Navigating Regulations in the Clean Fleet Landscape

January 14, 2022

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It’s a new year, which typically means California citizens and businesses are faced with hundreds of new laws. This year is no exception. It can be difficult enough to navigate the nuances of these new laws without considering how the implementation of existing laws will affect one’s business in 2022 and beyond.

In the world of transportation and logistics, these changes will require business owners to consider their partnerships with subcontractors and lessees in a new light. They will also force warehouse owners and operators to closely monitor who visits their locations. Several regulations from the California Air Resources Board (CARB) and the South Coast Air Quality Management District (South Coast AQMD) have provisions that mandate motor carriers and warehouse operators effectively become, for lack of a better term, their brother or sister’s keeper.

Regulations in California will require motor carriers and warehouse operators to consider their partnerships in a new light.

CARB’s Advanced Clean Fleets (ACF) regulation mandates Zero Emission Vehicle (ZEV) sales goals from vehicle manufacturers and composition goals for motor carrier fleets. South Coast AQMD’s Warehouse Indirect Source Rule (ISR) requires that warehouse operators mitigate the impact of vehicle trips to their location through various means, such as installing green infrastructure or utilizing ZEV yard tractors, among other methods.

Reviewing the For-Hire Carrier Model

With few exceptions, any for-hire carriers with which a company subcontracts will be considered part of that company’s fleet under CARB’s ACF regulation. This can lead to several complications, such as increasing the number of vehicles a motor carrier needs to convert to zero emissions to achieve ACF milestone requirements. This, in turn, can create fleet planning and procurement concerns that can last for years, compelling a motor carrier to reevaluate its business model moving forward. Perhaps subcontractors are no longer a feasible option, or maybe the number of company-owned vehicles needs to be reduced. Business owners need to start asking themselves these questions in light of the ACF rule.

Additionally, motor carriers are required to ensure any outside carrier or subcontractor that hauls freight for or otherwise does business with them is compliant with all CARB rules. This provision may require changes to the contract approval and onboarding processes to ensure initial compliance. Depending on how these contracts are managed, an annual review of all related documentation may also be required to ensure these contractors stay in compliance with all applicable rules.

Any for-hire carriers with which a company subcontracts will be considered part of that company’s fleet under CARB’s ACF regulation.

Effectively, ACF requires motor carriers to treat a subcontractor like they are part of their fleets, at least as far as compliance is concerned. The buck stops at the contracting company. If a non-compliant fleet is hired or utilized in any way, it could lead to audits, fines, and other corrective action from CARB. It is your responsibility as a fleet owner to ensure everyone with whom you do business follows the rules — but it doesn’t end there.

The Tricky TRU Situation

The proposed Transport Refrigeration Units (TRU) regulation presents particularly troublesome rules for any fleet company that leases TRUs to end users — especially if they are an interstate company. As it is currently written, a company that rents or leases TRUs to other parties for less than a year must consider those vehicles as part of its fleet. Lease agreements of a year or more can include language that identifies the lessee as the party responsible for compliance, but unless specified, the onus falls back on the leasing company.

That means that all TRUs that operate in California are subject to the rule. It also means that any potential unit that may travel to or be leased in California, even for a day, would be considered part of the owner’s California fleet and would be regulated accordingly. These regulations include restrictions on refrigerant usage, emission standards requirements, and conversion goals for zero-emission vehicles. Obviously, this presents a planning and procurement nightmare, as well as a compliance headache for most, if not all, motor carriers that utilize TRUs.

Weighing In with Warehouses

For warehouse operators in Southern California, the types of vehicles that visit a facility can have a direct impact on that company’s emissions reduction obligation. Several items contribute to a warehouse’s overall obligation, and there are mitigating factors that can reduce or even eliminate that obligation.

Commercial vehicles that make deliveries to and pickups from a location must be tracked to comply with South Coast AQMD’s Indirect Source Rule.

Commercial vehicles that make deliveries to and pickups from a location must be tracked to comply with South Coast AQMD’s Indirect Source Rule. Those trucks can either increase your obligation or help eliminate it, depending on what kind of vehicle they are. Zero-emission is king, and daily, weekly, and monthly visits to your facility by a zero-emission vehicle will reduce your overall compliance burden. Ensuring your partners meet or exceed their own zero-emission goals will help everyone in the long run.

Through these current and future regulations, CARB and South Coast AQMD are creating an atmosphere of mutual responsibility. Motor carriers and warehouse operators are no longer islands and must take steps to ensure both they and their business partners comply with all applicable rules. This can be a daunting task given the sheer volume and complexity of many of these regulations.

Compliance assistance, grant funding for infrastructure and vehicles, fleet planning, and government advocacy are all paramount to companies staying operational and profitable. The future is coming, and we all need to be prepared. If your company isn’t thinking about these issues, they should start now. Many of these rules are already in place, and more are being implemented each year.