[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 (NO<INF>X</INF>) 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: <a href="/cdn-cgi/l/email-protection#a7c2d1c6c9d4cfc8d7d7c2d589cbc6ccc2c9dec6e7c2d7c689c0c8d1"><span class="__cf_email__" data-cfemail="791c0f18170a111609091c0b571518121c170018391c0918571e160f">[email protected]</span></a>.

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
----------------------------------------------------------------------------------------------------------------
            Local agency                Rule No.              Rule title              Adopted        Submitted
----------------------------------------------------------------------------------------------------------------
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 NO<INF>X</INF> 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 (PM<INF>2.5</INF>).\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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    <bullet> 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;
    <bullet> 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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    <bullet> 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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    <bullet> 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 PM<INF>2.5</INF> NAAQS in the South 
Coast Air Basin and Coachella Valley;
    <bullet> 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
    <bullet> 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \31\ See CAA section 110(a)(2)(E).
    \32\ 88 FR 70616, 70620-70623.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \40\ 88 FR 70616, 70622.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \42\ 88 FR 70616, 70622.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.'').
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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'').
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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 PM<INF>2.5</INF>.
    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 NO<INF>X</INF> and PM<INF>2.5</INF>, 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 PM<INF>2.5</INF>.\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 PM<INF>2.5</INF>.
---------------------------------------------------------------------------

    \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 PM<INF>2.5</INF> 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \60\ 88 FR 70616, 70623.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.''
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.'')
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \76\ SCAQMD, Final Staff Report, pp. 16-17.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \104\ Union Electric Company v. EPA; 427 U.S. 246, 265 (1976).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \108\ 88 FR 70616, 70620-70621.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \109\ SCAQMD Resolution 21-9, adopted May 7, 2021, pp. 6-7.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \110\ SCAQMD Final Staff Report, p. 74.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \114\ SCAQMD Rule 2305(d)(1)(A).
---------------------------------------------------------------------------

    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 NO<INF>X</INF>, 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\
---------------------------------------------------------------------------

    \115\ SCAQMD, Final Staff Report, Appendix F, Response to 
Comment 45-6.
    \116\ Id.
    \117\ Id.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

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:
    <bullet> 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);
    <bullet> Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
    <bullet> 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.);
    <bullet> 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);
    <bullet> Does not have federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
    <bullet> Is not subject to Executive Order 13045 (62 FR 19885, 
April 23, 1997) because it approves a State program;
    <bullet> Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001); and
    <bullet> 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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


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