[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                  AN EXAMINATION OF THE CALIFORNIA AIR RE-
                   SOURCES BOARD'S (CARB) IN-USE LOCOMOTIVE 
                   REGULATION

=======================================================================

                                (118-64)

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON RAILROADS, PIPELINES,
                        AND HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              JULY 9, 2024

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure
             
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     Available online at: https://www.govinfo.gov/committee/house-
     transportation?path=/browsecommittee/chamber/house/committee/
                             transportation
                             
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
57-190 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------                             

             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    Sam Graves, Missouri, Chairman
                    
Rick Larsen, Washington, Ranking Member
Eleanor Holmes Norton,               Eric A. ``Rick'' Crawford, 
  District of Columbia               Arkansas
Grace F. Napolitano, California      Daniel Webster, Florida
Steve Cohen, Tennessee               Thomas Massie, Kentucky
John Garamendi, California           Scott Perry, Pennsylvania
Henry C. ``Hank'' Johnson, Jr., Georgiaian Babin, Texas
Andre Carson, Indiana                Garret Graves, Louisiana
Dina Titus, Nevada                   David Rouzer, North Carolina
Jared Huffman, California            Mike Bost, Illinois
Julia Brownley, California           Doug LaMalfa, California
Frederica S. Wilson, Florida         Bruce Westerman, Arkansas
Mark DeSaulnier, California          Brian J. Mast, Florida
Salud O. Carbajal, California        Jenniffer Gonzalez-Colon,
Greg Stanton, Arizona,                 Puerto Rico
  Vice Ranking Member                Pete Stauber, Minnesota
Colin Z. Allred, Texas               Tim Burchett, Tennessee
Sharice Davids, Kansas               Dusty Johnson, South Dakota
Jesus G. ``Chuy'' Garcia, Illinois   Jefferson Van Drew, New Jersey,
Chris Pappas, New Hampshire            Vice Chairman
Seth Moulton, Massachusetts          Troy E. Nehls, Texas
Jake Auchincloss, Massachusetts      Tracey Mann, Kansas
Marilyn Strickland, Washington       Burgess Owens, Utah
Troy A. Carter, Louisiana            Rudy Yakym III, Indiana
Patrick Ryan, New York               Lori Chavez-DeRemer, Oregon
Mary Sattler Peltola, Alaska         Thomas H. Kean, Jr., New Jersey
Robert Menendez, New Jersey          Anthony D'Esposito, New York
Val T. Hoyle, Oregon                 Eric Burlison, Missouri
Emilia Strong Sykes, Ohio            Derrick Van Orden, Wisconsin
Hillary J. Scholten, Michigan        Brandon Williams, New York
Valerie P. Foushee, North Carolina   Marcus J. Molinaro, New York
Christopher R. Deluzio, Pennsylvania Mike Collins, Georgia
                                     Mike Ezell, Mississippi
                                     John S. Duarte, California
                                     Aaron Bean, Florida
                                     Celeste Maloy, Utah
                                     Kevin Kiley, California
                                     Vince Fong, California

     Subcommittee on Railroads, Pipelines, and Hazardous Materials

                      Troy E. Nehls, Texas, Chairman
                      
Frederica S. Wilson, Florida, Ranking Member
Seth Moulton, Massachusetts          Brian Babin, Texas
Troy A. Carter, Louisiana            David Rouzer, North Carolina
Andre Carson, Indiana                Mike Bost, Illinois
Mark DeSaulnier, California          Doug LaMalfa, California
Marilyn Strickland, Washington       Bruce Westerman, Arkansas
Valerie P. Foushee, North Carolina,  Pete Stauber, Minnesota
  Vice Ranking Member                Tim Burchett, Tennessee
Grace F. Napolitano, California      Dusty Johnson, South Dakota
Steve Cohen, Tennessee               Tracey Mann, Kansas
Henry C. ``Hank'' Johnson, Jr.,      Georgiady Yakym III, Indiana
Jared Huffman, California            Thomas H. Kean, Jr., New Jersey
Jesus G. ``Chuy'' Garcia, Illinois   Eric Burlison, Missouri
Robert Menendez, New Jersey          Brandon Williams, New York,
Christopher R. Deluzio, Pennsylvania   Vice Chairman
Rick Larsen, Washington (Ex Officio) Marcus J. Molinaro, New York
                                     John S. Duarte, California
                                     Vince Fong, California
                                     Sam Graves, Missouri (Ex Officio)

                               CONTENTS

                                                                   Page

Summary of Subject Matter........................................   vii

                 STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Troy E. Nehls, a Representative in Congress from the State 
  of Texas, and Chairman, Subcommittee on Railroads, Pipelines, 
  and Hazardous Materials, opening statement.....................     1
    Prepared statement...........................................     3
Hon. Rick Larsen, a Representative in Congress from the State of 
  Washington, and Ranking Member, Committee on Transportation and 
  Infrastructure, opening statement..............................     4
    Prepared statement...........................................     5
Hon. Frederica S. Wilson, a Representative in Congress from the 
  State of Florida, and Ranking Member, Subcommittee on 
  Railroads, Pipelines, and Hazardous Materials, opening 
  statement......................................................     6
    Prepared statement...........................................     8

                               WITNESSES

Dillon Olvera, President and Chief Executive Officer, Modesto and 
  Empire Traction Company, on behalf of the American Short Line 
  and Regional Railroad Association, oral statement..............    10
    Prepared statement...........................................    12
Roger Nober, Director, GW Regulatory Studies Center and Professor 
  of Practice at the Trachtenberg School of Public Policy and 
  Public Administration, George Washington University, oral 
  statement......................................................    22
    Prepared statement...........................................    24
Ural Yal, Senior Vice President--Corporate Preconstruction Group, 
  Flatiron Construction, on behalf of the Associated General 
  Contractors of California, oral statement......................    29
    Prepared statement...........................................    31
Heather Arias, Chief, Transportation and Toxics Division, 
  California Air Resources Board, oral statement.................    36
    Prepared statement...........................................    37

                       SUBMISSIONS FOR THE RECORD

Letter of April 22, 2024, to Hon. Michael S. Regan, 
  Administrator, Environmental Protection Agency, from Casey 
  Katims, Executive Director, U.S. Climate Alliance, Submitted 
  for the Record by Hon. Frederica S. Wilson.....................    77
Submissions for the Record by Hon Troy E. Nehls:
    Letter of July 9, 2024, to Hon. Troy E. Nehls, Chairman, and 
      Hon. Frederica S. Wilson, Ranking Member, Subcommittee on 
      Railroads, Pipelines, and Hazardous Materials, from Kristen 
      Swearingen, Vice President, Legislative and Political 
      Affairs, Associated Builders and Contractors...............    79
    Letter of July 8, 2024, to Hon. Troy E. Nehls, Chairman, and 
      Hon. Frederica S. Wilson, Ranking Member, Subcommittee on 
      Railroads, Pipelines, and Hazardous Materials, from Ryan 
      Bowley, Vice President, Government Affairs, The Fertilizer 
      Institute..................................................    80
    Statement of Ian N. Jefferies, President and Chief Executive 
      Officer, Association of American Railroads.................    81
    Letter of April 10, 2024, to Hon. Michael S. Regan, 
      Administrator, Environmental Protection Agency, from U.S. 
      Chamber of Commerce et al..................................    85
    Letter of April 22, 2024, to the Environmental Protection 
      Agency, from Daniel J. Erspamer, Chief Executive Officer, 
      Pelican Institute for Public Policy et al..................    87
    Letter of July 9, 2024, to Hon. Troy E. Nehls, Chairman, 
      Subcommittee on Railroads, Pipelines, and Hazardous 
      Materials, and Hon. Rick Larsen, Ranking Member, Committee 
      on Transportation and Infrastructure, from David Williams, 
      President, Taxpayers Protection Alliance et al.............    89
    Letter of April 22, 2024, to Hon. Michael S. Regan, 
      Administrator, Environmental Protection Agency, from Herman 
      Haksteen, President, Private Railcar Food and Beverage 
      Association et al..........................................    91
    Letter of July 9, 2024, to Hon. Troy E. Nehls, Chairman, and 
      Hon. Frederica S. Wilson, Ranking Member, Subcommittee on 
      Railroads, Pipelines, and Hazardous Materials, from Michael 
      W. Johnson, President and Chief Executive Officer, National 
      Stone, Sand, and Gravel Association, and Robert Dugan, 
      President and Chief Executive Officer, California 
      Construction and Industrial Materials Association..........    94
    Letter of April 22, 2024, to Karl Simon, Director, 
      Transportation and Climate Division, Office of 
      Transportation and Air Quality, Environmental Protection 
      Agency, from Rob Benedict, Vice President, Petrochemical 
      and Midstream, American Fuel and Petrochemical 
      Manufacturers..............................................    95
    Letter of April 5, 2024, to Hon. Michael S. Regan, 
      Administrator, Environmental Protection Agency, from 
      Agricultural Producers and Agribusinesses..................    98

                                APPENDIX

Questions to Dillon Olvera, President and Chief Executive 
  Officer, Modesto and Empire Traction Company, on behalf of the 
  American Short Line and Regional Railroad Association, from 
  Hon. Troy E. Nehls.............................................   101
Questions to Roger Nober, Director, GW Regulatory Studies Center 
  and Professor of Practice at the Trachtenberg School of Public 
  Policy and Public Administration, George Washington University, 
  from Hon. Troy E. Nehls........................................   103
Questions to Heather Arias, Chief, Transportation and Toxics 
  Division, California Air Resources Board, from:
    Hon. Troy E. Nehls...........................................   104
    Hon. Vince Fong..............................................   107
    Hon. Henry C. ``Hank'' Johnson, Jr...........................   108
    Hon. Doug LaMalfa............................................   109

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                              July 3, 2024

    SUMMARY OF SUBJECT MATTER

    TO:      LMembers, Subcommittee on Railroads, Pipelines, 
and Hazardous Materials
    FROM:  LStaff, Subcommittee on Railroads, Pipelines, and 
Hazardous Materials
    RE:      LSubcommittee Hearing on ``An Examination of the 
California Air Resources Board's (CARB) In-Use Locomotive 
Regulation''
_______________________________________________________________________


                               I. PURPOSE

    The Subcommittee on Railroads, Pipelines, and Hazardous 
Materials of the Committee on Transportation and Infrastructure 
will meet on Tuesday, July 9, 2024, at 2:00 p.m. ET in 2167 
Rayburn House Office Building to receive testimony at a hearing 
entitled, ``An Examination of the California Air Resources 
Board's (CARB) In-Use Locomotive Regulation.'' The hearing will 
examine CARB's In-Use Locomotive Regulation. At the hearing, 
Members will receive testimony from Mr. Dillon Olvera, 
President of Modesto and Empire Traction Company testifying on 
behalf of the American Short Line and Regional Railroad 
Association; Mr. Roger Nober, Director of the George Washington 
Regulatory Studies Center and Professor of Practice at the 
Trachtenberg School of Public Policy & Public Administration, 
George Washington University; Mr. Ural Yal, Senior Vice 
President, Flatiron Construction, testifying on behalf of the 
Associated General Contractors of California; and Ms. Heather 
Arias, Chief, Transportation and Toxics Division of CARB.

                             II. BACKGROUND

    CARB issued a regulation to reduce in-state locomotive 
emissions in April 2023.\1\ The Clean Air Act (CAA), 42 U.S.C. 
Sec.  7401, et seq., regulates air emissions from stationary 
and mobile sources.\2\ The CAA authorizes the Environmental 
Protection Agency (EPA) to establish National Ambient Air 
Quality Standards (NAAQS)--which are limits in atmospheric 
concentrations of ``criteria pollutants''--to protect public 
health and welfare and to regulate the emissions of hazardous 
air pollutants.\3\ These are National standards applicable to 
all states and preempt state or local air regulations.\4\
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    \1\ CARB, Reducing Rail Emissions in California, (April 27, 2023), 
available at https://ww2.arb.ca.gov/our-work/programs/reducing-rail-
emissions-california#::text=On%20April%2027
%2C%202023%2C%20CARB,on%20the%20Locomotive%20factsheet%20website.
    \2\ EPA, Summary of the Clean Air Act, (Sept. 6, 2023), available 
at https://www.epa.gov/
laws-regulations/summary-clean-air-
act#::text=(1970),from%20stationary%20and%20mobile
%20sources (noting for the purposes of this hearing, the memorandum 
will focus on mobile sources, particularly the regulation of mobile 
sources from new motor vehicles and locomotives).
    \3\ Id. (Noting that while carbon dioxide emissions are classified 
as pollutants, they are not classified as criteria pollutants requiring 
NAAQS standards. However, two other criteria pollutants included in the 
CARB In-Use Locomotive Regulation--Nitrogen Oxides and Diesel 
Particulate Matter--have NAAQS limits).
    \4\ See generally 42 U.S.C.Sec.  7543(a) (noting for purposes of 
this hearing, the memorandum will focus on the regulation of mobile 
sources of regulated emissions. The general prohibition on states or 
political subdivisions enforcing individual emissions standards is 
codified at 42 U.S.C.Sec.  7543(a)).
---------------------------------------------------------------------------
    Because California air quality standards preceded National 
standards in the CAA, CAA Section 209 expressly allows 
California to seek a waiver of Federal preemption for new non-
road engines and vehicles provided its standards, in the 
aggregate, are at least as protective of public health and 
welfare as Federal standards, except for new locomotive engines 
in CAA Section 209(e)(1).\5\ In addition, CAA Section 177 
allows other states to adopt these standards without specific 
approval by EPA, provided such standards are identical to the 
approved state waiver.\6\
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    \5\ 42 U.S.C. Sec.  7543(e)(2).
    \6\ Codified at 42 U.S.C. Sec.  7543(e)(2)(B).
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    In seeking a waiver to enforce its own standards for non-
road engines and vehicles, California must seek authorization 
from EPA.\7\ EPA must then publish a notice for public hearing 
and comment in the Federal Register. Accordingly, California 
filed its formal request for authorization on November 7, 2023, 
and EPA hosted a virtual public meeting on the CARB regulation 
on March 20, 2024.\8\ EPA also provided a broader public 
comment period as announced in the Federal Register on February 
27, 2024, that closed on April 22, 2024.\9\
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    \7\ 42 U.S.C. Sec.  7543(b).
    \8\ EPA, Vehicle Emissions California Waivers and Authorizations, 
(last updated Apr. 26, 2024), available at https://www.epa.gov/state-
and-local-transportation/vehicle-emissions-california-waivers-and-
authorizations.
    \9\ California State Nonroad Engine Pollution Control Standards; 
In-Use Locomotive Regulation; Requests for Authorization; Opportunity 
for Public Hearing and Comment, 89 Fed. Reg. 39 (Feb. 27, 2024).
---------------------------------------------------------------------------
    Under CAA Section 209(e)(2), EPA shall grant an 
authorization unless the EPA Administrator finds:
    1) Lthe CARB rule is arbitrary and capricious;
    2) Lthat California does not need such standards to meet 
compelling or extraordinary conditions; or
    3) Lthe proposed CARB standards and accompanying 
performance procedures are inconsistent with Section 209.

               III. THE CARB IN-USE LOCOMOTIVE REGULATION

    The CARB locomotive regulation (``CARB Rule'' or 
``Regulation'') seeks to reduce emissions from locomotives of 
three regulated pollutants: diesel particulate matter, oxides 
of nitrogen, and carbon dioxide.\10\ The CARB Rule is primarily 
comprised of four parts: 1) the In-Use Operational Requirement, 
2) the Idling Requirement, 3) the Spending Account, and 4) 
Registration, Reporting and Recordkeeping Requirements.\11\ It 
also includes an Alternative Compliance Plan and Alternative 
Fleet Milestone Option that operators may voluntarily adopt as 
well as other compliance flexibilities such as potential 
extensions allowed for the unavailability of technologies.\12\ 
The CARB Rule was finalized on April 27, 2023.
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    \10\ California Air Resources Board, In the Matter of California's 
Request for Authorization Pursuant to Clean Air Act Section 209(e) for 
the In-Use Locomotive Regulation, Clean Air Act Section (3)(2), (Nov. 
7, 2023), available at https://ww2.arb.ca.gov/sites/default/files/
barcu/regact/2022/locomotive22/authorizationsdoc.pdf, [hereinafter 
``CARB Authorization''].
    \11\ Id.
    \12\ Id.
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IN-USE OPERATIONAL REQUIREMENT

    Starting in 2030, only locomotives with an original build 
date less than 23 years old can operate in California, unless 
they meet Tier 4 standards,\13\ operate in a zero emissions 
(ZE) configuration, or if the primary engine has not exceeded 
the specified megawatt hour (MWh).\14\ In addition, future 
switch, industrial, and passenger locomotives with original 
build dates of 2030 or later will need to operate in ZE 
configuration in California.\15\ Starting in 2035, line-haul 
locomotives engines build dates of 2035 or newer will need to 
operate in ZE configuration in California.\16\
---------------------------------------------------------------------------
    \13\ See Control of Emissions of Air Pollution From Locomotive 
Engines and Marine Compression-Ignition Engines Less Than 30 Liters per 
Cylinder, 73 Fed. Reg. 37,096 (June 30, 2008), available at https://
www.govinfo.gov/content/pkg/FR-2008-06-30/pdf/R8-7999.pdf (generally 
describing Tier 4 standards and locomotives); see also, CARB Locomotive 
Factsheets, available at https://ww2.arb.ca.gov/our-work/programs/
reducing-rail-emissions-california/locomotive-fact-sheets (noting less 
than five percent of locomotives operating in California meet the Tier 
4 standard).
    \14\ Cal. Code Regs. tit. 13, Sec.  2478.5 (2022) [hereinafter 
``CARB Final Regulatory Order''], available at https://ww2.arb.ca.gov/
sites/default/files/barcu/regact/2022/locomotive22/fro2.pdf.
    \15\ Id.
    \16\ Id.
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    Furthermore, the Regulation requires CARB staff to 
evaluate, in 2027 and 2032, the status of ZE technologies, 
configurations, and supporting infrastructure for 
locomotives.\17\ If these evaluations show the 2030 or 2035 ZE 
dates to be unfeasible, the staff may propose regulatory 
amendments.\18\
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    \17\ CARB Authorization, supra note 10, at 6.
    \18\ Id.
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IDLING REQUIREMENT

