Regulation Roll-out: Warehouses could be accountable for truck emissions.

Regulation Roll-out: Warehouses could be accountable for truck emissions.

Despite years of regulatory effort and billions invested in pollution control technologies, Southern California remains unable to meet federal requirements for clean air and is designated “extreme nonattainment” for the class of air pollutants called NOx (nitrogen oxides), which causes the formation of smog and acid rain. Diesel fuel emissions from trucks on roads and highways is a major source of NOx.

The South Coast Air Quality Management District (SCAQMD) primarily regulates air emissions from stationary sources and is prohibited from directly regulating mobile sources such as vehicular emissions. However, SCAQMD can promulgate “indirect source rules,” which means it can regulate stationary entities, such as warehouses, in a way that leads to a reduction in emissions from vehicles without placing specific requirements on such mobile emissions sources.

Studies reveal that poor air quality often occurs near facilities experiencing high levels of diesel truck traffic, such as ports, airports, railyards and, with the growth of e-commerce and related trucking activity at the ports of Los Angeles and Long Beach, large warehouses. The problem is exacerbated by more and larger warehouses being constructed where land is less expensive, such as eastern regions of Los Angeles County that already experience inferior air quality.

In response to this air quality challenge, the SCAQMD Governing Board approved the development of rules to control emissions from operations at warehouses in the Los Angeles area, including emissions from diesel trucks servicing these facilities, with most of the regulatory burden placed on warehouse operators. SCAQMD staff is working with stakeholders to obtain a better understanding of warehouse operations and economics in order to develop a regulatory program it hopes is enacted into law by December 2019. The difficulty in developing these new rules is the fact that many warehouse operators do not own or operate the trucks that service their facility, which gives them limited authority over requiring trucking companies to install emissions-related equipment upgrades.

In a recent report, SCAQMD staff focused on two approaches to regulate warehouse diesel truck emissions. One approach places a limit or “cap” on the emissions a warehouse can emit, with a further requirement that each warehouse reduce emissions by a certain percentage over a yet undetermined period of time. This approach requires that warehouses monitor on-site activity, track emissions from individual trucks, and submit the information to SCAQMD for review and approval. A methodology to estimate emissions still needs to be developed, and enforcement and auditing by SCAQMD would involve thousands of facilities currently unregulated by the agency.

The other approach employs market-based mechanisms to achieve compliance, primarily through the creation and sale of emission credits. For example, warehouses could create excess credits by lowering emissions beyond what is required and then sell these credits to warehouses that have not adequately reduced emissions through new equipment or operational changes. SCAQMD also could work with the California Air Resources Board to incentivize truck fleets to generate credits by upgrading equipment. These credits could then be sold to warehouses that will be required to purchase and retire a certain amount of credits each year based on the number of truck trips associated with that warehouse and whether that warehouse is located near sensitive receptors such as schools, dense population areas or environmental justice communities. This approach requires creating and administering a new credit trading program that ensures that the market for credits remains liquid and cannot be manipulated to create windfalls.

Either option being considered by SCAQMD places a regulatory and financial burden on previously unregulated warehouses. SCAQMD continues to seek industry input to improve its understanding of warehouse operations and economics. While these rules are being developed, it is critical that warehouse owners, operators and others in the supply chain make sure their voices are heard.

Steven Farkas is a principal at Meyers Nave specializing in land use and environmental law.

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