by a State as part of a SIP.\85\
---------------------------------------------------------------------------
\85\ Union Electric Company v. EPA; 427 U.S. 246, 265 (1976).
---------------------------------------------------------------------------
The EPA acknowledges the challenges for warehouse operators in
meeting the requirements of Rule 2305 but notes that warehouse
operators have options, as explained above, to earn or obtain WAIRE
points to meet their WPCO from actions that do not involve ZE/NZE
trucks.
In addition, the EPA notes that, based on the SCAQMD's first Annual
Report for the WAIRE Program, warehouse operators intend to meet their
obligations under Rule 2305 in various ways with only limited reliance
on the mitigation fee option. As described in the proposed rule, the
first Annual Report suggests that warehouse operators expect to meet
their WPCOs, at least in the early years of the program, primarily
through ZE hostler usage, (i.e., yard tractors that move trailers and
containers around warehouse facilities; approximately 40% of the
anticipated WAIRE points based on the Initial Site Information Report
(ISIRs) received), NZE Class 8 Truck Visits (approximately 27%), and ZE
hostler acquisition (approximately 8%).\86\ The submitted ISIRs also
suggest that, in addition to taking actions from the WAIRE Menu,
warehouse operators anticipate earning about 5,500 points through
mitigation fees, representing about 3% of total points earned, of about
$5.5 million.\87\ More recent data shows that, for Year 2023, warehouse
operators reported WAIRE Points primarily from hostler usage (53%),
solar panel installation and usage (15%), and NZE truck usage
(14%).\88\
---------------------------------------------------------------------------
\86\ 88 FR 70616, 70619, citing information from SCAQMD, Annual
Report for the Warehouse Actions and Investments to Reduce Emissions
(WAIRE) Program, January 2023, p. 15.
\87\ Id.
\88\ SCAQMD, Hybrid Mobile Source Committee Meeting, Agenda,
March 15, 2024, p. 18.
---------------------------------------------------------------------------
E. CTA Comments and EPA Responses
CTA Comment #1: The CTA asserts that the EPA should defer action on
Rule 2305 until Federal court examinations of SCAQMD legal authority
are complete and resolved.
EPA Response to CTA Comment #1: Please see EPA Response to POLB
Comment #1.
CTA Comment #2: The CTA contends that Rule 2305 is preempted by CAA
section 209 because it establishes de facto emission standards for
trucks because it is structured so as to make the acquisition of trucks
that meet only certain emissions standards, and their associated
infrastructure that is necessitated by truck acquisition, the only
economically reasonable and the principal method of compliance.
EPA Response to CTA Comment #2: The EPA disagrees that Rule 2305
establishes de facto emissions standards for trucks. Please see EPA
Response to POLB Comment #2 and EPA Response to A4A Comment #6.
CTA Comment #3: The CTA contends that Rule 2305 is preempted by the
ADA and the FAAAA because it will mandate changes to prices, routes,
and services. The CTA states that the EPA has no basis or expertise
upon which to rely with regard to either the interpretation or
application of the ADA or the FAAAA and that the best source of
definitive interpretation of the application of these Federal statutes
is a Federal court. The CTA also contends that the EPA should have
published a specific supplemental notice seeking additional public
input on these specific questions for which it has no legal expertise.
EPA Response to CTA Comment #3: The EPA disagrees that Rule 2305 is
preempted by the ADA or the FAAAA. Please see the EPA Responses to POLB
Comment #4 and A4A Comment #3. We also note that we consulted with the
U.S. Department of Transportation on our responses to comments related
to ADA and FAAAA preemption in this final rule.
In our proposed rule, the EPA noted that we did not consider the
requirements under Rule 2305 as relating directly to the price, route,
or service of any air carrier or common carrier but recognized that an
indirect effect on price is a foreseeable consequence of the additional
costs borne by warehouse owners or operators to comply with the annual
WPCO.\89\ Since publication of the proposed rule, the Court in the CTA
v. SCAQMD case has concluded that Rule 2305 is not preempted under the
ADA or the FAAAA, in part, based on the Court's finding that the
challengers to Rule 2305 had failed to show that the effect of the Rule
2305 on price, route or service of any air carrier ``is more than
tenuous, remote and peripheral.'' \90\ In light of the
[[Page 73582]]
Court's decision, the EPA affirms our preliminary conclusion that
SCAQMD Rule 2305 is not preempted by the ADA or the FAAAA. Therefore,
the SCAQMD is not prohibited under those statutes from carrying out
Rule 2305, consistent with the SIP requirements under CAA section
110(a)(2)(E). Also, in light of the Court's decision, the EPA considers
to be moot the CTA's suggestion to publish a supplemental notice to
seek additional public input on whether Rule 2305 is preempted by the
ADA or FAAAA.
---------------------------------------------------------------------------
\89\ 88 FR 70616, 70623.
\90\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023, p. 33.
---------------------------------------------------------------------------
CTA Comment #4: The CTA asserts that Rule 2305 is unenforceable
under State law, rendering SIP inclusion fatal. The CTA claims that
Rule 2305 imposes an unlawful tax under State law. The CTA objects to
the EPA's reliance on legal analysis provided by the State Attorney
General's office and asserts that such reliance is not a sufficient
basis for SIP approval. The CTA also contends that SCAQMD has adopted a
rule for which it does not have authority under State law \91\ because
the rule applies to new and existing sources whereas the authority of
SCAQMD to adopt ISR rules is limited to areas that have high-level,
localized concentrations of pollutants or with respect to any new
source that will have a significant effect on air quality in the South
Coast Air Basin.
---------------------------------------------------------------------------
\91\ The CTA cites California Health & Safety Code section
40440.
