Assembly Bill 98 imposes stringent design requirements applicable to new and expanded warehouse development as soon as January 1, 2026.
On September 29, 2024, Governor Gavin Newsom signed Assembly Bill 98 (AB 98) into law, marking a significant shift in the regulatory landscape for the logistics industry in California. AB 98 continues the trend of shifting regulation of logistics uses away from local jurisdictions to more regional and now statewide mandates. The bill introduces stringent design and build standards for new and expanded logistics use developments, defined as buildings where cargo is moved or stored for distribution, primarily involving heavy-duty trucks, excluding facilities like retail stores or rail-served buildings.
The bill aims to reduce the impact of these facilities on neighboring communities. Effective January 1, 2026, AB 98’s design requirements will apply to new or expanded (i.e., 20% increase in square footage) logistics use developments that meet certain locational requirements. More stringent requirements will apply to certain projects within a newly defined “Warehouse Concentration Region” that covers much of Southern California’s Inland Empire. AB 98 also imposes new requirements on municipalities and logistics use developers related to planned truck routes and the replacement of residential units.
This blog post provides an overview of AB 98’s requirements and considers how the bill fits alongside other recent regulatory initiatives to address air quality impacts in California.
Overview of AB 98 Requirements
Locational Triggers
AB 98 will shape logistics development across large swaths of California. Specifically, it imposes new design requirements on new and expanded logistics use developments that (a) have a loading bay within 900 feet of a sensitive receptor, such as residences, schools, daycare facilities, parks, nursing homes, and hospitals, or (b) are within a defined “Warehouse Concentration Region” and require a rezoning of non-industrial zoned property. The bill defines “Warehouse Concentration Region” to include the Counties of Riverside and San Bernardino and the Cities of Chino, Colton, Fontana, Jurupa Valley, Moreno Valley, Ontario, Perris, Rancho Cucamonga, Redlands, Rialto, Riverside, and San Bernardino.
Design and Build Requirements
AB 98 sets forth requirements that apply to new and expanded logistics use developments, focusing on various aspects of facility design and capability. A subset of the AB 98 requirements will apply to all new or expanded logistics use projects with a loading bay within 900 feet of sensitive receptors or in the Warehouse Concentration Region. These requirements include:
- installation of photovoltaic systems and associated battery storage;
- provision of electrical hookups at all loading bays serving cold storage;
- orientation of truck loading bays away from sensitive receptors;
- separate entrances for heavy-duty trucks;
- landscaped buffers; and
- installation of high-efficiency HVAC systems.
Additional requirements will apply to new or expanded logistics uses that are 250,000 square feet or larger. For instance, developers of these larger facilities will be required to equip a minimum of 10% of all passenger vehicle parking spaces with EV charging stations, install a microgrid-ready switchgear system, and install advanced smart metering.
Operational Requirements
For projects that are 250,000 square feet or larger, or those within the Warehouse Concentration Region, AB 98 will require the use of zero-emission forklifts on site (with effective dates for this requirement between 2028 and 2030, based on project size and location). Equipment used onsite with small off-road engines also will be required to be zero-emission. Both of these requirements will apply to the extent operationally feasible, commercially off-the-shelf available, and adequate power available onsite exists.
Housing Replacement
AB 98 will also mandate that local agencies approving a logistics use include a condition requiring a two-to-one replacement of any demolished housing unit occupied within the last 10 years with affordable housing, unless the unit was declared substandard, and requires developers to compensate displaced tenants with 12 months’ rent if residential dwellings are affected.
Trucking Plan
Finally, AB 98 will require a facility operator to submit a truck routing plan to the relevant local agency prior to issuance of a certificate of occupancy. The truck routing plan should describe the proposed routing including measures to prevent trucks passing sensitive receptors, and prevent queuing, stopping, and parking on public streets. Truck routing plans will be based on the relevant local agency’s truck route map, which will be a component of the circulation element of a local agency’s general plan. AB 98 requires local agencies to update their circulation elements by January 1, 2028, to include truck routes, among other requirements.
AB 98 and California’s Focus on Air Quality
AB 98’s passage comes at a time when California’s regulators have been busy crafting additional regulations and guidance on air quality that will continue to impact the logistics and goods moving industries. For example, the South Coast Air Quality Management District’s (District) Warehouse Indirect Source Rule, which was recently upheld by a federal district court and adopted into the State Implementation Plan by the US Environmental Protection Agency, has been phased in over the past several years. The rule established the Warehouse Actions and Investments to Reduce Emissions (WAIRE) Program, which is designed to decrease nitrogen oxide and diesel emissions linked to warehouses. Warehouse operators can comply with the WAIRE Program by undertaking various emissions-reducing measures, either selected from the “WAIRE Menu” or through a custom plan that has been approved by the District. While the WAIRE Program focuses on emission reduction through operational measures based on truck visits, several of the actions identified on the WAIRE Menu appear to overlap with AB 98 requirements, such as the installation of onsite zero emission charging infrastructure and the installation of onsite solar systems.
Similarly, the California Air Resources Board’s (CARB) 2022 amendments to the Airborne Toxic Control Measure for In-Use Diesel-Fueled Transport Refrigeration Units (TRU Rule) regulation established requirements that apply to (among other facility types) refrigerated warehouses or distribution centers with a building size greater than or equal to 20,000 square feet. Applicable facility owners must register their facility with CARB and report specific information about their facilities, including the number of loading dock doors, square footage of refrigerated storage space, and the number of TRUs under facility control. While the TRU Rule is specifically focused on facility reporting related to transport refrigeration units, AB 98 imposes a mandatory design feature — installation of electrical hookups at all loading bays serving cold storage. Additionally, AB 98 prohibits the idling and use of auxiliary truck engine power to power climate control equipment if the truck is capable of plugging in at the loading bay.
Finally, over the past several years, the South Coast Air Quality Management District has been developing additional guidance for public agencies to evaluate cumulative air quality impacts from increased air toxics for projects subject to the requirements of the California Environmental Quality Act (CEQA). The District initiated this effort in part to address air quality impacts from the proliferation of logistics and trucking uses in portions of Southern California. Existing District guidance suggests that agencies presume a cumulatively significant air toxics impact if a project is individually significant and vice-versa. Through a series of working group meetings, the District staff has presented draft proposals that likely would require a more stringent project-level analysis of cumulative air toxics impacts. If finalized, this guidance could complicate the CEQA approval process and expose projects to additional litigation risk.
These examples, along with AB 98, illustrate that California is likely to remain committed to aggressive regulation of new and expanded warehouses to address air quality impacts.
Conclusion
AB 98 marks a significant regulatory shift for California’s logistics industry, introducing stringent design and operational standards for facilities starting in January 2026. These requirements generally align with the goals of other initiatives like the WAIRE Program and CARB’s TRU Rule, all aimed at reducing emissions and enhancing air quality for neighboring communities.
Latham & Watkins will continue to monitor developments in this space.
This post was prepared with the assistance of Lauren Cahill in the San Diego office of Latham & Watkins.
