Written by: Virginia McCormick, NES, Inc.
This blog was updated on April 26, 2021 according to information provided by representatives of South Coast AQMD’s Planning, Rule Development, & Area Sources Division. As a result, compliance reporting dates now reflect the latest proposal. NES would like to thank the regulatory agency’s representatives for alerting us to these needed corrections.
Warehouses operating in four Southern California counties will be required to earn WAIRE points following the expected adoption of PR 2305.
PR 2305: The WAIRE Program, WAIRE Points, and Affected Businesses
In the coming months South Coast Air Quality Management District (South Coast AQMD) is expected to adopt Proposed Rule (PR) 2305, otherwise known as the Warehouse Actions and Investments to Reduce Emissions (WAIRE) program. Once PR 2305 is adopted, owners and operators of warehouses within South Coast AQMD’s jurisdiction with greater than or equal to 100,000 square feet of indoor floor space in a single building will be required to calculate WAIRE point obligations for each facility annually.
The calculation includes the weighted annual truck trips to the warehouse, a stringency value, and an additional variable that changes depending on the reporting year. These three factors are multiplied together, and the resulting value is the warehouse’s WAIRE Points Compliance Obligation, or WPCO.
Under PR 2305 and the WAIRE program, the warehouse must earn enough WAIRE points to satisfy the WPCO. Points can be earned in a variety of ways, such as by purchasing zero- or near-zero-emission vehicles, installing solar panels, developing a custom WAIRE-compliant plan, or paying a mitigation fee to South Coast AQMD (1 WAIRE point = $1,000).
South Coast AQMD’s jurisdiction covers roughly 18 million people, or about 45% of California’s total population. Large portions of four densely populated counties – Los Angeles, San Bernardino, Orange, and Riverside – are covered by South Coast AQMD. According to the Socioeconomic Assessment, PR 2305 is expected to affect 3,995 warehouse operators at 2,902 warehouses within this jurisdiction.
South Coast AQMD covers large areas of four of California’s most populated counties: Los Angeles, San Bernardino, Orange, and Riverside.
South Coast AQMD monitors air quality in these regions, proposes and implements regulation to meet federal and State air quality standards, and is a separate entity from the California Air Resources Board (CARB). However, PR 2305 has been noted as an important complement to, “other zero-emissions trucking rules in California, particularly [CARB’s] Advanced Clean Trucks Regulation, passed in June 2020.”
Last month, NES broke down CARB’s Advanced Clean Trucks regulation for our readers. For more information, see California Fleet Reporting Deadline Approaching Following CARB Advanced Clean Trucks Rule.
How to Earn WAIRE Points Under PR 2305
A WAIRE “menu” of actions was developed for PR 2305. WAIRE points from this menu can only be earned for “surplus” actions, which “go beyond existing federal and state regulations already applicable.” There are 32 actions that are detailed on the WAIRE program menu, but they can be broadly categorized under nine umbrella actions.
While updates to the proposed rule may cause this list to change in the future, the current menu options available to facilities to gain WAIRE points and meet their annual WPCOs is as follows:
- Zero-emissions (ZE) and near-zero-emissions (NZE) truck acquisitions and usage
- ZE and NZE truck visits from a non-owned fleet
- Electric vehicle charger acquisition and usage
- Hydrogen filling station acquisition and usage
- ZE yard truck acquisition and usage
- Solar panel acquisition and usage
- High-efficiency filter systems acquisition and replacement filters
- Transport refrigeration unit plug acquisition and usage
- Pay mitigation fee
For a more advanced breakdown of the WAIRE points menu, including point allocations for each action and the calculations used to determine them, it is recommended to review South Coast AQMD’s Technical Report.
PR 2305 targets indirect source emissions, which stem from day-to-day activities, such as vehicles entering and exiting the premises.
PR 2305 Expected to be Adopted Amid Some Controversy Over WAIRE Points System
In May of 2018, the governing board of South Coast AQMD initiated development of an indirect source rule in order to address heavy-duty emissions. This decision resulted in the WAIRE program and PR 2305.
PR 2305 would, “require warehouses subject to the rule to annually take actions that either reduce emissions regionally and locally or that facilitate emission reductions.” In order to estimate the likely impacts PR 2305 implementation would cause if adopted, 19 different scenarios were developed to, “show the range of potential compliance outcomes.”
The scenarios indicated that the maximum cost that warehouse operators would be expected to incur would be, “about $0.83/sq. ft./yr. resulting from the mitigation fee-only scenario.”
Despite these scenario tests, many Southern California organizations have expressed concerns with the adoption of PR 2305 in its current form. A joint-filing effort of multiple coalitions, committees, and community action groups assembled letters of concern regarding PR 2305 and the Warehouse Indirect Source rule.
Concerns from these parties range from criticism of inflicting excessive regulatory costs upon an essential industry, to requesting additional benefits for early adopters of the rule, to calls for annual WAIRE points reports to be accessible by the general public.
While PR 2305 has not yet been adopted, warehouse owners and operators should begin considering how to navigate the upcoming regulatory requirement.
Despite these concerns, the governing board of South Coast AQMD is expected to certify the final environmental assessment and adopt PR 2305 during a public hearing set for May 7, 2021, although the projected timeline could change.
If adopted in its current form, PR 2305 would require regulated owners to submit warehouse operations notification no later than July 1st of the year their first WAIRE report is submitted, or within 30 days of a written request. This notification would include the warehouse operator’s name and contact information, the warehouse size and square footage utilized for warehousing activities, and the duration of the building lease.
Following this, operators of the largest warehouses (≥ 250,000 sq ft) would be required to prepare and submit their initial report by January 2023, operators of medium warehouses (between 150,000 and 250,000 sq ft) by January 2024, and operators of small warehouses (between 100,000 and 150,000 sq ft) by January 2025.
Navigating Complex Regulations: How NES Can Help
PR 2305 is poised to become an important regulatory factor of the Southern California logistics industry. The proposed rule is being called complex by some reports, and regulated parties are being urged to carefully calculate their obligations in order to avoid costly surprises.
Warehouse operators and other business owners are likely familiar with jumping through these types of regulatory hoops. While the WAIRE program and PR 2305 will likely bring California closer to achieving its emission-reduction goals, businesses will need to adjust in order to keep up with ever-changing regulations, and some will likely be seeking outside support.
NES has been providing EH&S training and consulting services on behalf of a wide array of public and private businesses and government agencies for over 30 years. Additionally, NES has served as the Technical Group Leader for the California Trucking Association Storm Water Compliance Group (CTACG), one of the largest storm water compliance groups in the State of California, since 1999.
We administer CTACG and the California Trucking Association Storm Water Program (CTASWP), providing members with a range of benefits. For more information on the benefits provided to CTA Compliance Group and CTA Storm Water Program members, click here.
NES also provides in-house storm water programs for facilities that are not members of CTA. For more information, please contact our storm water compliance team at: firstname.lastname@example.org or 916-353-2360 / 800-637-2384.
South Coast Air Quality Management District
Second Draft Staff Report Proposed Rule 2305
South Coast AQMD – Jurisdiction
Socioeconomic Assessment Proposed Rule 2305
Supply Chain Dive – California proposes points system to hold warehouses accountable for truck emissions
Indirect Source Rule Letters of Concern
South Coast AQMD – Governing Board Meeting Agenda: April 2, 2021
National Law Review – Proposed Rule in Southern California Imposes Compliance Obligations To Reduce Emissions from Large Trucks and Yard Equipment