California’s small business sector, with allies in local governments, is gearing up against a sweeping change in the state’s regulation of warehouse siting and expansion, including mandated creation of acceptable trucking routes.
AB98 now sits on the desk of Gov. Gavin Newsom, who has until Sept. 30 to sign or veto the bill. A Newsom spokesman told FreightWaves in an email that “this measure will be evaluated on its merits,” giving no other indication which way the governor was leaning on the bill.
The law has two overriding features: It would set a variety of restrictions on new warehouse development regarding siting and truck routes into the facilities, and it would inject the state deeply into decisions that had generally been the province of local governments.
It has a significant number of grandfather clauses, so it would not impact existing warehouses – unless they sought to expand.
Melissa Sparks-Kranz, a legislative affairs lobbyist for the League of California Cities, told FreightWaves in an interview that AB98 is a “major step for the state to be intervening in what is typically the local level.”
“We have the ability to enact our own ordinances,” she said. Zoning and land-use issues now are based on what she called “good neighbor policies, based on local and regional characteristics that help address many of the issues that are articulated in the bill, like setbacks, buffer zones, things along those lines.”
From the business side, a large coalition of groups, including the California Business Roundtable and the Los Angeles Area Chamber of Commerce, wrote a letter to the State Senate, prior to its vote on AB98, saying the bill would kill supply chain jobs and economic output “in a region that is desperate for well-paying middle-wage jobs, especially for those without a college degree.”
While AB98 would apply to the entire state, California’s Inland Empire, east of the Los Angeles area, appears to be its main target. It is the home of dozens of warehouses with millions of square feet of space.
One of the primary sponsors of AB98 is Assemblymember Eloise Gómez Reyes, a Democrat who represents Colton in the Inland Empire. Colton is the home of numerous large warehouses, many of them serving as a way station for imports coming out of the ports of Long Beach and Los Angeles.
Here are some key provisions of the legislation:
- City and county governments would be required to put together a “truck routing plan to and from the state highway system, based on the latest truck route map” of the locality in question. The law would require the facility operator – the owner of the warehouse – to enforce that plan.
- There are other truck-specific requirements. Truck loading bays would have to be at least 500 feet from the property line of the nearest “sensitive receptor.” That is defined by the California Air Resources Board as “children, elderly, asthmatics and others who are at a heightened risk of negative health outcomes due to exposure to air pollution.” Access to the facility for trucks would need to be via a “truck route, arterial road, major thoroughfare, or a local road that predominantly serves commercial oriented uses.” There are requirements for buffers and sound barriers as well. Some of these restrictions might already be in place in certain localities, but AB98 takes them statewide.
- Localities, by the start of 2028, would need to create a broad plan to “identify and establish specific travel routes for the transport of goods, materials, or freight for storage, transfer or redistribution to safely accommodate additional truck traffic and avoid residential areas and concentrations of sensitive receptors.”
- If housing is going to be destroyed in the construction of a warehouse, there would need to be a replacement plan that calls for new construction elsewhere on a 2-for-1 basis, along with payments to displaced tenants.
- There would be a widened role for the South Coast Air Quality Management District (SCAQMD) in parts of four counties: Los Angeles, Orange, Riverside and San Bernardino, the last two of which are home to many of the state’s warehouses. The SCAQMD would be tasked with various testing and enforcement mandates. There also are environmental requirements regarding the use of such things as zero-emission vehicles and the installation of photovoltaic cells for solar power generation.
What local logistics associations said
The state’s logistics sector so far does not appear to have weighed in on the legislation, known as AB98. It passed in both houses of the California State Legislature last week and into the weekend at a whirlwind pace that may have caught potential opponents off guard.
Chris Shimoda, senior vice president of government affairs at the California Trucking Association, said the CTA did not take a position on AB98. However, in an email to FreightWaves, he did note that few local governments now have the capability to publish truck route maps, “much less in the required GIS format that can be picked up by GPS routing software.“
Sarah Wiltfong, the chief public policy and advocacy officer of the newly-formed Supply Chain Council, also said her organization did not take a stand on AB 98.
“But we have identified several critical issues in the bill that need to be addressed if signed by Governor Newsom,” she said in a statement. “We are pleased that the legislative authors have publicly committed to address several key concerns from industry, local government, and others, and the Supply Chain Council will continue to advocate and provide expertise.”
The process that led to AB98’s passage was described by Sparks-Kranz as “gut and amend.” Its backers took a piece of legislation that passed the State Assembly earlier in the year and had essentially nothing to do with warehouses, stuck on the warehouse rules as amendments and then passed that bill, which had the same agenda number – AB98 – as the earlier bill, which had to do with pesticides.
The history of the bill shows it was passed by the Assembly in its original form on March 23, passed a Senate committee in June, got stuck in the “inactive file” and then reemerged on Aug. 20, with the amendments coming in the Senate on Aug. 28. A sprint to the finish – the session was required to end last Saturday – resulted in passage on the final day of the month. The vote was not close: 46-17.
Process was a ‘jam job’
Sparks-Kranz, in her interview with FreightWaves, referred to the process that led to the bill’s passage as a “jam job.”
In a letter to the head of the Senate Appropriation Committee last week, Sparks-Kranz and Mark Neuburger, a legislative advocate with the California State Association of Counties, said the bill emerged “in the final days of the legislative session after months of exclusive closed-door negotiations, which excluded Cal Cities, county associations, and other key stakeholders.”
A ‘clean-up’ bill might be necessary
In the letter to the Senate sent by the almost 20 business and trade groups, there seemed to be an element of resignation that AB98 will become law, and the best thing to do was turn to the future.
“Unfortunately, we understand a clean-up bill is already needed for next year,” the letter said. “We would ask that instead of adopting a bill that has flawed language into state law, that we have an open and transparent conversation about this important legislation next year as part of the accepted legislative process.”
The impact on logistics comes through in both the allied groups’ letter and that of the League of California Cities.
The latter group, in its letter, said AB98 uses “an overly broad and generic definition of logistics.” It says its interpretation of the bill is that it “can also define industries beyond warehouses.” Specific industry groups in the alliance wrote the letter, including the Can Manufacturers Institute and the California Grocers Association.
“As manufacturers, our facilities often serve a dual purpose within a common building,” the letter said. “One part is manufacturing, and sometimes one part is distribution of that manufactured good or product. This proposal is a significant policy shift that will impact the manufacturing sector without manufacturers ever being part of the discussion.”
The letter sent by Sparks-Kranz and Neuburger took aim at several provisions, including the truck routing requirements that would seek to keep trucks on a limited number of roads.
“The bill would limit the trucks traveling from highways to industrial zoned areas to only use major and minor collector streets and roads that predominantly serve commercially oriented uses,” the letter said. “Communities are uniquely situated and not all regions can meet these restrictive requirements. Further understanding of the potential implications in small to mid-size communities, and suburban, rural and urban communities should be further analyzed before imposing such restrictions.”
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