The Environmental Protection Agency (EPA) will hold an important hearing on March 20th to consider a request from the California Air Resources Board (CARB) to fundamentally distort the regulation of economically critical railroads and their locomotive fleet. The EPA has a unique opportunity to stand for the rule of law while still advancing its mission for a cleaner environment. Decisive action in defending its regulatory lane and rejecting the overtures of California, which is seeking to obliterate highly efficient locomotives – responsible for just 0.6 percent of U.S. greenhouse emissions – would also protect millions of American businesses and consumers across the country.
At issue is a waiver the state of California must receive to implement a sweeping measure it recently passed. The rule says that railroads must prematurely start retiring their existing locomotive fleet in 2030, and that after 2035 railroads may no longer purchase new locomotives for use in California unless they are “zero-emission.” Yet no such locomotive is viable today and even the most optimistic forecasts say there is no way railroads could possibly replace thousands of locomotives in less than eleven years. This is to say nothing about very real grid capacity concerns.
Requiring railroads to deploy non-viable technology is wrongheaded. Especially because its lack of commercial viability is due to realities within the market and science – not obstinance.
Importantly, “rail is already one of the cleanest ways we move freight and has an important role to play in reducing freight transportation’s climate impacts,” say researchers at Third Way. The industry handles 40 percent of the nation's long-distance freight.
Railroads embody interstate commerce, operating across state lines every day throughout their integrated network. If EPA were to grant the waiver, the California rule would be national in scope immediately, because two-thirds of the locomotive fleet would be prohibited from operating in California by 2030, and because other states could replicate the regulation. A patchwork of unworkable state regulations would cripple supply chains.
Rail provides significant efficiencies for essential U.S. industries, particularly in the ability to move large quantities of goods long distances. This requires an ability to move seamlessly between states and do so with one set of equipment and corresponding regulation.
“Imagine a rail network where operators would need to switch locomotives repeatedly when crossing state lines,” writes former U.S. Transportation Secretary James Burnley. “That’s why we have a national rail system. It calls for national standards, not implemented on a state-by state basis.”
Nonetheless, California is also requiring railroads to deposit millions each year into an escrow account overseen by the state to be used exclusively in pursuit of the zero emissions goals. For large railroads, this will total about $800 million per year per railroad, while smaller railroads will be on the hook for roughly $5 million per year. Railroading is capital intensive, and many small railroads have said this will put them out of business, shifting freight to more carbon-intensive highways in the process. California has been troublingly agnostic about looming bankruptcies or creating counterproductive environment results.
Private dollars in this case would be better served supporting ongoing decarbonization research and development – like the testing of hydrogen and battery-hybrids – as well as network maintenance and improvement geared toward critical safety gains and capacity improvements for shippers.
Indeed, the policy at hand poses significant challenges for the vast set of railroad customers ranging from farmers to auto manufacturers to retailers, particularly in the context of environmental progress. Rail customers will be forced to consider new costs and less fluid operations, disrupting improved supply chains while exacerbating inflation.
Yet maybe the most important point for the EPA to consider is the elephant in the room: CARB is not just ignoring reality and the fate of small businesses – it's trampling on federal statutes like the Clean Air Act and the ICC Termination Act of 1995, both of which clearly preempt states’ abilities to engage in these types of actions. This isn't just about the railroad industry anymore; it's about the fundamental principles of regulatory authority and interstate commerce.
The EPA has a choice. We should all hope it makes the right one, favoring solutions that protect the economy while advancing our environmental goals.
