California bets on an obscure tool to replace clean air authority Trump revoked
When a package arrives at your door, it has likely passed through a chain of ports, train stations and warehouses across the state. All those ships, trains and trucks leave behind a trail of diesel exhaust, leading to some of the highest rates of asthma in communities.
For decades, state and federal regulators have tried to remedy this situation. Today, much of their authority is in doubt: The Trump administration revoked California’s authority to tax electric vehicles and withdrew federal authority to regulate greenhouse gas emissions – undermining California’s most effective tools.
A bill before the Legislature would attempt to fill that gap. Assembly Bill 1777, authored by Democrat Robert Garcia, who represents parts of San Bernardino County, would give California air regulators the power to hold ports, warehouses and rail yards accountable for the pollution they draw to nearby communities — using a regulatory tool called the indirect source rule.
The proposal “reflects this changing environment and aims to add more tools for California to combat the Trump administration’s drastic rollback of its desire to jeopardize the health and safety of Californians,” Garcia said in an email.
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The indirect source rules essentially hold operational sites responsible for the pollution they attract, not the trucks and trains themselves. But this tool is controversial because the state’s authority to use it is not the subject of clearly established law. Even at the local level, where authority is better established, rules relating to indirect sources have given rise to disputes. And experts say these rules alone probably won’t be able to make up for all the emissions reductions California loses.
Legal battles give the State pause
Ports, warehouses and rail yards do not own the trucks and trains that serve them. Why, business groups ask, should they be responsible for the pollution left by these vehicles?
They have been waging this battle in court for decades.
In 2005, the San Joaquin Valley Air District was the first to adopt an indirect sources rule, requiring developers to reduce emissions from the construction of large industrial, commercial or residential buildings. The National Association of Home Builders sued, arguing that the rule amounted to a vehicle emissions standard, which is preempted by federal law.
In 2023, after the South Coast Air Quality Management District developed an indirect source rule for warehouses, the California Trucking Association sued the air district over the regulation, making arguments similar to those of the National Home Builders Association two decades earlier. In both cases, the courts sided with the air regulators.
The main legal distinction, according to the courts, is that the indirect source rules target facilities rather than vehicles. This brings them closer to regulating stationary sources – such as refineries – than to vehicle emissions standards.
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“Every court that has faced a challenge has rejected the challenge,” said Brennon Mendez, an environmental law and policy specialist at UCLA Law School. “There is precedent that will defend them against challenges.”
Chris Shimoda, a lobbyist for the California Trucking Association, said the matter is far from settled.
“The Clean Air Act makes clear that mobile source emission standards are the sole province of the federal EPA,” he said. “A single court case that has not progressed beyond the district court stage is by no means a settled matter.”
Shimoda also questioned whether the tool was ever necessary. “We have been extremely successful in reducing tailpipe emissions through what I call the traditional regulatory regime,” he said. “The need for indirect examination of sources never really existed, and it lay dormant for many decades.”
Leaders of the state’s air boards, despite a favorable legal record, have been cautious about moving forward without clearer legal authorization — which Garcia’s proposal would provide.
Before the air board’s report to the governor last year, former chair Liane Randolph said the board viewed the indirect source rules as one part of a broader response to federal cuts.
“There is no single strategy that will work,” she said. “It’s really going to have to be a series of different things.”
A test case in Southern California
The South Coast Air Quality Management District’s Warehouse Indirect Source Rule – called the Warehouse Actions and Investments to Reduce Emissions, or WAIRE, program – offers a first look at how these rules work in practice.
Warehouses of 100,000 square feet or more must earn points by taking steps to reduce pollution: doing business with companies that use electric trucks, installing charging infrastructure or paying fees intended to mitigate the impact of their pollution on neighboring communities.
According to the South Coast Air District, the results have been significant. Area warehouses have purchased more than 1,400 zero-emission construction trucks and tractors. On average, warehouses earn 3.5 times more points than what they are charged and mitigation fees represent only 5% of the total points earned. Fees collected so far total $56 million.
Business groups say the air district data doesn’t tell the whole story. Brooke Armour, executive vice president of the California Business Roundtable, said the data does not reflect the number of warehouse developments that have been delayed or abandoned because of high operating costs. The warehouse rule, she said, is one cost that adds up to many.
“This is not an isolated cost; it’s a cost that adds to a constantly cascading series of costs,” she said.
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Independent data provides some context. Michael McCarthy, a researcher who tracks warehouse trends in California, said the warehouse industry has grown at about the same rate as the national economy over the past two decades.
“We are currently facing a slowdown in warehouse construction, but that is due to broader domestic market forces,” he said, and not necessarily regulatory forces. “Five million square feet of warehouses are currently under construction in the Inland Empire this quarter, and that’s the slowest in over a decade.
According to the South Coast Air District, approximately 100 million square feet of warehouse space has been added to the Southern California region since the rule took effect.
Rob Lapsley, president of the California Business Roundtable, warned that AB 1777 would give state regulators considerable new economic authority.
“This bill is essentially about providing (the California Air Resources Board) and other regulatory agencies the greatest ability to control California’s economy of any bill we’ve seen, especially since cap and trade.” he said.
Supporters of the bill say the framing completely ignores another set of costs.
“When families have to choose between buying their inhaler to treat their diesel-induced asthma and putting food on their table, it’s a cost of living issue,” said Ada Waelder, a policy activist with the environmental group Earthjustice.
A step towards electrification
The stakes are high. The California Air Resources Board projects that the loss of the state’s programs, including its mandate to electrify cars and heavy trucks, will result in 14,500 additional deaths, 5,000 additional hospitalizations and 6,700 additional emergency room visits for respiratory and cardiovascular problems by 2037.
“The gap that exists in California’s progress on air quality because of these federal actions is significant. It is deadly,” said Will Barrett of the American Lung Association.
Indirect source rules alone will not close the gap. But Sam Wilson, senior vehicle analyst at the Union of Concerned Scientists, said such rules would help lay the groundwork for large-scale electrification — and other states are taking note. In Illinois, a measure modeled after the South Coast’s WAIRE program, called the Warehouse Pollution Reduction Act, is making its way through the legislative process.
“One thing states can do in today’s policy landscape is help lay the groundwork for future freight electrification through rules on indirect sources.”
In California, Wilson added: “This is literally the worst time to put our hands up and say there’s nothing we can do about it. »
