The net-zero emissions rule in California now has control over US freight rail and supply chain.

The U.S. Environmental Protection Agency is moving closer to approving California regulators’ proposal to establish net-zero emissions standards for locomotives in the state. This plan has the potential to rapidly expand to other states, posing a risk to the dependable transportation of goods by rail across the nation.

Last summer, the California Air Resources Board completed its “In-Use Locomotive Regulation,” which requires that all locomotives operating in the state must be zero-emissions by 2030. In the coming years, all locomotives in California, whether transporting people, goods, or equipment, will be required to have a zero emissions configuration.

The officials in Sacramento crafted this regulation, even though there are currently no commercially viable zero-emission locomotives in North America. Furthermore, it is highly unlikely that any will be available in time to meet their arbitrary deadlines.

Starting on July 1, 2026, rail companies in California, including both large operators and smaller short-line carriers, will be obligated to make significant annual contributions to a state-run “Spending Account.” From 2030 onwards, these funds will be exclusively allocated for the acquisition or leasing of zero-emissions locomotives or zero-emissions equipment.

Freight trains and Amtrak’s long-distance passenger trains currently rely on diesel, a fossil fuel that California’s plan aims to phase out. However, the plan does not offer any suggestions for alternative fuel sources. Additionally, the mandatory deposits in the spending accounts divert funds that rail companies could otherwise use to invest in technologies that could reduce emissions from their diesel-powered locomotives.

Attorneys James Burnley and Fred Wagner argue in their analysis for the Washington Legal Foundation on March 13 that the California rule carries significant financial burdens.

According to the authors, if California’s rule were to be implemented, it would pose a threat to the U.S. supply chain. The railroads would be required to adopt untested technology to power locomotives and retire locomotives that still have many years of useful service life. They argue that complying with this impractical rule could create logistical obstacles in the timely transportation of food and essential goods in and through California. This comes at a critical time when the country has managed to restore its disrupted supply chain, largely due to the efforts of the railroads.

According to Section 209 of the Clean Air Act, the Environmental Protection Agency (EPA) is tasked with evaluating California’s requests to deviate from federal environmental regulations. The EPA has three options: approving, denying, or modifying the rule, which involves retaining certain elements while discarding others. If the EPA were to approve the majority or entirety of California’s locomotive rule, it would essentially extend California’s climate policies to a significant portion of the country’s railway system.

According to Burnley and Wagner, implementing a state-by-state regulatory scheme for the rail industry would violate federal preemption standards. They emphasize that the Clean Air Act allows other states to adopt California’s emissions standards only if the Environmental Protection Agency (EPA) authorizes such regulations. They highlight the impracticality of a rail network where operators would have to switch locomotives multiple times when crossing state lines. As a result, they argue for national standards for the rail system instead of a fragmented approach at the state level.

If the Biden EPA approves the California rule, it is likely that states such as New York, New Jersey, Massachusetts, Vermont, Illinois, Washington, and Oregon will follow suit. The EPA has already signaled its intention to support the California scheme.

In November, the EPA issued a new rule under the Clean Air Act that addresses emissions from locomotives and locomotive engines. This rule aims to narrow the scope of federal preemption of state efforts to regulate locomotive emissions, potentially opening the door for California’s stricter regulations on the rail industry. The EPA acknowledges that other states may adopt the same standards as California, which brings the Biden EPA closer to dismantling the long-standing structure of uniform federal rail regulation. This structure has been crucial in maintaining consistency, predictability, and certainty within this vital industry sector for many decades.

According to Steven G. Bradbury, who was the general counsel at the Department of Transportation from 2017 to 2021, America’s rail system operates as a unified national network, handling around 40 percent of the country’s freight transportation. Bradbury further emphasizes that California’s rule, which may receive approval from the EPA, would disrupt the Congress-established framework of consistent federal regulation for railroads and instead introduce a state-driven, anti-fossil fuel industrial strategy devised by bureaucrats in Sacramento.

The Environmental Protection Agency (EPA) has established a deadline of April 22 for the public to provide their comments on the proposal to the agency. It is anticipated that if the EPA proceeds with California’s plan, legal actions will promptly ensue. The Clean Air Act, the Interstate Commerce Commission Termination Act, and the Locomotive Inspection Act are among the statutes that the EPA will be accused of violating.

Moreover, the EPA will undoubtedly face criticism for breaching the major questions doctrine established by the U.S. Supreme Court in its influential ruling in West Virginia v. EPA in 2022. This doctrine prohibits federal agencies from implementing regulations that have significant economic or societal consequences without explicit authorization from Congress.

Congress has not been granted the authority by EPA to cripple the nation’s railroad network.

Bonner Russell Cohen, a senior policy analyst with the Committee for a Constructive Tomorrow, offers valuable insight into various policy matters.

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