Document ID: EPA-R09-OAR-2023-0494-0001
Agency: epa
Document Type: Proposed Rule
Title: Air Quality State Implementation Plans; Approvals and Promulgations: California; South Coast Air Quality Management District
Posted Date: 2023-10-12T04:00Z

[Federal Register Volume 88, Number 196 (Thursday, October 12, 2023)]
[Proposed Rules]
[Pages 70616-70625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22518]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2023-0494; FRL-11442-01-R9]

Air Plan Approval; California; South Coast Air Quality Management 
District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve a revision to the South Coast Air Quality Management District 
(SCAQMD or ``the District'') portion of the California State 
Implementation Plan (SIP) as SIP strengthening. This revision concerns 
emissions of oxides of nitrogen (NOX) and particulate matter 
(PM) from indirect sources associated with warehouses. The EPA is 
proposing to approve 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). The EPA is taking comments on this proposal and plans 
to follow with a final action.

DATES: Comments must be received on or before November 13, 2023.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-
OAR-2023-0494 at https://www.regulations.gov. For comments submitted at 
Regulations.gov, follow the online instructions for submitting 
comments. Once submitted, comments cannot be edited or removed from 
Regulations.gov. The EPA may publish any comment received to its public 
docket. Do not submit electronically any information you consider to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Multimedia submissions (audio, 
video, etc.) must be accompanied by a written comment. The written 
comment is considered the official comment and should include 
discussion of all points you wish to make. The EPA will generally not

[[Page 70617]]

consider comments or comment contents located outside of the primary 
submission (i.e., on the web, cloud, or other file sharing system). For 
additional submission methods, please contact the person identified in 
the FOR FURTHER INFORMATION CONTACT section. For the full EPA public 
comment policy, information about CBI or multimedia submissions, and 
general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets. If you need assistance in a 
language other than English or if you are a person with disabilities 
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. By phone: (415) 972-3245 or 
by email at [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us,'' 
and ``our'' refer to the EPA.

Table of Contents

I. The State's Submittal
    A. What rule did the State submit?
    B. Are there other versions of this rule?
    C. What is the purpose of the rule?
    D. What requirements does the rule establish?
II. The EPA's Evaluation and Action
    A. How is the EPA evaluating the rule?
    B. Does the rule meet the evaluation criteria?
    C. Public comment and proposed action
III. Incorporation by Reference
IV. Statutory and Executive Order Reviews

I. The State's Submittal

A. What rule did the State submit?

    Table 1 lists the rule addressed by this proposal with the dates 
that it was adopted by the local air agency and submitted by the 
California Air Resources Board (CARB).

                                             Table 1--Submitted Rule
----------------------------------------------------------------------------------------------------------------
             Local agency                   Rule #             Rule title             Amended        Submitted
----------------------------------------------------------------------------------------------------------------
SCAQMD................................            2305  Warehouse Indirect            05/07/2021      08/13/2021
                                                         Source Rule--Warehouse
                                                         Actions and Investments
                                                         to Reduce Emissions
                                                         (WAIRE) Program.
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    On February 13, 2022, the submittal for SCAQMD Rule 2305 was deemed 
complete by operation of law with respect to the completeness criteria 
in 40 CFR part 51, appendix V, which must be met before formal EPA 
review.

B. Are there other versions of this rule?

    SCAQMD Rule 2305 is a new rule. There are no previously approved 
versions of the rule in the applicable SIP.

C. What is the purpose of the rule?

    Emissions of NOX contribute to the production of ground-
level ozone, smog and PM, which harm human health and the environment. 
Emissions of PM, including PM equal to or less than 2.5 microns in 
diameter (PM2.5) and PM equal to or less than 10 microns in 
diameter (PM10), contribute to effects that are harmful to 
human health and the environment, including premature mortality, 
aggravation of respiratory and cardiovascular disease, decreased lung 
function, visibility impairment, and damage to vegetation and 
ecosystems. Section 110(a) of the CAA requires States to submit 
regulations that control NOX and PM emissions for purposes 
of attainment and maintenance of the National Ambient Air Quality 
Standards (NAAQS) and to meet other CAA requirements.
    The purpose of SCAQMD Rule 2305 is to reduce local and area-wide 
emissions of NOX and PM, by facilitating emission reductions 
associated with warehouses and the mobile sources attracted to 
warehouses in order to assist in meeting State and Federal air quality 
standards for ozone and PM2.5. Mobile sources of emissions 
associated with warehouses include the trucks that deliver goods to and 
from the facilities, yard trucks, transport refrigeration units (TRUs) 
located on trucks and trailers, and passenger vehicle trips associated 
with employees and visitors.\1\ Most of these vehicles are diesel 
powered, except for passenger vehicles which are typically gasoline 
powered. Heavy-duty trucks contribute roughly 90% of the overall mobile 
source inventory of NOX emissions from warehouse operations, 
followed in order of importance from an emissions standpoint by TRUs, 
passenger vehicles, and then yard trucks.\2\ Additional emissions 
sources can include onsite stationary equipment (e.g., diesel backup 
generators or manufacturing equipment).\3\ 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\ 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'', 12.
    \2\ SCAQMD Final Staff Report, 13.
    \3\ Id.
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    Also, through adoption of the 2016 South Coast Air Quality 
Management Plan (AQMP), the SCAQMD committed to assess and identify 
potential actions to further reduce emissions associated with emission 
sources operating in and out of warehouse distribution centers,\4\ and 
the SCAQMD adopted Rule 2305 to fulfill that commitment. The purpose of 
the 2016 South Coast AQMP is to establish a path toward the goal of 
attainment for ozone and PM2.5 NAAQS in the nonattainment 
areas subject to SCAQMD jurisdiction.
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    \4\ SCAQMD, Final 2016 Air Quality Management Plan, March 2017, 
pages 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'').
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    The EPA has taken several actions on the 2016 South Coast AQMP. 
With certain exceptions not relevant here, the EPA approved portions of 
the 2016 South Coast AQMP addressing the Serious Area requirements for 
the 2006 24-hour PM2.5 NAAQS in the South Coast Air Basin 
(``South Coast''); the portions of the 2016 South Coast AQMP updating 
the control strategies and attainment demonstrations for the 1-hour and 
1997 8-hour ozone NAAQS, and addressing the 2008 8-hour ozone NAAQS in 
the South Coast; the portions of the 2016 South Coast AQMP addressing 
the Moderate Area requirements for the 2012 annual PM2.5 
NAAQS in the South Coast; and the portions of the 2016 South Coast AQMP 
addressing the Severe Area requirements for the 2008 8-hour ozone NAAQS 
in Coachella Valley.\5\ In so doing, the EPA approved the SCAQMD's 
Stationary and Mobile

[[Page 70618]]

Source Control Measures, including the facility-based mobile source 
measures such as the Emission Reductions at Warehouse Distributions 
Center measure. The 2016 South Coast AQMP includes enforceable 
commitments by the SCAQMD to achieve certain aggregate emissions 
reductions by certain years through adoption and implementation of the 
SCAQMD's Stationary and Mobile Source Control Measures.
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    \5\ 84 FR 3305 (February 12, 2019), corrected at 84 FR 19680 
(May 3, 2019) (2006 PM2.5 NAAQS); 84 FR 52005 (October 1, 
2019) (1-hour, 1997 and 2008 Ozone NAAQS in South Coast); 85 FR 
71269 (November 9, 2020) (2012 PM2.5 NAAQS); and 85 FR 
57714 (September 16, 2020) (2008 Ozone NAAQS in Coachella Valley).
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D. What requirements does the rule establish?

