California Bill AB98: Impact on Warehousing and Trucking in the Golden State

The fate of Assembly Bill 98 (AB98) rests in Governor Gavin Newsom’s hands. He has until September 30, 2024, to decide whether to sign or veto the proposed legislation. If passed, this bill would reshape the trucking and warehousing industries across California. It would expand the state’s regulatory power in areas historically governed by local authorities. This shift has sparked intense debate within the logistics industry and environmental groups. The bill’s implications are far-reaching, affecting warehouse development, truck routing, air quality, and the economy.

Key Provisions of AB98

At the core of AB98 are new regulations for logistics hubs such as warehouses. These facilities have expanded rapidly in regions like the Inland Empire due to surging e-commerce demand. The bill outlines new standards for the construction and operation of these warehouses. Some of the most important elements include:

• Mandatory Truck Routes: AB98 would require local governments to designate specific routes for trucks accessing logistics facilities. These routes must avoid sensitive receptors like schools, daycares, and residential areas to limit environmental and public health impacts.
• Setback Requirements: New logistics facilities would need to maintain minimum distances (or “setbacks”) from sensitive areas. In industrial zones, these facilities would be at least 300 feet away, while in non-industrial zones, the setback would increase to 500 feet. This is less than the 1,000 feet recommended by the California Attorney General’s office, raising questions about its effectiveness in protecting public health.
• Electrification and Environmental Standards: Warehouses would need to implement electrification measures, including electric vehicle (EV) charging stations. They would also transition to zero-emission forklifts and other equipment by 2030, or by 2028 for larger facilities. Cold storage facilities would need to offer plug-in options for trucks to eliminate idling, which reduces diesel emissions.
• Buffer Zones and Barriers: AB98 mandates that new logistics facilities located within 900 feet of sensitive receptors must install barriers. These include solid decorative walls, landscaped berms, or other structures that protect adjacent communities from truck traffic, noise, and pollution.

These provisions aim to mitigate the negative effects of logistics operations, especially truck traffic and noise. Proponents of the bill argue that the state’s warehouse boom has disproportionately harmed disadvantaged communities. These massive logistics hubs, especially in the Inland Empire, have developed close to residential neighborhoods.

The Impact on the Trucking Industry

The trucking industry, closely tied to warehouse operations, would be heavily affected by AB98. The new truck routing and electrification standards would change how goods are transported. Here’s how the bill could impact truckers:

1. Increased Operational Costs: Meeting the new environmental regulations, such as installing EV charging infrastructure and transitioning to zero-emission trucks, would increase costs for logistics companies. While large operators might have the resources to comply, smaller operators and independent truckers could struggle. This could pressure their profit margins.
2. Longer Routes and Delays: Truckers might need to take longer, less direct routes to avoid sensitive receptors. This could increase fuel costs and delay deliveries, straining the already-burdened supply chain.
3. Reduced Warehouse Availability: The bill’s siting requirements could limit land availability for new warehouses, particularly in the logistics-heavy Inland Empire. Reduced warehouse capacity could raise rents and make it harder for trucking companies to find efficient distribution points. This, in turn, could drive up costs.
4. Air Quality and Public Health: Many truckers spend significant time in and around logistics hubs. The bill’s electrification measures could improve air quality. Reduced diesel emissions would benefit truckers’ health, as these emissions have been linked to respiratory illnesses, cancer, and other serious health problems.

Economic Concerns

Opponents of AB98, including business groups and local governments, argue that the bill could cause significant economic damage. The logistics industry has been a major driver of growth in California, particularly in regions like the Inland Empire. Many jobs in this area are tied to warehouse operations and trucking. Critics warn that the bill’s requirements could stifle warehouse development, limit job growth, and hurt the state’s economy.

Another concern is that the setback and routing requirements could make it difficult to find suitable locations for new warehouses. Developers may need to look further away from population centers, increasing transportation costs. These costs would likely be passed on to consumers, further driving up prices for goods.

Environmental and Social Justice Impacts

AB98 has strong support from environmental and social justice groups. They argue that the logistics boom has harmed low-income communities of color. Warehouses and the truck traffic they generate have been linked to higher rates of respiratory illnesses, noise pollution, and traffic congestion. These issues affect quality of life in nearby neighborhoods.

By requiring warehouses to be sited further from sensitive receptors and mandating electrification, AB98 aims to reduce these impacts. Proponents believe the bill strikes a balance between supporting economic growth and protecting public health.

Will Governor Newsom Sign AB98?

With the September 30, 2024, deadline approaching, Governor Newsom’s decision remains critical. If he signs the bill into law, it would represent a significant shift in how the state regulates logistics and trucking. The bill’s expansion of state power over an industry traditionally managed by local authorities has raised concerns. Some question whether a top-down approach will benefit the communities it seeks to protect or hinder economic growth and job creation.

Governor Newsom’s decision will likely involve balancing environmental concerns, public health, and the economic realities of the logistics industry. While the bill has the potential to improve air quality and public health, it also carries the risk of raising costs for businesses and consumers alike.

Conclusion

AB98 is a major step in California’s ongoing efforts to balance economic development with environmental and public health protections. By imposing new regulations on logistics hubs and trucking, the bill could reshape warehousing and transportation in the state. Whether Governor Newsom signs the bill into law or vetoes it, the consequences for the trucking industry, warehouse developers, and local communities will be far-reaching.

For truckers, adapting to these regulations could mean higher costs and changing logistics routes. However, for communities impacted by the warehouse boom, AB98 could offer much-needed relief from the environmental and health burdens associated with logistics hubs. The future of trucking and logistics in California will be shaped by the decision in the coming days.