---------------------------------------------------------------------------
EPA Response to CTA Comment #4: The EPA disagrees that SCAQMD Rule
2305 is unenforceable under State law. In the EPA's proposed rule, we
considered the question of the SCAQMD's authority to adopt Rule 2305
and preliminarily concluded that SCAQMD has the authority to adopt the
rule under California Health & Safety Code section 40440.\92\ This
section authorizes the SCAQMD to provide for indirect source controls
in those areas of the South Coast District that have high-level,
localized concentrations of pollutants or with respect to any new
source that will have a significant effect on air quality in the South
Coast Air Basin.
---------------------------------------------------------------------------
\92\ In relevant part, California Health & Safety Code section
40440 provides: ``(a) The south coast district board shall adopt
rules and regulations that carry out the plan and are not in
conflict with State law and Federal laws and rules and regulations.
Upon adoption and approval of subsequent revisions of the plan,
these rules and regulations shall be amended, if necessary, to
conform to the plan. (b) The rules and regulations adopted pursuant
to subdivision (a) shall do all of the following: . . . (3)
Consistent with Section 40414, provide for indirect source controls
in those areas of the south coast district in which there are high-
level, localized concentrations of pollutants or with respect to any
new source that will have a significant effect on air quality in the
South Coast Air Basin.''
---------------------------------------------------------------------------
In its Final Staff Report, the SCAQMD presents information
concerning high-level, localized concentrations of air pollutants in
the vicinities of warehouses.\93\ Such information provides support for
the SCAQMD's authority to adopt Rule 2305 under California Health &
Safety Code section 40440. The CTA cites the same section of California
code as disallowing Rule 2305. The CTA focuses solely on the second
part of the authority granted in section 40440, which refers to new
sources, whereas the statute provides two different bases for the
authority, either of which is sufficient, and the EPA has simply relied
on the first one, which does not distinguish between new or existing
sources.
---------------------------------------------------------------------------
\93\ SCAQMD, Final Staff Report, pp. 16-17.
---------------------------------------------------------------------------
In the EPA's proposed rule, with respect to the issue of whether
the mitigation fee in Rule 2305 constitutes an unlawful tax under State
law, we acknowledged comments to that effect that were submitted in the
District's rulemaking process but preliminarily found the mitigation
fee under Rule 2305 to be lawful under State law on the basis of legal
analysis provided by the State Attorney General's Office.\94\ In the
context of the EPA's actions on SIPs and SIP revisions, the EPA's
reliance on interpretations of State law from a State's attorney
general is generally appropriate given the role of a State Attorney
General as the chief legal officer of the State. The EPA generally
defers to interpretations of State law from State attorney generals in
the absence of clear error where questions of State law arise in the
context of SIP actions. We find no such error in the legal analysis
provided by the State Attorney General's Office in this instance.
---------------------------------------------------------------------------
\94\ Letter dated May 6, 2021 from Robert Swanson, Deputy
Attorney General, California Department of Justice, to Ellen Peter,
Chief Counsel, CARB, included as an enclosure to a letter dated May
6, 2021 from Ellen M. Peter, to Wayne Nastri, Executive Officer,
SCAQMD.
---------------------------------------------------------------------------
The CTA has pointed out no clear error in the legal analysis
provided by the State Attorney General's Office but suggests that the
EPA should view the analysis differently because the analysis was
provided as advocacy and justification for the adoption of Rule 2305
and because CARB and the State of California have joined the CTA v.
SCAQMD case as intervenors for the SCAQMD. However, the Attorney
General's Office prepared the legal analysis at the request of CARB on
behalf of the SCAQMD, which had received a variety of questions
concerning the legal authority of the SCAQMD to promulgate Rule
2305.\95\ Given these circumstances, the legal analysis appears to us
to be nothing more than a routine and appropriate response by the State
Attorney General's Office to questions from State agencies concerning
their authority under State law. The EPA also does not find CARB's and
the State of California's subsequent participation in the CTA v. SCAQMD
case as intervenors to defend the constitutionality of Rule 2305 to be
relevant to our evaluation of Rule 2305 as a revision to the California
SIP. As such, the EPA finds no basis to question the legal analysis
prepared by the State Attorney General's Office. The EPA reaffirms our
reliance on the State's analysis as the basis for our conclusion that
the mitigation fee in Rule 2305 does not constitute an unlawful tax
under State law. In addition, the SCAQMD is not prohibited under State
law from carrying out Rule 2305, including its mitigation fee option,
consistent with the SIP requirements under CAA section
110(a)(2)(E).\96\
---------------------------------------------------------------------------
\95\ Id.
\96\ Also, as noted previously in this document, in the CTA v.
SCAQMD case, the Court dismissed with prejudice CTA's and A4A's
remaining State law claims that had been included in the complaints.
The State law claims that were dismissed include claims that Rule
2305 mitigation fees constituted an unlawful tax under State law.
---------------------------------------------------------------------------
CTA Comment #5: The CTA contends that the EPA does not consistently
and clearly define ``Indirect Source Rule'' applications. To support
this contention, the CTA notes SCAQMD Rule 2305 is not a legitimate ISR
rule if one relies on the ISR rule at issue in National Association of
Home Builders v. San Joaquin Valley Unified Air Pollution Control
District (NAHB v. SJVUAPCD).\97\ Among the differences between the two
rules, the CTA asserts that the ISR rule at issue in NAHB v. SJVUAPCD
applies only to new sources of emissions, rather than new and existing
sources of emissions, and is concerned with the development site as a
whole, rather than being engine- or vehicle-based. Also, the CTA finds
inconsistencies between the approach to reducing emissions under SCAQMD
Rule 2305 and the description of ISR rules by CARB (that is cited by
the EPA in a separate rulemaking) as rules that ``cap'' emissions at an
entire facility or otherwise seek to reduce emissions below a certain
facility-wide level.