    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, as discussed below, from emission reducing 
activities, or to pay a mitigation fee. Warehouse facility owners or 
warehouse land owners may opt in to earn Warehouse Actions and 
Investments to Reduce Emissions Points (``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. Warehouse facility owners 
were required to submit initial Warehouse Operations Notifications to 
the SCAQMD by September 1, 2021, and then again within certain 
prescribed periods thereafter if certain conditions occur. Warehouse 
operators are also required to submit their Initial Site Information 
Reports (ISIR) and Annual WAIRE Reports to the SCAQMD. All of the 
notifications and reports are to be submitted through the WAIRE Program 
Online Portal (WAIRE POP). In addition, records which document the 
accuracy and validity of all information submitted to the SCAQMD as 
required by the rule must be kept by the warehouse owner, or operator 
as applicable, for a minimum of seven years from the reporting 
deadline. Records must be made available upon request to the SCAQMD 
during normal business hours.
    The principal substantive requirement in the rule is the 
requirement that each warehouse operator 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 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).\6\ WATT reflects all trips in a given year by trucks with gross 
vehicle weight ratings (GVWR) greater than 8,500 pounds but multiplies 
trips by trucks with GVWRs greater than 33,000 pounds (``Class 8'' 
trucks) by 2.5.\7\ The WATTs parameter serves as a proxy for overall 
warehouse activity and emissions.\8\ A warehouse owner may earn WAIRE 
Points and may transfer them to any warehouse operator at the site 
where the WAIRE Points were earned within a three-year period.
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    \6\ SCAQMD Rule 2305(d)(1)(A) and Tables 1 and 2.
    \7\ SCAQMD Rule 2305(d)(1)(B).
    \8\ SCAQMD Final Staff Report, 27, 35. As explained in footnote 
44 of the SCAQMD Final Staff Report, the SCAQMD adopted WATTs as the 
parameter for determining the WPCO for warehouses rather than 
emissions or vehicle miles travelled (VMT). SCAQMD decided against a 
parameter like emissions or VMT to reduce the administrative burden 
on warehouse operators and the SCAQMD compliance staff. Also, the 
SCAQMD notes that motor carriers had expressed concern that they do 
not want to reveal where or how far they travel to warehouse 
operators or SCAQMD in order to keep their clients private.
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    The requirement to earn WAIRE points to meet a WPCO does not apply 
to warehouse operators who use less than 50,000 square feet for 
warehousing activities of a warehouse that is greater than or equal to 
100,000 square feet.\9\ This exemption does not apply if the same 
parent company owns or controls multiple operators in the same building 
who collectively use more than 50,000 square feet of space for 
warehousing activity.\10\ A warehouse operator with a WPCO that is less 
than 10 in any compliance period also is exempt from earning WAIRE 
Points for that compliance period. In both cases, certain recordkeeping 
and reporting requirements (as stated above) under the rule continue to 
apply.
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    \9\ In Rule 2305(c)(33), the term ``warehousing activities'' is 
defined as meaning operations at a warehouse related to the storage 
and distribution of goods, including but not limited to the storage, 
labelling, sorting, consolidation and deconsolidation of products 
into different size packages. Supporting office administration, 
maintenance, manufacturing areas, or retail sales areas open to the 
general public, within the same warehouse building, that are 
physically separate from the warehouse area, are not considered 
warehousing activities for the purpose of the rule.
    \10\ The exemptions are set forth in SCAQMD Rule 2305(g).
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    In situations where investments or actions that were completed by a 
warehouse owner or operator perform significantly lower than 
anticipated due to unforeseen circumstances beyond the control of the 
warehouse owners or operators resulting in lower than anticipated 
earned WAIRE Points, the warehouse owner or operator may apply to the 
Executive Officer \11\ for a partial or complete exemption.\12\ This 
application must specify what portion of the WPCO that the 
malfunctioning equipment would have satisfied, and all relevant details 
on why the anticipated action was unable to earn the expected WAIRE 
Points. The Executive Officer will use the following criteria to grant 
a partial or complete exemption: (a) there is a manufacturing defect or 
an installation defect when using manufacturer-approved methods, and 
(b) the warehouse operator can demonstrate that despite good faith 
efforts for repairs on the vehicle or equipment, through either the 
warranty or other manufacturer and/or installer-approved methods, the 
repairs were not completed in a timely manner.
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    \11\ Executive Officer refers to the Executive Officer or 
designee of the SCAQMD. The Executive Officer is the Air Pollution 
Control Officer for the SCAQMD.
    \12\ For example, if a warehouse operator purchases a zero-
emission truck and anticipates using this same truck to earn WAIRE 
Points, but a malfunction in the powertrain due to an equipment 
manufacturer defect (e.g., malfunctioning electric motor, fuel cell 
stack, etc.) results in an inability to use the equipment, then the 
operator may apply for relief for the WAIRE Points that would have 
be earned. The exemption would be granted if the vehicle or 
equipment is shown to be due to a manufacturer defect or an 
installation defect. SCAQMD Final Staff Report, 37.
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    Warehouse owners (who opt in) and operators are required to earn 
WAIRE Points either: through the completion of specified actions from 
the list of actions in the WAIRE Menu,\13\ completion of actions in an 
approved custom plan, through payment of a mitigation fee, or through a 
combination of these three options.\14\ The WAIRE Points provision 
within Rule 2305 includes a WAIRE Menu with a list of specific actions 
that a warehouse owner or operator may take to earn points to meet the 
annual WPCO.\15\ The menu includes nine different types of actions or 
investments that qualify for points: (i) acquire Zero Emission (ZE)/
Near-Zero Emission (NZE) Trucks, (ii) number of ZE/NZE Truck 
Visits,\16\ (iii) acquire ZE Yard Truck, (iv) use ZE Yard Truck, (v) 
install onsite ZE charging or fueling infrastructure, (vi) use onsite 
ZE charging or fueling infrastructure, (vii) install and energize 
onsite solar panels, (viii) use onsite solar panels, and (ix)

[[Page 70619]]

