Will Air Plan Box In Cargo?

Will Air Plan Box In Cargo?
Inside Box: Greg Owen of Carson-area warehouse operator Ability Tri-Modal has worked to comply with emissions standards.

Outcry from warehouse owners, trucking companies, and business groups has spurred Supervisor Sheila Kuehl, a newly appointed member of the South Coast Air Quality Management District board, to scale back her proposal for new warehouse emissions rules.

Reacting to complaints from opponents of the regulations, who told the Business Journal her proposed guidelines would devastate the region’s logistics sector, Kuehl said she is revising the plan to apply only to new and renovated warehouses.

“Our proposed warehouse rule will only apply to new facilities and substantial renovations,” she said in an email last week. “Since industry is claiming they are already trying, there must be little impact on the supply chain.”

The Los Angeles County supervisor had originally proposed emissions rules that would apply to all warehouses, which some business owners and organizations said would have forced a reduction in truck trips to and from the facilities. The revised rules could still limit warehouses’ ability to expand or modernize their operations.

“We could not service our customer base if this takes effect,” Ability Tri-Modal owner Greg Owen said before Kuehl had softened her stance. “And the end result would be even more and longer truck trips to warehouses outside the region, which creates even more emissions. It’s sheer idiocy.”

The company operates five Carson-area warehouses that employ more than 200 people and has its own fleet of trucks, Owen said.

He said he has tried to comply with air emission mandates handed down by Sacramento and local air quality regulators in recent years. He has installed the latest clean engine technology in his trucks, purchased electric forklifts for his warehouses, and eliminated some truck trips, among other steps.

But air quality regulators have lately been pushing for more.

Kuehl’s amendments are part of the management district’s proposed air quality plan, a periodically revised document the agency must produce to show how it intends to reach increasingly stringent federal and state clean air mandates. The plan will be considered at a March 3 AQMD board meeting.

Two of the amendments target the ports of Los Angeles and Long Beach as well as the region’s five commercial airports, including Los Angeles International Airport. Another amendment – the one that drew the most immediate fire from business groups – was directed at warehouse distribution centers.

Under all three amendments, the district must draw up rules by which the facilities reduce emissions of nitrogen oxide and particulate matter – both of which are commonly found in vehicle exhaust – to meet future federal and state emissions standards.

Key to that is a plan to turn a number of voluntary measures and incentives aimed at reducing emissions from trucks and other vehicles – steps such as those Owen has already taken – into top-down mandates that facilities would have to put in place within the next two years.

Environmental pressure

Kuehl put forward her first set of amendments this month in response to mounting pressure from environmental groups concerned that the air quality agency is backsliding in its efforts to meet future clean air mandates.

“At the meeting, we heard from many community groups and residents that did not think the plan went far enough,” Kuehl said in an email. “We know that voluntary incentives don’t always work so we can’t stop there. We need to take action if and when voluntary goals are not met. The amendments I offered stem from my belief that where we have the authority to regulate, we should regulate.”

Business groups, led by the Los Angeles County Business Federation, or BizFed, had been largely supportive of the overall air quality plan. One major reason: The district had backed off an earlier suggestion that it would phase out the cap-and-trade program for large manufacturers and oil refineries and replace it with strict rules. Instead, the plan merely mentions that as an option should those facilities fail to achieve substantial emission reductions in the future.

But then came Kuehl’s amendments, which were introduced at a Feb. 3 meeting.

Of most concern has been the call for the agency to craft “indirect source” rules for the sister ports and hundreds of warehouses, most likely through caps on the number of vehicle trips used to move cargo – limits that decline over time.

Port of Los Angeles Executive Director Gene Seroka encouraged the AQMD board at the Feb. 3 hearing to hold off on implementing new restrictions on indirect pollution sources at the ports.

The move, he said “will halt proactive industry investment, discourage public-private collaboration, and hinder our ability to obtain much needed grant funding. Additionally, the measure will impact jobs across the region, of which one in nine is connected to the San Pedro Bay Port Complex.”

BizFed Chief Executive Tracy Hernandez told the board at the hearing, just prior to the introduction of Kuehl’s amendments, that the business community had already made several compromises on the emissions front, but added, “If the board changes course today and embarks on a path toward draconian regulations such as indirect source rules, then we are out. We will not sit idle while a few pull last-minute tricks to undermine the serious work of the many.”

Late last week, Hernandez said in a statement that Kuehl’s decision to narrow the scope of the warehouse amendment to new or renovated facilities was only a minor change.

Cargo cuts

The key concern for the logistics sector is that, unlike manufacturing plants that can retool their assembly lines, many warehouses don’t have direct control over the number of cargo-moving vehicles that arrive, said Joe Hower, southwest region practice leader for Ramboll Environ of Copenhagen, Denmark, who consults for BizFed.

While some warehouse operators also own truck fleets and have already converted much of those vehicles to cleaner-burning engines at considerable cost, Hower said such steps likely won’t prove sufficient to meet the amendments as originally put forward. Facing such restrictions on any new or expanded warehouses, the only remaining tactic, particularly for warehouse operators who don’t have their own fleets, would be to cap the number of truck trips.

That could hurt many warehouses businesses, he and warehouse owners said.

Responding to the original version of the warehouse amendment, one major warehouse operator said its business would be devastated.

“If you say you can only bring so many trips to and from a specific warehouse facility, that will basically shut our business down,” said Cameron Smith, director of operations support for Yusen Logistics Americas Inc.

Yusen runs a 100-acre warehouse complex in Carson near the border with Long Beach that employs 500 directly and has up to 1,000 contract workers. The company’s clients include Target Brands Inc. and other megaretailers.

Smith said the warehouse functions as a vast sorting station for cargo coming from the nearby ports. Once the cargo is sorted, it then leaves the facility and goes straight to rail cars that head up the Alameda Corridor and on to the rest of the nation.

But even the revised amendment could be problematic, since it would limit the ability of Yusen to expand its warehousing capability to keep up with demand. The company plans to demolish an older warehouse and build a more automated facility, which could trigger the new AQMD requirements.

“Our business relies on a high volume of cargo that has to get to the right retailer at the right location at just the right time,” Smith said. “Capping the number of trips would completely disrupt that supply chain and force our customers to use other ports.”

Beyond the warehouse impact, business leaders said the Kuehl amendments would hurt truckers at the ports, who already have had to switch to cleaner-burning engines to meet state mandates.

“This is going to hit independent truckers quite hard,” said Bill LaMarr, executive director of the California Small Business Alliance, which comprises eight trade associations representing 14,000 small businesses throughout Southern California that are regulated by the air district.

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