States Propose New Indirect Source Rules Targeting Warehouse Emissions

A growing number of states are advancing indirect source rules (ISRs), making warehouse and related logistics operations responsible for reducing or offsetting air pollution from the vehicles that transport goods to and from the covered warehouses. California’s South Coast Air Quality Management District (SCAQMD) has already adopted Rule 2305 — affecting warehouses in the Los Angeles region — and new legislative and regulatory proposals may soon expand similar obligations statewide in California and to other jurisdictions. These measures aim to address pollution from mobile sources, such as trucks that frequent warehouse hubs indirectly, and require a suite of costly measures aimed at transitioning fleets away from diesel fuels and internal combustion engines. Although these proposals directly regulate warehouse owners and operators, they aim to transition fleets to alternative energy sources by imposing costs for warehouse visits.

Background

The Clean Air Act allows states to include indirect source review programs as part of their state implementation plans (SIPs). Upon inclusion in the SIP, the indirect source requirements — which may target transportation hubs or other large sources that attract pollution — become federally enforceable.

SCAQMD began targeting warehouses with its implementation of Rule 2305, also known as the Warehouse Indirect Source Rule (WAIRE), which applies to warehouse facilities 100,000 square feet or larger in the South Coast Air Basin (including much of Los Angeles, Orange, Riverside, and San Bernardino counties). The rule requires covered facilities to earn annual “WAIRE Points” by implementing actions that reduce or offset air pollution associated with truck traffic, such as using zero-emission or near-zero-emission trucks, installing charging or fueling infrastructure, or placing solar panels. Facilities can also opt to pay a mitigation fee in lieu of compliance actions. The rule aims to curb diesel particulate and smog-causing emissions, particularly targeting emissions from warehouses located in overburdened communities. Rule 2305 is currently being implemented in phases based on warehouse size, and enforcement is ongoing.

What’s New?

California and other jurisdictions are considering proposals for ISRs that would implement similar measures to those currently in effect for fleets that visit warehouses in the Los Angeles region. The term warehouse is often defined broadly under these proposals and could include warehouses sited at ports, airports, and other transportation hubs.

California – Statewide Expansion of ISR Authority

California Assembly Bill 914, introduced on February 19 and amended on March 24, 2025, would require the California Air Resources Board (CARB) to adopt and enforce regulations on indirect sources of emissions, such as warehouses, rail yards, and ports. The bill would require CARB to establish a statewide reporting program to quantify emissions from these facilities, collect annual data, and impose fees on emitters of toxic air contaminants to fund enforcement efforts. Notably, the legislation would direct CARB to prioritize rules that reduce pollution in disadvantaged and low-income communities. The specifics of the rule development are left to CARB’s discretion, but the measure represents a significant expansion of statewide regulatory authority.

New York – Proposed Legislation with Broader Reach

New York Senate Bill S1180A, introduced on January 8, 2025, would require the Department of Environmental Conservation (DEC) to develop a program regulating emissions from warehouse operations larger than 50,000 square feet. The bill would require a points-based system similar to SCAQMD’s WAIRE program but adds other requirements:

• Mitigation Measures: Operators can earn compliance points through the use of zero-emissions vehicles, installation of on-site electric vehicle charging equipment, utilization of alternatives to truck or van trips, and installation of solar power and battery storage systems.
• Sensitive Area Protections: Additional requirements apply for facilities near sensitive receptors, such as schools, daycares, and disadvantaged communities.
• Employee Notification: Operators must inform impacted employees in writing before implementing alternatives to truck or van trips, including details on vehicles, equipment, and training.
• Permits and Green Building Standards: New or modified facilities must obtain a permit ensuring additional traffic will not violate air quality standards and must meet LEED silver, gold, or platinum standards. An operator must not have had an air quality violation within the preceding two years.
• Comprehensive Reporting: Operators must annually report on various metrics, including daily vehicle trips and miles traveled, heat maps of trip destinations, employment details, percentage of zero-emissions vehicles, usage of electric vehicle charging and hydrogen fueling stations, on-site renewable energy systems, and subcontractor details.

The bill further provides that DEC must assess the feasibility of implementing low- and zero-emissions zones for medium- and heavy-duty vehicles.

Colorado – Regulatory Development

Colorado’s Regional Air Quality Council (RAQC) has formed an Indirect Sources Technical Work Group to explore the development of an ISR targeting warehouses and potentially retail sales facilities. The goal is to reduce pollution from high-traffic locations that attract mobile sources of pollution. The work group is reviewing existing ISRs in other regions and assessing the potential benefits and challenges of establishing similar programs in the Denver Metro/North Front Range area.

New Jersey – Legislative Proposal

New Jersey Senate Bill S3546, introduced on September 12, 2024, would require certain high-traffic facilities, including warehouses, to obtain permits from the Department of Environmental Protection (DEP) and annually implement measures to reduce air pollution caused by the facility. The bill aims to address pollution from facilities that generate significant truck traffic, particularly in overburdened communities. It appears to draw from California’s SCAQMD Rule 2305 and seeks to implement similar indirect source review programs to mitigate emissions associated with warehouse operations.

What Does This Mean for Businesses?

Companies operating logistics and warehouse facilities — especially those with a national footprint or that do business in any of the states discussed above — should closely monitor these emerging ISR trends and rule developments. Compliance with these proposals may require:

• Increased costs for required mitigation and reduction measures.
• Operational changes to reduce vehicle trips and emissions.
• New permitting and reporting obligations.
• Engagement with regulators and policymakers to inform rule design.

Many of the proposed rules emphasize reducing pollution in overburdened communities and focus enforcement on facilities located in or impacting disadvantaged communities. Businesses may accordingly face increasing scrutiny of their supply chains and transportation logistics, especially in areas that already see high truck traffic.

Looking Ahead

While California’s statewide ISR legislation and New York’s bill are still in development, both signal a strong push by states to regulate mobile source emissions associated with warehouse operations. Similarly, Colorado and New Jersey are considering measures that could significantly impact warehouse and logistics operations within their jurisdictions. These policies, if adopted, would represent a new layer of environmental compliance with potentially significant business impacts for facilities. Companies should begin preparing for this regulatory shift and consider participating in public comment processes.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.