Calculate the AQMD Rule 2305 mitigation fees you will owe at the end of the year based on the size of your warehouse and the number of visits by diesel trucks. The free online calculator is provided below as a service to our readers.
Why read this article and use this AQMD Rule 2305 Fee Calculator
This online calculator calculates the charges resulting from the new South Coast Air Quality Management District Rule 2305 that measures the square feet of a facility, counts the number of diesel truck visits, and estimates the mitigation fees you will owe at the end of the year. It provides a background on the AQMD rule 2305 and explains important relevant terms.
Introduction to AQMD Rule 2305
You may have heard about the South Coast Air Quality Management District Rule 2305 otherwise known as the Warehouse Indirect Source Rule (ISR). It was adopted on May 7, 2021
The rule requires warehouses greater than 100,000 square feet to directly reduce nitrogen oxide (NOx) and diesel particulate matter (PM) emissions, or to otherwise facilitate emission and exposure reductions of these pollutants in nearby communities.
The AQMD warehouse rule 2305 is a menu-based points system requiring warehouse operators to annually earn a specified number of points. These points can be earned by completing actions from a menu that can include acquiring and using natural gas, Near-Zero Emissions and/or Zero-Emissions on-road trucks, zero-emission cargo handling equipment, solar panels, or zero-emission charging and fueling infrastructure, or other options.
Alternatively, warehouse operators can choose to pay a mitigation fee. Funds from the mitigation fee will be used to incentivize the purchase of cleaner trucks and charging/fueling infrastructure in communities nearby.
This guide is designed to assist warehouse operators to understand the new rule and anticipate future mitigation fees. Also, strategies are provided to avoid paying the fee and instead invest in the warehouse operation in a practical way.
What you need to know about Air Quality Management District Rule 2305
To calculate the South Coast Air Quality Management District’s new rule 2305, you will need to know the following:
- The total square footage of your warehouse
- The number of diesel truck visits per year
- WATTs score
- WAIRE points earned
- Annual WAIRE Points Compliance Obligation (WPCO)
- The WAIRE program stringency factor by year and warehouse size
Although, the rule is fairly straightforward, understanding the terms is necessary to perform the calculation and understand the possible fees owed starting in the year 2022.
Does Rule 2305 Apply to my Operation?
A warehouse operator who has a building with at least 100,000 square feet of floor area and 50,000 square feet are used for warehousing is required to report diesel truck visits, and earn WAIRE points or pay mitigation fees.
To determine the square footage of your warehouse, take the length of the warehouse and multiply it by the width of your warehouse. If it is greater than 100,000 and the at least half is used for warehousing activities, you are subject to Rule 2305.
Background of the South Coast AQMD Rule 2305
On 7 May, the South Coast Air Quality Management Area (South Coast AQMD) adopted Regulation 2305 (the “Regulation”) which aims to regulate nitrogen oxide (NOx) emissions and diesel particulate associated with truck traffic at warehouses. The Regulation will significantly increase compliance costs for warehouse operators in the South Coast Air Basin, requiring operators to achieve compliance through mechanisms such as green projects or discount taxes. The South Coast AQMD estimates that the Regulation will affect approximately 4,000 warehouses in the South Coast Air Basin, with an estimated total compliance cost of $979 million per year. The first report required by warehouse operators under the regulation will be on September 1, 2021. The Regulation does not regulate emissions directly from warehouses or any other sources but does impose requirements on facilities such as indirect sources of contaminants as a result of over-the-road commercial trucks and other vehicle emissions occurring at these facilities. The Regulation specifically applies to sources of distribution centers greater than or equal to 100,000 square feet of interior floor in the same building, existing or new, anywhere within the jurisdiction of the South Coast AQMD. South Coast AQMD stated that they generally expect the implementation of Rule 2305 to reduce the level of emissions in the form of smog from sources associated with over-the-road trucks visiting warehouses by 10% to 15%.
The AQMD Rule 2305 Compliance Obligation
Under the Rule, the South Coast AQMD requires warehouse and distribution center operators to perform a number of actions to achieve a sufficient number of points to meet a calculated compliance obligation. The “Warehouse Operations and Investment to Reduce Emissions (WAIRE) Compliance Points” are measured according to a set of specific formulas. Operators must submit a WAIRE plan application with their specific plan to collect points to meet the calculated obligation each year through the implementation of various specific actions. Points earned come from investments and expenditures on zero-emission vehicles and infrastructure. In some cases, WAIRE points can be banked or transferred to other organizations under the same operational control for compliance purposes, thus eliminating the need to make multiple investments over different facilities. Alternatively, a warehouse operation may choose to pay a mitigation fee instead ($ 1,000 per WAIRE point).
South Coast AQMD says it will use the proceeds of mitigation fees to encourage the purchase of cleaner trucks and to support investment in zero-emissions fuel infrastructure in nearby communities. Reporting requirements include an initial report on on-site information like warehouse square footage and WAIRE annual reports that include information on truck travel and earned WAIRE points.
