In the past month, California and the U.S. Environmental Protection Agency (EPA) took actions that will significantly impact warehousing in California. First, on September 29, 2024, Governor Gavin Newsom signed legislation (AB98) that will require certain new or expanded (20% or more) logistic uses to adhere to new site plan and building standards. Second, on September 11, 2024, the EPA approved the South Coast Air Quality Management District's (SCAQMD) Rule 2305 – Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program as part of the California State Implementation Plan.

New California Warehouse Legislation

Starting on January 1, 2026, local governments will be prohibited from approving new and expanded logistic uses that do not comply with the requirements set forth in the legislation. The requirements vary depending on the type of warehouse, project size, and the distance to “sensitive receptors.” “Sensitive receptors” are defined as residences, schools, daycare facilities, public parks, nursing homes, and hospitals. Logistic uses that are affected include buildings in which cargo, goods, or products are moved by heavy-duty trucks or stored for later distribution to business or retail customers. The legislation does not cover warehouses that predominantly serve retail customers for onsite purchases, intermodal facilities, and those that are connected to rail operations.

Key Requirements where the Loading Bay is within 900 feet of a Sensitive Receptor

• A microgrid-ready switchgear system capable of supporting distributed energy resources.
• A minimum of 50% of all passenger vehicle parking spaces preinstalled with conduit and all necessary physical infrastructure to support future charging of electric vehicles.
• Conduits and electrical hookups at all loading bays serving cold storage, Idling, or use of auxiliary truck engine power to power climate control equipment.
• Zero emission small off-road engines.
• Loading bays and truck entry/exits located away from sensitive receptors.
• Buffer zones at property lines.

There are also requirements for warehouses that are less than 250,000 square feet.

Prior to the issuance of a certificate of occupancy, the operator is required to submit for approval to the planning director a truck routing plan that the operator is responsible to enforce. If the construction plans include the demolition of housing, new affordable housing is required at a 2 to 1 ratio. The local government can still impose additional requirements as part of the California Environmental Quality Act (CEQA) process.

EPA's Approval of SCAQMD Rule 2305

On May 7, 2021, the SCAQMD adopted Rule 2305. Under Rule 2305, warehouse operators are annually required to commit to implementing enough strategies from a “menu” or pay a mitigation fee to satisfy the number of “points” the operator is required to earn. The number of “points” is based on the number of annual truck trips to and from the warehouse. Enforcement of the Rule was limited to the SCAQMD.

The EPA's September approval is significant in that it will allow for enforcement of Rule 2305 by EPA, in addition to the SCAQMD, and could open up warehouse owners and operators to potential legal liability under the “citizen lawsuit” provision in the federal Clean Air Act. In a citizen suit, the court may grant an injunction, impose penalties, and award attorney fees and litigation costs. After this approval, it is expected that other non-attainment areas will adopt similar warehouse rules and that other indirect source rules, such as those regulating ports, airports, and rail, will be submitted to the EPA to make them federally enforceable as well.