    For locomotives equipped with Automatic Engine Start/Stop 
(AESS) devices, CARB's idling requirements would require 
operators to shut down stationary locomotives after 30 
minutes.\19\ For the same reasons as allowed under Federal 
idling regulations, locomotives may only exceed this limit to 
prevent damage to the engine, maintain air pressure for brakes 
or auto start systems, recharge a locomotive battery, or 
perform necessary maintenance.\20\ The Regulation also requires 
that operators of AESS maintain these devices, and requires 
operators to manually shut down a locomotive if the system is 
not operating properly.\21\ Operators with AESS equipped 
locomotives are further required to report idling events that 
exceed 30 minutes as part of the regulations record keeping and 
reporting requirements.\22\
---------------------------------------------------------------------------
    \19\ CARB Final Regulatory Order, supra note 13, at Sec.  2478.9.
    \20\ 40 C.F.R. 1033.155(g) (2024).
    \21\ CARB Authorization, supra note 10, at 7.
    \22\ Id.
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REGISTRATION, REPORTING AND RECORD KEEPING REQUIREMENTS

    The Regulation requires registration, reporting and 
recordkeeping on locomotive operators for all locomotive 
activity in California.\23\ Locomotive operators are required 
to register all locomotives operating within California by July 
1, 2026.\24\ Required registration information includes 
operator contact information, locomotive identifying 
information, and emissions information such as road number, 
engine tier, and build year.\25\ Annual reporting requirements 
include all information necessary to establish compliance, as 
well as data on the quantity of locomotive emissions occurring 
in California, by operator.\26\ In addition to idling 
reporting, these requirements are necessary to verify an 
operator's mandatory contributions to a mandatory spending 
account.\27\
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    \23\ CARB Final Regulatory order, supra note 14, at Sec.  2478.10
    \24\ Id.
    \25\ Id.
    \26\ Id.
    \27\ Id. at Sec. 2478.11.
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SPENDING ACCOUNT

    The CARB Rule requires railroads operating in California to 
deposit funds into a spending account to purchase, lease, or 
rent zero emissions locomotives and associated equipment and 
infrastructure.\28\ The amount deposited in the account is 
calculated by estimating the locomotive's emissions in 
California and the health costs of those emissions.\29\ The 
Regulation permits operators to offset spending account 
obligations through qualifying purchases using funds other than 
spending account funds.\30\
---------------------------------------------------------------------------
    \28\ CARB Final Regulatory Order, supra note 13, at Sec.  2478.4.
    \29\ CARB Authorization, supra note 10, at 4.
    \30\ Id. at 5.
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    Initially, funds may be used for the purchase of, or the 
remanufacture of, existing locomotives to Tier 4 standard 
locomotives through the end of 2029.\31\ The funds may also be 
used to purchase, lease, or rent ZE locomotives, rail equipment 
or the remanufacture of locomotives to ZE powered.\32\
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    \31\ CARB Final Regulatory Order, supra note 13, at Sec.  2478.7.
    \32\ Id. at Sec.  2478.4.
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THE ALTERNATIVE COMPLIANCE PLAN AND THE ALTERNATIVE FLEET MILESTONE
                    OPTION

    The Alternative Compliance Plan (ACP) is a voluntary 
compliance pathway allowing regulated locomotive operators to 
comply with the spending account and/or In-Use Operational 
requirements using projects and activities that achieve 
equivalent levels of emissions reductions within three miles of 
locomotive activities.\33\ Examples of such activities include 
the electrification of trucks and operating equipment in or 
around rail facilities that reduces emissions of Diesel 
Particulate Matter (DPM) and nitrogen oxides (NOx).\34\ 
Operators may use this alternative as their pathway to 
compliance, or as a hybrid approach that combines partial 
direct compliance with reductions achieved through the ACP but 
must still comply with the idling record keeping and reporting 
requirements.\35\
---------------------------------------------------------------------------
    \33\ CARB Authorization, supra note 10, at 6.
    \34\ Id.
    \35\ Id.
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    The Alternative Fleet Milestone Option (AFMO) is primarily 
intended to provide a similar alternative compliance option for 
operators that wish to operate zero emissions locomotive 
technologies under a simplified milestone plan.\36\ Under the 
AFMO, an operator must demonstrate that 50 percent of its 
operations are accomplished by Tier 4 or cleaner locomotives by 
2030 and 100 percent by 2035; in 2042, 50 percent of operations 
need to operate in ZE configurations, and 100 percent ZE by 
2047.\37\
---------------------------------------------------------------------------
    \36\ Id.
    \37\ Id. at 7.
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          IV. THE CARB RULE AND TRANSPORTATION BY LOCOMOTIVES

    Stakeholders representing a variety of industries, local 
governments and labor have commented on the CARB Rule's 
economic impact on interstate freight rail transportation and 
investment.\38\ According to CARB's analysis, the rule would 
create $86 billion in Nationwide compliance costs.\39\ The 
analysis also estimated that the costs of the rule on smaller 
Class II and Class III operators could exceed annual operating 
profits.\40\ In its risk analysis, CARB states that if these 
operators cannot pass on compliance costs to customers, or 
cannot receive regulatory relief, ``it is possible some of 
these businesses would be eliminated.'' \41\ These economic 
concerns for Class II and Class III operators were likewise 
expressed by the United States Small Business Administration 
Office of Advocacy.\42\
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    \38\ See Letter from Dawn Rowe, Third District Supervisor, Chair, 
San Bernardino County Board of Supervisors to Karl Simon, Director, 
Transportation Climate Division, Office of Transportation and Air 
Quality, United States Environmental Protection Agency (Mar. 18, 2024); 
see also Letter from Jon Switalski, Executive Director, Rebuild SoCal 
Partnership to David Dickinson, Transportation Climate Division, Office 
of Transportation and Air Quality, United States Environmental 
Protection Agency (Mar. 25, 2024), available at https://
www.regulations.gov/comment/EPA-HQ-OAR-2023-0574-0074.
    \39\ California Air Resources Board, Proposed In-Use Locomotive 
Regulation: Standardized Regulatory Impact Assessment at 88-90, (May 
26, 2022), available at https://ww2.arb.ca.gov/sites/default/files/
barcu/regact/2022/locomotive22/appb.pdf [hereinafter ``CARB Reg. Impact 
Analysis''].
    \40\ CARB Reg. Impact Analysis, supra note 39, at 15.
    \41\ Id. at 143.
    \42\ Letter from Major L. Clark, III, Deputy Chief Counsel and Nick 
Goldstein, Assistant Chief Counsel, United States Small Business 
Administration Office of Advocacy to David Dickinson, Transportation 
Climate Division, Office of Transportation and Air Quality, United 
States Environmental Protection Agency (Apr. 22, 2024) available at 
https://www.regulations.gov/comment/EPA-HQ-OAR-2023-0574-0149.
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    CARB's analysis also estimates $32.3 billion in anticipated 
health benefits primarily from reduced cardiopulmonary 
mortality, hospitalizations, emergency room visits and other 
respiratory illnesses, and $2.4 billion in avoided climate 
change impacts within the State of California.\43\ These 
proposed benefit valuations and anticipated cost estimates 
represent CARB's own analysis.
---------------------------------------------------------------------------
    \43\ CARB Reg. Impact Analysis, supra note 39, at 47.
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                              V. WITNESSES

     LMr. Dillon Olvera, President, Modesto and Empire 
Traction Company, testifying on behalf of the American Short 
Line and Regional Railroad Association
     LMr. Roger Nober, Director, The GW Regulatory 
Studies Center at The George Washington University
     LMr. Ural Yal, Senior Vice President, Flatiron 
Construction, testifying on behalf of the Associated General 
Contractors of California
     LMs. Heather Arias, Chief, Transportation and 
Toxics Division, California Air Resources Board

 
 AN EXAMINATION OF THE CALIFORNIA AIR RESOURCES BOARD'S (CARB) IN-USE 
                         LOCOMOTIVE REGULATION

                              ----------                              


                         TUESDAY, JULY 9, 2024

                  House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous 
                                         Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:12 p.m., in 
room 2167 Rayburn House Office Building, Hon. Troy E. Nehls 
(Chairman of the subcommittee) presiding.
    Mr. Nehls. The Subcommittee on Railroads, Pipelines, and 
Hazardous Materials will come to order. I ask unanimous consent 
that the chairman be authorized to declare a recess at any time 
during today's hearing.
    Without objection, so ordered.
    I also ask unanimous consent that the Members not on the 
subcommittee be permitted to sit with the subcommittee at 
today's hearing and ask questions.
    Without objection, so ordered.
    And as a reminder, if Members wish to insert a document 
into the record, please also email it to 
DocumentsTI@mail.house.gov.
    I now recognize myself for the purposes of an opening 
statement for 5 minutes.

  OPENING STATEMENT OF HON. TROY E. NEHLS OF TEXAS, CHAIRMAN, 
 SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

    Mr. Nehls. At almost 145,000 route-miles, the United States 
has one of the most efficient and comprehensive freight rail 
systems in the world. It is also one of the safest.
    The benefits of this system aren't just measured in miles 
and tons of freight shipped, they can also be measured in other 
benefits, including reduced fuel consumption and associated 
emissions reductions. Rail is capable of transporting a ton of 
freight for more than 450 miles on only 1 gallon, that's right, 
just 1 gallon of diesel fuel.
    Unfortunately, the Biden administration and the State of 
California remain intent on pushing an unwanted, radical Green 
New Deal agenda on the American people, regardless--
regardless--of the cost and consequences to our economic and 
national security.
    While this hearing has been called to discuss the 
California Air Resources Board's request for authorization for 
a State-based regulation, we should be very mindful that this 
proposed regulation is not just confined to California. It's 
national in both impact and intent.
    According to CARB's own analysis, the rule would require 
both BNSF and Union Pacific to replace their entire fleet of 
locomotives nationwide to comply with the regulation, which 
will cost billions, with a B, billions of dollars, and will 
make freight transportation and the cost of goods drastically 
more expensive.
    We are also concerned about the rule's impact on the short 
line operations, which Mr. Olvera will highlight for us in his 
testimony. As the United States rail transportation system is 
intrinsically linked and vital to the safe and efficient 
movement of freight and passengers in interstate commerce, 
other rail operators would also be forced, they would also be 
forced to adjust their own operations.
    The importance of rail transportation is so great that 
Congress has enacted a number of statutes specifically designed 
to ensure the preservation of this most important mode of 
transportation. For example, railroads are the first American 
industry to be regulated under the Interstate Commerce Act of 
1887.
    Many of my colleagues who served in the last Congress are 
familiar with the Railroad Labor Act of 1927, which was 
designed to avoid the potential for economically crippling 
disruptions in interstate commerce caused by labor disputes.
    Additionally, the Staggers Rail Act of 1980 was enacted to 
restore the economic health of the industry at a time when the 
railroads were at the verge of bankruptcy--bankruptcy--due to 
the stifling Government regulation: the very same type of 
economic burden CARB and the Biden administration is seeking to 
reimpose.
    Further, the Interstate Commerce Committee Termination Act 
created the Surface Transportation Board and explicitly, quote, 
``preempts all State laws that may reasonably be said to have 
the effect of managing or governing rail transportation.'' That 
is the end quote.
    Finally, there is the Clean Air Act itself, which clearly 
establishes the Federal Government acting as the sole regulator 
of emissions for new locomotives. Unfortunately, this CARB 
request for authorization is an attempt to circumvent the 
statutory and legal requirements of both the Clean Air Act and 
the Administrative Procedure Act.
    Concerningly, falsely considering a matter of this scope as 
a waiver instead of an agency rule also denies it coverage 
under the Small Business Regulatory Efficiency Act and the 
Congressional Review Act.
    Moreover, CARB's proposal would fail any meaningful cost-
benefit analysis. It also fails to fully consider costs 
associated with the acquisition of still nonexistent--and I am 
going to repeat this point--nonexistent zero-emissions 
locomotives.
    The cost of building out, much less permitting the 
necessary infrastructure, including energy infrastructure, is 
likewise enormous.
    It is for these reasons that a broad coalition of 
railroads, shippers, and union organizations have come out in 
strong opposition to this rule. This regulation must be 
rejected by EPA and accompanied by a return to sanity in both 
Sacramento and right here in Washington, DC.
    I look forward to hearing from today's witnesses about the 
challenges and opportunities for commuter rail service as well 
as best practices to improve service, realize efficiencies, and 
increase fare revenues.
    [Mr. Nehls' prepared statement follows:]

                                
Prepared Statement of Hon. Troy E. Nehls, a Representative in Congress 
   from the State of Texas, and Chairman, Subcommittee on Railroads, 
                   Pipelines, and Hazardous Materials
    At almost 145,000 route miles, the United States has one of the 
most efficient and comprehensive freight rail systems in the world. It 
is also one of the safest. The benefits of this system aren't just 
measured in miles and tons of freight shipped, they can also be 
measured in other benefits including reduced fuel consumption and 
associated emissions reductions. Rail is capable of transporting a ton 
of freight for more than 450 miles on only one gallon of diesel fuel.
    Unfortunately, the Biden Administration and the State of California 
remain intent on pushing an unwanted, radical Green New Deal agenda on 
the American people, regardless of the cost and consequences to our 
economic and national security.
    While this hearing has been called to discuss the California Air 
Resource Board's request for authorization for a state-based 
regulation, we should be very mindful that this proposed regulation is 
not just confined to California. It's national in both impact and 
intent.
    According to CARB's own analysis, the rule would require both BNSF 
and Union Pacific to replace their entire fleet of locomotives 
nationwide to comply with the regulation, which will cost billions of 
dollars and will make freight transportation and the costs of goods 
drastically more expensive.
    We are also concerned about the rule's impact on short line 
operations, which Mr. Olvera will highlight for us in his testimony. As 
the United States rail transportation system is intrinsically linked 
and vital to the safe and efficient movement of freight and passengers 
in interstate commerce, other rail operators would also be forced to 
adjust their own operations.
    The importance of rail transportation is so great that Congress has 
enacted a number of statutes specifically designed to ensure the 
preservation of this important mode of transportation. For example, 
railroads were the first American industry to be regulated under the 
Interstate Commerce Act of 1887.
    Many of my colleagues who served last Congress are familiar with 
the Railroad Labor Act of 1927, which is designed to avoid the 
potential for economically crippling disruptions in interstate commerce 
caused by labor disputes.
    Additionally, the Staggers Rail Act of 1980 was enacted to restore 
the economic health of the industry at a time when the railroads were 
at the verge of bankruptcy due to stifling government regulation: the 
very same type of economic burden CARB and the Biden Administration 
seek to reimpose.
    Furthermore, the Interstate Commerce Committee Termination Act 
created the Surface Transportation Board and explicitly ``preempts all 
state laws that may reasonably be said to have the effect of managing 
or governing rail transportation.''
    Finally, there is the Clean Air Act itself, which clearly 
establishes the federal government acting as the sole regulator of 
emissions from new locomotives. Unfortunately, this CARB request for 
authorization is an attempt to circumvent the statutory and legal 
requirements of both the Clean Air Act and the Administrative Procedure 
Act.
    Concerningly, falsely considering a matter of this scope as a 
waiver instead of an agency rule also denies it coverage under the 
Small Business Regulatory Efficiency Act and the Congressional Review 
Act.
    Moreover, CARB's proposal would fail any meaningful cost-benefit 
analysis. It also fails to fully consider costs associated with the 
acquisition of still non-existent--and I am going to repeat this 
point--non-existent zero emissions locomotives.
    The cost of building out, much less permitting the necessary 
infrastructure, including energy infrastructure, is likewise enormous.
    It is for these reasons that a broad coalition of railroads, 
shippers, and union organizations have come out in strong opposition to 
this rule. This regulation must be rejected by EPA and accompanied by a 
return to sanity in both Sacramento and in Washington.
    I look forward to hearing from today's witnesses about the 
challenges and opportunities for commuter rail services, as well as 
best practices to improve service, realize efficiencies, and increase 
fare revenues.

    Mr. Nehls. I now will recognize the chairman of the full 
committee--I will now recognize Ranking Member Larsen of the 
full committee for 5 minutes.

 OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING 
     MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

    Mr. Larsen of Washington. Thank you, Chair. You are getting 
ahead of yourself. I want to thank Chair Nehls and the 
committee for holding this hearing on railroad locomotive 
emissions, and I want to commend the chair on setting a date as 
well for a rail safety hearing.
    Now that the NTSB has released its report after the Norfolk 
Southern derailment in East Palestine, Congress has to act on 
the NTSB's recommendations to enhance rail safety.
    Today's hearing addresses how Congress can continue to 
support freight movement, grow our economy, and reduce 
emissions from the transportation network.
    In Washington State, freight is key to long-term economic 
growth. Nearly one in two jobs statewide is freight dependent, 
with almost 40 percent of the State's wages generated by 
freight-dependent industries.
    According to Washington State Department of Transportation, 
Washington State's multimodal freight system handles almost 600 
million tons of cargo each year, which is valued at $677 
billion.
    In 2022, 15 percent of freight tonnage was moved by rail in 
my State, including through rail yards in Everett and 
Bellingham in my district.
    So, while transportation, including freight rail, keeps the 
economy and supply chains moving, the sector continues to be 
the largest source of greenhouse gas emissions.
    Transportation emissions are trending in the wrong 
direction. For example, U.S. greenhouse gas emissions increased 
1.6 percent from 2022 to 2023.
    According to my own State's Department of Ecology, diesel 
exhaust is one of the most harmful air pollutants. Diesel 
exhaust puts healthy people, including more than 4 million 
people who live and work near diesel emissions sources in my 
State, at risk for respiratory diseases and complicates health 
conditions for people with asthma, heart, and lung disease.
    And some of this was running through my mind on Saturday 
when a diesel locomotive was parked just below my place in 
Everett, Washington, and spit out diesel emissions for 7 
straight hours.
    Thankfully, Washington State is a leader in reducing 
emissions in transportation. In 2020, Washington enacted its 
motor vehicle emissions standards law, which is helping 
increase the number of zero-emission vehicles on State roads.
    Washington's ferry system, the largest in the country, yet 
also the largest source of transportation emissions statewide, 
is transitioning to a cleaner and greener passenger ferry 
fleet.
    Washington's Maritime Blue initiative invests in a 
thriving, world-class, and sustainable maritime industry for 
the next 30 years. For example, my State's work on maritime 
batteries resulted in a brandnew Corvus Energy facility at the 
Port of Bellingham, which opened last year. Corvus' expansion 
in northwest Washington State illustrates a growing regional 
and global demand for hybrid power and zero-emission energy 
solutions to transportation needs.
    Washington State expects to meet its emissions goals for 
2030, but more needs to be done to reach our 2040 and 2050 
goals for a cleaner and greener future.
    Congress and the administration want to be partners in 
this.
    Thanks to the BIL, communities in my district and in 
districts across the country are investing in a cleaner and 
greener future.
    Last month, the USDOT awarded the Port of Bellingham a 
nearly $18 million RAISE grant to modernize a shipping terminal 
site, returning the site to a fully functioning multimodal 
terminal with more efficient loading and unloading of railcars 
on the terminal, an investment that will reduce emissions while 
keeping supply chains and the maritime economy moving in 
northwest Washington and on the west coast.
    Congress has also invested more than $5 billion in 
Consolidated Rail Infrastructure and Safety Improvements, or 
CRISI, grants in the BIL. These grants can be used to purchase 
updated rail locomotives, and short line railroads can directly 
apply for grants rather than going through public agencies or 
entities.
    The BIL also specifically allows recipients to use CRISI to 
rehabilitate, remanufacture, procure, or overhaul locomotives, 
provided that such activities result in a significant reduction 
in emissions.
    The Federal Railroad Administration is currently reviewing 
applications for $2.4 billion in CRISI funds, an investment 
that can fund quite a few new locomotives in communities across 
the country.
    So, I look forward to hearing from today's witnesses about 
how they are working to build a cleaner and greener freight 
rail network, and with that, I yield back the balance of my 
time.
    [Mr. Larsen of Washington's prepared statement follows:]

                                
 Prepared Statement of Hon. Rick Larsen, a Representative in Congress 
    from the State of Washington, and Ranking Member, Committee on 
                   Transportation and Infrastructure
    Thank you, Chairman Nehls and Ranking Member Wilson, for holding 
this hearing on railroad locomotive emissions.
    I also want to commend you, Chairman Nehls, on setting a date for a 
rail safety hearing.
    Now that the National Transportation Safety Board (NTSB) has 
released its report after the Norfolk Southern derailment in East 
Palestine, Congress has to act on NTSB's recommendations to enhance 
rail safety.
    Today's hearing addresses how Congress can continue to support 
freight movement, grow our economy and reduce emissions from the 
transportation network.
    In Washington state, freight is key to long-term economic growth.
    Nearly one in two jobs statewide is freight dependent, with almost 
40 percent of the state's wages generated by freight-dependent 
industries.
    According to WSDOT, Washington state's multimodal freight system 
handles almost 600 million tons of cargo each year, which is valued at 
$677 billion.
    In 2022, 15 percent of freight tonnage was moved by rail in my 
state, including through rail yards in Everett and Bellingham in my 
district.
    While transportation, including freight rail, keeps the economy and 
supply chains moving, the sector continues to be the largest source of 
greenhouse gas emissions.
    Transportation emissions are trending in the wrong direction. For 
example, U.S. greenhouse gas emissions from transportation increased 
1.6 percent from 2022 to 2023.
    According to the Washington State Department of Ecology, diesel 
exhaust is one of the most harmful air pollutants.
    Diesel exhaust puts healthy people, including more than four 
million people who live and work near diesel emission sources in my 
state, at risk for respiratory diseases and complicates health 
conditions for people with asthma, heart and lung disease.
    Some of this was running through my mind on Saturday when a diesel 
locomotive was parked just below my place in Everett, WA and spit out 
diesel emissions for seven straight hours.
    Thankfully, Washington state is a leader on reducing emissions in 
transportation.
    In 2020, Washington enacted its Motor Vehicle Emission Standards 
law, which is helping to increase the number of zero-emission vehicles 
on state roads.
    Washington's ferry system--the largest ferry system in the country, 
yet also the largest source of transportation emissions statewide--is 
transitioning to a cleaner and greener passenger ferry fleet.
    Washington's ``Maritime Blue'' initiative invests in a thriving, 
world-class and sustainable maritime industry for the next 30 years and 
beyond.
    For example, my state's work on maritime batteries resulted in a 
brand new Corvus Energy facility at the Port of Bellingham, which 
opened last year.
    Corvus's expansion in Northwest Washington illustrates the growing 
regional and global demand for hybrid-power and zero-emission energy 
solutions to transportation needs.
    Washington state expects to meet its emissions goals for 2030, but 
more must be done to reach our 2040 and 2050 goals for a cleaner and 
greener future.
    Congress and the Administration want to be partners in this.
    Thanks to the Bipartisan Infrastructure Law (BIL), communities in 
my district and in districts across the country are investing in a 
cleaner and greener future.
    Last month, USDOT awarded the Port of Bellingham a nearly $18 
million RAISE grant to modernize a shipping terminal site, returning 
the site to a fully functioning multimodal terminal with more efficient 
loading and unloading of railcars on the terminal--an investment that 
will reduce emissions while keeping supply chains and the maritime 
economy moving in Northwest Washington and on the West Coast.
    Congress also invested more than $5 billion in Consolidated Rail 
Infrastructure and Safety Improvements (CRISI) grants in the BIL.
    These grants can be used to purchase updated rail locomotives, and 
short line railroads can directly apply for grants rather than going 
through a public agency or entity.
    The BIL also specifically allows recipients to use CRISI grants to 
rehabilitate, remanufacture, procure or overhaul locomotives, 
``provided that such activities result in a significant reduction in 
emissions.''
    The Federal Railroad Administration is currently reviewing 
applications for $2.4 billion in CRISI funds--an investment that can 
fund quite a few new locomotives in communities across the country.
    I look forward to hearing from today's witnesses about how they are 
working to build a cleaner and greener freight rail network.

    Mr. Nehls. The gentleman now yields. I now recognize 
Ranking Member Wilson for 5 minutes for an opening.

   OPENING STATEMENT OF HON. FREDERICA S. WILSON OF FLORIDA, 
   RANKING MEMBER, SUBCOMMITTEE ON RAILROADS, PIPELINES, AND 
                      HAZARDOUS MATERIALS

    Ms. Wilson of Florida. Thank you. Thank you, Mr. Chairman, 
and thank you to our witnesses today.
    For many, railroad tracks in this country have too often 
existed as a symbol of division, inequity, and a legacy of 
racial oppression. In the aftermath of slavery, and as a result 
of redlining, Black communities and other underserved 
communities formed settlements near rail lines. Even though 
these areas were polluted with hazardous locomotive emissions, 
which we now know are associated with disease and premature 
death, they settled there because they had nowhere else to go.
    This is why, when I would ask some of my constituents, 
where do you live, where do you work, and where do you go to 
school, they often respond with, ``across the tracks,'' which 
serves not just as an answer, but a statement of the persisting 
injustice and disproportionate burdens placed on so many 
communities of color.
    The California Air Resources Board, or CARB, is working to 
limit harmful emissions from locomotives, including by 
requiring cleaner engines after 2030 and reducing the time 
locomotives spend idling. CARB estimates that these efforts 
would save $32 billion in health costs and prevent over 3,200 
premature deaths in California.
    This regulation seeks to steer the railroad industry 
towards doing its part to prevent the worst impacts of the 
climate crisis. Every year, extreme weather events strike with 
increasing frequency and severity as sea levels continue to 
rise. For the residents of my district who live in south 
Florida, these threats are not just concerning, they are 
existential. We have seen constant flooding in south Florida 
recently, and seas are projected to rise in Miami-Dade County 
by over a foot within the next 30 years, dramatically 
increasing flood risks further inland and threatening the homes 
and livelihoods of frontline communities.
    Just last week, we had our first category 5 hurricane in 
the Caribbean, the earliest ever in hurricane season. It is now 
more important than ever that we protect California's right to 
implement Nation-leading regulations.
    The industry's response to this regulation should not be to 
sue CARB. We have had national Tier 4 locomotive standards in 
place since 2015, which the industry seems to have avoided 
implementing for over 90 percent of its locomotives. The 
technology exists--what is missing is the investment, the will, 
and the commitment to ending the legacy of railroad communities 
suffocating under the deadly effects of air pollution. It is 
only this commitment that may begin to make the phrase ``across 
the tracks'' a phrase of the past.
    In today's hearing, I look forward to learning what the 
railroad industry is doing to improve our air quality and the 
health of communities living near rail yards.
    Mr. Chair, the United States Climate Alliance recently 
submitted a letter to EPA Administrator Regan, supporting the 
deployment of zero-emission technologies across all 
transportation modes, and Mr. Chairman, I would like to ask for 
unanimous consent to add this letter to the record.
    Mr. Nehls. Without objection.
    [The information in on pages 77-78.]
    Ms. Wilson of Florida. And I yield back.
    [Ms. Wilson of Florida's prepared statement follows:]

                                 
  Prepared Statement of Hon. Frederica S. Wilson, a Representative in 
Congress from the State of Florida, and Ranking Member, Subcommittee on 
             Railroads, Pipelines, and Hazardous Materials
    Thank you, Chairman Nehls, and thank you to our witnesses today.
    Railroad tracks in this country have too often existed as a symbol 
of division, inequity and a legacy of racial oppression. In the 
aftermath of slavery and as a result of redlining, Black communities 
and other underserved minorities formed settlements near rail lines. 
Even though these areas were polluted with hazardous locomotive 
emissions--which we now know are associated with diseases and premature 
death--they settled there because they had nowhere else to go.
    That is why when I still hear my constituents respond to the 
questions: where do you live, where do you work and where do you go to 
school with ``across the tracks,'' it serves, not just as an answer, 
but a statement of the persisting injustice and disproportionate 
burdens placed on so many communities of color.
    CARB is working to limit harmful emissions from locomotives, 
including by requiring cleaner engines after 2030 and reducing the time 
locomotives spend idling. CARB estimates that these efforts would save 
$32 billion in health costs and prevent over 3,200 premature deaths in 
California.
    This regulation seeks to steer the railroad industry towards doing 
its part to prevent the worst impacts of the climate crisis. Every 
year, extreme weather events strike with increasing frequency and 
severity as sea levels continue to rise. For the residents in my 
district living in Miami and southeast Florida, these threats are not 
just concerning; they are existential. Seas are projected to rise in 
Miami-Dade County by over a foot within the next 30 years, dramatically 
increasing flood risk further inland and threatening the homes and 
livelihoods of frontline communities.
    Just last week, we had our first Category 5 hurricane in the 
Caribbean--the earliest ever in hurricane season. It is now more 
important than ever that we protect California's right to implement 
nation-leading regulations.
    The industry's response to this regulation should not be to sue 
CARB. We have had national Tier 4 locomotive standards in place since 
2015, which the industry seems to have avoided implementing for over 90 
percent of its locomotives. The technology exists--what's missing is 
the investment, will, and commitment to ending the legacy of railyard 
communities suffocating under the deadly effects of air pollution. It 
is only this commitment that may begin to strip the phrase ``across the 
tracks'' of its sordid history.
    In today's hearing, I look forward to learning what the railroad 
industry is doing to improve our air quality and the health of 
communities living near rail yards, and not more reasons why making 
progress is too hard. I yield back my time.

    Mr. Nehls. The gentlelady yields.
    I ask unanimous consent to enter into the record the 
letters and statements for the record from the Associated 
Builders and Contractors, The Fertilizer Institute, the 
Association of American Railroads, the U.S. Chamber of 
Commerce, the Pelican Institute for Public Policy, the 
Taxpayers Protection Alliance, and a joint letter from the 
Private Railcar Food and Beverage Association as well as the 
National Industrial Transportation League, and a joint letter 
from the National Stone, Sand, and Gravel Association and the 
California Construction and Industrial Materials Association, 
these letters.
    Without objection, so ordered.
    [Hon. Nehls' submissions for the record are on pages 79-
100.]
    Mr. Nehls. I would like to, again, welcome our witnesses 
and thank you, thank you all for being here today.
    Briefly, I would like to take a moment to explain our 
lighting system to our witnesses. There are three lights in 
front of you. Green means go, obviously yellow means you are 
running out of time, and red means to please conclude your 
remarks.
    I ask unanimous consent that the witnesses' full statements 
be included into the record.
    Without objection, so ordered.
    I also ask unanimous consent that the record of today's 
hearing remain open until such time as our witnesses have 
provided answers to any questions that may be submitted to them 
in writing.
    Without objection, so ordered.
    I also ask unanimous consent that the record remain open 
for 15 days for any additional comments and information 
submitted by Members and witnesses to be included in the record 
of today's hearing.
    Without objection, so ordered.
    And as your written testimony has been made part of the 
record, the subcommittee asks that you limit your oral remarks 
to 5 minutes.
    With that, I will recognize Representative Duarte of 
California to introduce Mr. Dillon Olvera.
    Mr. Duarte. Well, thank you, Mr. Chairman, for holding this 
important hearing today, and thank you for inviting Mr. Dillon 
Olvera, one of my constituents, to testify on behalf of the 
American Short Line and Regional Railroad Association.
    Mr. Olvera is the president and chief executive officer of 
Modesto and Empire Traction Company, also known as MET, a short 
line railroad operator situated in a bustling 2,000-acre 
industrial park known as the Beard Industrial District in 
Modesto, California.
    That includes globally recognized companies such as E&J 
Gallo Winery, Del Monte Foods, Nestle, Frito-Lay, Plastipak, 
Graham Packaging, and our local Stanislaus Foods.
    MET also maintains over 53 miles of track, helping 
integrate California's 13th Congressional District into the 
North American supply chain, including Mexico and Canada, 
through connections with BNSF and the Union Pacific Railroad.
    Mr. Chairman, I will discuss it more when it is my time for 
questions, but I am very appreciative of Mr. Olvera being here 
today. He can speak with credible fluency as to the harmful, 
real-world implications of CARB's rule.
    I yield back.
    Mr. Nehls. The gentleman yields. Thank you, Mr. Duarte.
    With that, Mr. Olvera, you are recognized for 5 minutes for 
your testimony.

   TESTIMONY OF DILLON OLVERA, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, MODESTO AND EMPIRE TRACTION COMPANY, ON BEHALF OF THE 
 AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION; ROGER 
NOBER, DIRECTOR, GW REGULATORY STUDIES CENTER AND PROFESSOR OF 
PRACTICE AT THE TRACHTENBERG SCHOOL OF PUBLIC POLICY AND PUBLIC 
ADMINISTRATION, GEORGE WASHINGTON UNIVERSITY; URAL YAL, SENIOR 
   VICE PRESIDENT--CORPORATE PRECONSTRUCTION GROUP, FLATIRON 
 CONSTRUCTION, ON BEHALF OF THE ASSOCIATED GENERAL CONTRACTORS 
  OF CALIFORNIA; AND HEATHER ARIAS, CHIEF, TRANSPORTATION AND 
        TOXICS DIVISION, CALIFORNIA AIR RESOURCES BOARD

   TESTIMONY OF DILLON OLVERA, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, MODESTO AND EMPIRE TRACTION COMPANY, ON BEHALF OF THE 
     AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION

    Mr. Olvera. Thank you, Congressman Duarte. Good afternoon. 
My name is Dillon Olvera, and I am the president and CEO of 
Modesto and Empire Traction Company, affectionately called the 
MET.
    As a member of the American Short Line and Regional 
Railroad Association, I am pleased to represent our Nation's 
small freight railroad community.
    The MET is a private, family-owned business, established in 
1911. We have 50 employees and are a Class III short line 
railroad that provides rail service to approximately 30 
customers in Modesto, California.
    The Central Valley is home to some of the Nation's most 
important food and agricultural shippers, and our railroad 
provides the first and last mile of service to those customers. 
We are fortunate to connect to two Class I railroads: the Union 
Pacific and the BNSF.
    California short lines move roughly 260,000 carloads of 
freight each year, and the MET represents 35,000 of these 
carloads. Each carload carries the equivalent of three to four 
trucks' worth of goods.
    California's short lines operate approximately 200 
locomotives, and our railroad represents 11 of those.
    Most short lines equip their fleets with low-cost but 
reliable and easy-to-maintain, older, second-hand locomotives, 
acquired from larger Class I's.
    This practical model is in compliance with Federal law, has 
been in place for decades, and allows short lines to survive.
    Short line locomotives, over 23 years old, which would soon 
be banned under the CARB rule, are, in fact, the norm in the 
industry. These locomotives cost only a few hundred thousand 
dollars, while new Tier 4 locomotives cost a few million 
dollars each.
    Railroads are already environmentally friendly. According 
to EPA data, the Nation's freight railroads account for less 
than 2 percent of transportation-related greenhouse gas 
emissions, and short lines make up only a tiny fraction of that 
2 percent.
    Our trucking competitors, meanwhile, account for 23 percent 
of transportation greenhouse gas emissions. The MET has already 
made great strides in reducing emissions, and we were an early 
adopter of clean locomotives.
    Beginning in 2008, our company worked closely with 
California to apply for State grants. Nine of our eleven 
locomotives were upgraded from Tier 0 to Tier 3 due to this 
work.
    There are three different grants in place today that have 
obligations that will be completed through 2032. The total cost 
of these upgrades was $12\1/2\ million, shared between 
California and the MET. These locomotives have many years of 
remaining useful life but would have to be scrapped and 
replaced with new locomotives per the CARB regulation.
    This CARB regulation will also force the MET to contribute 
to a spending account while continuing to complete our grant 
obligation. This is an unreasonable ask to make of any small 
business.
    Our current calculation for the spending account is over $1 
million annually. A grant match in the spending account 
emission fees would represent a massive increase in our 
locomotive spend, compared to historical levels.
    We also recently applied, and were awarded, CRISI grant 
funding to upgrade two switch-engine locomotives from Tier 0 to 
Tier 4. The total cost for this upgrade is approximately $5 
million, again, to be split between the Federal Government and 
the MET.
    As we have demonstrated, the MET, and short lines in 
general, are perfectly willing to work with CARB and other 
similar agencies to reduce emissions when they offer reasonable 
paths forward. But this rule is just not feasible for short 
lines.
    The CARB regulation will cause a significant financial 
impact to the entire short line industry. Railroads are 
capital-intensive, and our margins are tight. A well-run short 
line frequently spends over 80 percent of revenue on operating 
expenses, and contract provisions and market competition will 
prevent us from raising prices to cover CARB's regulation 
costs.
    If short lines are driven out of business due do CARB's 
unfeasible rule, that freight will move onto trucks, increase 
traffic congestion and freight costs, and businesses will have 
lost viable shipping options and move out of California or just 
vanish.
    The EPA should deny CARB's authorization request. Not only 
does it mandate the use of locomotive technology that is not 
currently commercially available, CARB has also publicly 
acknowledged that the massive compliance costs will force short 
lines out of business.
    This would have a catastrophic impact on our freight rail 
network, the U.S. supply chain, the environment, and highway 
safety.
    Thank you, and I looking forward to our discussion today.
    [Mr. Olvera's prepared statement follows:]