---------------------------------------------------------------------------
\97\ National Association of Home Builders v. San Joaquin Valley
Unified Air Pollution Control District, 627 F.3d 730 (9th Cir. 2010)
(``NAHB v. SJVUAPCD'').
---------------------------------------------------------------------------
EPA Response to CTA Comment #5: The EPA approved SJVUAPCD Rule
[[Page 73583]]
9510 (``Indirect Source Review (ISR)''), i.e., the ISR rule at issue in
NAHB v. SJVUAPCD, in part, by recognizing the rule as a type of rule
that any State may include in its SIP but that the EPA may not require
as a condition of approval of a SIP, under CAA section 110(a)(5).\98\
In so doing, however, we did not intend thereby to define the scope of
ISR rules in general but rather to take action on the specific rule
that was submitted to the Agency. Likewise, in our action on SCAQMD
Rule 2305, the EPA finds that the rule is the type of rule that a State
may include in its SIP under CAA section 110(a)(5), but, in doing so,
we do not intend to define the scope of ISR rules in general but only
to take action on the specific rule submitted to us.
---------------------------------------------------------------------------
\98\ The EPA approved SJVUAPCD Rule 9510 at 76 FR 26609 (May 9,
2011), and again as amended at 86 FR 33542 (June 25, 2021).
---------------------------------------------------------------------------
The EPA acknowledges differences between SJVUAPCD Rule 9510 and
SCAQMD Rule 2305, but, contrary to the CTA's assertion, both apply to
sites or facilities, rather than to vehicles or engines. In the case of
SJVUAPCD Rule 9510, the rule applies to larger development projects
(e.g., 50 residential units or 2,000 square feet of commercial space at
full buildout), and in the case of SCAQMD Rule 2305, the rule applies
to larger warehouses (i.e., greater than 100,000 square feet of indoor
floor space in a single building). Also, the issue of whether ISR rules
can apply to existing as well as new or modified facilities was not
raised in our action on SJVUAPCD Rule 9510. The EPA has explained, in
our proposed rule, why we conclude that the District is not precluded,
consistent with CAA section 110(a)(5), from regulating both existing
and new warehouses in Rule 2305.\99\ As such, our actions approving
SJVUAPCD Rule 9510 and, in this document, approving SCAQMD Rule 2305
are not inconsistent but simply reflect two different approaches to ISR
programs that States may adopt, but are not required to adopt, as part
of their SIPs under CAA section 110(a)(5).
---------------------------------------------------------------------------
\99\ 88 FR 70616, 70622.
---------------------------------------------------------------------------
With respect to the purported inconsistency between SCAQMD Rule
2305 and CARB's description of ISR rules that is cited by the EPA in
the Agency's authorization of CARB's amended Ocean-Going Vessels At-
Berth Regulation,\100\ we note first that establishing an emissions cap
may be a feature of an ISR rule, but it is not a required feature.
Other than by defining the terms ``indirect source'' and ``indirect
source review program'' and by distinguishing an ISR program from a
``transportation control measure,'' CAA section 110(a)(5) does not
prescribe any particular approach to ISR programs. Establishing a cap
for emissions at an entire facility or reducing emissions below a
certain facility-wide level are only two possible approaches in an ISR
rule, but other approaches are possible as well. In the case of SCAQMD
Rule 2305, the rule does not establish an emissions cap for warehouses
and does not require emissions reductions below a certain level.
Rather, Rule 2305 requires warehouse operators to earn points to meet
an annual obligation based on a proxy for all mobile source emissions
associated with warehouse operations, through completion of emissions-
reducing actions or investments listed in Rule 2305, through such
actions approved as part of a Custom WAIRE plan, or through paying the
mitigation fee, approaches which are also consistent with CAA section
110(a)(5).\101\ What these approaches have in common is that they are
examples of the types of facility-by-facility reviews of indirect
sources to which CAA section 110(a)(5) refers.
---------------------------------------------------------------------------
\100\ 88 FR 72461 (October 20, 2023).
\101\ Also, see the EPA's response to comments on CARB's request
for authorization for CARB's Ocean-Going Vessels At-Berth Regulation
at 88 FR 72461, at 72474-72475 (October 20, 2023) (Quoting CARB:
``Purpose of the Regulation is to achieve emissions reductions from
each vessel visit. . . . While the Regulation does regulate ports
and terminals, it does so only because regulating those entities has
proven essential to ensuring each vessel visit is able to use an
approved emission-reducing control technology.'')
---------------------------------------------------------------------------
F. Center for Community Action and Environmental Justice (CCAEJ)
Comments and EPA Responses
CCAEJ Comment #1: The CCAEJ expresses concerns that the SCAQMD will
not disclose information necessary for the public to enforce SCAQMD
Rule 2305. The CCAEJ also expresses concerns that the SCAQMD has not
developed a web portal for public access to that information, may
withhold important compliance information as business confidential
information, and may aggregate important compliance data. The CCAEJ
notes SCAQMD's disclosure of a high (55 percent) noncompliance rate
with Rule 2305, which, in CCAEJ's view, demonstrates the urgency of the
EPA ensuring that the public can enforce Rule 2305. The CCAEJ requests
that the EPA conditionally approve, or partially approve and partially
disapprove (or take other appropriate action under CAA section 110(k)),
SCAQMD Rule 2305 to ensure that the SCAQMD amends Rule 2305 to address
public disclosure of information to ensure that the public can enforce
the rule. The CCAEJ also states that the EPA should require the SCAQMD
to submit the program and parameters of the public's access to WAIRE
program compliance data for inclusion as part of the SIP.
