|On March 19, the City Council received the attached letter from Warland Investments Company objecting to two new South Coast Air Quality Management District (SCAQMD) rules which are set for hearing on April 2. Warland is one of the largest landowners in the Cypress Business Park and a crucial component of Cypress' local economy.
SCAQMD is the regulatory agency responsible for improving air quality in Los Angeles, Orange County, Riverside and San Bernardino counties. It is responsible for controlling emissions primarily from stationary sources of air pollution. These include anything from large power plants and refineries to the corner gas station. There are about 28,400 such businesses operating under SCAQMD permits. Many consumer products are also considered stationary sources; these include house paint, furniture varnish, and thousands of products containing solvents that evaporate into the air. About 25% of the area's ozone-forming air pollution comes from stationary sources, both businesses and residences. The other 75% comes from mobile sources - mainly cars, trucks and buses, but also construction equipment, ships, trains and airplanes. Emission standards for mobile sources are established by state or federal agencies, such as the California Air Resources Board and the U.S. Environmental Protection Agency, rather than by local agencies such as SCAQMD.
SCAQMD develops and adopts an Air Quality Management Plan, which serves as the blueprint to bring the area into compliance with clean air standards. Rules are adopted to reduce emissions from various sources, including specific types of equipment, industrial processes, paints and solvents, even consumer products. Permits are issued to many businesses and industries to ensure compliance with air quality rules. SCAQMD conducts periodic inspections to ensure compliance with these requirements.
Proposed Rules 2305 and 316
Proposed Rule 2305 requires warehouses greater than 100,000 square feet to directly reduce nitrogen oxides and diesel particulate matter, or to facilitate emission and exposure reductions of these pollutants. The Proposed Rule establishes the Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program which consists of a menu-based points system that will require warehouse operators to annually earn a specified number of points by completing actions from a menu. Menu items include things such as acquiring or using Near Zero Emissions (NZE) and/or Zero Emissions (ZE) on-road trucks, ZE equipment, ZE charging/fueling infrastructure, etc. Alternatively, warehouse operators unable to earn the specified number of points by completing menu items could prepare and implement a custom plan specific to their site, or pay an annual mitigation fee. Warehouse operators and owners would also have reporting and recordkeeping requirements.
Proposed Rule 316 establishes administrative fees that warehouse operators and owners must pay to allow SCAQMD to recover administrative costs associated with ensuring compliance with PR 2305. These fees include annual WAIRE fees, a Custom WAIRE Plan application evaluation fee, and a Mitigation Program administration fee. The fees established by PR 316 would be in addition to any mitigation fees paid by warehouse operators and owners under PR 2305.
Warland objects to the proposed SCAQMD rules for several reasons. The objection of most concern to the city is, "The Proposed Rules unduly burdens warehouse owners and operators in that they would have to either assume substantial costs of upgrading their facilities and or purchasing near-zero emission trucks, or assume an average annual compliance cost of approximately $0.90/square foot as soon as the year 2025. Although improving air quality is important to South Coast businesses and residents, the Proposed Rules will substantially increase the costs to operate by warehouse owners and operators, which will in tum increase the costs of goods and services for those same businesses and residents. Even more critically, the Proposed Rules will almost certainly drive warehouse owners and operators, as well as jobs, out of the South Coast area. The potential negative economic impact of the Proposed Rules cannot be overstated and demands further evaluation."