Cargo Volume Cap for Los Angeles/Long Beach?

John McLaurin, President

The South Coast Air Quality Management District (SCAQMD) is moving forward with Proposed Rule 2304 (PR 2304) - Indirect Source Rule (ISR) for Commercial Marine Ports. If enacted, it may cap cargo throughput at the ports of Long Beach and Los Angeles.

Under this proposed rule there would be two requirements: the Ports of LA/LB would be required to meet a port-wide mass emissions cap; and each individual container terminal would also have to meet their own individual emissions cap.

SCAQMD is expecting the Ports of Long Beach and Los Angeles to use tools such as deploying charging infrastructure, applying for grants (though it is unclear how applying for grants is a regulatory tool), developing incentive programs, implementing lease measures, and enacting tariff requirements (e.g., Clean Trucks Program).

According to the port ISR concept, terminals will be expected to control emissions from marine terminal equipment, locomotives, vessels, tugs, pilot boats and trucks. Most of these entities do not have a contractual relationship with the terminals.

Control of emissions would be done by evaluating a “terminal-specific max TEU throughput”. This would impose a cap on cargo volume; “routing cleaner ships through coordination with customers and ocean carrier under parent corporate control; require clean air actions from customers that have contractual agreements with terminal” and implementation of fees.

The SCAQMD port ISR is an effort by the air district to reduce NOx emissions and vessel emissions, including those in-transit. At this point in the development of the Port ISR, it is unclear at what level the emissions limits would be placed. In a recent presentation, SCAQMD staff stated that the emission reduction needs for the South Coast air region implied reductions of up to 80% for nitrogen oxides. The proposed port ISR concept would include two milestone years of 2031 and 2037, where no flexibility would be granted. Since vessel emissions make

up the majority (around 70%) of port-related emissions, the consequences of the rule will center on what happens with vessel technology. Given that there are no known tools to reduce vessel emissions by that magnitude in such a short timeframe, the emissions cap will likely serve as a limit on cargo volumes. In practice, this could mean that a terminal operator may have to choose between turning away cargo or willfully violating the rule.

As concerning as this rule is, it should not be viewed in isolation. Cargo owners need to look at the totality of recent regulatory requirements, additional proposed measures and their overall cost to the supply chain. These measures include the following:

• SCAQMD Warehouse Indirect Source Rule – currently being litigated and estimated to cost an additional $1 billion per year in compliance costs to the Southern California supply chain.

• SCAQMD New Railyard Facility Indirect Source Rule – proposed.

• CARB Advanced Clean Fleet rule – requiring that all new trucks registered in the state drayage truck registry be zero emission trucks starting January 1, 2024; requires complete transition to zero emission trucks by 2035.

• Costs to transition the port drayage fleet to zero emissions will be in the billions of dollars.

• California Energy Commission estimates that 157,000 MD/HD chargers are needed by 2030 – meaning over 400 chargers per week for the next seven years need to be installed in California requiring a “Manhattan Project” approach addressing permitting, funding, grid power availability and infrastructure for it to happen. 

• It has been proposed that the Ports of Long Beach and Los Angeles Clean Truck Fee be doubled to $20 per TEU later this year.

With respect to locally focused proposals and regulatory requirements, we expect them to be adopted in other air districts impacting other port gateways. We have already seen two similar ISR proposals from the San Diego County Air Pollution Control District. 

This is on top of rules which will already add immense costs while further increasing instability and uncertainty: more stringent shore power requirements, new tug replacement requirements, and 2030 goals for zero- emission cargo-handling equipment that doesn’t exist and has no supporting infrastructure.