EPA Response to CCAEJ Comment #1: In EPA's proposed rule, the EPA
preliminarily concluded that Rule 2305 includes recordkeeping and
reporting requirements that are sufficient to ensure compliance with
the applicable requirements. In support of this preliminary conclusion,
the EPA incorrectly referred to two sections of the California Code of
Regulations (13 CCR 2023.8 and 13 CCR 2023.9). The correct references
are to SCAQMD Rule 2305(d)(7)(A) (Warehouse Operations Notification or
WON), 2305(d)(7)(B) (Initial Site Information Report), and
2305(d)(7)(C) (Annual WAIRE Report). Warehouse facility owners must
submit WONs to the SCAQMD within certain time periods prescribed in
Rule 2305. The obligation to submit Initial Site Information Reports to
the SCAQMD falls on warehouse operators and the obligation to submit
Annual WAIRE Reports falls on warehouse operators who are required to
earn WAIRE Points, or warehouse facility, or landowners who earn WAIRE
Points as applicable. Submission of these records, as stated by the
SCAQMD, is through the WAIRE POP Portal.
In comments submitted in response to EPA's proposed rule, the
SCAQMD indicates that it has created a separate web page to provide
information on the WAIRE Program to the public. The SCAQMD also
indicates that it is evaluating a proposal to include additional WAIRE
Program data, including aggregated information about compliance
obligations and completed compliance actions, in its Facility
Information Detail (``FIND'') tool. The EPA supports the SCAQMD's
efforts to provide online access to the public of rule compliance
information, but providing such access is not a CAA requirement. The
rule compliance information that SCAQMD provides online to the public
will serve to supplement and enhance the information available to the
public through more traditional means such as requests made to the
SCAQMD under the California Public Records Act.\102\
---------------------------------------------------------------------------
\102\ See Ca. Gov't Code sections 7920.000-7931.000.
---------------------------------------------------------------------------
The EPA has no information at the present time that the SCAQMD's
review of public information requests under the California Public
Records Act will substantially impair enforceability of the rule by the
public, and the EPA
[[Page 73584]]
declines to speculate as to the outcome of future responses by SCAQMD
to public information requests related to Rule 2305. Accordingly, the
EPA believes that citizens can obtain the information necessary to
determine compliance by individual facilities with SCAQMD Rule 2305
with or without online access to rule compliance information.
As to the high noncompliance rate reported last year by the SCAQMD,
the EPA is aware of this circumstance and agree with the CCAEJ on the
importance of enforceability of Rule 2305 by the public, but the EPA
also notes the specific actions SCAQMD has taken to improve compliance
and to enforce the rule.\103\
---------------------------------------------------------------------------
\103\ See SCAQMD, Compliance Advisory, ``Notice to All Warehouse
Owners and Operators regarding Upcoming Enforcement Action and
Potential Daily Penalties,'' September 12, 2023; and SCAQMD's list
titled ``Rule 2305 violations issued on 12/14/2023.''
---------------------------------------------------------------------------
Lastly, because the EPA concludes that Rule 2305 includes
recordkeeping and reporting requirements that are sufficient to ensure
compliance with the applicable requirements, we have no occasion to
explore alternatives to full approval under CAA section 110(k), such as
a partial approval/partial disapproval or a conditional approval, with
respect to this issue, nor does the EPA believe that it will be
necessary to require the SCAQMD to submit the program and parameters of
the public's access to WAIRE program compliance data for inclusion as
part of the SIP.
CCAEJ Comment #2: Citing the EPA's proposed approval that states
that the online portal (WAIRE POP) will provide the public information
about how warehouse operators and owners are complying with Rule 2305
and how WAIRE Mitigation Program funds are spent, the CCAEJ notes that
no such portal exists and that the District has not yet finalized what
data would be made available on that portal.
EPA Response to CCAEJ Comment #2: In comments submitted in response
to the EPA's proposed rule, the SCAQMD indicates that the EPA's
description of the WAIRE POP Portal in the proposed rule was not
correct. The SCAQMD clarifies that the WAIRE POP Portal's purpose is to
only electronically collect information, reports, and fees from
warehouse owners and operators annually. The WAIRE POP Portal does not
distribute information about the WAIRE Program to the public. If the
public would like to enforce Rule 2305, they can request the data from
the SCAQMD. This is in compliance with 40 CFR 51.211 which requires
owners or operators of stationary sources to maintain records and
periodically report these records to the State or District. The SCAQMD
also indicates that it has created a separate web page to provide
information on the WAIRE Program to the public. That page hosts links
to various resources related to the WAIRE Program, including the WAIRE
Program's annual report as stated in EPA Response to CCAEJ Comment #1.
G. International Warehouse Logistics Association (IWLA) Comments and
EPA Responses
IWLA Comment #1: The IWLA believes that Rule 2305 will have
unintended consequences and an overall negative effect on California's
economy. The IWLA states that the mitigation fees accrued from the rule
will raise the costs for California warehouse operators and increase
the cost of living for Californians. The IWLA asserts that these
increased costs will be regressive in nature and negatively impact
lower-income communities.
EPA Response to IWLA Comment #1: The EPA notes that the commenter
does not challenge EPA's conclusion that SCAQMD Rule 2305 generally
meets all applicable CAA requirements but rather contends that rule
will have unintended adverse economic and socioeconomic effects.
However, in reviewing SIP submissions, the EPA's role is to approve
State choices, provided that they meet the minimum criteria set in the
CAA or any applicable EPA regulations. Thus, considerations such as
whether a District rule may be economically or technologically
challenging cannot form the basis for EPA disapproval of a rule
submitted by a State as part of a SIP.\104\
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\104\ Union Electric Company v. EPA; 427 U.S. 246, 265 (1976).
