By Paul Berger

California is finding ways to pressure companies to cut pollution, even as Republican lawmakers roll back the state's clean-air efforts that pioneered emissions regulations.

The air-quality agency that covers the region around California's busiest port complex is stepping up enforcement of an obscure rule that regulates emissions from vehicles operating at warehouses.

Regulators are hoping the rule, known as an indirect-source rule, could push companies toward green technologies as other regulatory efforts stall.

The South Coast Air Quality Management District has over the past six months issued more than 220 violation notices to companies for failing to submit timely reports for the warehouse indirect-source rule. The agency has collected more than $1.3 million in penalties for the tardy filings and more than $54 million in fees since 2023 to mitigate warehouse-related pollution.

Those actions, as well as the continuing enforcement of the warehouse rule even after Republicans rolled back other California air regulations, are prompting logistics companies to take a hard look at emissions and to consider mitigation efforts. These range from installing electric-vehicle charging stations to buying battery-electric trucks.

"Everyone was thinking this was going to be another one of those things we're not going to have to do," said Gary Kendle, vice president of transportation for Weber Logistics, which operates 12 warehouses in the region. "Now that it is still there, they're taking it a lot more seriously."

Last month, the Republican-led Congress revoked waivers granted to California to set stricter emissions rules than the federal government. The move stripped a state regulator, the California Air Resources Board, of its power to impose tough pollution standards for heavy-duty engines and mandate sales of zero-emission, heavy-duty trucks. CARB earlier this year, citing anticipated opposition from the Trump administration, abandoned its request for a federal government waiver that would have allowed it to force companies to buy battery-electric trucks.

California regulators say they plan to challenge the waiver revocations in court. But CARB Chair Liane Randolph told a state assembly committee last week that litigation could take years and that, meanwhile, policies such as indirect-source rules could help "to offset some expected vehicle-emissions reductions that we've lost."

Indirect-source rules are implemented by local air districts to regulate air pollution from vehicles that operate or call at facilities such as logistics hubs and shopping malls. While most tailpipe-emissions laws rely on federal waivers, local air districts have the authority to implement the rules under state and federal laws. The few such rules in California have so far withstood legal challenges.

Transportation and logistics companies oppose the rules, saying they add costs and increase regulatory burdens on companies. The Supply Chain Federation, an industry group that represents such companies, says the South Coast AQMD's rules are a "backdoor approach [that] does little to cut emissions and instead raises costs, disrupts supply chains." It warns that other similar rules are being considered in California and in other states.

Regulators say the rules are needed to cut air pollution that causes respiratory diseases and deaths. The South Coast AQMD covers a region that includes the nation's busiest logistics hubs, from the country's biggest container-handling ports at Los Angeles and Long Beach to a vast complex of warehouses in Southern California's Inland Empire about 40 miles east of Los Angeles.

Ian MacMillan, an official at the South Coast AQMD who helped craft the warehouse rule, said more emissions-reduction programs will be needed if California's other air regulations are stalled. "Trucks are still the largest source of smog-forming emissions in the region and we have the worst ozone quality in the nation, so we need to find ways to reduce emissions from these sources," he said.

The warehouse rule is in the fourth year of a five-year phase-in plan and currently covers warehouses 100,000 square feet or larger. Warehouse operators calculate the number of truck trips their operations generate. Then they earn points to offset the pollution-causing activity, such as by attracting zero-emissions trucks or installing solar panels or EV chargers. If the efforts don't earn enough points, they pay a mitigation fee.

South Coast AQMD officials say less than 5% of compliance points so far have been earned from mitigation fees. They say they have been surprised by how many companies are earning points by investing in green technologies such as battery-electric trucks that move trailers around yards.

Write to Paul Berger at paul.berger@wsj.com

(END) Dow Jones Newswires

June 06, 2025 05:30 ET (09:30 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.