For almost a decade, the logistics industry has faced the threat of “indirect source rules” or ISRs. Indirect source rules are a clever way of saying that facilities should be responsible for emissions from sources they do not control. Under the ISR logic, a warehouse in the Inland Empire would be responsible for the emissions of trucks picking up and dropping off freight.

Mobile source regulatory authority resides with the Air Resources Board (CARB) since California began controlling emissions for the simple reason that cars and trucks move throughout the State (not to mention the country) and vehicle operators could never comply with a patchwork of different regulations from county to county. CARB has implemented this authority through two straightforward mechanisms: new engine standards, by which CARB has ensured that each new generation of vehicles is cleaner than the last and in-use standards, where CARB requires that vehicles be retired early thereby forcing the adoption of newer, cleaner equipment. Through these requirements, new vehicles are more than 90% cleaner than older vehicles…and are getting cleaner still.

Local air pollution control districts were granted authority over stationary sources like oil refineries and power plants for the simple reason that these sources do not move and cannot be subject to multiple jurisdictions. But, local air pollution control districts have always coveted CARB’s mobile source authority. ISRs are a means through which local districts hope to wield mobile source authority.

The current ISR battle begins with the South Coast Air Quality Management District’s (SCAQMD) 2017 Air Quality Management Plan (AQMP). In that plan, SCAQMD again put ISRs on the table. After years of development, the March 2017 approval of the 2017 AQMP accelerated the ISR discussion. A month later, CARB took up the indirect source issue despite the fact it has direct regulatory authority to set engine emissions standards. A year later, CARB staff ultimately concluded that its authority is better exercised through establishing new engine standards and in-use standards.

However, during a CARB Board hearing, community activists expressed displeasure with local land-use decisions. These activists requested tools from CARB to block or overturn these decisions currently made by local elected officials. The CARB Board, in spite of its direct regulatory authority, has expressed sympathy to activists’ concerns. CARB Chair Mary Nichols said:

“…the proliferation of warehouses has not gone unnoticed. It’s a really serious problem and the Air Resources Board was watching the South Coast district very closely and hoping that they will do the right thing. And if some reason they don’t then we will have to take action.”

Fast forward to this March. SCAQMD heard public testimony on staff’s proposal to initiate a regulatory process for freight facility indirect source rules. Following public testimony and citing lack of board member attendance, the Board postponed the issue. In April, the Board again voted to postpone consideration. This May, if enough Board members are present, the public may finally know where the SCAQMD stands on ISRs – a phenomenally bad public policy that, if implemented, would have dire consequences for the logistics industry, the ports and consumers throughout the United States.

Why dire consequences?

Unlike the straightforward regulatory approach California has taken for decades, ISRs require freight facilities, like marine terminals, to be responsible for mobile source emissions (trucks) – sources they do not control. ISRs have no requirement that equipment manufacturers build compliant trucks, unlike new engines standards. Indirect source rules have no requirement that fleet owners accelerate their purchase of new, cleaner equipment, unlike in-use standards.

Instead, indirect source rules would either fine freight facilities when truck manufacturers don’t produce cleaner trucks and/or fleet owners don’t purchase those vehicles or would require facilities to limit hours of operation or shut down when they reach emission thresholds. Imagine how that would play out in a global trade environment?

Which raises the question, how is indirectly regulating something more effective than doing so directly? How are indirect source rules a better strategy to clean up the air than new engine standards and new in-use standards? Or are indirect source rules simply a power grab by regulators attempting to exert control over a vibrant part of California’s economy?