When a package reaches your doorstep, it has likely passed through a network of ports, railyards, and warehouses across the state. These ships, trains, and trucks emit diesel exhaust along the way, contributing to some of the highest asthma rates in communities.
For many years, state and federal regulators have attempted to address this issue. However, their efforts face uncertainty: the Trump administration rescinded California’s authority to require electric vehicles and reduced federal power to control greenhouse gas emissions, weakening California’s most effective strategies.
A legislative bill aims to bridge this gap. Assembly Bill 1777, introduced by Democrat Robert Garcia who serves parts of San Bernardino County, seeks to empower California air regulators to hold ports, warehouses, and railyards accountable for pollution affecting nearby communities, utilizing a tool known as the indirect source rule.
Garcia stated in an email that the proposal “reflects this changing environment and aims to add more tools for California to combat the drastic rollback by the Trump administration’s desire to jeopardize Californians health and safety.”
Indirect source rules hold operational facilities accountable for the pollution they attract rather than the vehicles themselves. This approach is contentious because the state’s authority to implement it remains legally ambiguous. Even in areas where authority is clearer, these rules have faced legal challenges. Experts also note that indirect source rules alone are unlikely to compensate for all the emissions reductions California is missing.
Legal battles give the state pause
Ports, warehouses, and railyards do not own the trucks and trains that service them, leading business groups to question their responsibility for the resulting pollution.
For years, these entities have been challenging this responsibility in court.
In 2005, the San Joaquin Valley Air District was the pioneer in adopting an indirect source rule, mandating developers to cut emissions from large industrial, commercial, or residential projects. The National Association of Home Builders contested this, claiming it was a vehicular emission standard preempted by federal law.
In 2023, following the South Coast Air Quality Management District’s introduction of an indirect source rule for warehouses, the California Trucking Association sued over similar grounds. In both instances, the courts ruled in favor of air regulators.
Courts have differentiated these rules from vehicle emission standards by targeting facilities, akin to stationary source regulations like those for refineries.
“Every court that’s ever seen a challenge to it has rejected the challenge,” said Brennon Mendez, an environmental law and policy fellow at the UCLA School of Law. “There’s been precedent that’s going to defend them against the challenges.”
Chris Shimoda, a lobbyist for the California Trucking Association, argued that the issue is far from resolved.
“The Clean Air Act is pretty clear that mobile source emission standards are the exclusive providence of the federal EPA,” he said. “Just one court case that didn’t get beyond the district court is not a settled matter by any means.”
Shimoda also questioned the necessity of the tool. “We’ve been extremely successful in reducing tailpipe emissions from what I call the traditional regulatory regime,” he said. “The need for indirect source review really has never been there, and it kind of laid dormant for many decades.”
Despite favorable court outcomes, state air board leaders remain cautious about advancing without clearer legal authority, which Garcia’s proposal seeks to provide.
Ahead of a report to the governor, former chair Liane Randolph mentioned that the board was considering indirect source rules as part of a broader strategy to counter federal policy rollbacks.
“There’s no one strategy that’s going to work,” she said. “It’s really going to need to be a suite of different things.”
A test case in Southern California
The South Coast Air Quality Management District’s warehouse indirect source rule, known as the Warehouse Actions and Investments to Reduce Emissions (WAIRE) program, provides an early example of how these rules operate.
Warehouses of 100,000 square feet or more must earn points by taking pollution-reducing actions: partnering with companies using electric trucks, setting up charging infrastructure, or paying fees to mitigate their pollution’s effects on nearby communities.
According to the South Coast air district, the results have been substantial. Warehouses in the area have acquired over 1,400 zero-emission trucks and yard tractors. On average, they are earning 3.5 times the required points, with mitigation fees accounting for only 5% of total points earned. Fees collected have reached $56 million to date.
Business groups argue the air district’s data doesn’t reveal the full picture. Brooke Armour, executive vice president of the California Business Roundtable, stated that the data fail to show how many warehouse projects were delayed or canceled due to high operational costs. She described the warehouse rule as an additional cost on top of many others.
“It’s not a cost in isolation; it’s a cost on top of an ever-cascading series of costs,” she said.
Independent data provide additional context. Michael McCarthy, a researcher who monitors California warehouse trends, noted that the warehouse sector has expanded at a rate comparable to the national economy over the past two decades.
“We’re currently in a warehouse construction slowdown, but it is because of broader national market forces,” he said, rather than regulatory influences. “Five million square feet of warehouses are currently under construction in the Inland Empire this quarter, and that is the slowest it has been” in over a decade.
The South Coast air district reports that approximately 100 million square feet of warehouse space has been added to the Southern California region since the rule’s implementation.
Rob Lapsley, president of the California Business Roundtable, cautioned that AB 1777 would grant state regulators extensive new economic authority.
“This bill represents essentially providing (the California Air Resources Board) and the other regulatory agencies with the greatest ability to control California’s economy of any of the bills that we have seen, especially since cap-and-trade.” he said.
Proponents of the bill argue that this perspective overlooks other costs entirely.
“When families have to choose between buying their inhaler from their diesel‑induced asthma and putting food on their table, that’s a cost-of-living issue,” said Ada Waelder, a policy advocate with environmental group Earthjustice.
A step toward electrification
The implications are significant. The California Air Resources Board anticipates that losing state programs, including mandates to electrify cars and heavy-duty trucks, will result in 14,500 additional deaths, 5,000 more hospital admissions, and 6,700 extra emergency room visits due to respiratory and cardiovascular issues by 2037.
“The gap that exists in California’s clean air progress because of those federal actions is significant. It is deadly,” said Will Barrett with the American Lung Association.
While indirect source rules cannot close the gap alone, Sam Wilson, senior vehicles analyst with the Union of Concerned Scientists, believes these rules could help lay the foundation for widespread electrification. Other states are taking notice, with Illinois considering a measure inspired by the South Coast WAIRE program called the Warehouse Pollution Reduction Act, which is progressing through the legislative process.
“One thing that the states can do while we’re in the current political landscape is to help to build those foundations for future freight electrification through indirect source rules.”
In California, Wilson added, “It is literally the worst time to throw our hands up and say we can’t do anything about it.”