install MERV 16 or greater filters or filter systems in residences, 
schools, daycares, hospitals, or community centers.
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    \13\ SCAQMD Rule 2305, Table 3.
    \14\ SCAQMD Rule 2305(d)(1) and (2).
    \15\ SCAQMD Rule 2305, Table 3.
    \16\ NZE and ZE truck visits can come from the warehouse 
operator's own fleet or by any other third-party fleet (whether 
contracted by the warehouse operator or not). See SCAQMD Final Staff 
Report, at 99. The term ``truck visits'' refers to the round-trip a 
truck takes to and from a warehouse. For example, 520 ``truck 
visits'' is the same as 1,040 one-way ``truck trips'' as explained 
in the SCAQMD Final Staff Report, 30.
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    Rule 2305 specifies the number of points for the different types of 
actions or investments, ranging from 1 point (per 165,000 kilowatt-
hours) from the use of onsite solar panels to 1,680 points for 
installation of a 700-kilogram-per-day hydrogen (H2) fueling 
station. SCAQMD assigned WAIRE Points to the different types of actions 
or investments based on three key parameters: cost, regional emissions 
reductions, and local emissions reduction.\17\ For example, under Rule 
2305, acquiring a new class 8 ZE/NZE truck in the warehouse operator 
fleet would be worth 126 points. Similarly, 365 visits by class 8 ZE/
NZE trucks to a warehouse would be worth 51 points during a given 
annual compliance period.
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    \17\ SCAQMD Final Staff Report, 111.
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    Based on the most current information contained in the first Annual 
Report for the WAIRE Program, the average WPCO per warehouse operator 
was rounded to 80 points for the 2022 compliance period.\18\ The same 
number of WATTs in 2023 and 2024 (and beyond) for the same warehouse 
operators would result in an average WPCO of 160 points and 240 points, 
respectively, taking into account the annual variable under Phase I 
(which applies to warehouses equal to or greater than 250,000 square 
feet) for those years.\19\
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    \18\ SCAQMD, Annual Report for the Warehouse Actions and 
Investments to Reduce Emissions (WAIRE) Program, January 2023, 16. 
The report represents 47% of warehouses in the SCAQMD. The average 
WPCO estimate of 80 points reflects SCAQMD's anticipated aggregate 
WPCO of approximately 30,000 divided by 380, the number of Phase I 
warehouses for which Initial Site Information Reports (ISIR) were 
submitted in time for the report. The 30,000 aggregate point value 
reflects a 0.33 annual variable for the first compliance period for 
Phase I warehouses.
    \19\ Rule 2305, table 2 (``Annual Variable'').
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    Under the rule, the Custom WAIRE Plan is a second option that 
allows warehouse owners or operators to earn WAIRE Points through a 
customized plan specific for a warehouse facility.\20\ Custom WAIRE 
Plan applications must demonstrate how the proposed action will earn 
WAIRE Points based on the incremental cost of the action, the 
NOX emission reductions from the action, and the diesel PM 
(DPM) emission reductions from the action, relative to baseline 
conditions. Custom WAIRE Plans may not include actions that are 
included in the WAIRE Menu on Table 3 of Rule 2305. The methodology to 
determine the total WAIRE Points for an action in a Custom WAIRE Plan 
application must be consistent with methods in the WAIRE Program 
Implementation Guidelines.\21\ Any WAIRE Points earned from a Custom 
WAIRE Plan for emission reductions must be quantifiable, verifiable, 
and real as determined by the Executive Officer and consistent with the 
WAIRE Implementation Guidelines.
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    \20\ SCAQMD Rule 2305(d)(4).
    \21\ SCAQMD Final Staff Report, 86. A copy of the current 
version of the SCAQMD's WAIRE Implementation Guidelines, version 
1.1, is included in the docket for this rulemaking.
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    Warehouse owners or operators have a third option to meet the 
annual compliance obligation that involves payment of a mitigation fee 
in the amount of $1,000 for each WAIRE Point.\22\ The mitigation fee is 
an option for warehouse operators to fulfill all or a portion of their 
WPCO. In adopting Rule 2305, the SCAQMD Governing Board directed the 
Executive Officer to develop the WAIRE Mitigation Program with funds 
generated from mitigation fee payments.\23\ Any solicitations for 
requests for funding, or funding allocations that would be spent from 
the WAIRE Mitigation Program, must be approved by the SCAQMD Governing 
Board in a public meeting.\24\ In adopting the Rule 2305, the Board 
also specified that proposed solicitations and project awards must be 
presented to the Governing Board no less frequently than on an annual 
basis. The Board directed the Executive Officer to track mitigation 
fees paid by warehouse operators according to the Source Receptor Area 
(SRA) \25\ and county in which they are located to achieve or 
facilitate emission reductions in the same SRAs and counties in which 
the mitigation fees were paid. As adopted by the Board, if sufficient 
projects are not identified in each individual SRA relative to the 
available funding, then funds may be directed either to an adjacent SRA 
in the same county or held for a subsequent funding. The SCAQMD states 
that the mitigation fees collected from Rule 2305 will go towards the 
purchase of NZE and ZE trucks, installation of ZE charging and/or 
hydrogen fueling infrastructure.\26\ Funds may also be combined with 
other incentive programs, such as Carl Moyer and Proposition 1B, as 
allowable on a case-by-case basis.
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    \22\ SCAQMD Rule 2305(d)(5).
    \23\ SCAQMD, Resolution 21-9, signed June 4, 2021, 6.
    \24\ SCAQMD Final Staff Report, 40.
    \25\ Source Receptor Areas (SRAs) are shown in a SCAQMD-prepared 
map titled ``General Forecast Areas & Air Monitoring Areas''.
    \26\ SCAQMD Final Staff Report, 40.
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    As noted above, warehouse operators have three basic options, or 
any combination of these options, through which to earn or obtain 
points sufficient to meet their WPCO. Warehouse owners may also earn 
WAIRE Points using the same methods or options available to warehouse 
operators and may transfer these WAIRE Points to any warehouse operator 
at the site where the WAIRE Points were earned within a three-year 
period.
    In the SCAQMD's first Annual Report for the WAIRE Program, the 
SCAQMD compiled information from 380 ISIR's that had been submitted by 
warehouse operators through September 30, 2022. 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 ISIRs received), NZE Class 8 Truck Visits (approximately 27%), and 
ZE hostler acquisition (approximately 8%).\27\ 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, and 
about $5.5 million.\28\
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    \27\ SCAQMD, Annual Report for the Warehouse Actions and 
Investments to Reduce Emissions (WAIRE) Program, January 2023, 15.
    \28\ Id.
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    The SCAQMD developed emissions reduction estimates for various 
scenarios representing different compliance approaches to Rule 
2305.\29\ The estimates of reductions in emissions of NOX 
and DPM vary widely among the scenarios and from year to year but 
represent positive emission reductions beyond those that are expected 
by the SCAQMD to occur due to CARB regulations (such as CARB's Advanced 
Clean Trucks, Low NOX Omnibus, and Heavy Duty Inspection and 
Maintenance (I/M) regulations).\30\
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    \29\ SCAQMD Final Staff Report, Tables 15 and 16.
    \30\ SCAQMD Final Staff Report, 62.
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    Lastly, the rule includes recordkeeping and reporting requirements. 
The three types of reports that are due under Rule 2305 include: (1) 
the Warehouse Operations Notification (WON), which is the 
responsibility of the warehouse owner, (2) the ISIR, and (3) the Annual 
WAIRE Report, both of which are the responsibility of warehouse 
operators. The rule also specifies a sunset date after the EPA finds 
that all air basins within the SCAQMD have attained the

[[Page 70620]]

2015 ozone NAAQS and that CARB finds that all air basins within the 
SCAQMD have attained the California ozone ambient air quality standard 
(which is numerically the same as the 2015 ozone NAAQS).\31\
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    \31\ SCAQMD Rule 2305(e) and (h).
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II. The EPA's Evaluation and Action

