California vs. the World on Zero-Emissions Trains

The state’s absurd railroad mandate has drawn near-unanimous opposition in filings with the EPA.

C alifornia’s regulations on gas-powered cars and trucks have gotten a lot of attention in the past few years. The state wants to phase out internal combustion engines on a very short timeline, claiming environmental benefits. But it has also pursued a rule on trains that is perhaps even crazier than the rules on cars and trucks. That rule is currently waiting for a waiver from the EPA to go into effect, and it has drawn opposition from just about everyone: railroads, locomotive manufacturers, business groups, farming groups, politicians around the country, regulatory experts, and even labor unions.

What California Wants

The California Air Resources Board (CARB) adopted the In-Use Locomotive Regulation in April 2023. The regulation has four components:

• By 2035, all locomotives that operate in California will need to be zero-emissions. Starting in 2030, diesel locomotives originally built more than 23 years ago will be prohibited, unless they are at Tier 4 standards, the most recent EPA regulations for diesel locomotives.
• Any locomotive stationary for longer than 30 minutes must be shut down, and locomotives must have devices that automatically shut them down when 30 minutes has elapsed.
• Beginning in 2026, railroads must set aside money in a spending account based on how much they emit. The amount to set aside is based on estimates of health costs from emissions while operating in California. The money must be used to buy new locomotives or retrofit old locomotives that are greener. Until 2030, the money can be used to comply with Tier 4 regulations. After that, it can be used only for zero-emissions locomotives.
• Railroads must keep records and report to CARB about their compliance with the rules and pay $175 per locomotive in administrative fees.

The Clean Air Act of 1972 regulates air standards nationally. It preempts many forms of state-level air-standards regulations. But it contains Section 209, which allows California to make its own air standards. Here is the relevant text of that part of the law:

The Administrator shall, after notice and opportunity for public hearing, authorize California to adopt and enforce standards and other requirements relating to the control of emissions from [non-road] vehicles or engines if California determines that California standards will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards. No such authorization shall be granted if the Administrator finds that—

• the determination of California is arbitrary and capricious,

• California does not need such California standards to meet compelling and extraordinary conditions, or

• California standards and accompanying enforcement procedures are not consistent with this section.

The word “shall” is very important. It essentially puts the burden of proof on people who oppose California’s regulations. The default is that California gets to make its own rules. California does not have to demonstrate that its rules are good. Opponents have to demonstrate that its rules are bad, in at least one of the three ways listed. This determination does not take place before a federal judge, but before the EPA.

CARB says it is pursuing this regulation because California’s air quality is low. It points to 21 areas of the state that do not meet federal air-quality standards. It frames the concern in terms of environmental justice, the idea that various forms of discrimination show up in environmental outcomes.

“Reducing locomotive emissions is also critical to protecting communities that disproportionately bear the burden of health impacts caused by emissions from locomotives,” CARB said in its comment to the EPA. “At least 90% of California’s railyards are within one mile of disadvantaged communities according to EPA’s Justice40 Climate and Economic Justice Screening Tool, and locomotives travel to and operate at seaports, railyards, and other locations that are often near vulnerable populations of children, the elderly, and the ill, such as schools, hospitals, elder care facilities, and residential neighborhoods.”

CARB believes the rule will be at least as protective of public health and welfare as federal standards are. The text of Section 209 gives California the authority to determine that, not the EPA. Regardless, CARB notes, “California’s protectiveness determination occurs against the backdrop of prior authorization proceedings in which California previously determined — and EPA affirmed — that California’s nonroad emission control program is at least as protective as EPA’s. In fact, EPA affirmed just such a determination in October 2023, and no one challenged EPA’s finding.” Consequently, it argues that the finding is not arbitrary and capricious, since it has precedent to back it up.

Given the large amount of noncompliance with federal air standards in California, CARB argues that there are compelling and extraordinary conditions that require the added regulations. It believes that with stricter air-quality regulations coming from the EPA down the road, more areas in California will become noncompliant. It also believes that “California faces severe threats from climate change” and those threats are also compelling and extraordinary. It says the state’s wildfires and water-supply problems are affected by climate change. It also singles out the state’s agriculture industry as being particularly affected.