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IWLA Comment #2: The IWLA asserts that the increased costs
associated with Rule 2305 may cause some warehouse operators to
relocate out of state and thereby increasing mobile source emissions as
trucks travel from Southern California to new locations and decreasing
employment opportunities.
EPA Response to IWLA Comment #2: With respect to economic
challenges arising from Rule 2305, please see EPA Response to IWLA
Comment #1. Also, we note that the SCAQMD considered the potential for
warehouse relocation effects due to Rule 2305 based on two economic
studies and peer reviews of those studies.\105\ In response to comments
on proposed Rule 2305, the SCAQMD stated that these studies fully
analyze the range of potential economic impacts and conversely the
monetized public health benefits of Rule 2305 (and its associated fee
rule, Rule 316).\106\ The SCAQMD indicates that the studies conclude
that the costs potentially imposed by Rule 2305 (and Rule 316) are not
anticipated to cause warehouses to relocate outside of the region.\107\
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\105\ SCAQMD, Final Staff Report, Appendix F, Master Response 5.
The two economic studies are Industrial Economics, Inc. (IEc),
``Assessment of Warehouse Relocations Associated with the South
Coast Air Quality Management District Warehouse Indirect Source
Rule,'' December 23, 2020, and SCAQMD, ``Final Socioeconomic Impact
Assessment for Proposed Rule 2305--Warehouse Indirect Source Rule--
Warehouse Actions and Investments to Reduce Emissions (WAIRE)
Program and Proposed Rule 316--Fees for Rule 2305,'' May 2021.
\106\ SCAQMD, Final Staff Report, Appendix F, Master Response 5.
\107\ Id.
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IWLA Comment #3: The IWLA states that Rule 2305's goal of reducing
truck pollution is at the expense of the warehouse operator, not the
truck operator. Moreover, the IWLA asserts that warehouse operators
have no control over what types of trucks arrive at their facilities
and that Rule 2305 does not incentivize trucking companies to upgrade
their fleets to ZE/NZE trucks and is, in the end, simply a tax on
warehouse operators.
EPA Response to IWLA Comment #3: With respect to economic or
technological challenges arising from Rule 2305, please see EPA
Response to IWLA Comment #1.
Nonetheless, the EPA acknowledges the challenges for warehouse
operators in meeting the requirements of Rule 2305, but we note that
warehouse operators have three basic options, or any combination of
these options, through which to earn or obtain points sufficient to
meet their WPCO and that all these options provide for points to be
earned toward the WPCO from actions that do not involve ZE/NZE trucks
or a combination of these options.
In addition, the EPA notes that, based on the SCAQMD's first Annual
Report for the WAIRE Program, warehouse operators intend to meet their
obligations under Rule 2305 in various ways with only limited reliance
on the mitigation fee option as described in EPA's Response to BAR
Logistics Comment #2.
IWLA Comment #4: The IWLA asserts that the SCAQMD has overreached
its authority with Rule 2305 because, by statute, SCAQMD has
jurisdiction over air pollutant emissions from stationary sources
(i.e., warehouses) in the region, but through Rule 2305, the SCAQMD is
attempting to regulate mobile sources (trucks) even though the
California Air Resources Board has jurisdiction over mobile sources.
[[Page 73585]]
EPA Response to IWLA Comment #4: Rule 2305 does not directly
regulate mobile sources but is instead directed towards warehouses,
which are facilities that attract mobile source emissions. As such, the
EPA finds Rule 2305 to be an ISR regulation, and, in the proposed rule,
the EPA addressed the issue of SCAQMD's authority under State law to
adopt Rule 2305 by reference to California Health & Safety Code section
40440 (``Rules and regulations''), which authorizes the SCAQMD to
provide for indirect source controls in those areas of the South Coast
District that have high-level, localized concentrations of
pollutants.\108\
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\108\ 88 FR 70616, 70620-70621.
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IWLA Comment #5: The IWLA asserts that the SCAQMD has presented no
plan on how the new revenues generated from Rule 2305 will be spent,
and on this basis, the IWLA believes Rule 2305 to be ``arbitrary and
capricious'' under State law.
EPA Response to IWLA Comment #5: The commenter has not identified
the specific State law provision that would present an obstacle to the
SCAQMD's implementation of Rule 2305 due to the purported absence of a
plan for spending mitigation fees collected by the Agency. The EPA
notes that, in adopting Rule 2305, the SCAQMD Board directed the SCAQMD
Executive Officer to develop the WAIRE Mitigation Program with funds
generated from mitigation fee payments from Rule 2305.\109\ The SCAQMD
Board has established certain parameters that will govern how funds
generated from mitigation fee payments are to be spent, how funds are
to be awarded, and where funds are to be spent.
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\109\ SCAQMD Resolution 21-9, adopted May 7, 2021, pp. 6-7.
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IWLA Comment #6: In addition to the hefty fees associated with Rule
2305, the IWLA asserts that there are many additional burdensome
reporting requirements that will add substantial administrative fees to
warehouse operations.
EPA Response to IWLA Comment #6: The reporting requirements in
SCAQMD Rule 2305 are important elements of the rule to document
compliance with the requirements of the rule and to provide for
enforceability of the rule by the District, the EPA, and citizens. The
EPA notes that the SCAQMD expects the administrative costs associated
with recordkeeping and reporting for Rule 2305 to be similar to the
administrative costs associated with CARB's Advanced Clean Trucks
Regulation, specifically for large entity reporting, which is estimated
to be no more than 25 hours of work totaling $1,250 per year.\110\
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\110\ SCAQMD Final Staff Report, p. 74.
