AB 98: Redefining California Warehouses

California Gov. Gavin Newsom on Sept. 29, 2024, signed California Assembly Bill 98 (AB 98) into law. This bill, which is part of California's ongoing efforts to regulate warehousing and trucking activity to reduce emissions and enhance community health, will increase the state's regulation of warehouses, including truck routes into warehouses. However, the bill also imposes additional costs and regulatory burdens to warehouse and truck operators in the state.

AB 98 becomes effective on Jan. 1, 2026. Further, cities and counties are required to update their circulation elements (e.g., identifying and establishing truck routes) by Jan. 1, 2028.

California's AB 98 aligns with the state's ongoing efforts to regulate warehousing and trucking activity, such as the warehouse indirect source rule of the South Coast Air Quality Management District (whose jurisdiction includes the ports of Los Angeles and Long Beach and common Inland Empire warehousing locations) that regulates warehouse facilities to reduce emissions from the operators and carriers that use the warehouses. The California Air Resources Board (CARB) has also enacted regulations aimed at reducing emissions for Advanced Clean Trucks, Advanced Clean Fleets and the Clean Truck Check Program (CTC Program), which phase in obligations for manufacturers and carriers operating in California to use zero-emission vehicles. The state has further regulated trucking through Assembly Bill 5, California's independent contractor law, which makes utilizing independent contractor drivers (a very common arrangement nationwide) very challenging.

AB 98 mandates several environmental and community health protections. The bill focuses on regulating the construction and operation of new or expanded warehouses that are 250,000 square feet or larger. Key provisions include:

• installation of energy-saving features such as solar panels and electric vehicle charging stations
• transition to zero-emission forklifts by 2030
• establishment of buffer zones between warehouses and sensitive areas such as homes, schools and parks
• establishment of truck routes that avoid residential areas

AB 98 expands state involvement into what has traditionally been in the purview of local government. Prior to Newsom signing AB 98 into law, the bill had passed by a narrow margin in both the Senate and the Assembly. Groups representing California cities and counties had raised concerns and argued that they were not sufficiently consulted. The bill changes how large warehouses are developed and operated in California. Warehouse operators will likely face increased costs because of the infrastructure and equipment requirements, including the need for detailed truck routing plans and separate truck entrances. Additionally, the location constraints imposed by the buffer zones could limit the availability of suitable land for new developments, potentially slowing the approval and construction processes. Though these measures aim to enhance environmental protection and community health, they may also lead to higher operational costs and logistical challenges for warehouse operators in California.