ISR Compliance Could Save Warehouse Operators Thousands

June 8, 2022

As a warehouse operator, your day is often spent trying to ensure dozens of different needs are met, from unloading trucks to managing warehouse staff to cataloging inventory. These are important duties, for sure, but there is another you should add to the list of daily to-dos — tracking vehicle traffic to and from your warehouse.

Why, you ask? Well, if you operate a warehouse in Southern California, and specifically in Los Angeles, Orange, San Bernardino, or Riverside Counties, the number of vehicles that visit your facility on a daily basis could end up costing you money.

Warehouses that are 100,000 square feet or larger and are located within the South Coast Air Quality Management District (South Coast AQMD) are subject to the Warehouse Indirect Source Rule (ISR). This rule requires warehouse operators to keep an accurate record of the frequency of truck trips and take actions to help mitigate the environmental impact of those activities at their locations.

The Warehouse ISR is built as a credit-deficit system. Through the Warehouse Actions and Investments to Reduce Emissions (WAIRE) program, individual sites generate their own compliance obligation based on how busy that location is. This is done primarily through daily trip data collection. Warehouse operators subject to this rule must ensure vehicle data is being logged in a consistent and, most importantly, verifiable way. This can be done in any number of ways — physical logging using a guard shack or other driver checking process, digital trip logging via a dispatching system, or through contractual records. There are no specific requirements for recordkeeping other than the records themselves being verifiable.

Those records are used to calculate your WAIRE Points Compliance Obligation (WPCO). Think of this as a “debt” you must resolve. This number has a very real dollar amount attached to it. In fact, each point that is generated by your warehouse’s vehicle traffic is equivalent to $1,000. South Coast AQMD has estimated that a 250,000-square-foot warehouse with an average amount of vehicle traffic would likely generate a WPCO of 195 in a single year. With administrative fees, this means warehouse operators could see a bill of more than $200,000 at the end of the compliance period.

Warehouse Size Initial Reporting Date Initial Compliance Period
250,000+ sq ft July 1, 2022 Jan. 1, 2022 – Dec. 31, 2022
150,000 – 249,999 sq ft July 1, 2023 Jan. 1, 2023 – Dec. 31, 2023
100,000 – 149,999 sq ft July 1, 2024 Jan. 1, 2024 – Dec. 31, 2024

There are ways to reduce or even eliminate any compliance obligation your warehouse may have accrued over the course of the year. South Coast AQMD has identified several options that generate credits that can be used to satisfy your WPCO. These include actions like purchasing electric or natural gas vehicles, having electric or natural gas vehicles visit your location, and installing charging or solar infrastructure at your site, among others. A handful of mitigating actions can easily eliminate your entire obligation. These may be actions your warehouse has already taken or are planning to take soon. It is important to understand what is required so you can perform adequate procurement and capital planning.

In addition to the recordkeeping requirements of this rule, warehouse operators are also required to submit annual reports to South Coast AQMD to maintain compliance. The Initial Site Information Report (ISIR) for warehouses 250,000 square feet and above is due on July 1. That gives operators less than a month to collect and compile truck traffic data and present it to South Coast AQMD. Failure to do so will likely result in fines and other corrective action.

This all may seem a bit daunting. If you were not aware of this rule or its implications, don’t worry. You are likely not alone. Understanding the rule and its implications is imperative to keeping your warehouse operational and profitable. GNA can help with all aspects of the Warehouse ISR, from calculating your obligations to helping you find cost-effective solutions.