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IWLA Comment #7: The IWLA states that the WAIRE mitigation points
system requires warehouses to mitigate external truck emissions through
the use of more sustainable technology within their warehouse operation
and infrastructure, but much of the technology is still in its nascent
phase and is presently cost-prohibitive and unproven in the field,
especially as it pertains to hydrogen technology and heavy-duty ZE/NZE
trucks.
EPA Response to IWLA Comment #7: In reviewing SIP submissions, the
EPA's role is to approve State choices, provided that they meet the
minimum criteria set in the CAA or any applicable EPA regulations.
Thus, considerations such as whether a District rule may be
economically or technologically challenging cannot form the basis for
EPA disapproval of a rule submitted by a State as part of a SIP.\111\
---------------------------------------------------------------------------
\111\ Union Electric Company v. EPA; 427 U.S. 246, 265 (1976).
---------------------------------------------------------------------------
However, as noted in the EPA Response to BAR Logistics Comment #2,
based on the SCAQMD's first Annual Report for the WAIRE Program,
warehouse operators intend to meet their obligations under Rule 2305 in
various ways with only limited reliance on the mitigation fee option.
The first Annual Report suggests that warehouse operators expect to
meet their WPCOs, at least in the early years of the program, primarily
through ZE hostler usage, (i.e., yard tractors that move trailers and
containers around warehouse facilities; approximately 40% of the
anticipated WAIRE points based on the Initial Site Information Report
(ISIRs) received), NZE Class 8 Truck Visits (approximately 27%), and ZE
hostler acquisition (approximately 8%).\112\ More recent data shows
that, for Year 2023, warehouse operators reported WAIRE Points
primarily from hostler usage (53%), solar panel installation and usage
(15%) and NZE truck usage (14%).\113\
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\112\ 88 FR 70616, 70619, citing information from SCAQMD, Annual
Report for the Warehouse Actions and Investments to Reduce Emissions
(WAIRE) Program, January 2023, p. 15.
\113\ SCAQMD, Hybrid Mobile Source Committee Meeting, Agenda,
March 15, 2024, p. 18.
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IWLA Comment #8: The IWLA asserts that the stringency factor of
0.0025 seems to be arbitrary, there does not seem to be any modeling or
science behind how the number was derived, and the hypothetical
emission reductions do not appear to be practical. Furthermore, the
stringency factor in Rule 2305 can be increased at any time by the
SCAQMD Board, at its sole discretion.
EPA Response to IWLA Comment #8: Under SCAQMD Rule 2305, the
stringency factor is used along with WATT and an annual variable to
determine the annual WPCO for a warehouse operator.\114\ The stringency
factor in Rule 2305 is 0.0025 WAIRE Points per WATT.
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\114\ SCAQMD Rule 2305(d)(1)(A).
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During the District's rulemaking process, the SCAQMD explained that
the stringency factor was developed on the basis of an analysis of 18
WAIRE Menu compliance scenarios and additional supporting analysis in
the Socioeconomic Impact Assessment, including a warehouse relocation
study.\115\ The SCAQMD noted that there is no mathematical equation
governing the entire process, nor is there an overarching governing
equation required, and that the totality of the impact of Rule 2305 was
considered for the stringency of 0.0025 WAIRE Points per WATT.\116\
According to the SCAQMD, the benefits of Rule 2305 at the recommended
stringency include, but are not limited to: significant emission
reductions of about 1.5 to 3 tons per day of NOX, the
encouragement of many facilitating measures to enhance emission
reductions from other programs, public health benefits for most
compliance scenarios that are about three times higher than the costs,
costs on industry that are not out of line with normal cost increases
that the industry experiences routinely in rent hikes, a market signal
for the goods movement industry to encourage adoption NZE and ZE
technologies on a more widespread basis than the unregulated market
would provide--and much faster than CARB would require with its
regulations, satisfying the requirements of control measure MOB-03 in
the 2016 AQMP, satisfying the commitment in AB 617 Community Emission
Reduction Plans, and reducing emissions for local communities located
closest to warehouses who have experienced disproportionate
environmental burdens just by living where they do.\117\
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\115\ SCAQMD, Final Staff Report, Appendix F, Response to
Comment 45-6.
\116\ Id.
\117\ Id.
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The SCAQMD Board could, in the future, consider increasing the
stringency factor, but prior to adoption, the SCAQMD would be required
to meet State procedural requirements for rule amendments that
including providing notice to the public of the proposed amendments and
the opportunity for
[[Page 73586]]
public comment. No such amendment would be federally enforceable unless
and until the State submits, and the EPA approves, amended Rule 2305 as
a revision to the SIP under CAA section 110(k).
IWLA Comment #9: The IWLA asserts that warehouses in SCAQMD
coverage areas will be placed at a competitive disadvantage and
beneficial cargo owners will look to divert their cargo to alternative
areas in surrounding States or to alternative ports of entry to
warehouse and distribute their goods.
EPA Response to IWLA Comment #9: Please see EPA Response to IWLA
Comment #2.
IWLA Comment #10: The IWLA states that Rule 2305 does not
adequately address why the SCAQMD or another air district cannot adopt
even more expansive ISRs (e.g., what would stop SCAQMD from imposing an
ISR on retailers based on vehicle traffic to their locations).
EPA Response to IWLA Comment #10: This comment is beyond the scope
of this rulemaking. The EPA will consider future ISRs for compliance
with CAA requirements if and when such ISRs are submitted as revisions
to the SIP.
IWLA Comment #11: The IWLA asks that the EPA not approve SCAQMD
Rule 2305 into the California SIP.