CARB says the regulation is perfectly consistent with Section 209 because it was the intent of Congress in the Clean Air Act to give California “the broadest possible discretion” to regulate air quality.

CARB acknowledges that the EPA has sole authority to regulate new locomotives, but it emphasizes that the law gives California the ability to regulate non-new locomotives. That is why “in-use” is part of the name of the regulation; CARB knows it can’t regulate new locomotives.

It argues that it is not regulating new locomotives with the new rules, only banning locomotives that already exist and forcing railroads to put money aside to comply with the rules. CARB argues, “Operators can comply with all aspects of the Locomotive Regulation through the use of locomotives built to current EPA emission standards and/or operation of their existing locomotives in a ZE configuration.” It argues that “all locomotives in service today can be configured by the operator to run on ZE power.”

It emphasizes that the regulations apply only to operators, not to manufacturers, and they are technology-neutral, meaning that any zero-emissions locomotive fulfills the requirements. That would include conventional electric-traction locomotives powered by overhead wires or third rail, or battery-powered or hydrogen-powered trains that are not yet commercially available.

It also says the rule does not require railroads to spend the money they set aside, and that they could spend all of the money only on existing locomotives if they wanted to. “Operators thus have multiple choices concerning their Spending Accounts that will not even involve locomotive manufacturers or locomotive sales, much less control them,” CARB says.

Requiring all trains to be zero-emissions by 2035 gives railroads only eleven years to retrofit or replace essentially their entire fleets within California. This is a reasonable timeline, according to CARB. It points to examples of zero-emissions locomotives either in testing or already on order in several different countries, and says it expects battery and hydrogen locomotives to be commercially available by 2035. It also believes that railroads could convert to conventional electric traction in that time by building overhead wires and converting existing trains to run on them.

CARB says the statutorily relevant cost of compliance is only the portion from complying with the first part of the rule, not the portions from the spending accounts, idling rules, or recordkeeping. It estimates that cost will total to $13.8 billion from now through 2050. “For context, the two Class I railroads operating in California who are estimated to bear about 85% of the total costs between them, each posted annual net incomes exceeding $5 billion in 2023,” CARB says.

What Critics Say

The EPA, in accordance with Section 209, put out a notice for comments on the In-Use Locomotive Regulation. This is a standard procedure for administrative rulemaking, where affected industries, experts, and the general public can submit comments to inform regulators. A wide range of critics have contributed comments, and in total, they essentially say every single part of CARB’s argument is wrong.

The railroads are the most obvious opponents of the rule. “The railroad industry is invested in reducing emissions from locomotives as quickly as realistically possible, while protecting the critical efficient functioning of the national freight rail network,” the Association of American Railroads (AAR) said in its comment. “CARB’s In-Use Locomotive regulation . . . will be devastating to the latter and will in fact set back progress toward the former.”

The AAR points out that railroads have done a lot on their own to reduce emissions and already offer the most fuel-efficient mode of surface transportation. It says CARB’s feasibility analysis “shows only that zero-emission technology may be technically possible at some point, and in some contexts — not that it is actually safe, reliable, maintainable, or operable on the North American rail network or that it will plausibly be so for the foreseeable future.”

It says CARB did not consult with railroads when it conducted that analysis. The AAR says converting existing locomotives to zero-emissions is not nearly as easy as CARB makes it sound, and that it “demonstrates a fundamental misunderstanding of how locomotives work.”

The comment from Westinghouse Air Brake Technologies (Wabtec), one of the top locomotive manufacturers in the world, confirms that it will not be feasible for railroads to comply with the rule on the timeline provided. It notes that locomotives usually have service lives of 30 years or longer, so railroads would be getting rid of many perfectly good locomotives to comply with the rule.

Crucially, Wabtec argues that the CARB rule would be a regulation on new locomotives, which is something only the EPA can regulate. “Manufacturers like Wabtec will need to design and manufacture new locomotives and new engines capable of zero-emission operations as early as 2030 to enable new locomotive purchases as operators are forced to retire older models,” the company says. It says that federal oversight is there for good reason, because the national freight-rail network is clearly interstate commerce and having consistent regulations over the entire network is conducive to safety and efficiency.

