Air Board Proposal Makes More Businesses Subject to Its Jurisdiction

Do you get deliveries to your business? I expect you do. Under a new rule being considered by the California Air Resources Board (CARB), you may be subject to onerous reporting requirements under CARB’s Advanced Clean Trucks program even if you do not own or lease a single truck. This reporting requirement is the first step in CARB’s plan to explore ways to regulate your contracts with pickup and delivery companies.

CARB is taking a close look at reducing greenhouse gas emissions (GHGs) in the transportation sector, which accounts for 41% of California’s total GHG emissions, according to CARB estimates. CARB has already moved to electrify transit buses and cutaway shuttles under the Innovative Clean Transit program, require zero-emission airport shuttle buses and state fleets, and require upgrades to heavy-duty diesel trucks and buses.

CARB has now moved its sights to medium- and heavy-duty trucks, even though the infrastructure to charge and maintain electric vehicles is still in its infancy. The Advanced Clean Trucks rule was initially designed as zero-emission mandates on manufacturers and fleet owners—an idea problematic in its own right. Now, CARB is looking at mandates on California businesses that do not own, but which contract for deliveries using these trucks, starting with a mandatory reporting requirement in 2021.

Who Will Be Impacted?

Short answer? A whole lot of businesses that aren’t usually subject to CARB regulation, in addition to engine manufactures and fleet owners. The rule will apply to:

• Any entity, including corporate parents and all subsidiaries, registered to do business in California with gross (not net) revenues above $50 million. Important note: that’s a nationwide revenue trigger, not just business done in California.
• Any fleet owner with more than 100 trucks, but the draft proposal requires that only one of those trucks have been in California at any time in 2019.
• Any broker or entity that arranged transport of more than 100 trucks’ worth of property.

CARB estimates that the revenue category alone will pull in at least 12,000 California businesses. The other broad categories will pull in many others. CARB’s examples include deliveries of parcels, linens/uniforms, armored cash deliveries, water/beverages, and any other goods.

As further examples, CARB lists the type of businesses likely to be impacted as:

• Store;
• Restaurant;
• Distribution center/warehouse;
• Manufacturer/factory/plant;
• Multi-building campus/base;
• Service center;
• Hotels/motels/resorts;
• Medical/hospital/care;
• Administrative/office building; and
• Truck/equipment yard.

Like I said, a whole lot of businesses.

What’s Required?

The rule will require entities to report details on items such as revenue, subhaulers/subcontractors, number of facilities, loading bay heights, details on cold storage, availability of electric vehicle (EV) charging, number of tenants at the property, and whether shuttle or van service is provided.

In addition, the rule requires businesses to describe details on:

• how items are shipped, both in-state and out-of-state;
• how the business ships through to ports and by rail;
• warehousing;
• how direct and intermediary sales products are distributed;
• how products are shipped to homes and businesses.

It also requires detail on how a company enters into contracts for linen/uniform delivery; parcel delivery; facility maintenance and repair; details on armored cash transport; and how contracts for both refrigerated and nonrefrigerated food, other goods, and “all other supplies, tools, and equipment” are handled. The only logical conclusion from this data gathering is a mandate that all businesses get deliveries from zero-emission vehicles.

What’s Next?

Comments to CARB on the informal draft are due on September 21, 2019. Informal comment periods are a crucial time for regulated entities to explain the impact of these ideas before the formal rulemaking process begins. The regulated community provides CARB with much-needed insight into on-the-ground conditions, helping to achieve an optimal balance between protecting the environment and continued economic stability.

For more information or to get involved in coalition discussions, please reach out to me directly

This story originally appeared as a Capitol Insider blog post.

Staff Contact: Leah Silverthorn

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Leah B. Silverthorn served as a CalChamber policy advocate from May 2018 to February 2022. She specialized in climate change, air quality, energy, environmental justice, marijuana/cannabis, and transportation and infrastructure issues. She brought to the CalChamber more than a decade of legal experience in environmental, energy, and land use matters. Immediately before coming to CalChamber, she was the principal owner of Silverthorn Legal, based in Seattle, Washington. She focused on environmental litigation, contaminated property redevelopment, and environmental cost recovery and defense. She is an honors graduate of Indiana University-Bloomington, with a B.S. in public affairs and environmental management. She earned her J.D., with honors, at the Indiana University McKinney School of Law, where she was articles editor for the Indiana International and Comparative Law Review and a member of the Moot Court Board.