EPA Response to IWLA Comment #11: Under CAA section 110(k), the EPA
is obligated to approve, disapprove, or conditionally approve, in whole
or in part, SIP revisions submitted to the Agency within a prescribed
period. Thus, the EPA is obligated to take a final action on Rule 2305.
In addition, the EPA notes that an EPA disapproval of Rule 2305 would
not prevent the implementation of Rule 2305 within the SCAQMD because
the rule would still be enforceable, under State law, regardless of the
EPA's action to approve or disapprove SCAQMD Rule 2305 as a revision to
the California SIP. The consequence of the EPA's approval of Rule 2305
as a revision to the SIP is that the rule becomes federally
enforceable.
H. Private Citizen Comments and EPA Responses
Private Citizen Comment #1: The private citizen states that the EPA
is calling for SCAQMD Rule 2305 to go into effect and for the affected
parties to conform to SCAQMD Rule 2305 by the 2024 calendar year. This
compliance deadline, contends the private citizen, will have a negative
impact on warehouses, specifically the truck drivers that Rule 2305
will impact. The private citizen contends that it is unreasonable to
require a warehouse to comply by the beginning of 2024 or pay a
mitigation fee.
EPA Response to Private Citizen Comment #1: The EPA notes that the
commenter does not challenge EPA's conclusion that SCAQMD Rule 2305
generally meets all applicable CAA requirements but rather contends
that rule will go into effect with insufficient time for warehouse
operators to meet the requirements and will thereby result in negative
economic effects. However, in reviewing SIP submissions, the EPA's role
is to approve State choices, provided that they meet the minimum
criteria set in the Clean Air Act or any applicable EPA regulations.
Thus, considerations such as whether a District rule may be
economically or technologically challenging cannot form the basis for
EPA disapproval of a rule submitted by a State as part of a SIP.\118\
---------------------------------------------------------------------------
\118\ Union Electric Company v. EPA; 427 U.S. 246, 265 (1976).
---------------------------------------------------------------------------
Also, an EPA disapproval of Rule 2305 would not prevent the
implementation of Rule 2305 within the SCAQMD because the rule would
still be enforceable, under State law, regardless of the EPA's action
to approve or disapprove SCAQMD Rule 2305 as a revision to the
California SIP. The timing of the EPA's approval of Rule 2305 as a
revision to the SIP does not affect the compliance deadlines set forth
in the rule (and that already are in effect under State law) but,
rather, affects when the rule becomes federally enforceable.
Lastly, we note that Rule 2305 has been in effect since May 2021
and that the rule was designed to apply the requirements in three
phases beginning with year 2022 with the largest warehouses (greater
than or equal to 250,000 square feet), then to year 2023 for medium-
sized warehouses (between 150,000 and 250,000 square feet), and then to
year 2024 for smaller warehouses (100,000 to 150,000 square feet).\119\
Within each phase, the requirements themselves are phased in through
the use of an annual variable that begins with a 0.33 value in the
first year, a 0.67 value in the second year, and a 1.0 value in the
third and subsequent years.\120\ Again, the timing of the EPA's action
on SCAQMD Rule 2305 under CAA section 110(k) has no effect on the
compliance deadlines set forth in Rule 2305.
---------------------------------------------------------------------------
\119\ SCAQMD Rule 2305, Table 1.
\120\ SCAQMD Rule 2305, Table 2.
---------------------------------------------------------------------------
Private Citizen Comment #2: The private citizen asserts that the
proposed rule fails to adequately address the ambiguity in CAA section
110(a)(5) as to whether the term ``indirect source review program''
encompasses existing, as well as new or modified, facilities. The
private citizen states that the ambiguity poses a problem for
compliance with the new rule. Also, the private citizen states that the
EPA's proposed rule fails to address the ambiguity in a meaningful way,
which, in turn, may lead to litigation and potential delay in achieving
the emissions reductions that the rule is intended to achieve.
EPA Response to Private Citizen Comment #2: With respect to the
comment regarding the applicability of ISR programs to existing, and
not just new or modified, indirect sources under CAA section 110(a)(5),
please see EPA Response to POLB Comment #3.
As to the issue of the purported ambiguity in CAA section 110(a)(5)
affecting compliance with Rule 2305, we note that Rule 2305
unambiguously applies to both existing and new warehouses of a certain
size, and thus, the purported ambiguity in CAA section 110(a)(5) has no
bearing on compliance with Rule 2305.
Lastly, as to the potential for this issue to lead to litigation,
the EPA notes that this particular issue was included among the issues
raised in a legal challenge against the SCAQMD's adoption of Rule 2305.
In that case, the Court ruled in favor of the SCAQMD and, as to this
issue, stated: ``Nothing in the text, structure, or purpose of the
indirect-source-review provision suggests that this phrase limits
indirect source reviews to those based on new and modified indirect
sources.'' \121\ The EPA finds that the Court's decision and rationale
provide further support to the EPA's conclusion as to this particular
issue.
---------------------------------------------------------------------------
\121\ CTA v. SCAQMD, Order Re: Plaintiff's Motion for Summary
Judgment as to Plaintiff's Complaint for Declaratory Judgment and
Injunctive Relief (Dkt. 65); and Plaintiff-Intervenor Airlines for
America's Motion for Summary Judgment (Dkt, 73), Dkt. 162, December
14, 2023, p. 28.
