November 30, 2021

Volume XI, Number 334

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November 30, 2021

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November 29, 2021

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Proposed Rule in Southern California Imposes Compliance Obligations To Reduce Emissions from Large Trucks and Yard Equipment

The South Coast Air Quality Management District (SCAQMD) recently released a 153-page preliminary draft staff report that analyzes one of its most controversial proposed rules in recent years: the Warehouse Indirect Source Rule (Warehouse ISR). The Warehouse ISR, unlike other air district rules that mainly affect factory emissions, would require owners and operators of warehouses to take specific actions each year or pay a mitigation fee or implement a combination of the two. The Warehouse ISR regulates the emissions associated with vehicle travel to-and-from large warehouses within the SCAQMD's jurisdiction (portions of Los Angeles, Riverside, and San Bernardino Counties, as well as all of Orange County) with the primary goal of improving ozone and particulate matter levels in the region’s air.

Below, we address common questions focusing on the applicability of the Warehouse ISR, its high-level impact as currently proposed, and the opportunities for interested parties to learn more about the Warehouse ISR and provide input to the SCAQMD.  Interested parties can provide comments on the Warehouse ISR at virtual community meetings to be conducted via Zoom on February 16 and February 17, 2021, or in writing before the hearing during which the SCAQMD Governing Board will consider the rule (currently scheduled for April 2, 2021, but this schedule could change).

APPLICABILITY OF THE WAREHOUSE ISR: WHO WILL BE AFFECTED?

The Warehouse ISR will apply to owners and operators of both new and existing warehouses that contain greater than 100,000 square feet of indoor floor space in a single building.

HOW WILL THE WAREHOUSE ISR OPERATE AS CURRENTLY DRAFTED?

The Warehouse ISR is designed to reduce or offset "indirect source" emissions, which are those emissions that do not originate directly from a warehouse, but stem from its day-to-day operation, such as trucks entering and exiting the premises with manufactured goods. Under the Warehouse ISR, each warehouse owner or operator must satisfy an annual points requirement that is determined according to a formula. Warehouse owners and operators may satisfy their individualized points requirement each year by one of three methods: (i) taking specific, pre-approved actions, (ii) paying a mitigation fee, or (iii) combining the first two methods by taking some actions to limit emissions and supplementing them with a reduced mitigation fee.

Proposed actions that would count toward satisfaction of a warehouse owner or operator's points requirement include acquiring low or zero-emissions trucks, increasing the proportion of annual truck trips by low or zero-emissions trucks, and installing onsite electrical charging or alternative fueling infrastructure (such as hydrogen). A full list of actions that would earn points, as well as the proposed formula for the points requirement, is included in the current proposed Warehouse ISR. The rule as proposed is complex and regulated parties will need to carefully consider their options.

Warehouse owners and operators who do not meet their points requirement will be required to pay a mitigation fee. Estimates of this fee vary, but the SCAQMD has estimated in its preliminary draft staff report that the mitigation fee will require warehouse owners and operators to pay an average of $0.75 per square foot on an ongoing, annual basis. (SCAQMD Preliminary Draft Staff Report, p. 77.) It is possible that the compliance costs could be higher.

WHAT OPPORTUNITIES EXIST TO INFLUENCE THE RULEMAKING PROCESS?

Though COVID-19 restrictions on gatherings have temporarily halted SCAQMD's plans for public meetings to gather input regarding the Warehouse ISR, interested parties still have an opportunity to provide feedback. SCAQMD is currently seeking comments on the proposed Warehouse ISR at upcoming community meetings on February 16 and 17, 2021. These public meetings have been scheduled in order to provide information and solicit comments from the public on the proposed Warehouse ISR. The meetings will be conducted via Zoom, and more information is available on the SCAQMD website.

CONCLUSION: WHAT DOES THE FUTURE HOLD FOR THE WAREHOUSE ISR?

The Warehouse ISR is expected to be considered by the SCAQMD Governing Board at a public hearing on April 2, 2021. Approximately 30 days prior to that hearing, SCAQMD will release further information pertaining to the Warehouse ISR, including a socioeconomic assessment and a comparative analysis of other federal or SCAQMD rules and regulations that are applicable to the same source, along with potential revisions to the proposed rule. Interested parties may attend the upcoming community meetings in February to provide comments on the Warehouse ISR, as well as submit comments to the SCAQMD Governing Board during the notice and comment period in advance of the anticipated April 2, 2021, public hearing.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 41
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About this Author

John Condas, Allen Matkins Law Firm, Environment and Real Estate Attorney
Partner

John C. Condas, a partner in our Orange County office, has broad experience obtaining and defending all types of land use and environmental permits. He has assisted numerous land developers and industrial, multifamily, retail and office developers, and homebuilders in obtaining entitlements from federal, state, regional and local agencies. He has particular experience working with multiple species habitat plans, affordable housing regulations and the winding down of RDAs, and advises clients on the developing climate change and green building requirements they face....

949-851-5551
Dana P. Palmer Environmental Lawyer LA Office
Partner

Dana P. Palmer is a partner in the Los Angeles office and a member of the firm's Environmental & Natural Resources Group. Dana's practice focuses on air quality regulatory compliance, litigation pertaining to California's Proposition 65 and CERCLA cases, and a variety of environmental transactional matters. He has broad experience in dealing with California agencies including the South Coast Air Quality Management District, California Air Resources Board, State and Regional Water Boards, Department of Toxic Substances Control, Department of Pesticide Regulation,...

(213) 955-5613
Kent Toland Litigation & Counseling Attorney Allen Matkins Leck Gamble Mallory & Natsis Los Angeles, CA
Associate

Kent Toland helps craft litigation strategies tailored specifically to meet his clients' particular needs and objectives. A skillful researcher, Kent consistently delivers high-quality work. In all client matters, he develops a deep understanding of the relevant facts and all related law in order to make the best possible arguments on behalf of his clients.

Kent earned his law degree from Columbia Law School, where he was a James Kent Scholar and a Harlan Fiske Stone Scholar. While attending law school, Kent served as the Notes Editor for the Journal of Law and Social Problems...

(213) 955-5634
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