California bets on an obscure tool to replace clean air authority Trump revoked

When a package arrives at your door, it has likely traveled through a chain of ports, railyards and warehouses throughout the state. All those ships, trains and trucks leave behind a trail of diesel exhaust as they go, driving some of the highest asthma rates in communities.

For decades, state and federal regulators have tried to clean that up. Now much of their authority is in doubt: the Trump administration revoked California’s authority to mandate electric vehicles and pulled back federal power to regulate greenhouse gas emissions — undermining California’s most effective tools.

A bill moving through the Legislature would try to fill that gap. Assembly bill 1777, authored by Democrat Robert Garcia, who represents parts of San Bernardino County, would give California air regulators authority to hold ports, warehouses and railyards 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 drastic rollback by the Trump administration’s desire to jeopardize Californians health and safety,” Garcia said in an email.

Indirect source rules essentially hold operational sites responsible for the pollution they attract, not the trucks and trains themselves. But the tool is controversial because state authority to use it isn’t clearly settled law. Even locally, where authority is more established, the indirect source rules have drawn litigation. And experts say these rules alone likely can’t make up for all the emissions reductions that California is losing out on.

Legal battles give the state pause

The ports, warehouses and railyards don’t own the trucks and trains that serve them. Why, business groups ask, should they be responsible for the pollution those vehicles leave behind?

For decades, they’ve been fighting that battle in court.

In 2005, the San Joaquin Valley Air District was the first to adopt an indirect source rule, requiring developers to reduce emissions from the construction of large industrial, commercial or residential buildings. The National Association of Home Builders sued, arguing the rule amounted to a vehicular emission 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 similar arguments as the National Home Builders Association did two decades prior. In both cases, courts sided with air regulators.

Semi-trucks exit Yusen Terminals at the Port of Los Angeles in San Pedro on Feb. 11, 2025. Photo by Joel Angel Juarez for CalMatters

The key legal distinction, courts have found, is that indirect source rules target facilities rather than vehicles. That makes them more like regulation of stationary sources — such as refineries — than vehicle emissions standards.

“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, said the matter is far from settled.

“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 whether the tool was ever necessary. “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.”

State air board leaders, despite the favorable court record, have been cautious about moving forward without clearer legal authority — which is what Garcia’s proposal would provide.

Ahead of the air board’s report to the governor last year, former chair Liane Randolph said the board was weighing indirect source rules as just one piece of a broader response to federal 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 — called the Warehouse Actions and Investments to Reduce Emissions, or WAIRE, program — offers an early look at how these rules work in practice.

Warehouses of 100,000 square feet or larger must earn points by taking actions to reduce pollution: doing business with companies that use electric trucks, installing charging infrastructure, or paying a fee that goes toward mitigating their pollution’s impact on nearby communities.

According to the South Coast air district, the results have been significant. Warehouses in the region have bought more than 1,400 zero-emission trucks and yard tractors. On average, warehouses are earning 3.5 times more points than they’re required to and mitigation fees account for just 5% of the total points earned. The fees collected total $56 million so far.

Business groups say the air district’s data doesn’t tell the whole story. Brooke Armour, executive vice president of the California Business Roundtable, said the data don’t capture how many warehouse developments were delayed or abandoned because of high operating costs. The warehouse rule, she said, is one cost layered on top of many.

“It’s not a cost in isolation; it’s a cost on top of an ever-cascading series of costs,” she said.

Independent data offer some context. Michael McCarthy, a researcher who tracks California warehouse trends, said the warehouse industry has been growing at about the same pace as the national economy over the last two decades.

“We’re currently in a warehouse construction slowdown, but it is because of broader national market forces,” he said, not necessarily regulatory forces. “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 more than a decade.

According to the South Coast air district, about 100 million square feet of warehouse space has been added to the Southern California region since the rule went into effect.

Rob Lapsley, president of the California Business Roundtable, warned that AB 1777 would give state regulators sweeping 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.

Supporters of the bill say that framing ignores a different set of 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 stakes are significant. The California Air Resources Board projects that the loss of state programs, including its mandate to electrify cars and heavy duty trucks, will lead to 14,500 more deaths, 5,000 more hospitalizations and 6,700 more emergency room visits from respiratory and cardiovascular problems 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.

Indirect source rules won’t close the gap on their own. But Sam Wilson, senior vehicles analyst with the Union of Concerned Scientists, said such rules would help lay the groundwork for wide-scale electrification — and that other states are taking notice. In Illinois, a measure inspired by the South Coast WAIRE program, called the Warehouse Pollution Reduction Act, is making its way 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.”