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III. EPA Action
No comments were submitted that change our assessment of the rule
as described in our proposed action. Therefore, as authorized in
section 110(k)(3) of the Act, the EPA is approving SCAQMD Rule 2305
into the California SIP. The EPA concludes that, while SCAQMD Rule 2305
does not meet all the evaluation criteria for enforceability (i.e.,
certain definitions that cross-reference rules that are not part of the
SIP, the sunset clause, and certain instances of unbounded director's
discretion), we are taking final action to approve it because it is not
a required SIP element and would
[[Page 73587]]
strengthen the SIP. In light of the deficiencies, however, the EPA
concludes that the submitted rule should not be credited in any
attainment and rate of progress/reasonable further progress
demonstrations. This final action incorporates SCAQMD Rule 2305 into
the federally enforceable SIP.
IV. Incorporation by Reference
In this rule, the EPA is finalizing regulatory text that includes
incorporation by reference. In accordance with requirements of 1 CFR
51.5, the EPA is finalizing the incorporation by reference of SCAQMD
Rule 2305, Warehouse Indirect Source Rule--Warehouse Actions and
Investments to Reduce Emissions (WAIRE) Program, adopted on May 7,
2021, that establishes an Indirect Source Review program for certain
warehouse owners and operators within the SCAQMD. The EPA has made, and
will continue to make, these documents available through
www.regulations.gov and at the EPA Region IX Office (please contact the
person identified in the FOR FURTHER INFORMATION CONTACT section of
this preamble for more information).
V. Statutory and Executive Order Reviews
Under the Clean Air Act, the Administrator is required to approve a
SIP submission that complies with the provisions of the Act and
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions, the EPA's role is to approve State
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this action merely approves State law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by State law. For that reason, this action:
Is not a significant regulatory action subject to review
by the Office of Management and Budget under Executive Orders 12866 (58
FR 51735, October 4, 1993), 13563 (76 FR 3821, January 21, 2011) and
14094 (88 FR 21879, April 11, 2023);
Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Public Law 104-4);
Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
Is not subject to Executive Order 13045 (62 FR 19885,
April 23, 1997) because it approves a State program;
Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001); and
Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act.
Executive Order 12898 (Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations, 59 FR 7629,
February 16, 1994) directs Federal agencies to identify and address
``disproportionately high and adverse human health or environmental
effects'' of their actions on communities with environmental justice
(EJ) concerns to the greatest extent practicable and permitted by law.
The EPA defines EJ as ``the fair treatment and meaningful involvement
of all people regardless of race, color, national origin, or income
with respect to the development, implementation, and enforcement of
environmental laws, regulations, and policies.'' The EPA further
defines the term fair treatment to mean that ``no group of people
should bear a disproportionate burden of environmental harms and risks,
including those resulting from the negative environmental consequences
of industrial, governmental, and commercial operations or programs and
policies.''
The SCAQMD did not evaluate EJ considerations as part of its SIP
submittal; the CAA and applicable implementing regulations neither
prohibit nor require such an evaluation. However, the Community
Steering Committees for four communities admitted into the State's
Community Air Protection Program, created by Assembly Bill 617, in the
affected area requested development of a warehouse ISR rule due to
concerns regarding air pollution impacts from trucks and diesel
particulate matter.\122\ The focus of the Community Air Protection
Program is to reduce exposure in communities most impacted by air
pollution.\123\ The EPA did not perform an EJ analysis and did not
consider EJ in this action. Due to the nature of the action being taken
here, this action is expected to have a neutral to positive impact on
the air quality of the affected area. Consideration of EJ is not
required as part of this action, and there is no information in the
record inconsistent with the stated goal of E.O. 12898 of achieving EJ
for communities with EJ concerns.
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\122\ SCAQMD Final Staff Report, pp. 9-10.
\123\ CARB, Community Air Protection Blueprint For Selecting
Communities, Preparing Community Emissions Reduction Programs,
Identifying Statewide Strategies, and Conducting Community Air
Monitoring, October 2018, page 1.
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Lastly, the SIP is not approved to apply on any Indian reservation
land or in any other area where the EPA or an Indian Tribe has
demonstrated that a Tribe has jurisdiction. In those areas of Indian
country, this action does not have Tribal implications and will not
impose substantial direct costs on Tribal governments or preempt Tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).
This action is subject to the Congressional Review Act, and the EPA
will submit a rule report to each House of the Congress and to the
Comptroller General of the United States. This action is not a ``major
rule'' as defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by November 12, 2024. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this action for the purposes of
judicial review, nor does it extend the time within which a petition
for judicial review may be filed, and shall not postpone the
effectiveness of such rule or action. This action may not be challenged
later in proceedings to enforce its requirements. (See section
307(b)(2).)
List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Nitrogen dioxide, Ozone,
Particulate matter, Reporting and recordkeeping requirements.
Dated: September 4, 2024.
Martha Guzman Aceves,
Regional Administrator, Region IX.
For the reasons stated in the preamble, the Environmental
Protection Agency amends part 52, chapter I, title 40 of the Code of
Federal Regulations as follows:
[[Page 73588]]
PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS
0
1. The authority citation for part 52 continues to read as follows:
Authority: 42 U.S.C. 7401 et seq.
Subpart F--California
0
2. Section 52.220 is amended by adding reserved paragraph (c)(615) and
adding paragraph (c)(616) to read as follows:
Sec. 52.220 Identification of plan--in part.
* * * * *
(c) * * *
(615) [Reserved]
(616) The following regulation was submitted on August 13, 2021, by
the Governor's designee.
(i) Incorporation by reference. (A) South Coast Air Quality
Management District.
(1) Rule 2305, ``Warehouse Indirect Source Rule--Warehouse Actions
and Investments to Reduce Emissions (WAIRE) Program,'' adopted on May
7, 2021.
(2) [Reserved]
(B) [Reserved]
(ii) [Reserved]
* * * * *
[FR Doc. 2024-20349 Filed 9-10-24; 8:45 am]
BILLING CODE 6560-50-P