                                 
  Prepared Statement of Dillon Olvera, President and Chief Executive 
Officer, Modesto and Empire Traction Company, on behalf of the American 
              Short Line and Regional Railroad Association
                              Introduction
    My name is Dillon Olvera, and I am the President and CEO of the 
Modesto and Empire Traction Company, affectionately called the MET. MET 
is a member of the American Short Line and Regional Railroad 
Association (ASLRRA), the trade association that represents the 
nation's more than 600 Class II and III freight railroads (commonly 
known as short line railroads or short lines) and hundreds of suppliers 
that support them. In this capacity I can speak to you on behalf of the 
ASLRRA, representing the interests of our nationwide small railroad 
industry. I appreciate the opportunity to appear before you today.
    The MET is a private, family-owned business established in 1911. 
MET is a short line railroad with 53 miles of track that provides rail 
service to approximately 30 customers in Modesto, California, located 
in the Central Valley of the state and employs approximately 50 
employees with stable jobs and benefits. MET meets the Small Business 
Administration's small business size standard. The Central Valley is 
home to some of the nation's largest food and agriculture shippers. Our 
railroad provides the first-mile and/or last-mile service to our 
customers. We are fortunate to have access to two Class I Railroads, 
connecting shippers on the MET to the Union Pacific Railroad and BNSF 
Railway.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                         Map of the MET network
                         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                 MET employees at work on the railroad

    We may not be household names, but short lines are critical in your 
communities and pivotal in making sure that goods and freight that your 
constituents rely upon can get to their homes and businesses in a safe, 
efficient, and reliable manner. Smart regulatory action by Congress in 
the early 1980s helped make this possible, sparking the growth of the 
short line industry and facilitating the freight rail service we 
proudly provide today. Now a new regulation in California threatens 
four decades of economic progress. The regulation is rooted in good 
intentions--reducing greenhouse gas emissions--but it is problematic in 
its application, a fundamental violation of federalism, interferes with 
interstate commerce, and is based on unrealistic assumptions. Moreover, 
it takes direct aim at our industry and the critical link in the supply 
chain we represent. The California Air Resources Board (CARB), the 
agency issuing the regulation, does get one thing right--it predicts 
the demise of our industry due to the costs of its measure, noting ``it 
is possible some of these businesses would be eliminated.'' \1\ 
(Emphasis added.)
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    \1\ Proposed In-Use Locomotive Regulation: Standard Regulatory 
Impact Assessment (SRIA) at 143.
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    As one of ``these businesses''--and on behalf of the families and 
communities and thousands of other U.S. businesses that rely on 
railroads like ours--I am here to sound the alarm. If small railroads 
begin to go bankrupt simply because they cannot afford to comply with 
the regulation, the effects will ripple across our supply chain, 
starting in California and stretching across the country. These will be 
felt in the form of higher costs for shippers and consumers and will be 
witnessed in the form of more trucks on our roads, greater congestion 
on our highways, more particulate matter in our environment--and, 
ironically, more greenhouse gas emissions in California and elsewhere.
    We appreciate the subcommittee's interest in this matter and in 
providing an opportunity for our industry to speak about CARB's 
misguided measure. We also appreciate the leadership that Chairman 
Graves, Subcommittee Chair Nehls, and many on this panel, and others in 
Congress, have shown in giving voice to our concerns and urging a 
thoughtful approach to policymaking by the federal actors who have a 
rightful say in these matters. This includes the Environmental 
Protection Agency (EPA), which is currently deliberating over CARB's 
authorization request. While CARB fails to recognize the competing 
interests that must be balanced to achieve good policy outcomes, we 
remain confident that Congress and the federal government can be 
reasonable and level-headed in working with our industry to ensure that 
our shared goals--clean air, a thriving freight economy, and a world 
class supply chain system--are all achieved. I urge Congress to call on 
EPA to deny CARB's request to authorize their In-Use Locomotive 
Regulation, for the many reasons I cite in this testimony.
                  The Short Line Freight Rail Industry
    Our industry is a great American success story. It was spurred to 
new life in the early 1980s when partial deregulatory action by 
Congress--the Staggers Act--allowed larger Class I railroads to spin 
off moribund, outdated rail lines no longer deemed business-worthy. 
Short line railroads acquired and revived these marginal lines, which 
were often in very poor condition. They invested mightily, ran scrappy 
and smart, knocked on every door they could find, and managed to turn 
them into thriving enterprises. They have preserved freight rail 
service for thousands of customers, all while working closely with 
Class I railroads to ensure the network's success. Our railroads can be 
seen here:
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

      Short lines serve communities in every corner of the country

    Today, short lines provide first-mile and last-mile freight rail 
service and are responsible for handling one in five railcars on the 
national rail system. They ensure that businesses in dense urban 
centers, small towns, and isolated rural communities in 49 states that 
would otherwise be cut off from the North American freight rail network 
have the access they need to domestic and global markets. While we 
provide a critical connection to all commodities, the manufacturing, 
industrial, agricultural, mining, energy, and chemical sectors are 
particularly reliant on short line service. For areas of rural and 
small-town America, we are typically the only connection to the 
national rail network. Indeed, our presence can be the tipping point 
for businesses to locate or expand in a region, driving new family-
supporting jobs throughout the country in places that otherwise may 
struggle to attract investment.
    Large, mega-corporations we are not. Most of our members are small 
businesses.\2\ The typical short line employs about 30 people, operates 
about 80 route miles, and for those in California, makes about $1.3 
million in revenue per year. While we operate approximately 30% of the 
national network (or 50,000 route miles) and handle about 20% of the 
freight cars in service, our members earn only about 6% of the total 
revenue earned by the country's freight railroads.
---------------------------------------------------------------------------
    \2\ While some short lines are owned by larger companies, all must 
stand on their own financially, and properties that become permanently 
cash flow-negative are not viable.
---------------------------------------------------------------------------
    Nonetheless, our members have a big impact on economic outcomes. 
Short lines are critical links in the nation's freight supply chain, 
and are vital engines of economic activity, tied to 478,000 jobs 
nationwide, $26 billion in labor income and $56 billion in economic 
value-add.\3\ Altogether, short lines ensure more than 10,000 critical 
businesses can get their goods and products to market.\4\
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    \3\ The Section 45G Tax Credit and the Economic Contribution of the 
Short Line Railroad Industry, prepared by PWC for ASLRRA (2018) (PWC 
Report).
    \4\ (PWC Report)
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    Our members provide these customers with a low-carbon freight 
logistics option that is more environmentally friendly than competing 
forms of transportation over land, preventing costly damage to pavement 
that would be borne by often cash-strapped state and local agencies. We 
are proud of how we relieve traffic congestion, cutting emissions of 
harmful pollutants while reducing deadly crashes. And we are proud of 
our reputation for providing attentive, tailored, ``white glove'' 
service to a variety of shippers, making the extra effort to ensure 
that rail service for any shipment size is the right logistics choice 
and our customers' critical goods get where they are going on time.
Short lines are still investing limited resources to revitalize 
        outdated track
    Even after decades of investment by short lines--often a third to 
40% of their annual revenue, making short line railroading one of the 
most capital-intensive businesses in the country--the backlog of 
repairs still looms large. We estimate more than $12 billion is still 
needed to allow short lines to fully modernize and meet the country's 
freight needs. This estimate unfortunately is subject to rise due to 
the hard-hitting impact of inflation on construction costs and looming 
new mandates like CARB's In-Use Locomotive Regulation.
                 The Short Line Industry in California
    California, as the nation's largest economy--and one of the world's 
as well--is no stranger to short lines and typifies our profile in many 
places. There are 25 short lines in my state. All are Class III 
operations, but some of these run (either by owning or leasing) over 
lengthy routes, for example the San Joaquin Valley Railroad at around 
400 miles. The average California short line operates about 57 route 
miles. Short lines like Sierra Northern Railway and Mendocino Railway 
each have a few dozen employees. These small railroads move 
agricultural products, petroleum products, minerals, chemicals, 
plastics, lumber, and forest products--all critical to the well-being 
of residents in California and millions beyond the state's borders. 
Indeed, some short lines, like the Arizona & California Railroad, 
operate in both states represented in the railroad's name, or in the 
case of Central Oregon and Pacific Railroad, in California and its 
northern neighbor. These examples emphasize the interstate, integral 
nature of the short line freight rail economy. All short line 
railroads, whether interstate or intrastate, are considered by the STB 
to be integral parts of the freight rail network.
    California short lines move roughly 260,000 carloads of freight in 
California each year, and the MET represents 35,000 of these carloads, 
almost 15%. Each carload carries the equivalent of 3-4 trucks worth of 
goods, meaning that short lines in California alone keep roughly one 
million trucks off the road. California short lines operate 
approximately 200 locomotives in the state, and our railroad has 11 of 
those locomotives.
    Railroads are already the most environmentally friendly way to 
transport freight across the country. According to EPA data, the 
nation's freight railroads account for less than 2% of total 
transportation-related greenhouse gas emissions, and short lines make 
up only a tiny fraction of that 2%. Our trucking competitors account 
for 23% of transportation-related greenhouse gas emissions.
                  CARB's In-Use Locomotive Regulation
The new regulation and its four key provisions
    For many years, CARB recognized implicitly and explicitly that 
federal law prevented it from regulating the national freight rail 
network. But in 2022, the agency formally bucked what was a sound, 
reasonable and legally grounded position and launched the current 
regulatory regime. The short line industry and our stakeholders 
presented our significant economic concerns while CARB put together the 
measure. But our points did not seem to carry much weight in the face 
of CARB's single-minded aim of achieving an abrupt transition to zero 
greenhouse gas emissions. In 2023, CARB formally promulgated the in-use 
locomotive regulation, and it came into effect on January 1, 2024. Some 
compliance dates have already come due and many more will come due in 
the months and years ahead. These include:
    1.  A mandate to spend millions on new locomotives. The 
regulation's first key tenet requires railroads to set aside funds 
annually into a forced ``spending account'' that can only be used to 
acquire, lease, or rent certain new technologies approved by CARB, 
largely limited to low-emission and zero-emission locomotives. The 
amount of funds is related to the operators' emissions levels. Some 
short line operators might have to spend several millions of dollars 
annually to comply with this mandate, potentially exceeding the annual 
revenue of these companies, much less any profit. The fees levied on 
locomotive emissions are deliberately scaled to make operation of even 
locomotives that are fully compliant with EPA's emissions tiers up to 
Tier 3 prohibitively expensive and the operation of Tier 4 compliant 
locomotives very expensive--even though all these locomotives are 
compliant with federal law.

    2.  A requirement that currently useful locomotives stop operating 
in California. The regulation's second key tenet is operational in 
focus, mandating that by 2030, locomotives for switcher, industrial and 
passenger use cannot operate in California unless they are under 23 
years old and meet the newest emissions criteria or are zero-emission. 
By 2035, all locomotives in line-haul use must meet these criteria. 
This means that locomotives purchased before 2007, which could have 
many decades of valuable, useful life left, will be banned in the 
state. Short line fleets largely consist of used locomotives acquired 
on the secondary market. It is rare to find a locomotive under a decade 
old on a short line property. Most are over 23 years old, some far 
over. Many short lines have only locomotives that are over 23 years 
old.

    3.  A limit on the length of time a railroad may remain stationary 
without turning off its engine. Locomotives with an ``automatic engine 
start/stop'' device must be ``shut off no more than 30 minutes after 
the locomotive becomes stationary,'' in most instances. Railroads must 
track any idling over this duration, and report the cause, a 
substantial administrative burden.

    4.  A mandate for new recordkeeping. The fourth and final element 
requires railroads to report annually to the state specific emissions 
information and operating practices.
                     MET's Experience in California
    The MET has already made great strides in reducing greenhouse gas 
emissions. In fact, the MET was an early adopter of clean locomotives. 
Beginning in 2008, our company worked closely with the state of 
California to apply for state grants. There are nine locomotives that 
were upgraded from Tier 0 to Tier 3 due to this work and California's 
investments. There are three different grants in place today that have 
obligations that will be completed between 2026 through 2032, which are 
as follows:
      Funding from the Diesel Emission Reduction Act program, 
which will be complete in 2026, and help invest in two locomotives;
      Funding from California's Carl Moyer program, which will 
be complete in 2028 and help invest in an additional two locomotives; 
and
      Funding from San Joaquin Valley Unified Air Pollution 
Control District, which will be complete in 2032 and help with 
investments for five locomotives.

    The total cost of these upgrades is $12.5 million dollars. The cost 
of these upgrades was shared between the state of California and the 
MET. These locomotives have many years of remaining useful life, but 
they would all have to be scrapped and replaced with new locomotives 
per the CARB regulation. The useful life of a locomotive operated by a 
short line is typically 40+ years, however, the CARB regulation calls 
for the elimination of all locomotives that have an age of 23 years or 
greater. This CARB regulation will also force the MET to contribute to 
a spending account while continuing to complete our grant obligation. 
This is an unreasonable ask for any small business to make. With the 
present fleet mix, our current calculation for the spending account is 
over $1.0 million dollars annually, which is an unsustainable 
percentage of revenue. This spending account creates a use-it-or-lose-
it monetary incentive to force locomotive upgrades. As demonstrated by 
our previous work together, the MET, and short lines in general, are 
perfectly willing to work with CARB and other similar agencies to 
reduce emissions when they offer reasonable paths forward, particularly 
on help acquiring newer and cleaner locomotives. This regulation, 
however, is just not feasible for us.
    The CARB regulation will cause a significant financial impact to 
the entire short line industry. Railroads are capital-intensive and 
well-run short line railroads frequently spend at least 80% of revenue 
on operating expenses and basic upkeep. Short lines are also frequently 
prevented by contract provisions and/or market competition from trucks 
from effectively raising prices to cover CARB regulation's costs.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