A. How is the EPA evaluating the rule?

    The EPA has evaluated SCAQMD Rule 2305 against the applicable 
procedural and substantive requirements of the CAA for SIPs and SIP 
revisions and has concluded that, with certain exceptions discussed 
below, Rule 2305 meets the applicable requirements and would strengthen 
the SIP. Generally, SIPs must include enforceable emission limitations 
and other control measures, means, or techniques, as well as schedules 
and timetables for compliance, as may be necessary to meet the 
requirements of the Act (see CAA section 110(a)(2)(A)); must provide 
necessary assurances that the State will have adequate personnel, 
funding, and authority under State law to carry out such SIP (and is 
not prohibited by any provision of Federal or State law from carrying 
out such SIP) (see CAA section 110(a)(2)(E)); must be adopted by a 
State after reasonable notice and public hearing (see CAA section 
110(a)(1); section 110(a)(2); section 110(l)); and must not interfere 
with any applicable requirement concerning attainment and reasonable 
further progress, or any other applicable requirement of the Act (see 
CAA section 110(l)).\32\
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    \32\ CAA section 193, which prohibits any pre-1990 SIP control 
requirement relating to nonattainment pollutants in nonattainment 
areas from being modified unless the SIP is revised to insure 
equivalent or greater emission reductions of such air pollutants, 
does not apply to the SCAQMD Rule 2305 because, as a new rule, it 
does not represent a pre-1990 SIP control requirement.
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    The SCAQMD jurisdiction covers all the South Coast Air Basin, and 
portions of the Salton Sea and Mojave Desert Air Basins, and includes 
air quality planning areas that are designated as nonattainment for the 
1-hour ozone NAAQS and the 1997, 2008 and 2015 8-hour ozone NAAQS 
(South Coast and Coachella Valley areas); the 1997 24-hour and annual 
PM2.5 NAAQS, the 2006 24-hour PM2.5 NAAQS and the 
2012 annual PM2.5 NAAQS (South Coast area), and the 1987 24-
hour PM10 NAAQS (Coachella Valley area).\33\ The South Coast 
Air Basin is currently classified as an Extreme nonattainment area for 
the 1-hour ozone NAAQS and the 1997, 2008, and 2015 8-hour ozone NAAQS, 
as a Moderate nonattainment area for the 1997 annual and 24-hour 
PM2.5 NAAQS, and as a Serious nonattainment area for the 
2006 24-hour and 2012 annual PM2.5 NAAQS. The Coachella 
Valley portion of the Salton Sea Air Basin is classified as a Severe 
nonattainment area for the 1-hour ozone NAAQS, as an Extreme 
nonattainment area for the 1997 and 2008 8-hour ozone NAAQS,\34\ as a 
Severe nonattainment area for the 2015 8-hour ozone NAAQS; and as a 
Serious nonattainment area for the 1987 24-hour PM10 NAAQS.
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    \33\ 40 CFR 81.305. In addition, a portion of Los Angeles County 
is designated nonattainment for the lead NAAQS, but SCAQMD Rule 2305 
does not affect lead emissions, and thus, the lead NAAQS is not 
germane to our proposed action and is not discussed further.
    \34\ The EPA recently finalized a reclassification requested by 
CARB for Coachella Valley from Severe to Extreme for the 2008 ozone 
NAAQS. 88 FR 14291 (March 8, 2023).
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    CAA section 172(c)(1) requires States with ozone nonattainment 
areas to implement all reasonably available control measures (RACM), 
including such reductions in emissions from existing sources in the 
area as may be obtained through the adoption, at a minimum, of 
reasonably available control technology (RACT), as expeditiously as 
practicable. CAA sections 182(b)(2) and 182(f) specify that 
implementation of RACT under CAA section 172(c)(1) is required for all 
major stationary sources of NOX in the area. In addition, 
the CAA requires States with Serious PM10 and 
PM2.5 NAAQS nonattainment areas to implement Best Available 
Control Measures (BACM), including Best Available Control Technology 
(BACT) (see CAA section 189(b)(1)(B)). As noted above, SCAQMD includes 
both Extreme and Severe ozone nonattainment areas and Moderate and 
Serious PM nonattainment areas.
    With respect to rule stringency, the EPA is prohibited by the CAA 
from requiring States and local air agencies to submit indirect source 
review (ISR) programs as a condition to approving a SIP.\35\ Because 
the EPA cannot require a State or local air agency to adopt and 
implement an ISR program, the EPA reasons that it likewise cannot 
require that such a program meet any particular level of stringency 
otherwise required to meet SIP requirements, such as attainment plan 
requirements for the ozone or PM NAAQS. Therefore, the EPA is not 
evaluating SCAQMD Rule 2305 for compliance with the RACM/RACT or BACM/
BACT requirements.
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    \35\ CAA section 110(a)(5)(A)(i); National Association of Home 
Builders v. San Joaquin Valley Unified Air Pollution Control 
District, 627 F.3d 730, 737-38 (9th Cir. 2010) (``NAHB v. 
SJVUAPCD'') (``Congress added section 110(a)(5) to the Act in 1977 
after the EPA had tried to force the states to regulate indirect 
sources of pollution. When the states had not regulated indirect 
sources to the EPA's satisfaction, the EPA began to promulgate its 
own rules for indirect sources. The EPA's move `drew heavy criticism 
because [it] represented a significant federal intrusion into the 
traditionally local domain of land use control.' In response to the 
EPA's actions, a 1977 amendment to the Act `severely limit[ed] the 
EPA's authority' over indirect sources, but `left largely to the 
states' the matter of `whether and how to regulate' indirect 
sources.'' (Internal citations omitted)).
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B. Does the rule meet the evaluation criteria?

1. Did the State provide for reasonable public notice and hearing prior 
to adoption?
    Under CAA section 110(l), SIP revisions must be adopted by the 
State, and the State must provide for reasonable public notice and 
hearing prior to adoption. Pursuant to 40 CFR 51.102, States must 
provide at least 30-days' notice of any public hearing to be held on a 
proposed SIP revision. States must provide the opportunity to submit 
written comments and allow the public the opportunity to request a 
public hearing within that period. Rule 2305 was adopted by SCAQMD on 
May 7, 2021, through Resolution 21-9, following a public hearing held 
on the same day. Prior to adoption, the SCAQMD published notice of the 
May 7, 2021 public hearing on March 31, 2021, and provided more than 30 
days for submission of written comments. The CARB subsequently adopted 
the rule as a revision to the SIP on August 13, 2021, through Executive 
Order S-21-012. The CARB then submitted SCAQMD Rule 2305 to the EPA on 
August 13, 2021, as an attachment to a letter with the same date. 
Various other materials comprising the SIP submission package were 
submitted as well, including copies of public comments received during 
the comment period, District responses to comments, and environmental 
and socioeconomic impact assessments.
    Based on the materials provided in the August 13, 2021 SIP 
submission summarized above, we propose to find that the District and 
the CARB have met the procedural requirements for adoption and 
submission of SIPs and SIP revisions under CAA section 110(l) and 40 
CFR 51.102.
2. Does the State have adequate legal authority to implement the rule?
    The SCAQMD has been granted both general and specific authority 
under the California Health & Safety Code (CH&SC) to adopt and 
implement Rule 2305.\36\ Specific authority is found in CH&SC section 
40440 (``Rules and

[[Page 70621]]

regulations''), which authorizes the SCAQMD to provide for indirect 
source controls in those areas of the South Coast District in which 
there are high-level, localized concentrations of pollutants.
---------------------------------------------------------------------------

