US freight rail, supply chain, now at the mercy of California’s net-zero emissions rule

The U.S. Environmental Protection Agency is edging toward greenlighting California regulators’ plan to set net-zero emissions standards for locomotives operating in the Golden State. This scheme that could quickly spread to other states, threatening reliable rail transport of goods throughout the country.

Last summer, the California Air Resources Board finalized its “In-Use Locomotive Regulation,” which mandates that by 2030, only zero-emissions locomotives will be allowed to operate in the state. Within a few years, all locomotives transporting people, goods, or equipment in California must be in a “zero emissions configuration.”

For context, this regulation was crafted by officials in Sacramento, even though there are no commercially viable zero-emission locomotives in North America, and none are expected to be available in time to meet their arbitrary deadlines.

Under the this rule, rail companies in California — from large operators to smaller short-line carriers — will be required to make sizeable annual contributions to a state-run “Spending Account,” starting on July 1, 2026.  Beginning in 2030, these accounts could only be used for the purchase or lease of zero-emissions locomotives or zero-emissions equipment. 

Freight trains and Amtrak’s long-distance passenger trains currently run on diesel, a fossil fuel that California’s plan is specifically designed to eliminate while providing no guidance on what is to replace it.  What’s more, the mandatory deposits in the spending accounts divert funds that rail companies could otherwise use to invest in available technologies that could reduce emissions from their diesel-powered locomotives.

In a March 13 analysis for the Washington Legal Foundation, attorneys James Burnley and Fred Wagner point to what they say are the “enormous costs” of the California rule. 

“The U.S. supply chain would be threatened,” they write. “Railroads would be forced to use unproven technology to power locomotives and to take locomotives with many years of useful life remaining out of service. Complying with California’s impracticable rule could create new logistical challenges for the timely movement of food and essential goods in and through California. All this, just as America has gotten its broken supply chain back on track, largely because of the railroads.”  

Under Section 209 of the Clean Air Act, EPA is responsible for reviewing requests by California to depart from federal environmental requirements. EPA has only three choices: it can approve, deny, or modify the rule, keeping some parts and eliminating others. By approving all or most of California’s locomotive rule, EPA would effectively subject much of the nation’s rail network to California’s climate policies.

“Substituting a state-by-state patchwork regulatory scheme over the rail industry violates federal preemption standards,” Burnley and Wagner point out. “The Clean Air Act gives other states the ability to adopt California’s emissions standards, if EPA authorizes the regulations. Imagine a rail network where operators would need to switch locomotives repeatedly when crossing state lines. That’s why we have a national rail system. It calls for national standards, not implemented on a state-by-state basis.”

If the Biden EPA greenlights the California rule, will such states as New York, New Jersey, Massachusetts, Vermont, Illinois, Washington, and Oregon be far behind? EPA is already indicating that it plans to embrace the California scheme. 

In November, EPA issued a new rule under the Clean Air Act addressing emissions from locomotives and locomotive engines. The rule narrowed the scope of federal preemption of state efforts to regulate locomotive emissions in such a way as to open the door — if not yet to fully authorize — California’s clamp down on the rail industry. Because, as EPA expressly points out in the rule, other states may “adopt those same California standards,” the Biden EPA has moved one step closer to dismantling the structure of uniform federal rail regulation that has for decades ensured consistency, predictability, and certainty in this vital industry sector.

As noted by the Heritage Foundation’s Steven G. Bradbury, who served as general counsel at the Department of Transportation 2017-2021, “America’s rail system functions a single integrated national network,” accounting “for about 40 percent of America’s freight carriage.” California’s rule, he adds (which now may be blessed by EPA), “would overthrow Congress’s system of uniform federal regulation of railroads and replace it with an anti-fossil fuel industrial plan hatched by state bureaucrats in Sacramento.”

EPA has set a deadline of April 22 for the public to submit comments on the proposal to the agency. If, as expected, EPA goes along with California’s scheme, lawsuits will quickly follow. Among the statutes EPA will be charged with violating are the Clean Air Act, the Interstate Commerce Commission Termination Act, and the Locomotive Inspection Act.

Additionally, EPA is certain to be called out for violating the U.S. Supreme Court’s major questions doctrine, anchored in its landmark 2022 decision in West Virginia v. EPA. That doctrine prohibits federal agencies from issuing rules with major economic or societal impacts without specific congressional authorization. 

Congress has not given EPA the authority to cripple the nation’s railroad network.

Bonner Russell Cohen is a senior policy analyst with the Committee for a Constructive Tomorrow.