               MET genset locomotive and train operations

    The MET recently applied for and was awarded CRISI grant funding to 
upgrade two SW1500 switch engine locomotives from tier 0 to tier 4. The 
total cost for these upgrades is approximately $5 million dollars, to 
be split between the federal government and the MET.
    The CARB regulation's spending account ``funding requirement'' is 
charged on a sliding scale based on emissions that is calculated to 
make the operation of a locomotive that is EPA Tier 3-compliant, or 
less, prohibitively expensive. This practically forces the operator to 
upgrade to a Tier 4 or zero emission locomotive. In the case of MET, 
the cost to operate the recently upgraded Tier 3 locomotives under the 
new regulation would rapidly become prohibitive. For that reason, MET 
has submitted another application for CRISI funding to repower the 9 
Tier 3 gensets to Tier 4. This dynamic displays the profound conflicts 
that have been created between prior state policy, present federal 
policy, and the In-Use Locomotive Regulation. Tier 3 locomotive engines 
that are quite low-emitting and were acquired with public assistance, 
and that are legal under today's EPA regulations, are forced to be 
scrapped with decades of useful life remaining, becoming ``stranded 
assets.''
    Even with the entire MET fleet upgraded to Tier 4, the spending 
account requirement would still require MET to deposit hundreds of 
thousands of dollars each year into its account. The zero emission 
locomotives promoted as available today are, in our assessment, still 
in early development. They are not yet an economically or physically 
practical option that could reliably, effectively, and cost-effectively 
meet the operational requirements at our active railroad.
    This forced diversion of funds, even considering support from state 
and federal sources, still reflects a massive increase from our 
historical baseline of locomotive capital expenditure and a pulling 
forward of decades of that investment. It is orders of magnitude 
greater than what was spent in the past. This forces tradeoffs in 
valuable investments that otherwise would have been made at the MET. 
One is investments in improved track condition, an important driver of 
safety that reduces derailment risk. Another is investment in public 
at-grade crossing protection. MET serves a busy industrial park with 50 
crossings with varying degrees of protection. This diversion of funding 
occurs at the expense of investments to improve protection levels at 
crossings.
    Finally, if short lines are driven out of business due to CARB's 
infeasible regulation, that freight will move onto trucks, increasing 
damage to roads, increasing traffic congestion and freight cost, and 
impacting traffic safety. Businesses who have lost shipping options 
will move out of California or just vanish.
            The Problems Presented by CARB's New Regulation
    There are a broad array of problems awaiting California and the 
nation's freight economy due to CARB's regulation. But the following 
five are those that our industry finds the most fundamental and 
concerning.
The regulation is preempted by federal law
    The nation's rail industry has been around 200 years, and it is the 
poster child for interstate commerce. California's actions effectively 
regulate the national network and the interstate commerce it supports. 
It is logical that no state should be able to regulate the national 
rail network any more than it can regulate the national airspace and 
the interstate commerce that relies on our aviation system. Two 
centuries of jurisprudence interpreting the Commerce Clause as well as 
several federal statutes, among them the Interstate Commerce Commission 
Termination Act (ICCTA) and the Clean Air Act and the Locomotive 
Inspection Act, all clearly render CARB's regulation illegal. Freight 
trains and railcars are constantly moving between states on an 
integrated and interoperable network demonstrating every day the 
inherently national characteristic of the freight rail industry.
    We understand the proper venue for our legal arguments is in court, 
and ASLRRA is engaged in ongoing litigation with CARB alongside the 
Association of American Railroads (AAR). We are confident in those 
proceedings, but we regret that litigation is necessary to stem 
regulatory activity that never should have been seriously contemplated 
in the first place. We also remain eager to work with Congress to 
advance legislative efforts and support federal administrative activity 
that asserts the rightful federal primacy over our country's freight 
rail network.
The regulation mandates technology that does not exist in a viable form 
        and at scale, and that may not for years to come
    CARB's regulation is replete with faulty assumptions about current 
technological capabilities, the direction they are going, and the scale 
and timing of new developments.
    The regulation requires that over the next decade, railroads 
acquire and use locomotive technology that is low-emission, and 
eventually, zero-emission. While an admirable goal, this requires the 
locomotive manufacturing industry to make massive leaps in development 
in just a few short years. To go from the current situation, in which 
there are not proven commercially viable zero-emission freight 
locomotives or adequate manufacturing capacity in North America, to one 
in which there are thousands running throughout California and many 
other states from which goods and freight might move into and out of 
California is impossible based on realistic commercial testing and 
manufacturing timelines.
    Locomotives are massive, complex machines designed to haul heavy, 
voluminous amounts of freight. These are not 4,000-pound Tesla EVs 
moving a few bags of groceries around the neighborhood. The locomotives 
in use today must be capable of hauling hundreds if not thousands or 
tens of thousands of tons (i.e., trains generally weigh well into the 
millions of pounds) of stone, grain, chemicals and other heavy goods 
and commodities in demanding weather conditions such as the high heat 
in the San Joaquin Valley, or through California's Sierra Nevada 
mountains in the depths of winter, for hours on end. As impressive as 
advances have been in battery technology in recent years, they pale in 
comparison to the advances that would be necessary to outfit a 
locomotive to ensure it can reliably move strings of massive railcars. 
The most efficient batteries in use today would need to demonstrate a 
greater than tenfold increase in capacity to achieve CARB's aims--and a 
swift ability to recharge that is not possible with today's technology. 
As much as our industry would like to see that happen, there is no path 
forward yet for that technology to be achieved--just writing it into a 
state regulation does not make it so.
    The same applies to other new technologies, like alternative fuels, 
hydrogen, and hydrogen fuel cells. These efforts, while moving quickly 
and with our full support and participation, are still in a nascent 
stage--nowhere near the readiness necessary to justify scrapping years 
of investments in diesel engines and stranding tens of thousands of 
perfectly functional locomotives.
The regulation ignores how short lines acquire and use locomotives and 
        the fundamental short line business model
    Just as CARB-mandated technology remains many years away from the 
market, it is farther still from any secondary market where our members 
could realistically afford to acquire the technology and incorporate it 
into their operations.
    The rail industry engages in a practice known as ``cascading,'' 
where used locomotives from Class I railroads are sold to short lines, 
as the Class I's locomotive models are replaced with newer motive 
power. A locomotive that has reached its practical end of life in Class 
I service can have decades of use left in the less punishing short line 
operating environment. This has been a bedrock principle of railroad 
operating economics from the advent of interstate railroading. It is an 
economic win-win that benefits all involved in rail: the Class Is, the 
short lines, and the shippers that depend upon efficient, cost-
effective, and safe rail transportation as an alternative to higher-
cost truck transportation.
    California's ban on any locomotive older than 23 years old 
beginning in 2030 is a completely unworkable proposal for short line 
railroads that regularly rely on
30-, 40- and 50-year-old locomotives, which are fully compliant with 
federal law, to keep sometimes barely marginal railroads viable. 
Departing from that economic model and requiring smaller railroads to 
purchase dramatically more expensive locomotives would lead to the ruin 
of many short lines. The difference in capital costs for short lines 
between acquiring new versus used locomotives is not a few percentage 
points, it is an order of magnitude. The nature of short lines, that 
these costs must be spread over the fewer cars that short lines 
typically handle on a per mile basis, renders this path completely non-
viable.
The regulation ignores the operational complexities created by 
        mandating new technology
    CARB's approach fails to recognize the levels of complexity that 
come with upgrading locomotives to progressive tiers. With each tier, 
maintenance intervals are shorter, maintenance activities are more 
elaborate, repairs become more costly and are borne by operators who 
are still building familiarity with their new technology.
    The latest Tier 4 compliant locomotives--also the newest on the 
market--are dramatically more complex machines than the lower tier 
locomotives commonly found at short lines, in terms of the engines, 
electronic controls and monitoring systems. The step from Tier 3 to 
Tier 4 is notable for these impacts. Locomotive maintenance personnel 
require substantial additional training, more consumables and spares 
must be kept on hand, and fleets may even have to be sized differently 
to address lower-than-expected availability levels. CARB does not seem 
to have fully considered the effect of this dynamic--it will 
disproportionately impact smaller operators of locomotives with small 
maintenance shops.
The regulation evades any effort to recognize how it will uniquely 
        affect small businesses
    A longstanding body of law, including the Regulatory Flexibility 
Act of 1980 (RFA), as modified by the Small Business Regulatory 
Enforcement and Fairness Act of 1996 (SBREFA), requires that federal 
agencies exercise utmost care and discretion in evaluating how 
regulations they promulgate affect small businesses. While not bound by 
these laws, CARB has clearly ignored their wisdom in creating a 
prescriptive, costly, and complex new regulatory framework. Many small 
railroads are unable to comply with ``one size fits all'' requirements 
that are written with larger entities in mind. Each small railroad has 
a unique operating environment that can differ dramatically from others 
in terms of scale, market, operating characteristics, capital needs, 
and price sensitivity of shippers served. It is no wonder that the U.S. 
Small Business Administration's (SBA) Office of Advocacy has formally 
weighed in on CARB's authorization request to EPA, noting its harms and 
how it ``will disproportionately impact small businesses in the 
locomotive sector as well as small entities who depend on the 
locomotive sector.'' \5\
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    \5\ See April 22, 2024 letter from U.S. Small Business 
Administration to U.S. EPA.
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                The Broad Harm the Regulation Will Bring
California short lines will face massive new costs with some forced to 
        shutter
    As noted above, CARB's regulation imposes new costs that come in 
the form of massive, mandated capital expenditures on locomotive fleet 
replacements and upgrades, and on an infeasible timetable.
    A Class III railroad in California, as CARB notes in their 
regulatory analysis, can have cost of compliance with the new 
regulation as high as 42% of annual revenue for a short line.\6\ For 
more than a decade, the spread in cost between an older, lower-tier 
used locomotive in good condition and a brand-new unit has been 
dramatic--from a few hundred thousand dollars for used equipment 
contrasted with over $4 million for a small-order purchase of a new 
Tier 4-compliant locomotive. The long-term financial planning of short 
lines has been constructed around the former; but with whiplash speed, 
to comply with CARB's regulation, short lines must jettison their time-
tested economic model and focus on new, lavishly more expensive 
machinery than they need.
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    \6\ CARB Standardized Regulatory Impact Assessment (SRIA) at 95; 
ASLRRA notes this estimate may be low.
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    We estimate that between $335 to $427 million will be required to 
upgrade the short line freight locomotive fleet currently operating in 
California. We believe our state's short lines operate 172 locomotives 
that would need to be replaced. This cost over and above the normal 
cost is due to the difference in investment between repowering 
locomotives versus purchasing completely new locomotives. The cost 
would be even higher if zero-emission locomotives were required, 
because, for battery-electric powered locomotives, there is a high 
probability that small rail operations now using one or two diesel 
locomotives would require two or three battery locomotives, due to the 
recharging periods for the batteries requiring more time than simply 
refueling a diesel-electric locomotive. A small railroad would be 
required to provide back-up locomotives in case of an issue with the 
new zero-emission technology that takes it out of service. Unlike a 
larger railroad that to a degree may be able to reshuffle its 
locomotive assignments to cover for individual locomotive failures, 
small railroads do not have that ability and will be required to build 
in a back-up plan to provide service continuity to their customers.
    CARB makes unrealistic assumptions that short lines can pass on 
these new, mandated compliance costs to their customers. Many short 
line shippers are small to medium sized businesses themselves and most 
operate in sectors with razor-thin profit margins and intense 
competitive pressures; there is nothing to ``pass on'' that customers 
will not feel acutely as well. When short line customers are met with 
new higher rail shipping costs, they will be forced to turn to other 
means, like trucking, in response. A downward spiral would then 
commence, with many short lines seeing costs soar, customers flee or be 
forced to shutter, revenue nosedive, and bankruptcy or abandonment of 
lines as the end state.
    CARB has included two provisions in the regulation ostensibly to 
reduce the burden on small businesses: the Alternative Compliance Plan 
(ACP) and the Small Business Hardship Extension. Both measures enable 
regulated railroads to delay compliance with some elements of the 
regulation for periods of time, but they entail substantial reporting 
burdens and neither addresses the basic challenge, that under the 
regulation, inevitably, and on approximately the same terminal 
timeline, short line railroads will be forced to make a massive 
investment in Tier 4 locomotives--or zero-emission locomotives, if ever 
practical and available--that will be many times the motive power 
investments that would have been expected to support their operations 
under the legal framework prior to the ruling. The costs imposed by the 
regulation will remain as insurmountable for small businesses under the 
Alternative Compliance Plan and with the Small Business Hardship 
Extensions structure as they would under normal compliance. In the case 
of the ACP, the locomotive operator must have control over non-
locomotive assets that emit, and which can be controlled to attain 
equivalent emissions reductions. Few if any short lines have such 
assets.
    For those railroads that do remain in business, safety will suffer, 
as they will be forced to shelve critical upgrades and maintenance, 
investing less in addressing the leading cause of derailments on short 
lines: outdated rail and track. CARB's mandates will supplant those 
needs, jeopardizing the railroads' operations. Sensible environmental 
upgrades will be halted, too, as intermediate EPA tier improvements 
that could result in significant reductions in emissions, like our 
investments in Tier 3 locomotives, would effectively be disincentivized 
by CARB in favor of maximalist targets.
With short lines gone, the state's supply chain and economy will 
        suffer, and residents will encounter new health and safety 
        hazards
    Short lines represent about a third of California's rail network. 
With the new regulation placing those businesses on the brink and 
pushing some into bankruptcy, California's supply chain is in for a 
torrent of trouble.
    Businesses will still have goods and freight to ship to market, but 
with fewer options available, customers will have to increasingly move 
products via large trucks and commercial motor vehicles. This can be 
four to five times more expensive than shipping by rail. With the 
trucking industry taking freight that previously moved by rail, the 
pressure upon short lines could continue further through ``modal 
diversion.'' Even short lines that initially weather CARB's regulation 
will find a freight marketplace where they are slowly supplanted by 
trucking. With few short lines left, California could see companies 
flee the state in search of locations with better rail and shipping 
options.
    Aware of this cascade of new costs and limited options for shipping 
their products, it is not surprising that 25 national and 50 state 
agriculture groups--from California and throughout the country--are on 
record opposing this regulation, deeming it a ``significant danger to 
U.S. agriculture and the broader U.S. supply chain.'' \7\ The 
agriculture industry is joined by hundreds of other business groups, 
manufacturers, energy firms, defense groups and even the National 
Association of Counties. Like us, these groups all rightly predict the 
elimination of shipping options and the increased costs that will come 
with whatever shipping options remain--costs that will be passed on 
eventually to consumers, your constituents.
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    \7\ See, e.g., letters from U.S. Chamber of Commerce, National 
Association of Manufacturers and hundreds of agriculture and industrial 
groups. Docket at https://www.regulations.gov/document/EPA-HQ-OAR-2023-
0574-0001/comment
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    If the sticker shock of higher shipping costs were not enough, 
Californians could quickly see a staggering number of additional trucks 
on their roads. We estimate short lines ship about 260,000 carloads per 
year that could in large measure be forced onto roadways in California, 
and each rail carload is the equivalent of 3 to 4 trucks. One short 
line predicts the loss of just its rail traffic alone will put as many 
as 100,000 more trucks on California's roads per year.
    With more trucks dominating California's public roadways, the 
state's residents will be greeted with more greenhouse gas emissions in 
the near term, as even CARB's ambitious regulatory timeline, assuming 
it survives judicial scrutiny, only suggests that the truck fleet will 
reach zero emissions in 2045. Moreover, Californians will breathe in 
particulate matter, also known as particle pollution, generated from 
billions of microscopic pieces of shredded tires that will be generated 
from all the trucks newly traversing their towns and communities, on 
roadways they share with big trucks. Heavier trucks--many weighing in 
at 80,000 pounds--will shorten the lifespan of public roads and bridges 
throughout the state. Finally, the greatest concern is one of safety. 
More trucks on roadways invite the risk of more crashes and collisions 
with passenger vehicles.
    Even a completely electrified trucking industry would still produce 
many of these new harms. Regardless of any possible rapid adoption of 
electric trucks in California, these vehicles will still generate 
particulate matter emissions from tire wear, and electric trucks will 
still impose wear and tear on pavement and bridges. Their safety threat 
is not mitigated in any way by their fuel source, rather, it may only 
be compounded as trucks grow heavier to accommodate massive battery 
packs. Electric trucks are considerably heavier than diesel trucks, 
reducing the payload. So yet even more electric trucks (or heavier 
trucks) will be required to absorb the modal diversion resulting in 
more road damage and safety concerns.
The impacts will ripple out nationwide
    Due to the integrated, interconnected nature of the freight rail 
network and the freight economy, other states will experience these 
impacts. Should EPA authorize this regulation, other states that could 
move quickly to replicate it, which would threaten short lines around 
the nation. The map below illustrates states that have adopted some or 
all of California's criteria pollutant vehicle emissions standards 
under section 177 of the Clean Air Act.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                         CAA section 177 states

    Considering this demonstrated past propagation of California 
requirements for emissions standards, it is reasonable to expect 
numerous other states to consider enacting new regulations on 
locomotive emissions modeled on the CARB regulation. States that are 
favorable to additional emissions mandates could be willing to take the 
California defense of this regulation at face value and proceed 
promptly to adoption.
    As we speak, EPA is considering CARB's authorization request. The 
effect of the spread of the CARB regulation would be to build a 
disconnected patchwork of state regimes for locomotive emissions that 
would prevent the movement of locomotives across state borders, even 
when on the same railroad, creating geographically captive fleets. This 
would impact Class I railroad operations fundamentally, but also Class 
II and III railroads as many small railroads also have lines that cross 
state borders, and, regardless, all railroads and rail customers depend 
on the smooth flow of interstate commerce. Such a potential propagation 
of the CARB regulation, following the scale and pattern illustrated 
above, would dramatically multiply the financial burden projected for 
California short lines across hundreds of small railroads and thousands 
of locomotives.
                          What Congress Can Do
Call on EPA to deny CARB's request
    The Clean Air Act requires EPA, following certain administrative 
procedures, to authorize California to adopt and enforce standards 
relating to the control of emissions from non-road engines and vehicles 
otherwise not prohibited under the Clean Air Act if California 
determines that its standards will be at least as protective of public 
health and welfare as applicable federal standards. EPA is required to 
reject such standards, however, if they are (1) arbitrary and 
capricious; (2) unnecessary to meet compelling and extraordinary 
conditions; or (3) inconsistent with certain provisions in the Clean 
Air Act.
    We firmly believe CARB's In-Use Locomotive Regulation fails this 
standard, and, along with the Class I railroads and thousands of 
affected stakeholders, we are actively engaged with EPA conveying the 
clarity of our case and urging the agency to reject California's 
request. We are appreciative of all on this panel and in Congress who 
have formally asked for a denial of the request. Your efforts could 
help sideline this new regulatory effort. EPA's review is ongoing. By 
calling on the EPA to deny CARB's request, you are asserting proper 
federal primacy over the national freight network, in general rejecting 
an unworkable and inefficient patchwork of state-by-state rail 
regulations and stopping this infeasible counter-productive California 
regulation from becoming the de facto new national regulation.
Continue to partner with our industry to advance emissions-reducing 
        technology
    An additional problem with CARB's mandate is that there is nowhere 
near enough public or private sector funding to allow short line 
railroads to quickly and comprehensively adopt even currently existing 
technology that could lead to lower emissions across all in-service 
locomotives. CARB has also drastically overstated federal and state 
funding opportunities that short lines could avail themselves of in 
efforts to comply; by our estimate, federal and state programs are 
hundreds of millions of dollars short of what would be necessary just 
for locomotive operations in California.
    Nonetheless, there are important resources that can continue to 
help our industry move in the direction we all want to go--a rail 
network that has an even smaller emissions footprint than it has today 
and is an even more attractive option for the surface transportation of 
freight. These efforts include the USDOT's CRISI program (noted above), 
which can provide funding for short lines to upgrade locomotives for 
emissions purposes, and the other R&D efforts and demonstration 
projects noted above. Under the Infrastructure Investment and Jobs Act 
(IIJA), Congress has the authority to appropriate up to a billion 
dollars each year to CRISI for the next two fiscal years. Full funding 
will help further that aim, as well as other safety and reliability 
goals. We also urge support for the EPA's Clean Ports program and its 
Diesel Emissions Reduction Act program. We continue to support varied 
R&D efforts with federal agencies with jurisdiction of these matters, 
including efforts with US DOT and DOE to research alternative fuels, 
battery electric locomotives and hydrogen fuel cells. For example, we 
support DOE's Decarbonization of Off-Road, Rail, Marine, and Aviation 
Technologies (DORMA) program. We urge Congress to strongly support this 
and similar efforts in Fiscal Year 2025.
    Railroads, however, cannot be held responsible for ensuring 
dramatic advances in industries far outside of our control, such as 
those manufacturing battery power solutions. We support, and urge 
Congress to support, efforts at the DOE and the USDOT, aimed at the 
basic research and development necessary to advance the industries and 
technologies that will be necessary for rail and other hard-to-
decarbonize industries to use to dramatically reduce our environmental 
footprint, such as batteries, hydrogen, and renewable diesel fuels.
Support the rail industry
    Compared to the other options, rail is the more sustainable way to 
move goods and freight over land, a more cost-effective option for all 
manner of businesses, and a proven way to improve safety on public 
roads. By supporting this industry, you do great service to your 
constituents--and simultaneously help advance the goal we share with 
CARB: achieving cleaner air. There are a multitude of ways we encourage 
you to support freight rail: advancing efforts like CRISI to ensure 
short lines can stay safe, reliable and efficient; avoiding excessive 
subsidization of less-environmentally friendly shipping alternatives 
like trucking by allowing heavier trucks or allowing the trucking 
industry to avoid paying its fair share for use of the highway system; 
and ensuring that federal and state regulations make good sense and 
meet a true need.
                                Closing
    The EPA should deny CARB's authorization request for its In-Use 
Locomotive Regulation. Not only does it mandate the use of locomotives 
with technology not currently commercially available, but CARB has also 
publicly acknowledged that the massive compliance costs may be too much 
for some short line railroads in California to bear--they would be 
forced to cease operating because of their inability to comply with an 
impossible regulation. This would have serious, negative impacts on the 
freight rail network, the U.S. supply chain, the environment, and 
highway safety. This regulation will have noticeable impact to your 
constituents in elevated pricing of goods, and loss of jobs because of 
the shuttering of railroads and shippers unable to obtain efficient 
transportation options.