    \36\ General authority is found in CH&SC sections 40000 and 
40001.
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    Moreover, the EPA knows of no obstacle under State or Federal law 
in the SCAQMD's ability to implement Rule 2305. With respect to State 
law, the EPA notes that, during the rule development phase, certain 
commenters challenged the mitigation fee option in Rule 2305 on the 
grounds that it imposes an unlawful tax under State law. However, 
CARB's August 13, 2021 SIP submission package includes a legal analysis 
from the State Attorney General's Office \37\ 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.\38\ In 
explaining how the mitigation fee option is not compulsory, the State 
Attorney General's Office letter notes that, under Rule 2305, 
``warehouse operators have numerous options to reduce their emissions 
or otherwise earn compliance points. If they elect not to take actions 
to reduce their emissions or environmental impacts, warehouse operators 
may comply by paying the in-lieu fee. A `hallmark' of a tax is that `it 
is compulsory.' The in-lieu fee is not compulsory, so it is not a 
tax.'' \39\ (Internal citations omitted.) Also, even if viewed as 
compulsory, the Attorney General's Office explains how the mitigation 
fee option falls under two exceptions to the meaning of ``tax'' under 
the relevant provisions of State law.\40\ The EPA proposes to find that 
the State Attorney General's Office letter provides the necessary 
assurances that State law with respect to the mitigation fee option is 
not an obstacle to the SCAQMD's ability to implement Rule 2305.
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    \37\ Robert Swanson, Deputy Attorney General, California 
Department of Justice, letter to Ellen Peter, Chief Counsel, CARB, 
dated May 6, 2021, included as an enclosure to Ellen M. Peter, Chief 
Counsel, CARB, letter to Wayne Nastri, Executive Officer, SCAQMD, 
dated May 6, 2021.
    \38\ Id. at 12-14.
    \39\ Id. at 12.
    \40\ Id. at 12-14.
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    With respect to Federal law, the EPA is aware of an ongoing legal 
challenge by the California Trucking Association (CTA), among others, 
to the SCAQMD's legal authority to implement Rule 2305 in litigation to 
which the EPA is not a party.\41\ In the CTA case, plaintiff CTA and 
plaintiff-intervenor Airlines for America assert that implementation 
and enforcement of Rule 2305 by the SCAQMD is preempted under the CAA, 
the Airline Deregulation Act (ADA) and the Federal Aviation 
Administration Authorization Act (FAAAA or F4A). Based on the 
information currently before the EPA at this time, the EPA proposes to 
find that Rule 2305 is not preempted under the CAA, ADA or the F4A. If 
the District Court were to issue a decision against the SCAQMD in the 
pending litigation before the EPA takes final action on Rule 2305 
pursuant to this proposal, we will take that decision into account and 
evaluate appropriate action at that time.\42\
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    \41\ California Trucking Association v. South Coast Air Quality 
Management District, C.D. Cal., Docket #21-cv-06341 (CTA).
    \42\ For instance, the EPA may re-propose action or supplement 
the proposed action depending upon the implications of the decision 
on the District's authority to implement and enforce the rule, among 
other considerations. If an adverse decision were to be issued after 
the EPA approves Rule 2305, then the EPA would consider withdrawal 
of the approval, again, depending upon the implications of the 
decision on the District's authority to implement and enforce the 
rule, among other considerations.
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    With respect to the CAA, the EPA's evaluation of Rule 2305 
indicates that the SCAQMD is authorized to adopt this program for 
inclusion into the California SIP. CAA section 110(a)(5) authorizes 
States to include any ISR program in their SIPs. Under CAA section 
110(a)(5), the EPA may not require a State to adopt an ISR program as 
part of its SIP, but the EPA may approve an ISR program that a State 
chooses to adopt and submit for inclusion into its approved SIP. In 
this context, ``indirect source'' means a facility, building, 
structure, installation, real property, road, or highway that attracts, 
or may attract, mobile sources of pollution.\43\ ``Indirect source 
review program'' means the facility-by-facility review of indirect 
sources of air pollution, including such measures as are necessary to 
assure, or assist in assuring, that a new or modified indirect source 
will not attract mobile sources of air pollution, the emissions from 
which would cause or contribute to air pollution concentrations--
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    \43\ CAA section 110(a)(5)(C). The term ``indirect source'' as 
defined in the CAA includes parking lots, and parking garages, and 
other facilities subject to any measure for management of parking 
supply, including regulation of existing off-street parking but such 
term does not include new or existing on-street parking. ``Indirect 
source'' does not include direct emissions sources or facilities at, 
within, or associated with, any indirect source.
---------------------------------------------------------------------------

     Exceeding any national primary ambient air quality 
standard for a mobile source-related air pollutant after the primary 
standard attainment date; or
     Preventing maintenance of any such standard after such 
date.\44\
---------------------------------------------------------------------------

    \44\ CAA section 110(a)(5)(D). Indirect source review programs 
are not considered ``transportation control measures.'' CAA section 
110(a)(5)(E).
---------------------------------------------------------------------------

    Rule 2305 involves the facility-by-facility review of existing and 
new warehouses, which are facilities that attract mobile sources of air 
pollution. Based on this review, the rule provides a list of specific 
measures that, when implemented by the warehouse operator, will reduce 
or offset the related mobile source emissions that contribute to the 
exceedances of the NAAQS for PM2.5 and ozone in areas under 
SCAQMD jurisdiction. The rule also provides options to allow the 
operator of the warehouse to develop a custom WAIRE plan or pay a 
mitigation fee or a combination of these options. More specifically, 
under Rule 2305, warehouse operators are required, on an annual basis, 
to earn or obtain WAIRE points sufficient to meet their WPCO, a value 
that reflects the WATTs associated with each warehouse. As noted 
previously, the WATTs parameter represents a calculated value that 
reflects the number of truck trips to and from a warehouse in a given 
year and serves as a proxy for overall warehouse activity and 
emissions.
    To earn or obtain WAIRE points, warehouse owners and operators have 
the option of: (i) taking various types of actions or making variety 
types of investments specified in the WAIRE menu; (ii) following an 
approved Custom WAIRE Plan; (iii) paying a mitigation fee; (iv) or any 
combination of such options (see section I.D of this document). The 
SCAQMD anticipates that the same types of actions and investments that 
are specified in Rule 2305 will also occur under the WAIRE Mitigation 
Program funded by the mitigation fee option under the rule (see section 
I.D of this document). As such, Rule 2305 is designed to reduce, 
offset, or mitigate the emissions generated by mobile sources attracted 
to warehouses in the SCAQMD. This includes the associated contribution 
to area-wide exceedances of the NAAQS and to the local pollutant burden 
on communities in the vicinities of warehouses.
    Rule 2305 is similar to the ISR review program previously adopted 
by the San Joaquin Valley Unified Air Pollution Control District 
(SJVUAPCD) to reduce or offset emissions of NOX and PM in 
the San Joaquin Valley from the construction-phase and operational-
phase of development projects through design features, on-site 
measures, and through off-site measures paid through implementation of 
an in-lieu mitigation fee.\45\ The SJVUAPCD ISR program was

[[Page 70622]]

upheld by the Ninth Circuit in a challenge that claimed that the 
program was characterized as an ISR program but was in reality a rule 
regulating emissions from nonroad equipment in violation of CAA section 
209(e).\46\
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    \45\ SJVUAPCD Rule 9510 (``Indirect Source Review (ISR)''), 
approved by the EPA at 76 FR 26609 (May 9, 2011), and approved as 
amended at 86 FR 33542 (June 25, 2021).
    \46\ NAHB v. SJVUAPCD, 627 F.3d 730, 734 (9th Cir. 2010); at 
739: ``The Act, by allowing states to regulate indirect sources of 
pollution, necessarily contemplates imputing mobile sources of 
pollution to an indirect source as a whole. If an indirect source 
review program could not attribute the emissions from mobile 
sources, while they are stationed at an indirect source, to the 
indirect source as a whole, states could not adopt any indirect 
source review program. What allows Rule 9510 to qualify as an 
indirect source review program under section 110(a)(5) is precisely 
what allows the Rule to avoid preemption under section 209(e)(2): 
its site-based regulation of emissions. In this way, the two 
sections do not conflict, but rather fit together neatly like two 
interlocking puzzle pieces.''
---------------------------------------------------------------------------

