 New Southern California pollution rules to hike warehouse costs |
Source |
American Shipper |
Post Date |
05/20/2021 |
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A Southern California regulatory agency has approved new air pollution rules that will increase costs for warehouse operations, but the regulations are not expected to stymie growth in the country¡¯s largest warehouse and distribution region.
Rules 2305 and 316, also known as the Warehouse Indirect Source regulations, require distribution facilities of 100,000 square feet or larger to implement measures that will reduce emissions of nitrogen oxide (NOx), a source of smog, and diesel particulate matter (DPM), which is linked to cardiovascular and cardiopulmonary illnesses such as asthma and heart disease.
According to the South Coast Air Quality Management District, some 2.4 million residents of the four-county area in and around Los Angeles live within a half-mile of the more than 3,300 warehouses in the region. The warehouses emit pollutants from their own operations, and they also generate millions of truck trips each year that generate harmful diesel emissions.
The new requirements, which will be phased in over the next three years, provide warehouse operators with a menu of measures they can choose from to reduce pollution. The goal is to reduce total emissions from warehouse and truck operations in the region by 10 to 15 percent. The options include installing rooftop solar panels and zero-emission cargo-handling equipment at their facilities. The rules are also designed to reduce diesel emissions by encouraging the use of near-zero and zero-emission trucks to shuttle freight to and from the warehouses.
The AQMD noted that the indirect source rules were developed over the past four years during dialogue with industry stakeholders. The agency estimates the rules will add at most 3 percent to the cost of warehouse operations, though there are lower-cost options available that would increase costs by about 0.5 percent, according to the AQMD. Warehouse operators who do not implement pollution-reduction measures will pay an annual mitigation fee. It was not immediately clear how that fee would be calculated.
Background material provided by the AQMD noted that a major complaint of freight-moving interests is that the agency is ¡°overreaching¡± by going beyond regulating emissions from stationary sources like warehouses to include mobile sources such as the truck and passenger vehicle traffic that moved to and from the warehouses. Also, according to the agency, freight interests claim the mitigation fee is really a tax. The agency said those claims are not accurate.
Organizations and trade groups representing freight interests have not yet publicly stated if they will challenge the AQMD¡¯s decision, which was rered late Friday.
Indirect source rules won¡¯t lead to cargo diversions
The regulatory agency also questioned complaints made by freight interests that the added costs warehouse operators will incur because of the new rules will cause a diversion of cargo from Southern California. To the contrary, cargo volumes in Los Angeles-Long Beach are quite strong, and activity in the warehouse sector remains especially robust, the agency said.
¡°South Coast AQMD has studied the economic impacts of this rule and expects the industry to continue to thrive,¡± the agency stated in supporting documentation. ¡°The current low warehouse vacancy rates and high rent increases support our analysis.¡±
Indeed, the Los Angeles-Long Beach port complex, which handles about 50 percent of total US imports from Asia, according to PIERS, a JOC.com sister product within IHS Markit, has experienced nine consecutive months of record or near-record import volumes since July. Retailers project those volumes are going to continue at least through September, according to the Global Port Tracker released Friday by the National Retail Federation and Hackett Asso
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