    Mr. Nehls. Thank you, Mr. Olvera.
    I now recognize Mr. Nober for 5 minutes for your testimony. 
Yes, sir.

   TESTIMONY OF ROGER NOBER, DIRECTOR, GW REGULATORY STUDIES 
CENTER AND PROFESSOR OF PRACTICE AT THE TRACHTENBERG SCHOOL OF 
  PUBLIC POLICY AND PUBLIC ADMINISTRATION, GEORGE WASHINGTON 
                           UNIVERSITY

    Mr. Nober. Good morning, subcommittee Chairman Nehls, 
Ranking Member Wilson, full committee Ranking Member Larsen, 
and members of the subcommittee. My name is Roger Nober, and I 
am honored to be back testifying on the important topic of 
today's hearing: an examination of issues related to CARB's in-
use locomotive regulations.
    Earlier this week, I submitted my full written testimony 
and will not repeat it now. But today, I would like to draw on 
my background, my experiences on this committee as the lead 
staffer on the Interstate Commerce Commission Termination Act 
of 1995, as well as subsequently chairing the Surface 
Transportation Board, and then as an executive vice president 
of BNSF Railway, and focus on three main points for my written 
testimony:
    First, provide you all with a brief history of the 
Interstate Commerce Act preemption provisions; second, explain 
why I believe the CARB regulations, whether or not authorized 
by EPA under section 209 of the Clean Air Act, are preempted by 
the Interstate Commerce Act; and third, review effective 
nonpreempted alternatives for lowering locomotive emissions and 
improving air quality in California today.
    So, let's turn to the Interstate Commerce Act preemption. 
Section 10501 of the Interstate Commerce Act broadly preempts 
both State and Federal laws or regulations that affect rates, 
classifications, rules, practices, route services, and the 
facilities of such carriers.
    This provision was intentionally written to be extremely 
broad and reflects the bipartisan desire of committee members 
to ensure that railroads were exclusively regulated in those 
areas at the Federal level.
    Importantly, the section preempted other Federal laws as 
well. Over the past 30 years, section 10501 has been read 
broadly, although not literally.
    State and local laws that might be preempted from applying 
to railroads, like sanitation codes and environmental reviews, 
have been found to still apply to them.
    But State efforts to regulate railroad operations through 
creative actions, such as those we are reviewing today, have 
been disallowed.
    When another Federal law is thought to conflict with 
section 10501, the STB or courts will attempt to harmonize the 
laws or regulations. If they cannot be harmonized, then the 
conflicting Federal law will be preempted.
    All right. So, turning to the CARB in-use locomotive rules, 
in my view, the CARB regulations are unequivocally preempted by 
section 10501. I come to this conclusion when considering the 
following:
    The plain language of section 10501 and its clear and 
unambiguous intent;
    The fact that CARB has petitioned the EPA to open a Tier 5 
locomotive rulemaking, and while the EPA has not yet done so, 
it is still studying the issue;
    The broad intent and scope of the CARB regulations and that 
they effectively apply to equipment entering California and not 
just equipment local to California;
    The practical infeasibility of creating a California-only 
locomotive fleet means that the CARB regulations would become 
de facto national standards;
    There is the technical and commercial infeasibility of 
zero-emissions technology in the CARB regulation's timelines, 
and the uncertainty created by two progress evaluations;
    The attempt by CARB to influence equipment manufacture 
through definition of ``in-use'' and the reality that 
conforming locomotives do not yet feasibly exist;
    The economic impact of and the penalty-like nature of 
spending;
    And as Mr. Olvera just mentioned, the impossibility of 
small railroads' compliance with these requirements.
    I also believe that were EPA to grant CARB section 209 
petition, the CARB regulations could not be harmonized with the 
Interstate Commerce Act and would be preempted.
    As a matter of statutory construction, section 10501 is the 
later enactment of law, that section 209(e) is more specific is 
not important here. A later enacted, broad, preemption 
provision need not list every statute that it might apply to.
    So, what are the alternatives? CARB, in its testimony, has 
indicated that the legal prohibitions give locomotives a, 
quote, ``free pass,'' and conclude that railroads need to do 
their part to improve air quality in California--and I 
absolutely agree. Locomotive emissions should be reduced but 
not on a national--on a national and not on a State basis.
    Going forward, the best step long term would be an EPA Tier 
5 regulation. CARB, as I said, has sought such a rulemaking as 
recently as 2017, and EPA has not refused to do so.
    While a Tier 5 rulemaking might be slow and laborious, EPA 
would also consider the national implications of such a rule 
and imbalance improving emissions profiles with mode and route 
shifts that nationally might increase overall emissions 
exposure to more people.
    In the short term, CARB and local air quality districts in 
California could also negotiate voluntary agreements with 
railroads. These agencies, for decades, understood the value of 
voluntary agreements to reduce locomotive emissions, and they 
have produced real benefits to California residents, and I 
believe that they could again.
    In conclusion, I believe that these regulations are legally 
preempted and substantively the wrong way to reduce locomotive 
emissions. I ask the committee not to lose sight of the larger 
picture, which is that rail is the most environmentally 
friendly mode of surface transportation.
    As a result, locomotive emissions regulation should not let 
the perfect, which is adopting unavailable zero-emissions 
technology by a date certain and penalizing those who don't, be 
the enemy of the outstanding, which is moving as much freight 
on rail as possible, using the most efficient rail equipment 
commercially feasible.
    So, thank you again for inviting me to testify this 
afternoon, and I look forward to any questions you might have.
    [Mr. Nober's prepared statement follows:]

                                 
  Prepared Statement of Roger Nober, Director, GW Regulatory Studies 
 Center and Professor of Practice at the Trachtenberg School of Public 
     Policy and Public Administration, George Washington University
    Good afternoon, Chairman Nehls, Ranking Member Wilson and members 
of the Subcommittee.
    My name is Roger Nober, and I am here to present testimony on legal 
and practical concerns with the adoption of regulations promulgated by 
the California Air Resources Board (CARB) (hereafter the CARB 
regulations) and CARB's subsequent petition to the United States 
Environmental Protection Agency (EPA) to allow CARB to regulate 
locomotive emissions when such locomotives are in use in the State of 
California.
                             My Background
    I am currently the Director of the GW Regulatory Studies Center 
housed in the Trachtenberg School of Public Policy and Public 
Administration at the George Washington University and a Professor of 
Practice at the Trachtenberg School. I have been in this position since 
the start of 2024. I testify today in this capacity only.\1\
---------------------------------------------------------------------------
    \1\ The George Washington University Regulatory Studies Center 
works to improve regulatory policy through research, education, and 
outreach. This statement reflects my own views and does not represent 
an official position of the GW Regulatory Studies Center or the George 
Washington University.
---------------------------------------------------------------------------
    Prior to joining the GW Regulatory Studies Center, I had over 30 
years' professional experience in transportation, focusing on legal 
issues, legislation, policy and operations. From the beginning of 2007 
until I retired at the end of 2022, I was the Executive Vice President 
for Law and Corporate Affairs at BNSF Railway Company, the nation's 
largest freight railroad. At BNSF, I was a Board Member of BNSF LLC and 
led the legal, environmental, communications, compliance, State 
government affairs and regulatory functions. Among my duties, my teams 
worked with State and local air resource agencies in California (and 
numerous other states) on issues ranging from locomotive emissions to 
permitting of new intermodal facilities. I also was a consultant for 
BNSF following my retirement during calendar year 2023.
    Prior to joining BNSF, I served as the Chairman of the United 
States Surface Transportation Board (STB) from 2002 to 2006. I was 
confirmed by the Senate in November of 2002 and appointed by President 
Bush as Chairman when I was administered the oath of office. I served 
as STB Chairman until my departure in January of 2006. During my time 
as Chairman, I had the unusual circumstance of being the only Board 
Member for 54 weeks in 2003 and 2004. After leaving the STB I was a 
partner at Steptoe & Johnson in Washington DC for the balance of 2006. 
Prior to being confirmed as an STB Member, from June of 2001 until 
November of 2002 I served at the Department of Transportation, where I 
was the Counselor to Deputy Secretary Michael P. Jackson and the 
Aviation Policy Assistant to Secretary Norman Y. Mineta.
    Prior to joining the Department of Transportation, I was a staff 
member to the Republican Members of this Committee serving in a variety 
of roles from 1993 until 2001. I began as a Minority Counsel on the 
Subcommittee on Surface Transportation in the 103rd Congress (when the 
full Committee was known as the Public Works and Infrastructure 
Committee) under Ranking Member Bud Shuster. In 1995, at the start of 
the 104th Congress, I became the Majority Counsel for the Subcommittee 
on Highways and Transit of the renamed Transportation and 
Infrastructure Committee, which had also gained jurisdiction over 
freight and intercity railroads from the Energy and Commerce Committee 
in a 1995 House Committee reorganization under then Chairman Shuster. I 
subsequently became the Full Committee Chief Counsel and in that role 
was involved in the passage of numerous significant pieces of 
legislation. Most importantly for this hearing, in 1995 I was the lead 
House staffer on the Interstate Commerce Commission Termination Act of 
1995 (ICCTA), the legislation to terminate the Interstate Commerce 
Commission (ICC), create the STB and significantly revise the 
Interstate Commerce Act (ICA) with respect to interstate rail carriers 
and motor carriers.
    I have been an adjunct professor of law at Texas A&M University and 
Southern Methodist University Law Schools teaching Administrative Law, 
and I am teaching a course on Administrative Law at the Trachtenberg 
School in the Fall of 2024. I am a Member of the Advisory Boards at the 
Texas A&M Transportation Institute, the Northwestern University 
Transportation Center and the Board of Directors of the Eno Center for 
Transportation.
                     Background to Today's Hearing
    As the Members of the Committee are aware, in April of 2017 CARB 
petitioned the EPA to open a so-called Tier 5 locomotive rulemaking--in 
other words asking EPA to revise locomotive emissions standards to make 
them more stringent. In November of 2022, the EPA responded by 
promising to create a working group to examine how best to address 
emissions from locomotives and initiate a rulemaking to examine federal 
preemption of State regulations governing locomotive emissions. In 
April of 2023, CARB adopted its in use locomotive standards 
(significantly revised in September 2023). In November of 2023, CARB 
petitioned the EPA under section 209(e) of the Clean Air Act to 
delegate to CARB the regulation of locomotives when in the State of 
California so that CARB had the legal authority to put those standards 
into effect under the federal Clean Air Act law (hereafter the CARB 
petition).
    CARB and numerous commentators have discussed the many practical 
and technical issues in the CARB regulations in depth and I will not 
repeat that analysis here. I also submitted comments to EPA regarding 
CARB petition and would like to include those by reference here as 
well. https://regulatorystudies.columbian.
gwu.edu/carb-regulating-use-locomotives.
    In these comments, I focus on the application of the ICA to most 
significant portions of the CARB regulations, the legal conflict that 
EPA's granting of the CARB petition would create under the ICA and then 
review alternative approaches for lowering locomotive emissions in 
California.
         CARB In Use Locomotive Regulation and Petition to EPA
    In sum, the CARB regulations have the following components:
      A prohibition as of 2030 on the operation of locomotives 
older than 23 years old in the State of California, meaning any 
locomotive originally manufactured before 2007 unless that locomotive 
is in zero emissions configuration.
      Imposition of charges on certain locomotives that operate 
in California which do not meet zero emissions standards set forth in 
the regulations beginning on January 1, 2025 with the first deposits 
due July 1, 2026;
      A direction that those charges be deposited into a 
``spending account'' that the payors can only use to purchase certain 
specified types of locomotives or zero emissions infrastructure support 
facilities;
      Mandates that (i) yard and switch locomotives 
manufactured after 2030 must operate in zero emissions configuration 
and (ii) road locomotives manufactured after 2035 must operate in zero 
emissions configuration in California;
      Setting of additional locomotive idling requirements; and
      Imposition of statewide locomotive registration and 
reporting requirements.

    While CARB has relied upon its own findings that conforming 
locomotives will be available by the specified dates, CARB also appears 
to recognize that the technological feasibility of zero emissions 
linehaul locomotives is uncertain, and the CARB regulations include a 
provision to conduct ``progress assessments'' in 2027 and 2032. The 
results of those assessments could lead to extending the deadlines in 
the regulations.
    The CARB petition to EPA is to delegate to California the authority 
to adopt the CARB regulations and regulate locomotives in California 
pursuant to section 209(e) of the Clean Air Act. The CARB regulations 
are ostensibly limited in application to California alone, but the CARB 
petition recognizes the potential effects of the CARB regulations on 
locomotive manufacturers, interstate movement of goods, and the 
regulatory requirements of other states. Seen as a whole, I believe 
these actions reveal CARB's apparent intent to create a technology-
forcing set of requirements to hasten zero emission locomotive 
development and deployment, not just in California, but nationally.
                   Interstate Commerce Act Preemption
    Based on my experiences on the Transportation and Infrastructure 
Committee, as Chairman of the Surface Transportation Board and as an 
Executive Vice President at BNSF Railway and now as a regulatory 
scholar, I believe that the CARB regulations that are the subject of 
the CARB petition are unambiguously preempted by Section 10501 of the 
ICA, 49 USC 10501. In this section I would like to explain why I 
believe this is so by first recounting the history of section 10501 and 
what I believe the Committee's intent was in enacting it, and then 
examining its application to the CARB petition and CARB regulations.
1. Background
    A foundational principle of interstate commerce is the need for 
uniformity in operations across the fifty states. In my 31 years of 
experience, maintaining national uniformity through preemption of State 
regulation has been a longstanding bi-partisan priority of this 
Committee. The reasons are straightforward. Most commerce, on 
waterways, in surface transportation or in air cargo is interstate in 
nature. National rules for economic, safety and operational regulation 
facilitate our national system of freight movements. State regulation 
creates an unworkable and inefficient patchwork of rules and 
requirements.
    As the Members of this Committee are well aware, most freight and 
passenger transportation economic regulations were eliminated or 
modified in the late 1970s and early 1980s. Those deregulatory efforts 
have brought American consumers and business tremendous value in the 
decades since; it is no exaggeration to state that America's freight 
transportation is the envy of the world and a significant competitive 
advantage for the American economy. Maintaining national economic, 
operating and safety standards through preemption of State regulation 
of interstate commerce remained core to those deregulatory efforts. 
When I joined the Minority staff of the Public Works and Transportation 
Committee in 1993, there were only a few remnants of State regulation 
left in transportation, but one inadvertent vestige was causing 
competitive harm and needed to be addressed.
    By 1993, Federal aviation laws had clearly preempted State 
regulation of intrastate movements of air carriers, but the ICA, which 
governed movements subject to the jurisdiction of the ICC, still 
permitted States to economically regulate intrastate movements of motor 
carriers of property that were not part of an interstate movement. The 
practical effect of this discrepancy was a difference in regulation at 
the State level between FedEx, which originated as an air carrier but 
by the 1990s owned significant trucking assets, and UPS, which 
originated as a motor carrier but by the 1990s owned thousands of 
aircraft. While UPS and FedEx had very similar businesses, since FedEx 
was authorized as an air carrier and UPS as a motor carrier, States 
were preempted from regulating intrastate movements by FedEx but could 
regulate the same movements by UPS.
    In 1994 Congress closed that inadvertent regulatory loophole by 
passing H.R. 2739, the Federal Aviation Administration Authorization 
Act of 1994 (PL 103-305). While ostensibly legislation to reauthorize 
aviation programs, it is best known as one of the final surface 
transportation deregulation legislative acts. Section 601 of that act 
amended 49 USC 14501 (then codified at 49 USC 11501) to create a new 
subsection (h), which broadly preempted State regulation of prices, 
routes and services (emphasis added) of intrastate movements of motor 
carriers of property.
    A complication arose to this effort. In H.R. 2739, Congress 
intended to model the preemption provision it was enacting of State 
motor carriers of property on the broad preemption of State regulation 
of air carriers in 49 USC 41713, which as passed preempted State 
regulation of air carrier rates, routes and services (emphasis added). 
The rates, routes and services clause of section 41713 had been broadly 
interpreted by Courts, including the Supreme Court. However, in 
drafting section 601 of the FAA Authorization Act, the Committee 
discovered that the critical language of section 41713 preemption, 
rates, routes and services had been amended in a technical corrections 
act by the Law Revision Council to a different (the current) 
formulation, prices, routes and services. The Conference Report on H.R. 
2735 clarified Congress' intent that the different language of the two 
provisions had the same meaning and force of law.
2. ICC Termination Act of 1995
    In the 1994 midterm elections, Republicans became the majority 
party in both the House and Senate in the 104th Congress and a 
legislative priority of the new majorities was the elimination of the 
ICC. While eliminating federal agencies was a provision of the so-
called ``Contract for America,'' efforts to specifically eliminate the 
ICC predated it. In the Democratic led 103rd Congress, there had been a 
bipartisan effort among several members of the House (led by the 
unusual bi-partisan coalition of Congressmen Frank, DeLay and Kasich) 
to eliminate the ICC, but those efforts lacked leadership support. 
Another consequence of the 1994 midterm election was a reorganization 
of Committees in the House in the 104th Congress, where the Public 
Works and Transportation Committee was renamed the Committee on 
Transportation and Infrastructure and was, as indicated above, given 
jurisdiction over railroads from the Energy and Commerce Committee (as 
well as Coast Guard and Merchant Marine from the Resources Committee). 
Thus in 1995 this Committee began the bipartisan task of eliminating 
the ICC, which involved revising the entire ICA and creating the STB.
    In the yearlong process of drafting and passing the ICCTA, this 
Committee and the Senate Commerce Committee very deliberately revised 
and expanded the ICA preemption provision in 49 USC 10501(b) to be as 
broad as possible, both because of their fundamental belief in the 
importance of preemption of State regulation of interstate commerce, 
and to avoid a repeat of the Committees' 1994 experience with the scope 
and then-changed language of the aviation (and modeled thereafter 
trucking) preemption provisions, which had just happened a few months 
prior.
    In pertinent part, section 10501(b)(1) as enacted reads:

        (b) The jurisdiction of the Board over--
        (1) transportation by rail carriers, and the remedies provided 
        in this part with respect to rates, classifications, rules 
        (including car service, interchange, and other operating 
        rules), practices, routes, services and the facilities of such 
        carriers . . .