    Commenters, objecting to Rule 2305 during its adoption, contended 
that an ISR program, for the purposes of CAA section 110(a)(5), is 
limited to new or modified indirect sources and that, therefore, Rule 
2305 is not authorized under the CAA, at least as it applies to 
existing warehouses. This contention is based on the clause in the 
definition of the term ``indirect source review program'' describing 
such programs as ``including such measures as are necessary to assure, 
or assist in assuring, that a new or modified indirect source will not 
attract mobile sources of air pollution.'' \47\
---------------------------------------------------------------------------

    \47\ CAA section 110(a)(5)(D).
---------------------------------------------------------------------------

    In its own rulemaking process, the SCAQMD responded to this issue 
by noting that the SCAQMD's authority derives from State law, not 
Federal law. State law does not limit the authority of the SCAQMD to 
regulating only new or modified (as opposed to existing) indirect 
sources.\48\ The SCAQMD also noted that CAA section 110(a)(5) does not 
prescribe limits on State authority but rather prescribes certain 
limits on the EPA. Finally, the SCAQMD stated that it has authority 
under CAA section 116 for this type of provision.
---------------------------------------------------------------------------

    \48\ Final SCAQMD Staff Report, Master Responses, 157-158.
---------------------------------------------------------------------------

    In reviewing Rule 2035, the EPA has specifically evaluated whether 
it is consistent with the requirements of CAA section 110(a)(5). When 
taking action on any SIP submission, the EPA must evaluate whether the 
SIP provisions as issue meet applicable statutory and regulatory 
requirements. The EPA acknowledges that there are ambiguities in the 
language of section 110(a)(5). For example, section 110(a)(5)(D) 
superficially appears to define the term ``indirect source review 
program'' in terms of ``new or modified'' indirect sources. That 
provision in relevant part defines an indirect source program as one 
``including'' such measures at new or modified sources. The EPA does 
not, however, interpret this definition to restrict States from having 
such programs that extend to existing sources if they elect to do so. 
Instead, the use of ``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.
    Other provisions support this interpretation. Section 110(a)(5)(C) 
defines the term ``indirect source'' itself to include many things such 
as a building ``which attracts, or may attract, mobile sources of 
pollution.'' This definition could encompass both existing and future 
structures. By contrast, with respect to parking, section 110(a)(5)(C) 
expressly states that an indirect source program can include ``existing 
off-street parking'' but not ``new or existing on-street parking.'' If 
such an ``indirect source program'' could apply to existing off-street 
parking, then it is unclear why this conceptually would not extend to 
other existing sources such as existing buildings, notwithstanding the 
reference to new or modified sources in the definition of ``indirect 
source program.'' At most, there is a small degree of ambiguity with 
respect to whether Congress actually intended the definition of 
``indirect source program'' to function as a restriction on the EPA's 
authority to approve a State indirect source program that extends to 
existing buildings into the State's SIP. The EPA does not consider such 
a restrictive reading of the provision to be reasonable or logical, 
absent a clearer prohibition.
    As further support for this interpretation, the EPA notes that CAA 
section 116 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. Even if Congress 
anticipated that States might typically elect to adopt such programs 
that would include new or modified sources, Congress did not explicitly 
appear to preclude States from adopting indirect source programs that 
extend to existing sources as well, except with respect to ``new or 
existing on street parking.'' In other words, by defining the term 
``indirect source program'' in CAA section 110(a)(5)(D), Congress was 
not diminishing existing State authority under CAA section 116 to adopt 
such programs that apply to existing sources, such as existing 
warehouses, if they elect to do so. Thus, the EPA concludes that the 
State is not precluded from regulating both existing and new warehouses 
in Rule 2305, and thus this poses no issue with respect to the EPA 
proposing approval of the rule into the SIP.
    During the rule development process, the SCAQMD received comments 
objecting to Rule 2305 on the grounds that the rule, 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). These adverse 
comments cited to the Supreme Court decision in Engine Mfrs. Ass'n v. 
S. Coast Air Quality Mgmt. Dist, 541 U.S. 246 (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.\49\
---------------------------------------------------------------------------

    \49\ Engine Manufacturers Ass'n v. South Coast Air Quality 
Management District, 541 U.S. 246, 253-255 (2004).
---------------------------------------------------------------------------

    As noted above, the question of whether an ISR program is preempted 
under Section 209 of the CAA was squarely addressed by the Ninth 
Circuit in NAHB v. SJVUAPCD. The EPA agrees with the Ninth Circuit's 
interpretation of the statute on this point and proposes to find that 
Rule 2305 is similar in relevant respects to the ISR program the Court 
determined in NAHB was not preempted. Most critically, Rule 2305 
regulates at the level of the indirect source, and 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 
source site] as a whole.'' \50\ This ``site-based'' approach to 
regulating emissions ``is precisely what allows the Rule to avoid 
preemption under section 209(e)(2).'' \51\ That Rule 2305 is properly 
characterized as an ISR program under Section 110(a)(5) distinguishes 
it from the vehicle purchase mandate at issue in the Supreme Court EMA 
case.\52\
---------------------------------------------------------------------------

    \50\ NAHB v. SJVUAPCD, 627 F.3d 730, 737.
    \51\ Id., 739.
    \52\ ``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 [that were at issue in EMA] are 
not analogous to Rule 9510.'' NAHB v. SJVUAPCD, 627 F.3d 740.

---------------------------------------------------------------------------

[[Page 70623]]

    The EPA has previously acknowledged the possibility that a rule 
styled as an ISR program may in effect be a regulation of direct 
sources, including motor vehicles or nonroad sources. In other words, 
the EPA is not obligated merely to accept at face value a State or 
local authority's characterization, but may consider how the program 
will work in practice. In its 2011 final approval action on the 
SJVUAPCD ISR, the EPA noted factors that might indicate a rule 
ostensibly measuring emissions from a site was a de facto regulation of 
nonroad engines.\53\ As explained below, Rule 2305 lacks the indicia of 
a de facto regulation of either motor vehicles or nonroad vehicles or 
engines.
---------------------------------------------------------------------------

    \53\ ``[I]n the TSD, EPA evaluates the potential for Rule 9510, 
as an ISR rule otherwise authorized under CAA section 110(a)(5), to 
nevertheless run afoul of CAA section 209(e), and in so doing, EPA 
identified two ways that an ISR rule that on its face is authorized 
under CAA section 110(a)(5) could nonetheless be preempted. First, 
the ISR rule could be preempted if the rule in practice as applied 
acts to compel the manufacturer or user of a nonroad engine or 
vehicle to change the emission control design of the engine or 
vehicle, or second, an ISR rule could be preempted if it creates 
incentives so onerous as to be in effect a purchase mandate.'' 76 FR 
26609, 26611 (May 9, 2011).
---------------------------------------------------------------------------

    As explained in section I.D above, Rule 2305 applies to warehouse 
operators and provides multiple options for meeting the annual WPCO. As 
noted by the SCAQMD in response to comments on proposed Rule 2305, 
``the WPCO is not based on truck emissions; it is based on truck trips. 
The proposed rule uses truck trips as a proxy for total warehouse 
emissions when setting the compliance obligation because the number of 
truck visits is representative of the total activity at, and emissions 
associated with, a warehouse.'' \54\ 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 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 for the purposes of CAA section 209(a).\55\
---------------------------------------------------------------------------