The Implementation Schedule for the AQMD Rule 2305
The AQMD Rule 2305 introduces a three-year phase-in period, applied first to the largest distribution centers as a priority. The proposed rule will require compliance based on the size of the facility and is as follows:
2022: Warehouses equal to or greater than 250,00 square feet
2023: Warehouses equal to or greater than 150,00 square feet
2024: Warehouses equal to or greater than 100,00 square feet
Weighted Annual Truck Trips (WATTS) – definition
- All truck trips (to or from the warehouse) occurring over the 12-month compliance period
- If more than one operator occupied the warehouse, then WATTS is calculated individually for each operator
- WATT𝑠 = 𝐶𝑙𝑎𝑠𝑠 2𝑏 𝑡𝑜 7 𝑇𝑟𝑢𝑐𝑘 𝑇𝑟𝑖𝑝𝑠 + [2.5 × 𝐶𝑙𝑎𝑠𝑠 8 𝑇𝑟𝑢𝑐𝑘 𝑇𝑟𝑖𝑝𝑠]
- Class 2b to 7 truck trips = All trucks or tractors entering or exiting a warehouse truck gate(s) or driveway(s) that are truck Class 2b, 3, 4, 5, 6, or 7. If truck class information is not available, Class 2b to 7 trucks are all straight trucks that entered or exited a warehouse truck gate(s) or driveway(s)
- Actual truck trip data to the warehouse must be collected by the warehouse operator using methods that contemporaneously record verifiable truck trips.
Warehouse Actions and Investments to Reduce Emissions (WAIRE) – definition
- WAIRE Points will be earned for the actions/investments completed each compliance period and only for the portion of the year that a warehouse operator occupies a warehouse
- WAIRE Points must be earned only for warehouse operators in buildings with ≥100,000 square feet dedicated to warehousing activities, and who operate at least 50,000 square feet of the warehouse
- Warehouse operators must earn points every 12-month compliance period
AQMD Rule 2305 WATT points and mitigation fee calculator
This is just an estimator and is offered as a guide only. Please consult the AQMD for specific guidance pertaining to your individual warehouse operations.
How to Earn WAIRE points and Avoid Paying the Rule 2305 Mitigation Fees
To earn WAIRE points and avoid paying the AQMD Rule 2305 mitigation fees, there are a number of things a warehouse operator can d. The WAIRE “menu” of actions was developed for PR 2305. WAIRE points from this menu can only be earned for “surplus” actions, that “go beyond existing federal and state regulations already applicable.” Under the WAIRE point menu, there are nine categories of actions a business can take to avoid paying the rule 2305 mitigation fees.
At the time of writing this article and publishing this calculator, the WAIRE menu options available to facilities to gain WAIRE points and meet their annual WPCOs is as follows:
- Zero-emissions (ZE) and near-zero-emissions (NZE) truck acquisitions and usage
- ZE and NZE truck visits from a non-owned fleet
- Electric vehicle charger acquisition and usage
- Hydrogen filling station acquisition and usage
- ZE yard truck acquisition and usage
- Solar panel acquisition and usage
- High-efficiency filter systems acquisition and replacement filters
- Transport refrigeration unit plug acquisition and usage
- Pay mitigation fee
For more detail on the WAIRE points menu, including the point values for each action taken, read the South Coast AQMD’s Technical Report here.
Environmental Justice Implications for AQMD Rule 2305
With e-commerce booming during the pandemic economy, rapidly growing numbers of warehouses, and, by connection, expanding distribution channels that support them, will likely become the focus of more intense scrutiny by environmental justice communities and advocates – as well as that of the Biden Administration. By targeting air emissions stemming from activities associated with warehouses, including indirect source emissions resulting from freight trucks driving to and from warehouses, the Rule begins to address the longstanding concerns of neighboring environmental justice communities who often face the most direct impacts.
Potential Legal Challenges to Rule 2305
The Rule may be subject to legal challenge, which could potentially stay its implementation. For example, the Rule requires a warehouse to install solar energy panels, but that will not do anything to significantly reduce diesel truck emissions or ambient ozone concentrations created by truck activities. Several concerns were also raised that the mitigation fee included in the rule is an unlawful special tax. Environmental groups commented that the Rule is not sufficiently stringent to protect communities neighboring industry. South Coast AQMD was also required to comply with the California Environmental Quality Act (CEQA) for adoption of the Rule, and determined that in several areas, environmental impacts would be significant. Given the broad swath of competing comments, and the tendency for CEQA to invite litigation, a challenge may be imminent. For now, distribution warehouses subject to South Coast AQMD’s Rule 2305 should consider evaluating the limited exemptions, preparing a compliance strategy, and planning based on the implementation schedule provided in Table 2 of the approved Rule. Affected warehouse operators should also begin preparing the first reports due under the Rule on September 1, 2021.
The rule may be subject to legal objections that may apply. For example, the change requires the installation of solar panels in a warehouse, but this does not contribute to the reduction of emissions from Class 2b-Class 8 over-the-road (OTR) trucks or to environmental ozone levels generated by transport truck activities. Concerns have also been raised that the mitigation fee included in the rule is an unlawful special tax. Environmental groups said the rule is not strict enough to protect the environment of neighboring communities. The South Coast AQMD was also asked to comply with the California Environmental Quality Act (CEQA) before the adoption of the rule, and concluded that the environmental impact would be significant in a number of areas. Given the broad swath of competing comments, and the tendency for CEQA to invite litigation, a challenge may be forthcoming. For now, distribution warehouses subject to South Coast AQMD’s Rule 2305 should start preparing a compliance strategy based on the implementation schedule noted above. Distribution centers equal to or larger than 250,000 will need to complete a warehouse operations notification and submit it by September 1, 2021