                                 * * *

        is exclusive. Except as otherwise provided in this part, the 
        remedies provided under this part with respect to the 
        regulation of rail transportation are exclusive and preempt the 
        remedies provided under Federal or State law. (emphasis added)

    As indicated above, section 10501 as enacted was purposely 
broadened from prior preemption provisions both in reaction to the 
issues raised in 1994 and to forestall any need to modify and clarify 
the provision in the future. Notably for this hearing, the revised 
section 10501 specifically preempted other remedies that could be 
applicable to rail carriers under other federal laws and not just State 
laws.
    Over time, section 10501 has been recognized to be extremely broad, 
and as a result applied using a rule of reason (since read literally it 
would preempt every other law potentially even health and safety laws 
such as building codes!). In my experience, the pertinent analysis is 
for the STB or a reviewing Court to examine the intent and effect of 
the other State or federal law, evaluate whether that law would be 
subject to 10501 and determine whether the intent and effect of such 
law or regulation is contrary to 10501. Importantly when the effect of 
section 10501 is evaluated with respect to another federal law, the STB 
and Courts evaluate the two laws to see if they are in conflict, and 
before determining the other federal law is preempted, attempt to 
harmonize the statutes (or regulation promulgated thereunder).
   The CARB Regulations are Preempted by The Interstate Commerce Act
    In my view, the CARB regulations are unequivocally preempted by 
section 10501 of the ICA. I come to this conclusion when considering 
the following:
      The plain language of section 10501 and its clear and 
unambiguous intent to prevent State regulation of rail carriers 
operating in interstate commerce;
      The fact that CARB has petitioned the EPA to open a Tier 
5 locomotive standard proceeding, and while EPA chose not to open such 
a proceeding, it is studying the issue;
      The broad intent and scope of the CARB regulations and 
that they explicitly apply to equipment entering California as part of 
an interstate movement and not just equipment local to California;
      The practical infeasibility of creating a California-only 
locomotive fleet for movements in interstate commerce means the CARB 
regulations' standards would become de facto national standards;
      The attempt by CARB to influence equipment manufacture 
through the CARB regulations' definition of in use;
      The infeasibility of zero emissions technology in the 
timeframes anticipated by the CARB regulations and the uncertainty 
created by the two progress evaluations.
      The economic impact of, and the penalty-like nature of 
the spending account provisions proposed; and
      The impossibility of small railroads' compliance with the 
requirements.

    Similarly, when examining the CARB petition to the EPA, I do not 
see how the CARB regulations could take effect in a manner that would 
not conflict with the plain wording and longstanding intent and 
application of the ICA and as a result would be facially preempted. I 
also believe that, were the EPA to grant the CARB petition under 209(e) 
and delegate to California the ability to regulate locomotives in use 
in California, the CARB regulations could not be harmonized with the 
ICA and would be preempted.
    Importantly, as a matter of statutory construction, section 10501 
is the later enactment of federal law. The amendments to the Clean Air 
Act cited by CARB as the underlying authority for their petition to EPA 
predate the ICCTA. This means that when Congress passed the ICCTA and 
its included preemption provision, Congress was aware of the cited 
provisions of the Clean Air Act when it preempted ``remedies provided 
under federal . . . law'' 49 USC 10501.
The EPA is the Proper Agency to Set Locomotive Emissions Standards for 
                           a National System
    While I understand that many Members of the Committee may believe 
that locomotive emissions can and should be further curtailed, 
particularly in California, there are effective and importantly, non-
preempted ways for the EPA and CARB to do so--EPA can open a Tier 5 
locomotive rulemaking and CARB can continue its efforts to reach 
voluntary agreements with freight railroads operating in California.
    First, EPA is the proper agency to set locomotive standards at a 
national level consistent with the needs of an interoperable national 
system. Even with the preemption provisions of the ICA, the EPA has had 
the ability to set national locomotive emissions standards and has 
undertaken a number of rulemakings in the past to do so. The most 
current emissions standards, Tier 4, were set by the EPA. As has been 
indicated many times in comments to EPA in their proceeding on CARB's 
request, CARB did petition the EPA to open a Tier 5 proceeding to set 
new standards and while EPA has not opened such a proceeding, it still 
has the ability to do so. While such a proceeding may take time, the 
fact that it would be time consuming to consider national implications 
of its standard setting illustrates the complex and evolving nature of 
locomotive manufacture and technological limits.
    Second, CARB could return to a cooperative posture with the freight 
rail industry and make real improvements in air quality for its 
citizens through voluntary agreements, which have been highly effective 
in reducing locomotive emissions in California. In the past, California 
State and local air quality agencies had accepted that they did not 
have the legal authority to set locomotive emissions standards and 
sought to work cooperatively with railroads. When a local California 
air quality agency, the South Coast Air Quality Management District 
(SCAQMD), did adopt locomotive idling restrictions some years ago they 
were ruled to be preempted. CARB negotiated voluntary locomotive fleet 
agreements with the major western freight railroads, Union Pacific and 
BNSF Railway, which produced real local benefits to California 
residents and at the same time allowed the freight railroads to 
effectively operate national networks. Emissions in California have 
improved significantly as a result of those agreements and could again.
             Regulatory Process Concerns With CARB Proposal
    In addition to the substantive concerns raised above regarding the 
conflict of the CARB regulations with the ICA, I would also highlight 
several reasons why I am concerned about this situation as a matter of 
regulatory policy.
    First, the CARB regulations are technology forcing, as they require 
railroads to adopt technology that does not yet commercially exist, by 
a future date certain with the aim of spurring technology innovation 
and adoption. While it may be well-meaning, as a general matter 
adopting technology forcing regulation raises the question of whether 
an agency is improperly requiring the adoption of equipment which is 
neither technologically nor economically feasible. CARB tries to 
preemptively address this reality by including periodic, future 
``progress reviews'' to evaluate the state of zero emissions 
technology. Looked at another way, CARB effectively acknowledges the 
current infeasibility of the equipment it is requiring. Yet this kind 
of process--legally requiring the deployment of technology that is not 
yet available and providing for a discretionary waiver of that 
requirement if meeting the requirement by the adoption date become 
infeasible--is the wrong way to encourage the adoption of new 
technology. Rather than focusing on realistic and tangible 
improvements, this type of regulation encourages strong opposition and 
in my opinion is a deterrent to the adoption of new technology.
    Second, CARB is, obviously, a California State agency, and in 
adopting regulations CARB is only required to evaluate effects in the 
State of California, even when, as here, the clear impact of its action 
is nationwide. EPA, by contrast, is a national regulatory agency and 
must consider the nationwide effects of its actions and evaluate and 
respond to all comments. Considering the full effects of regulatory 
actions is the proper way to regulate national industries.
    Finally, if adopted and enforced, the CARB regulations would likely 
increase emissions and pollutants in other jurisdictions by diverting 
cargo to other locations and through mode shift to trucks. Neither is 
in the national interest but could in theory meet California's desired 
goals. National policymakers should not let California regulators take 
steps to reduce emissions in California by increasing them elsewhere 
without consideration of those effects.
                               Conclusion
    For the reasons I have discussed in this testimony, I believe the 
CARB regulations and CARB proposal are preempted by section 10501 of 
the ICA. While recognizing that decreasing emissions from locomotives 
is a laudable goal, I ask the Committee to remember that there are 
better and more effective ways to do so than improperly delegating the 
ability to regulate locomotive emissions standards to one state.
    I look forward to answering any questions you might have.

    Mr. Nehls. Thank you, Mr. Nober.
    Mr. Yal, you are recognized for 5 minutes, sir.

    TESTIMONY OF URAL YAL, SENIOR VICE PRESIDENT--CORPORATE 
PRECONSTRUCTION GROUP, FLATIRON CONSTRUCTION, ON BEHALF OF THE 
          ASSOCIATED GENERAL CONTRACTORS OF CALIFORNIA

    Mr. Yal. Thank you. Chairman Nehls, Ranking Member Wilson, 
and members of the subcommittee, thank you for inviting me to 
testify on this important topic. My name is Ural Yal. I am a 
senior vice president at Flatiron Construction and a vice 
president of the highway and transportation division at AGC, 
Associated General Contractors of California.
    With nearly 900 members specializing in all facets of 
construction, at AGC of California, we believe the construction 
industry is vital to the success of California, and we are 
passionate about shaping policy, improving our State's 
infrastructure, and developing our workforce.
    My firm, Flatiron Construction, is a national 
infrastructure contractor founded in Colorado in 1947, and we 
have been operating in California since 1989.
    With more than 3,500 craft and professional employees--
1,100 of those are in California--we work for public and 
private clients to deliver essential infrastructure. Our yearly 
revenues exceed $2\1/2\ billion, and more than $1 billion is 
generated in California.
    We have worked with passenger and freight rail operators 
throughout our history with notable projects such as a 68-mile 
segment of California high-speed rail, Redlands Passenger Rail 
Project in San Bernardino County, North Coast Corridor Program 
in San Diego that serves joint Amtrak and BNSF lines, 
intermodal facility improvements, rail operation and safety 
improvements such as grade separations and double-tracking on 
passenger and freight rail lines across California and several 
other States.
    As a contractor that self-performs the majority of our work 
with our own craft workforce, and with rail and transit 
construction being a major part of our business, maintaining 
investments in infrastructure spending is very important to us.
    A more environmentally friendly Nation starts with our 
State and Federal agency partners' ability to build while 
maintaining jobs, ensuring stable material pricing, meeting 
effective transportation needs, and securing the funding 
required to build the projects our communities need.
    The construction industry not only creates jobs, but also 
drives economic growth by developing the infrastructure 
necessary for a sustainable future.
    While AGC of California supports the goal of a more 
environmentally friendly State, the California Air Resources 
Board in-use locomotive regulation, if granted, will have 
significant adverse effects on infrastructure development, 
construction supply chain, and job creation.
    One reason for this adverse effect is available funding. 
The proposed spending account and useful life requirements 
within CARB's in-use locomotive regulation present significant 
financial and operational challenges for our agency partners 
and operators.
    These requirements are designed to accelerate the 
transition to zero-emission locomotives by mandating 
substantial financial contributions from operators into a 
spending account, and limiting the operational life of existing 
locomotives.
    While we support the intent to reduce emissions, these 
measures impose undue burdens on our transportation agencies, 
and by extension, the communities they serve.
    We are concerned that this regulation will have unintended 
consequences and jeopardize planned infrastructure projects and 
construction jobs.
    Another aspect of this regulation is the potential impacts 
on construction costs. The costs of construction have gone up, 
including the cost of construction materials, construction 
labor, and transportation of materials.
    Since February 2020, the average cost of construction 
materials has increased by 39 percent, a rate that is nearly 
twice as high as the rate of consumer inflation, with notable 
increases of over 60 percent or more in diesel and steel mill 
products.
    The CARB in-use locomotive regulation would further 
increase these costs and the costs to rebuild the Nation's 
infrastructure, further diminishing what can be built with 
available funding.
    The majority of AGC of California members rely on sustained 
infrastructure funding to keep and develop our workforce and 
sustain our businesses.
    Given the already strained funding and infrastructure due 
to supply chain and inflationary pressures, resulting in the 
recent downscaling of projects due to lack of funding, CARB's 
in-use locomotive regulation will result in further impacts to 
our industry.
    Thank you for allowing me to testify today, and I am happy 
to answer any questions you may have.
    [Mr. Yal's prepared statement follows:]

                                 
   Prepared Statement of Ural Yal, Senior Vice President--Corporate 
    Preconstruction Group, Flatiron Construction, on behalf of the 
              Associated General Contractors of California
                              Introduction
    Chairman Nehls, Ranking Member Wilson, and members of the 
Subcommittee on Railroads, Pipelines, and Hazardous Materials, thank 
you for inviting me to testify on this vitally important topic. My name 
is Ural Yal, Senior Vice President of the Corporate Preconstruction 
Group at Flatiron Construction, and an active member of the Associated 
General Contractors (AGC) of California. I currently sit on the 
Executive Committee at AGC as the Vice President of Highway & 
Transportation. Since 1920, AGC of California has been a member driven 
organization (501c6) with around 900 members specializing in commercial 
construction. We believe the construction industry is vital to the 
success of California. Together, our members actively create 
opportunities to build and strengthen our state. We are passionate 
about shaping policy, improving industry relationships, and developing 
our workforce.
    AGC members are the contractors that built California's current 
infrastructure. They are also the contractors maintaining our existing 
infrastructure and building the next generation for the state. This 
includes passenger rail systems, freight rail, affordable, and mixed 
income housing developments, air and seaports, roads, bridges, transit 
systems, and more.
    Flatiron is a leading infrastructure contractor with operations 
across the United States and Canada. We were in founded in Colorado in 
1947 and have been operating in California since 1989. With more than 
3,500 craft and professional employees--1,100 of those employees are in 
California--we collaborate with public and private clients to deliver 
essential infrastructure. Our revenues exceed $2.5b, of which more than 
$1B is generated in California. We are ranked top 10 by Engineering 
News-Record in transportation and heavy civil construction in the US. 
Our focus market segments are rail and transit systems, aviation, 
highways, bridges, water and wastewater treatment facilities, 
resiliency and flood protection, dams and reservoirs, and sustainable 
mobility. With a focus on safety and quality, Flatiron builds long-
term, collaborative relationships with clients, construction partners 
and communities. Our skilled craft employees and on-site leaders bring 
vital expertise and experience to each project. Our industry-leading 
engineers create innovative solutions to complex issues. And, beyond 
delivering essential infrastructure projects, Flatiron people 
demonstrate a commitment to sustainability, to our clients and the 
communities where we live and work.
    We have worked with passenger and freight rail operators throughout 
our history, with notable projects such as a 68-mile segment of 
California High-Speed Rail, Redlands Passenger Rail in San Bernardino 
County in California, North Coast Corridor program in San Diego that 
serves joint Amtrak and BNSF lines, intermodal facility improvements 
for BNSF, numerous safety improvements such as grade separations and 
double tracking on passenger and freight rail lines across California 
and several other states.
    As a contractor that self-performs majority of our work with our 
own craft workforce and with rail and transit construction being a 
major part of our business, maintaining investments in infrastructure 
spending in this field very important to us.
    The construction industry is vital to our nation's economy, 
providing the foundation upon which our communities are built and 
thrive. A more environmentally friendly nation starts with our state 
and federal agency partners' ability to build it while maintaining the 
jobs our communities need, ensuring stable material pricing, meeting 
effective transportation needs, and securing the funding required to 
support the communities our agency partners develop and build for. The 
construction industry not only creates jobs but also drives economic 
growth by developing the infrastructure necessary for a sustainable 
future.
    While AGC of California supports the goal of a more environmentally 
friendly state, the California Air Resources Board's (CARB) In Use 
Locomotive Regulation, if granted, will have significant adverse 
effects on infrastructure development, the construction supply chain, 
and job creation.
    CARB's regulation would require railroads, beginning in 2030, from 
operating locomotives in California that are more than 23 years beyond 
their original manufacture date. In addition, beginning in 2030 for 
industrial, switch, and passenger locomotives and 2035 for line-haul 
locomotives, newly purchased locomotives operated in California would 
need to be zero-emission. The railroads have made significant 
investments in developing battery electric and hydrogen fuel cell 
locomotives, however commercially viable zero-emission locomotives are 
unavailable.
    California has a total of twelve ports and about forty percent of 
container freight moves through California ports.\1\ According to Union 
Pacific, 52% of rail traffic is bulk commodities for things like 
agriculture and energy products, construction materials, chemicals, 
equipment, metals, minerals, among other things.\2\ And according to 
the Association of American Railroads, rail accounts 40 percent of 
long-distance freight by ton-mile.\3\ The ability to transport 
construction materials and other freight by rail is vital to the 
economy of California and the nation and would be hindered by the CARB 
regulation.
---------------------------------------------------------------------------
    \1\ The California Legislature's Nonpartisan Fiscal and Policy 
Advisor, Overview of California's Ports
    \2\ Union Pacific, How Much Freight Ships by Rail In the US?
    \3\ Association of American Railroads, Data Center
---------------------------------------------------------------------------
                   Construction Costs have Increased
    The costs of construction have gone up, including the cost of 
construction materials, construction labor, and transport of materials. 
The CARB In Use Locomotive Regulation would further increase these 
costs and the cost to rebuild the nation's infrastructure.
Construction Material Prices
    At Flatiron Construction, and more broadly within the construction 
industry, managing inflation defined 2023 and a lot of 2024. Since 
February 2020, the average cost of construction materials has increased 
by 39%; nearly twice as high as the rate of consumer inflation, which 
was 21% during that same period (See Appendix Table 1). More 
specifically, some construction markets, like highway construction, 
have seen an increase of 68% since December 2020, according to the 
Federal Highway Administration's (FHWA) National Highway Construction 
Cost Index (NHCCI).\4\ These figures also reflect significant cost 
increases for specific construction materials from February 2020 to May 
2024 (See Appendix Table 2), which include a:
---------------------------------------------------------------------------
    \4\ National Highway Construction Cost Index, Q4 2020 to Q4 2023
---------------------------------------------------------------------------
      63% increase in the price of diesel;
      60% increase in the price of steel mill products;
      49% increase in the price of gypsum (used in a lot of 
building materials); and
      38% increase in the price of cement.\5\
---------------------------------------------------------------------------
    \5\ Bureau of Labor Statistics, Producer Price Indexes