    \54\ SCAQMD Final Staff Report, 160.
    \55\ SCAQMD's 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), particularly pages ES-5--ES-7, 
and table 18, indicates that the ZE/NEZ 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 incentive 
acquisition and use of ZE/NZE trucks over the non-acquisition 
options. However, the scenarios 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 through 2031. The EPA expects warehouse operators will select 
multiple points-earning actions or investments along with mitigation 
fees to meet the annual compliance obligation, and that the 
selection will change over the years in light of the ever-changing 
circumstances of individual businesses and the composition of 
vehicle fleets.
---------------------------------------------------------------------------

    Commenters objecting to the SCAQMD's adoption of Rule 2305 
contended that the requirements are preempted under the ADA and F4A. 
Under the ADA, with certain exceptions not applicable here, a State or 
political subdivision of a State may not enact or enforce a law, 
regulation, or other provision having the force and effect of law 
related to a price, route, or service of an air carrier or carrier 
affiliated with a direct air carrier through common controlling 
ownership when such carrier is transporting property by aircraft or by 
motor vehicle (whether or not such property has had or will have a 
prior or subsequent air movement).\56\ The F4A extends the same 
preemptive language to any motor carrier (``common carrier'') or any 
motor private carrier, broker, or freight forwarder with respect to the 
transportation of property.\57\ Rule 2305 applies to owners and 
operators of warehouses greater than 100,000 square feet of indoor 
floor space in a single building, and both air carriers and common 
carriers are subject to the requirements of Rule 2305 because both 
types of carriers own or operate such warehouses in the SCAQMD.
---------------------------------------------------------------------------

    \56\ 49 U.S.C. 41713(b).
    \57\ 49 U.S.C. 14501(c)(1).
---------------------------------------------------------------------------

    The EPA does not consider the requirements under Rule 2305 as 
relating directly to the ``price, route, or service'' of any air 
carrier or common carrier but do recognize 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 WAIRE points 
compliance obligation. However, the EPA proposes to find that Rule 2305 
is not preempted under either the ADA or F4A because any price effect 
is indirect and remote. Moreover, 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. 
Any incremental increase in price for delivery services due to 
compliance with Rule 2305 internalizes costs otherwise borne by the 
public, particularly members of the public living and working in the 
vicinities of warehouses, through the types of health effects 
associated with elevated concentrations of PM.
3. Is the rule enforceable as required under CAA section 110(a)(2)?
    The EPA has evaluated the enforceability of Rule 2305 with respect 
to applicability and exemptions; standard of conduct; compliance dates; 
sunset provisions; discretionary provisions; and test methods, 
recordkeeping and reporting,\58\ and the EPA believes, for the reasons 
given below, that the regulation is generally enforceable for the 
purposes of CAA section 110(a)(2) but with certain deficiencies.
---------------------------------------------------------------------------

    \58\ These concepts are discussed in detail in an EPA memorandum 
dated from September 23,1987, from J. Craig Potter, EPA Assistant 
Administrator for Air and Radiation, et al., to Addressees, Subject: 
``Review of State Implementation Plans and Revisions for 
Enforceability and Legal Sufficiency.''
---------------------------------------------------------------------------

    First, with respect to applicability, the EPA generally finds that 
Rule 2305 is sufficiently clear as to which entities are subject to the 
requirements in the regulation and which entities are exempt.\59\ The 
EPA finds that Rule 2305 is sufficiently specific so that the persons 
affected by the regulation are fairly on notice as to what the 
requirements and related compliance dates are.\60\ To a large extent, 
the EPA has already described the substantive requirements and 
compliance dates set forth in Rule 2305 in section I.D of this 
document. The EPA notes, however, that two definitions in Rule 2305 
cite to sections of the California Code of Regulations (CCR), and thus, 
the two definitions in Rule 2305 would be ambiguous for the purposes of 
enforcement of the SIP unless the CCR sections on which Rule 2305 
relies are submitted and approved into the SIP.\61\ The CCR sections on 
which Rule 2305 relies are included in two new CARB mobile source 
regulations that the EPA anticipates that CARB will submit to the EPA 
for approval as part of the California SIP. If these two CCR sections 
are submitted and the EPA subsequently approves them into the SIP, then 
Rule 2305 will avoid this particular potential ambiguity and the 
related implications for enforceability.
---------------------------------------------------------------------------

    \59\ 13 CCR 2023.
    \60\ 13 CCR 2023.1.
    \61\ The definitions in Rule 2305 of ``Near Zero-Emission'' 
truck and ``Zero-Emission'' truck cite to 13 CCR 1956.8 and 1963, 
respectively.
---------------------------------------------------------------------------

    Second, with respect to compliance dates, the EPA notes that all 
warehouses subject to the rule will be required to meet their WAIRE 
points annual compliance obligation requirements beginning with 
calendar year 2024. This is consistent with achieving emission 
reductions in advance of the July 20,

[[Page 70624]]

2032 attainment deadline for the South Coast Air Basin and Coachella 
Valley Extreme nonattainment areas for the 2008 ozone NAAQS. By 
extension, Rule 2305 compliance dates are compatible with the 
applicable attainment deadlines for the 2015 ozone NAAQS: August 3, 
2033, for the Coachella Valley ``Severe'' nonattainment area; and 
August 3, 2038, for the South Coast Air Basin ``Extreme'' nonattainment 
area. The compliance dates in Rule 2305 are also consistent with 
providing emission reductions in advance of the applicable attainment 
deadlines in the South Coast of October 16, 2025 for the 2006 24-hour 
PM2.5 NAAQS and December 31, 2025 for the 2012 annual 
PM2.5 NAAQS.\62\
---------------------------------------------------------------------------

    \62\ See 85 FR 57733 (September 16, 2020) and 40 CFR 
51.1004(a)(3) (2006 24-hour PM2.5 NAAQS); and 85 FR 71264 
(November 9, 2020) and 40 CFR 51.1004(a)(2) (2012 annual 
PM2.5 NAAQS).
---------------------------------------------------------------------------

    Third, Rule 2305 includes a sunset provision.\63\ Specifically, 
Rule 2305 provides that the WAIRE points annual compliance obligation 
requirements expire in the year following the determinations by the EPA 
that the South Coast Air Basin and Coachella Valley have attained the 
2015 ozone NAAQS and the determinations by CARB that the South Coast 
Air Basin and Coachella Valley have attained the State ambient air 
quality standard for ozone (which is numerically the same as the 2015 
ozone NAAQS). Generally, the EPA finds sunset provisions in SIP rules 
to be a deficiency that must be addressed for full approval because of 
the potential to interfere with reasonable further progress (RFP) or 
attainment of the NAAQS, and potential inconsistency with CAA section 
110(l) requirements through purported elimination of existing control 
requirements without a sufficient demonstration at that future date. In 
this instance, we are not crediting Rule 2305 at this time with a 
specific level of emissions reductions for RFP or attainment 
demonstration purposes. This does not mean that the rule would not 
achieve emissions reductions in practice over the near-term and well 
into the future and, therefore, does not mean that sunsetting the rule 
would not result in foregone emissions reductions that would be 
relevant for both the ozone and PM2.5 NAAQS at that future 
time. We recommend that SCAQMD amend Rule 2305 to eliminate the sunset 
clause. The SCAQMD is free to rescind the rule at any time, but a 
future rescission of Rule 2305 must be effectuated though adoption and 
submission of the rescission as a SIP revision to the EPA for review 
and action under CAA section 110(k), and consistent with CAA section 
110(l), at that time.
---------------------------------------------------------------------------

