In a final rule published October 11, 2024, in the Federal Register, the EPA took final action on a revision to the South Coast Air Quality Management District (SCAQMD) portion of the California state implementation plan (SIP). This revision concerns the regulation of nitrogen oxide (NOx) emissions and particulate matter (PM) associated with warehouses as indirect sources that attract or may attract mobile source emissions.

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In the final action, the EPA approved SCAQMD Rule 2305, “Warehouse Indirect Source Rule (ISR)—Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program,” to regulate these emissions sources under the Clean Air Act (CAA) as a SIP-strengthening action.

Rule 2305 was designed to protect communities from air pollution generated by warehouse operations, including freight vehicle trips to and from warehouses.

“South Coast’s rule, which we have now made federally enforceable, protects overburdened communities from the harmful effects of indirect sources of air pollution,” said EPA Pacific Southwest Regional Administrator Martha Guzman in an Agency news release. “These indirect sources, such as warehouses, ports, and rail yards, all contribute to pollution and therefore must be addressed so our communities can breathe cleaner air."

The “EPA’s approval of our Warehouse [ISR] ensures that we will continue to make progress on improving air quality in the South Coast air basin,” said SCAQMD Executive Officer Wayne Nastri in the release. “This is especially important for communities surrounding warehouses, which more often are impacted by greater environmental burdens as well as higher rates of asthma.”

The SCAQMD adopted the ISR in 2021 to reduce harmful air pollutants, including NOx and PM, associated with warehouse operations, such as trips taken by trucks that deliver goods to and from the facilities, yard trucks, and transport refrigeration units.

The SCAQMD ISR is part of a larger multi-pronged strategy to reduce emissions associated with indirect sources and improve public health.

WAIRE

The “ISR Rule 2305 creates a [menu-based] point system known as [WAIRE]. The rule allows warehouses to earn WAIRE points by completing actions such as investing in zero emission and/or near-zero emission technologies, using solar power, installing onsite zero emission charging or fueling infrastructure, or installing filtration systems in qualified buildings such as schools. Other options to earn WAIRE points include developing a custom WAIRE plan or paying mitigation fees. By 2025, warehouses with greater than or equal to 100,000 square feet of indoor floor space in a single building will be subject to the rule.”

Rule 2035 requires warehouse operators to earn a specific number of points each year and to calculate the total annual number of truck trips. Tractors and tractor trailers are weighted 2.5 times higher than smaller, straight trucks due to their higher emissions. Rule 2305 refers to the combined truck count as weighted annual truck trips (WATTs).

Truck trips are defined as one-way trips that tractors and straight trucks make to a warehouse facility when delivering goods to or from another location. Truck trips are counted when a truck enters or exits a site. A single “visit” from a truck is equal to two trips. 

Warehouse operators in the program are required to calculate their WAIRE Points Compliance Obligation (WPCO) by using a specific equation available on the SCAQMD FAQ Sheet.

Only warehouse owners who also operate their warehouses are required to earn WAIRE points. Warehouse operators are required to submit an Initial Site Information Report (ISIR) for the first year that they operate a warehouse. ISIRs are only submitted once during the first compliance period warehouse operators are occupying a warehouse. Additional ISIRs are required to be submitted by the warehouse operators should they relocate to a different warehouse subject to Rule 2305. ISIRs include information about warehouse operations.

Warehouse operators are also required to submit an Annual WAIRE Report (AWR) to demonstrate what their WPCO is for every compliance period and how they earned the required number of points. Warehouse owners who voluntarily opt in to earn WAIRE points must also submit an AWR at the end of the compliance period when the WAIRE points were earned.

WAIRE menu item metrics

The table below provides an overview of the reporting metrics that warehouse operators must report on their AWR to earn WAIRE points from the WAIRE menu.

The WAIRE Program also allows the option for warehouse operators to submit custom WAIRE plans for approval.

Some examples of potential custom WAIRE plan proposals include:

• Jointly owned off-site ZE charging or fueling infrastructure
• The use of battery storage systems or energy management that reduces emissions from local natural gas-fired power plants
• The acquisition and/or usage of NZE yard trucks
• Local hires to be counted as points toward compliance with the rule by reducing employee commute emissions
• Use of a local state-certified apprenticeship program

Under the program, WAIRE points can be transferred in three specific circumstances:

• “Excess WAIRE Points transferred to a warehouse operator’s other warehouses: If a warehouse operator conducts warehousing activities at more than one warehouse during any single compliance period, then WAIRE Points earned for one warehouse may be used at the other warehouse(s) under the operational control of that same warehouse operator. Only those points earned in excess of a warehouse operator’s WPCO at that site may be transferred, and only for the current compliance period.
• WAIRE Points transferred between a warehouse owner and operator: A warehouse facility or landowner may voluntarily earn WAIRE Points during a compliance Period using the WAIRE Menu, a Custom WAIRE Plan, by paying a mitigation fee, or may have WAIRE Points transferred to them from the warehouse operator at that site. The warehouse facility or landowner may then transfer these WAIRE Points to any warehouse operator at the site where the WAIRE Points were earned within a three-year period after the points were originally earned. Any warehouse operator using these transferred WAIRE Points to satisfy a WPCO during this three-year period must demonstrate that any onsite improvements or equipment installations that were used to earn the WAIRE Points being transferred are still operational at that warehouse facility in the year that WAIRE Points are used.
• Warehouse operators that vacate a warehouse before the end of a compliance period may transfer any excess WAIRE Points to the warehouse owner. These Points may then be transferred to the next warehouse operator.
• Excess WAIRE Points banked for future use at that site: WAIRE Points in excess of the warehouse operator’s WPCO in one compliance period may be banked for use in any of the next three compliance periods. After this time, any remaining banked WAIRE Points will expire and can no longer be used. WAIRE Points banked for future use in this way cannot be transferred to another warehouse. … If any onsite improvements or equipment installations that were used to originally earn the WAIRE Points are no longer functional, the banked WAIRE Points may not be used to satisfy a WPCO. Finally, if WAIRE Points are earned prior to a warehouse operator’s first compliance period, the three-year clock on banked WAIRE Points does not begin until after their first compliance period.”

The WAIRE Program contains many alternatives and options for warehouse owners to reduce overall emissions. See the WAIRE Implementations Guidelines for additional details.

“In addition to this ISR rule from the local air district, EPA’s national-level actions to tighten engine emission standards for new vehicles, including heavy duty trucks, will improve Southern California’s air quality,” adds the EPA news release. “These regulatory actions to bring cleaner air are complemented by unprecedented federal funding from the Bipartisan Infrastructure Law and the Inflation Reduction Act, which together are making historic investments to move the country towards a zero-emission economy, tackling climate change and creating a more equitable future. In June 2024, EPA awarded AQMD nearly half a billion dollars to cut transportation and goods movement related climate pollution in southern California.”

The “EPA’s approval of the Warehouse ISR Rule 2305 reflects EPA’s commitment to environmental justice and civil rights -- to make progress in historically overburdened and underserved communities, ensuring fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income in developing and implementing environmental laws, regulations, and policies.”

Read more about the EPA Pacific Southwest Region Environmental Justice and External Civil Rights Implementation Plan and the SCAQMD WAIRE Program.

Takeaway

Environment, health, and safety (EHS) professionals in transportation sectors are advised to familiarize themselves with the intricacies of ISR 2305 because many states tend to duplicate California emissions rules.

The benefits for logistics operations include:

• Reduced emissions
• Improved community health standards
• The ability to transfer unused WAIRE points
• Mitigation fees contributing to improved local infrastructure
• Financial benefits received through cash incentives for improved operations and equipment