Railroads don’t have fleets by state. They have national fleets, with the same locomotive often carrying freight across several states. Under this rule, railroads would either have to entirely reconfigure the way they route shipments to allow for engine changes at the California border, or they would have to use zero-emissions locomotives nationwide.

The AAR also says that CARB does not adequately consider the costs of building entirely new electrified railroads, especially in a state with such restrictive regulations on construction. It notes that it currently takes over a decade just to build transmission lines in California, and that “California’s own experience building high speed rail offers additional evidence that electrification of the rail network promises to be extremely costly for geographically large projects.”

The AAR argues that CARB’s rule is really a national regulation that would effectively ban diesel locomotives, completely transforming the current freight-rail industry in only eleven years. The impact of that decision is so large that it would be considered a “major question” under the Supreme Court precedent in West Virginia v. EPA, which means it can be made only with “clear congressional authorization.”

“Rather than a clear authorization, Congress has issued a clear prohibition,” the AAR writes. That prohibition is not only in the Clean Air Act, which gives the EPA authority to regulate new locomotives, but also in the Interstate Commerce Act, which makes clear federal preemption of state railroad regulations.

Further evidence of the national implications of the rule is the fact that numerous state and local officials from across the country also wrote comments to the EPA opposing CARB. That included state legislators from as far away as Kentucky and New York, and mayors from Illinois and Mississippi. They all noted the value of the freight-rail network to their economies and the need for it to operate efficiently. The National Association of Counties wrote, “Counties respectfully urge you to ensure the sole authority to regulate freight rail operations remains at the federal level.”

National trade associations also wrote against CARB. And they weren’t writing just about the effects on their members in California. For example, the Intermodal Association of North America commented on how freight going to and from West Coast ports would be affected, with “negative externalities upstream and downstream from rail operations and throughout the nation.”

The Rail Customer Coalition, a massive list of national trade groups in industries from retail to chemicals, also submitted a comment against the rule. They oppose the spending-accounts portion because it would prevent railroads from investing that money in better operations and could result in the reduction of service, especially for short-line railroads that don’t make a ton of money to begin with.

CARB’s claim to be protecting California’s agriculture industry from climate change was refuted by a coalition of California-based agriculture groups urging the EPA to reject the rule. “As agricultural stakeholders especially reliant on efficient and affordable rail transportation, we believe the regulation is unworkable and will negatively affect our ability to bring vital California goods to market,” the coalition wrote in its comment.

It might seem unremarkable for a bunch of business groups to oppose a regulation, but these business groups often disagree with railroads. For example, when the Surface Transportation Board was considering a rule to give regulators more power to force reciprocal switching between railroads, many of these same rail-customer trade groups were arguing vigorously against the railroads, which opposed the rule. Some of these trade groups also sided with the unions against the railroads during the contentious labor negotiations in late 2022.

Speaking of the unions, even they are against this rule. Unions usually fall in line behind progressive environmental regulations, as for example the United Auto Workers union has. Here, however, rail workers’ unions and other unions in California submitted comments to oppose CARB. That includes SMART and the BLET, the two largest rail unions that were at the center of the 2022 labor negotiations.

The BLET writes, “This regulation ignores the complex, interconnected nature of railroad operations, as well as the reality of where technology stands today. By seeking to enforce zero-emissions locomotive standards that will not be commercially available anytime in the foreseeable future, these regulations would adversely affect not only California but the rest of the country.” It’s hard to get rail unions to sound just like railroads when talking about a proposed regulation, but that portion of BLET’s argument is nearly indistinguishable from the AAR’s.

Even two comments from within the federal bureaucracy do not support the rule. One is from the Office of Advocacy in the Small Business Administration. It makes clear that it is an independent office and that its views do not necessarily reflect the views of the administration as a whole. But it nonetheless “requests [that] the EPA withhold authorization of California’s proposed In-Use Locomotive regulation until the state addresses its potential impacts on small businesses.” It argues the rule would disproportionately affect short-line railroads, which often employ only a few dozen people, by effectively eating up their entire profits with the emissions-based deposits into the spending accounts for green technologies.