    \63\ SCAQMD Rule 2305(h).
---------------------------------------------------------------------------

    The EPA notes that Rule 2305 includes provisions that allow for 
discretion on the part of the SCAQMD's Executive Officer. Such 
``director's discretion'' provisions can undermine enforceability of a 
SIP regulation, and thus prevent full approval by EPA. In the case of 
Rule 2305, it allows for director's discretion in connection with the 
determination of whether WAIRE Points from a Custom WAIRE Plan are 
quantifiable, verifiable, and real and the determination of whether the 
warehouse owner or operator is making adequate progress to complete an 
approved Custom WAIRE Plan.\64\ Inclusion of such provisions that in 
effect give a State official, unilateral, and unbounded authority to 
make decisions concerning whether a regulated entity is, or is not, in 
compliance that bind the EPA or other parties are inconsistent with 
basic SIP requirements.
---------------------------------------------------------------------------

    \64\ SCAQMD Rule 2305(d)(4)(A)(iii) and (d)(4)(D).
---------------------------------------------------------------------------

    Lastly, Rule 2305 includes recordkeeping and reporting requirements 
that are sufficient to ensure compliance with the applicable 
requirements.\65\ The EPA notes that, in adopting Rule 2305, the SCAQMD 
Board directed the Executive Officer to develop an online portal for 
the purpose of submitting required reports and documents as required by 
Rule 2305. 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.\66\ The 
SCAQMD has since developed a WAIRE program tab under Rules & Compliance 
portion of the District's website. It includes a portal to the WAIRE 
POP for warehouse operators to submit reports and includes general 
information on the program such as the implementation guidelines, 
applications, guidance, and analytical tools, among other things.
---------------------------------------------------------------------------

    \65\ 13 CCR 2023.8 and 2023.9.
    \66\ SCAQMD Resolution 21-9, 7.
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4. Does the rule interfere with reasonable further progress (RFP) and 
attainment or any other applicable requirement of the Act?
    The SCAQMD adopted Rule 2305 in part to meet a commitment in the 
2016 South Coast AQMP to assess and identify potential actions to 
further reduce emissions associated with emission sources operating in 
and out of warehouse distribution centers. While the EPA is not 
proposing to credit Rule 2305 with achieving a specific amount of 
emissions reductions, the EPA's evaluation of Rule 2305 indicates that 
the rule will achieve additional emission reductions. 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.
    However, as discussed previously, we find that the sunset clause in 
Rule 2305 could interfere with attainment or reasonable further 
progress by foregoing emissions reductions that may be needed for 
attainment or maintenance of the NAAQS. Thus, the EPA recommends that 
the SCAQMD remove the sunset clause and follow the normal course of 
action in rescinding rules from the SIP, i.e., through a SIP revision 
and EPA approval under CAA section 110(k) and section 110(l).
5. Will the State have adequate personnel and funding for the rule?
    The SCAQMD adopted a specific rule, Rule 316 (``Fees for Rule 
2305''), for the purpose of recovering the SCAQMD's costs associated 
with implementing Rule 2305. In light of the adoption of Rule 316, the 
EPA finds that the SCAQMD will have adequate personnel and funding to 
implement Rule 2305.
6. EPA's Rule Evaluation Conclusion
    Based on the above discussion, the EPA believes Rule 2305 is 
consistent with the relevant CAA requirements, policies, and guidance, 
except as otherwise noted. As an ISR program under CAA section 
110(a)(5), Rule 2305 is not a required submission. The EPA proposes to 
find that the District has the authority to implement and enforce Rule 
2305 and is not prohibited from doing so by any State or Federal law. 
While Rule 2305, as stated previously, will reduce emissions associated 
with warehouses, the EPA proposes to find that the rule is not fully 
enforceable, and that the amount of associated emissions reductions is 
not sufficiently quantifiable for credit at the present time. The EPA 
proposes to find that Rule 2305 is SIP-strengthening and proposes to 
approve it on this basis. A recent decision by the Ninth Circuit upheld 
the EPA's approval of a SIP submission for the San Joaquin Valley on 
SIP strengthening grounds.\67\ In that case, like our proposed action 
on Rule 2305, the EPA deemed the SIP provision at issue not fully 
enforceable and accordingly granted no SIP credit for

[[Page 70625]]

emissions reductions from the provision.
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    \67\ Association of Irritated Residents v. EPA, 10 F.4th 937 
(9th Cir. 2021).
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C. Public Comment and Proposed Action

    As authorized in section 110(k)(3) of the Act, the EPA proposes to 
approve the submitted rule. The EPA concludes that, while SCAQMD Rule 
2305 does not meet all the evaluation criteria for enforceability, we 
are proposing approval because the submitted rule is not a required SIP 
element and would strengthen the SIP. In light of the deficiencies 
identified above, however, the EPA concludes that the submitted rule 
should not be credited in any attainment and rate of progress/
reasonable further progress demonstrations.
    We will accept comments from the public on the proposed action, the 
rationale and basis for the proposed action, and other relevant matters 
until November 13, 2023. If the EPA takes final action to approve the 
submitted rule, the final action will incorporate this rule into the 
federally enforceable SIP.

III. Incorporation by Reference

    In this rule, the EPA is proposing to include in a final EPA rule 
regulatory text that includes incorporation by reference. In accordance 
with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by 
reference SCAQMD Rule 2305, adopted on May 7, 2021, that establishes an 
ISR program for certain warehouse owners and operators, as described in 
section I of this preamble. The EPA has made, and will continue to 
make, these materials available through https://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).

IV. 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 proposed action merely proposes to approve State law 
as meeting Federal requirements and does not impose additional 
requirements beyond those imposed by State law. For that reason, this 
proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Orders 
12866 (58 FR 51735, October 4, 1993), 13563 (76 FR 3821, January 21, 
2011) and 14094 (88 FR 21879, April 11, 2023);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001); and
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act.
    Executive Order 12898 (Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations, 59 FR 7629, 
Feb. 16, 1994) directs Federal agencies to identify and address 
``disproportionately high and adverse human health or environmental 
effects'' of their actions on minority populations and low-income 
populations to the greatest extent practicable and permitted by law. 
The EPA defines environmental justice (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 environmental justice 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 environmental justice 
communities admitted into the State's AB 617 program in the affected 
area requested development of a warehouse ISR rule due to concerns 
regarding air pollution impacts from trucks and DPM.\68\ The EPA did 
not perform an EJ analysis and did not consider EJ in this action. Due 
to the nature of the action being proposed here, this proposed 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 environmental justice for people 
of color, low-income populations, and Indigenous peoples.
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    \68\ SCAQMD Final Staff Report, 9 and 10.
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    Lastly, the SIP is not approved to apply on any Indian reservation 
land or in any other area where the EPA or an Indian tribe has 
demonstrated that a tribe has jurisdiction. In those areas of Indian 
country, the proposed rule 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).

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: October 5, 2023.
Martha Guzman Aceves,
Regional Administrator, Region IX.
[FR Doc. 2023-22518 Filed 10-11-23; 8:45 am]
BILLING CODE 6560-50-P