The Environmental Protection Agency (EPA) has recently taken a significant step by approving California’s Warehouse Actions and Investments to Reduce Emissions (WAIRE) program. This approval not only makes the program federally enforceable within California but also opens the door for lawsuits to be filed in federal court. While the WAIRE program initially allowed lawsuits to be filed against warehouse operators in Southern California, the EPA’s approval now expands the scope, allowing plaintiffs to take legal action at the federal level. This marks a new era in environmental regulation that will likely impact both operators and property owners in the logistics and commercial real estate industries.
WAIRE’s Broader Legal Implications for Operators and Owners
The WAIRE program requires warehouse operators to take steps to reduce emissions associated with the transportation of goods in and out of warehouse facilities. The program implements an indirect tax (identified as the Facility’s “WAIRE Point Compliance Obligation (WPCO)) which is tied to the number of truck trips in and out of warehouse facilities. Although the WPCO is generally tied to the warehouse operator, property owners are not exempt from legal responsibility. If an owner is seen as hindering the feasibility of environmental improvements, such as prohibiting the installation of electric vehicle (EV) charging stations and/or solar panels, they too could be dragged into costly lawsuits. This is particularly relevant as many property owners may not initially see themselves as directly responsible for emissions reductions, believing it is solely the tenant’s responsibility. However, the reality is that owners can be implicated if they don’t facilitate the changes needed to make their properties more environmentally sustainable.
The Federal Government’s Position on Indirect Emissions and Potential Impact on Other States
The federal government’s acceptance of regulating the distribution cycle of indirect sources of emissions, like warehouses, is significant because it broadens the potential reach of these regulations. This ruling suggests that other states may soon follow California’s lead. For example, New York is currently considering a bill that mirrors the WAIRE program in many respects. This bill, waiting for the governor’s signature, raises important environmental justice issues, particularly regarding the placement of warehouses in low-income areas.
In these communities, warehouses often contribute significantly to local pollution, affecting residents who may not benefit economically from the presence of these facilities. The New York bill emphasizes the need for EV feasibility studies and aims to reduce the pollution that disproportionately impacts vulnerable populations. With the New York bill on the horizon, it’s becoming clear that the WAIRE program could serve as a model for similar legislation across the country.
How Operators and Owners Can Get Ahead of These Regulations
To avoid potential lawsuits and costly penalties, operators and property owners must begin taking proactive measures to comply with both current and upcoming regulations. While WAIRE is specific to the South Coast Air Quality Management District (SCAQMD) of California, it’s likely that other air districts within California and other states, particularly those with major urban centers, will soon adopt similar programs.
Here’s what warehouse operators and owners can do to stay ahead of the curve:
Track Truck Trips: Regulations like WAIRE often require tracking the number of truck trips made to and from warehouses for the purpose of the movement of goods regardless of the material transport vehicles being directly owned by the warehouse operator or covered vehicles being owned by third-party transporters. Operators and owners need to establish a thorough accounting system to monitor these trips and take steps to reduce emissions. Note, that the WAIRE program requires that the data elements used within submitted agency reporting must be auditable.
Encourage the Use of Alternative-Fuel Vehicles: Companies like FedEx are setting a strong example by setting a goal to make their entire fleet electric by 2040, beginning with pilot programs in California. Encouraging tenants and vendors to adopt low-emission vehicles is a key strategy for reducing emissions and earning credits within programs like WAIRE.
Invest in EV Technology: Installing EV charging stations is a critical component of any long-term emissions reduction strategy. One Partner client, a warehouse owner in Southern California, installed solar panels and two EV chargers while leasing an electric truck. This initiative helped the company bank enough points to offset the full WPCO costs for the first two years of compliance. In addition, future points earned from the usage of the charging units and solar panels, and the continued leasing of electric vehicles will allow the Facility to offset a large portion (if not all) future WPCO fees. This success story demonstrates that early investments in green technology can pay off.
Owner-Tenant Collaboration on Solar Projects: Many tenants may have long-term leases, but property owners might not have permits to install solar panels or other renewable energy infrastructure. Owners and tenants can collaborate to make green investments that not only meet regulatory requirements but also reduce energy costs in the long run. These collaborations can make properties more attractive to eco-conscious tenants, giving owners a competitive edge.
Tax Rebates and Credits: Owners and operators alike should also take advantage of the tax incentives available for going green. Federal and state governments provide tax rebates and credits for installing EV infrastructure and using alternative fuel vehicles. Additionally, there are federal tax credits for business that own solar energy systems. These incentives can significantly offset the cost of compliance.
Success Stories and Benefits of Going Green
Some clients have already experienced success by adopting green initiatives. As mentioned earlier, a warehouse operator in California who invested in solar panels and EV chargers was able to avoid WAIRE program fees, while also reducing energy costs. FedEx’s goal to switch to an all-EV fleet is another example of how going green can lead to operational success.
Moreover, in the South Coast Air Quality Management District, green technology has proven to pay for itself. By investing in solar panels, operators are not only reducing their carbon footprint but also saving money on electricity bills. In many cases, the initial cost of green investments is offset by savings in energy costs and the avoidance of compliance fees.
Owners’ Liability and Involvement
While operators are directly responsible for complying with WAIRE and similar regulations, property owners can also face liabilities if they fail to support environmental improvements. As a result, many owners are now vetting potential tenants to ensure compliance with environmental standards before signing lease agreements. By doing so, owners can protect themselves from legal risks while making their properties more attractive to environmentally conscious tenants.
Looking Forward
With states like New York following California’s lead, it’s clear that WAIRE-style regulations are set to potentially become a national trend. Warehouse operators and owners should act now to avoid future lawsuits and penalties by embracing green technologies, encouraging alternative-fuel vehicles, and collaborating with tenants on sustainable projects. As regulations continue to evolve, those who take proactive steps today will be better positioned for success in the future.
Partner’s EV Charging and Renewable Energy experts are here to help guide clients through the process of renewable energy adoption, from feasibility studies to installation. Additionally, Partner’s Environmental Compliance team is also available to assist clients within the SCAQMD in navigating the WAIRE program requirements and assisting in ensuring full compliance with the Rule. Contact us today more information about how we can help.
Authors:
Nicole Bartlett, Director of EV Charging, Partner Energy
David Dumond, CESCO, Technical Director – EHS Compliance Assurance, Partner Engineering and Science