The other comment from within the federal bureaucracy came from the Surface Transportation Board, which is the federal economic regulator of railroads. Under Biden-appointed chairman Martin Oberman, the STB has opposed the railroads’ position on policy and been a harsh critic of rail-service levels. Yet the STB’s comment expresses concern about California’s trampling of interstate-commerce regulations and warns the EPA to tread carefully. “EPA should consider interpreting and applying the CAA narrowly when making these determinations and erring on the side of finding CAA preemption should it have doubts as to the Regulation’s technical feasibility or whether aspects of it attempt to regulate the control of emissions from new locomotives or otherwise run afoul of or not qualify for authorization under [Section 209],” the STB said.

A comment from Republican representatives on the House Committee on Transportation and Infrastructure echoes the interstate-commerce concerns. They wrote that Congress has been extremely clear in several different laws that state and local regulations of railroads are federally preempted because of the intrinsically interstate nature of the rail network and the desirability of uniform regulation for efficiency. “Nevertheless, CARB ignores both clear statutory text and court concurrence in seeking to establish a rule that unreasonably burdens and interferes with rail transportation, and EPA would only further this should it grant the request for authorization,” they wrote.

Steven Bradbury, now at the Heritage Foundation, was general counsel for the Department of Transportation during the Trump administration. He also thinks that the federal preemption is clear. “It does not matter that CARB’s mandates are directed at the use of locomotives, rather than their manufacture,” he wrote. The mandate is still a regulation on new locomotives, and thus preempted by the Clean Air Act, citing a 2004 court case. And he added that “every part of the rule is barred” under the Interstate Commerce Act. He also pointed out that CARB conceded federal preemption of similar rules in a legal argument it made in 2005.

Perhaps the greatest irony is that CARB’s regulation would have negligible effects on the climate and could even increase emissions. As Benjamin Zycher of the American Enterprise Institute pointed out in his comment, even the high end of CARB’s own estimates would yield a particulate-matter reduction of 0.9 percent and a nitrogen-oxide reduction of 3.9 percent statewide. The highest estimate of greenhouse-gas-emissions reduction from CARB would yield a climate impact of 0.000063°C by 2100, using the EPA’s climate modeling.

And CARB doesn’t consider that if rail becomes more expensive based on its regulation, shippers will opt for trucking instead, which is far worse for the environment. Alex Scott, a professor of supply-chain management at the University of Tennessee, did the math in his comment. “Even a modest 2% mode shift from intermodal to truck would offset the reductions estimated by CARB,” he found. He also noted that the capital diverted to the spending accounts would decrease the quality of service nationwide and prevent railroads from reducing emissions through purchase of new technology in other states.

Marc Scribner, commenting for the Reason Foundation, pointed out that CARB should know better because it commissioned a study in 2016 that found this style of regulation would likely decrease the market share of freight rail. Trucks are the most obvious alternative, in most cases. Maybe CARB thinks that’ll be fine because all trucks will be electric anyway, but that regulation is facing its own set of problems and is unlikely to be implemented in anything like the timeframe California expects.

What Happens Next

The crazy thing is, despite all the contrary evidence, the EPA might still rule to approve the new rule from the California Air Resources Board. The interstate-commerce concerns, while obvious, are not something the EPA directly considers under the Clean Air Act. Commenters brought those up more as a warning to the EPA that if it allows the rule to go through, it will immediately be challenged in federal court on interstate-commerce grounds, and that challenge is likely to succeed.

But that doesn’t mean the EPA won’t approve the rule under the Clean Air Act. The law is written to be extremely deferential to California. Under Biden, the EPA has prioritized environmental-justice concerns, and CARB knew what it was doing when it played those up in its argument for the rule. If the EPA rules against CARB, it might do so on the grounds that the regulation is on new locomotives. That portion of preemption is clear within the Clean Air Act.

The sheer range of commenters speaking up against the rule indicates how far off the deep end California has gone on environmentalism. The only groups commenting on CARB’s side were, by and large, environmentalist groups. Their comments applauded the rule for being restrictive. They did not weigh the costs against the benefits or consider the mode shift to trucking that could make air quality worse.

If all the economic analysis on one side, combined with the facial absurdity of California’s rule, isn’t enough to get the rule blocked by the EPA, it’s a great argument for rewriting the Clean Air Act. There is no reason railroads and all the businesses dependent on them should have to deal with potentially years of litigation to get a clearly preempted state regulation struck down in federal court. And there is no reason California should be able to make environmental rules for the entire country.