    The price of fuel, especially diesel, has driven up costs for the 
construction industry and project costs nationwide. Higher diesel costs 
mean construction companies must pay more to operate equipment, deliver 
materials to jobsites, and haul away dirt, debris, and equipment. 
Likewise, construction workers themselves feel the pain of higher 
commuting costs--particularly for jobs in rural areas where workers 
often have long commutes.
Construction Labor Costs
    The Bureau of Labor Statistics released numbers in April 2024 that 
showed that there were still 338,000 job openings in construction 
despite 353,000 new hires reported throughout the month. In other 
words, the industry cannot find enough people to hire. This has 
resulted in dramatic increases in labor costs. The average hourly 
earnings in construction increased 20% from $29.64 an hour in December 
2020 to $35.45 an hour in May 2024. This increase, outpacing growth in 
the private sector.\6\
---------------------------------------------------------------------------
    \6\ Bureau of Labor Statistics, Current Employment Statistics 
Survey
---------------------------------------------------------------------------
Transporting Construction Materials
    Construction material prices have increased and as a result of the 
increased cost of diesel, so have the costs to transport them. The CARB 
regulation would only exacerbate the problem.
    While railroads account for a smaller portion of freight movement 
by weight and value, it is significant because these shipments reduce 
what would otherwise be increased congestion on our roadways. In 
addition, according to the Association of American Railroads, on 
average railroads are three to four times more fuel efficient than 
trucks.\7\ Railroads account for about 0.5% of total U.S. greenhouse 
gas emissions and just 1.7% of greenhouse gas emissions in the 
transportation sector.\8\
---------------------------------------------------------------------------
    \7\ Association of American Railroads, Freight Rail Facts and 
Figures
    \8\ Association of American Railroads, Data Center
---------------------------------------------------------------------------
    CARB Regulation will Jeopardize Planned Infrastructure Projects
    The proposed Spending Account and Useful-Life Requirement within 
CARB's In-Use Locomotive Regulation present significant financial and 
operational challenges for our agency partners. These requirements are 
designed to accelerate the transition to zero-emission locomotives by 
mandating substantial financial contributions from operators into a 
spending account and limiting the operational life of existing 
locomotives. While the intent to reduce emissions is commendable, these 
measures impose undue burdens on our transportation agencies and, by 
extension, the communities they serve. We are concerned that this 
regulation will have unintended consequences and jeopardize planned 
infrastructure projects and construction jobs.
Barstow International Gateway Project
    Burlington Northern Santa Fe Railway (BNSF) Railway's Barstow 
International Gateway is a transformative infrastructure project 
designed to enhance the efficiency and capacity of freight rail 
operations in California. This state-of-the-art, master-planned rail 
facility represents an investment of over $1.5 billion and spans 
approximately 4,500 acres on the west side of Barstow. The facility 
will include a rail yard, an intermodal facility, and warehouses for 
transloading freight from international containers to domestic 
containers. The facility is designed to improve cargo velocity and 
reduce congestion both at the ports and on the highways. By allowing 
for the direct transfer of containers from ships at the Ports of Los 
Angeles and Long Beach to trains, the project will help reduce truck 
traffic and freeway congestion in the Los Angeles Basin and the Inland 
Empire. The use of clean-energy powered cargo-handling equipment at the 
facility will also contribute to improving the region's air quality.\9\
---------------------------------------------------------------------------
    \9\ BNSF Railway, BNSF to Build New Integrated Rail Complex in 
Barstow to Increase Supply Chain Efficiency Nationwide
---------------------------------------------------------------------------
    The Spending Account (Section 2478.4(a)-(e)) mandates that 
locomotive operators deposit significant sums annually based on the 
tier of their locomotives. Katie Farmer, CEO of BNSF spoke at the North 
American Rail Shippers Conference and said, ``We estimate that that 
payment for us, and I know that it would be similar for the Union 
Pacific, would be around $800 million a year.'' \10\
---------------------------------------------------------------------------
    \10\ Trains.com, California locomotive emission rules threaten 
BNSF's proposed Barstow terminal
---------------------------------------------------------------------------
    The path forward, if the EPA were to grant a waiver, would be 
unclear and in question for BNSF.\11\
---------------------------------------------------------------------------
    \11\ Progressiverailroading.com, Rail industry to Congress: 
California's locomotive rule is a state reg with national consequences
---------------------------------------------------------------------------
    Furthermore, in a comment made by California's Office of Business 
and Economic Development on the BNSF Barstow Project, ``The 
significance of BNSF's investment to improve the supply chain here in 
California cannot be overstated. Rail plays a critical role in moving 
goods safely and efficiently, while reducing emissions due to 
congestion in many of our high-traffic corridors,'' said Trelynd 
Bradley, Deputy Director of Sustainable Freight and Supply Chain 
Development at the Governor's Office of Business and Economic 
Development. He added, ``Projects like BNSF's will work to strengthen 
our inland local economies, such as that of Barstow in San Bernardino 
County. We look forward to continuing to work with projects like these, 
as well as others, to drive transformative investments that will 
enhance and elevate California's supply chain ecosystem for a more 
efficient and resilient tomorrow.'' \12\
---------------------------------------------------------------------------
    \12\ BNSF Railway, BNSF to Build New Integrated Rail Complex in 
Barstow to Increase Supply Chain Efficiency Nationwide
---------------------------------------------------------------------------
    California clearly and publicly supports infrastructure development 
that improves upon the movement of goods specifically referring to BNSF 
Railway's Barstow International Gateway Project. Trelynd Bradley also 
stated the positive impact ``Rail plays a critical role in moving goods 
safely and efficiently, while reducing emissions due to congestion in 
many of our high-traffic corridors'' again, stated by California's 
Office of Business and Economic Development. However, the CARB 
regulation works to dismantle such efforts.
The Barstow Project would Create Jobs and have Positive Economic 
        Impacts
    The Barstow International Gateway is poised to create significant 
economic benefits for the region and beyond. The project is expected to 
generate approximately 20,000 direct and indirect jobs, a substantial 
boost to the local economy of Barstow, where the population is around 
25,231. The jobs impacted by this regulation would span beyond my 
company and the construction industry and also jeopardize jobs in 
operations, and ancillary services, providing much-needed employment 
opportunities in the high desert region. Those jobs and many others are 
threatened by CARB's In-Use Locomotive Regulation.
The CARB Regulation would Contradict State Priorities
    Furthermore, the Los Angeles County Metropolitan Transportation 
Authority (LA Metro), Ventura County Transportation Commission (VCTC), 
San Bernardino County Transportation Authority (SBCTA), National 
Railroad Passenger Corporation (Amtrak), Orange County Transportation 
Authority (OCTA) Southern California Regional Rail Authority 
(Metrolink) and Peninsula Corridor Joint Powers Board (Caltrain) 
accounting for the majority of passenger rail in California have 
expressed the severe financial burden that would be a result of such 
accounts. According to CalTrain ``This would mean encumbering tens of 
millions of dollars into a Spending Account that would be unavailable 
for rail operations, state of good repair improvements, or leveraging 
federal investment in rolling stock and capital projects, despite 
existing plans to replace 75 percent of our fleet with ZEV EMUs. 
Caltrain does not have flexible funds that could account for this level 
of financial disruption and would be forced to impact operating 
budgets, reduce service, or in the worst case, shut down entirely. This 
requirement in creating a new financial liability could impact the 
agency's credit rating, which would be problematic for the financing 
that may be needed simply to comply with the regulation and continue to 
run service. There is no funding attached to this regulation and thus, 
passenger rail agencies will have no assistance or recourse to 
comply.'' \13\
---------------------------------------------------------------------------
    \13\ California Air Resource Board, Caltrain letter
---------------------------------------------------------------------------
    The world is anticipating the LA28 Olympic Games which officials 
have advertised as `car-free' games.\14\ This regulation itself 
contradicts the State of California's goals to reduce Vehicle Miles 
Traveled (VMT) if our agency partners ability to utilize funds for 
maintenance, operations, and expansion of rail prior to the Olympics is 
significantly reduced. While the goals of the Spending Account and 
Useful-Life Requirement within CARB's In-Use Locomotive Regulation are 
aimed at promoting environmental sustainability, the adverse effects on 
agency partners are substantial.
---------------------------------------------------------------------------
    \14\ Los Angeles Times, L.A. buses helped eliminate 1984 Olympic 
traffic. Can they repeat for 2028?
---------------------------------------------------------------------------
                               Conclusion
    In conclusion, while the goals of CARB's In-Use Locomotive 
Regulation to reduce emissions and promote environmental sustainability 
are commendable, the proposed Spending Account and Useful-Life 
Requirements present significant challenges that cannot be overlooked. 
These measures impose undue financial and operational burdens on our 
transportation agencies, complicating compliance with existing federal 
standards and diverting critical funds from essential infrastructure 
projects.
    While construction materials are shipped by virtually every mode of 
transportation, constraining the rail industry's ability to operate in 
the state of California could have ripple effects across the country. 
In addition, AGC is concerned about other states following suit and 
mandating zero emission locomotives like how they followed California's 
vehicle emission standards.\15\
---------------------------------------------------------------------------
    \15\ California Air Resource Board, States that have Adopted 
California's Vehicle Regulations
---------------------------------------------------------------------------
    The construction industry, which is pivotal to rebuilding our 
nation's infrastructure, stands to be severely impacted. The burden and 
uncertainty of the CARB regulation could disrupt supply chains, delay 
construction projects, and jeopardize construction jobs. This, in turn, 
undermines the ability of the construction industry and its agency 
partners to build and maintain the infrastructure that supports our 
communities.
    I thank the Committee for the opportunity to testify today and look 
forward to answering any questions that members may have.
                                Appendix

                                Table 1
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                Table 2
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Mr. Nehls. Thank you, Mr. Yal.
    Ms. Arias, you are recognized for 5 minutes.

 TESTIMONY OF HEATHER ARIAS, CHIEF, TRANSPORTATION AND TOXICS 
            DIVISION, CALIFORNIA AIR RESOURCES BOARD

    Ms. Arias. Good afternoon and thank you for having me 
today. Chair Randolph asked that I pass along her apologies for 
not being able to attend.
    I am Heather Arias, the Transportation and Toxics Division 
chief. My team is the team that developed the locomotive rule 
that we are discussing today.
    I also have teams who have developed and are implementing 
regulations for engines all across California's transportation 
system, but today, we are focused on the locomotive regulation.
    Locomotives are one of the largest sources of criteria 
pollutants in California. Ninety percent of California 
railroads are within 1 mile of vulnerable residential 
communities already highly impacted by nitrogen oxide, or NOx, 
and toxic diesel particulate matter, of which there is no known 
safe level of exposure.
    Reduction of the pollution caused by locomotives operating 
in the State is critical for California to meet its Clean Air 
Act obligations. Locomotives represent 31 percent of the NOx 
reductions needed in California's State Implementation Plan 
Strategy to meet attainment under the Clean Air Act for highly 
polluted air basins such as South Coast and San Joaquin.
    Locomotives are not entitled to a free pass, and like other 
regulated industries, railroads operating in California must 
reduce emissions that are harming Californians.
    Railroad operations in California continue to use, and are 
increasing use of, some of the oldest and most polluting 
engines in California.
    Although Tier 4 engines have been available since 2015, 
railroads have continued to operate locomotives in California 
with emission control technologies over 20 years old, 
technologies that produce over 80 percent more emissions than 
the current U.S. EPA Tier 4 emission standard.
    Even worse, railroads continue to operate locomotives in 
California that are up to 50 years old with no emission 
controls at all, and in the past several years, the average 
emissions of their locomotive fleets operating in California 
have gotten worse--not better.
    California has been taking robust steps, pursuant to the 
Clean Air Act, to reduce emissions from other mobile sources, 
including heavy-duty trucks, passenger cars, off-road 
equipment, ships docked in California's ports, and more. 
Locomotives are increasingly the outlier. Today, when comparing 
the transportation of the same number of shipping containers, 
locomotives produce more NOx and toxic diesel particulate 
matter than trucks operating in the State, and soon, 
locomotives will produce more greenhouse gas emissions than 
trucks on a per-shipping-container basis.
    In 2023, the California Air Resources Board, or CARB, 
adopted a locomotive regulation that is estimated to result in 
$32 billion in health savings to Californians by preventing 
3,200 premature deaths and 1,500 emergency room visits and 
hospitalizations. The reg would also decrease cancer risk from 
exposure to locomotive emissions by up to 90 percent.
    CARB's locomotive regulation follows California's expressly 
preserved authority under the Clean Air Act to regulate 
emissions from locomotives operating in the State. It does not 
set emission standards on new locomotives, nor does it mandate 
the purchase or use of zero-emission locomotives.
    Operators may continue to operate Tier 4 locomotives for 
decades to come, and because nearly every locomotive operating 
today runs on fully electric motors and can be powered using a 
fuel source other than its diesel generators, operators may 
continue using their existing locomotives by configuring them 
to run on zero-emission power sources.
    The regulation allows ample time for emission-control 
technologies to continue to advance and for market efficiencies 
to put downward pressure on prices.
    It is important to note that zero-emission rail 
transportation is nothing new. Electrified rail is more than 
100 years old, and we once had electrified tracks throughout 
the Nation, coast to coast.
    Advances in battery and hydrogen fuel technology have given 
railroads more options than 100 years ago. It is saddening and 
disappointing that railroads remain some of the top polluters 
in the State given all the tools available to them to do 
better.
    California's passenger vehicles, heavy-duty trucks, 
oceangoing vessels, and heavy off-road equipment, among other 
emission sectors, are all doing their part. All we ask is that 
the railroads do their part, too, so Californians can have 
clean air to breathe. Thank you.
    [Ms. Arias' prepared statement follows:]

                                
 Prepared Statement of Heather Arias, Chief, Transportation and Toxics 
                Division, California Air Resources Board
                               Background
    Locomotives are one of the largest sources of criteria pollutants 
in California. Ninety percent of California's railyards are within one 
mile of vulnerable residential communities already highly impacted by 
nitrogen oxide (NOx) and toxic diesel particulate matter--of which 
there is no known safe level of exposure. Reduction of the pollution 
caused by locomotives operating in the State is critical for California 
to meet its Clean Air Act obligations. Locomotives represent 31% of the 
NOx reductions needed in California's State Implementation Plan 
Strategy to meet attainment under the Clean Air Act for highly polluted 
air basins such as South Coast and San Joaquin Valley. Locomotives are 
not entitled to a free pass, and, like other regulated industries, 
railroads operating in California must reduce emissions that are 
harming Californians.

Table 1: Statewide Expected Emissions Reductions by 2037 from Proposed 
                            SIP Measures \1\
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Railroad\\ operators in California continue to use--and are 
increasing use of--some of the oldest and most polluting engines in 
California. Although Tier 4 locomotives have been available since 2015, 
railroads have continued to operate locomotives in California with 
emissions control technology over 20 years old--technology that 
produces over 80% more emissions than the current U.S. EPA Tier 4 
emission standard. Even worse, railroads continue to operate 
locomotives in California that are up to 50 years old with no emission 
controls at all. And in the past several years, the average emissions 
of their locomotive fleets operating in California have been getting 
worse--not better.
---------------------------------------------------------------------------
    \1\ CARB, 2022 State SIP Strategy, September 22, 2022, https://
ww2.arb.ca.gov/sites/default/files/2022-08/2022_State_SIP_Strategy.pdf.
---------------------------------------------------------------------------

                Figure 1: Locomotive Emissions per Tier
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

   Figure 2: Locomotive Activity in the South Coast Air Basin by Tier
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    California has been taking robust steps pursuant to the Clean Air 
Act to reduce emissions from other mobile sources--including heavy duty 
trucks, passenger cars, off-road equipment, ships docked in California 
ports, and more. Locomotives are increasingly the outlier. Today, when 
comparing the transportation of the same number of shipping containers, 
locomotives produce more NOx and toxic diesel particulate matter than 
trucks operating in the State.\1\ And soon, locomotives will produce 
more greenhouse gas emissions than trucks on a per-shipping container 
basis.

                Figure 3: Truck vs. Train NOx Emissions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                 Figure 4: Truck vs. Train PM Emissions
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

         Figure 5: 2024 California Locomotive Activity by Tier
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                      In-Use Locomotive Regulation
    In 2023, the California Air Resources Board (CARB) adopted a 
Locomotive Regulation that is estimated to result in $32 billion in 
health savings to Californians by preventing 3,200 premature deaths and 
1,500 emergency room visits and hospitalizations. The regulation would 
also decrease cancer risk from exposure to locomotive emissions by up 
to 90%.

                Figure 6: Cancer Risk Near Railyards \2\
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    CARB's\\ Locomotive Regulation follows California's expressly 
preserved authority under the Clean Air Act to regulate emissions from 
locomotives operating in the State. It does not set emission standards 
on new locomotives. Nor does it mandate the purchase or use of zero 
emission locomotives. Operators may continue to operate Tier 4 
locomotives for decades to come. And because nearly every locomotive 
operating today runs on fully electric motors and could be powered 
using a fuel source other than its diesel generators, operators may 
continue using their existing locomotives by configuring them to run on 
a zero-emission power source. The regulation allows ample time for 
emission control technologies to continue to advance and for market 
efficiencies to put downward pressure on prices.
---------------------------------------------------------------------------
    \2\ CARB, Initial Statement of Reasons, Appendix H: Health Analyses 
for the Proposed In-Use Locomotive Regulation, https://ww2.arb.ca.gov/
sites/default/files/barcu/regact/2022/locomotive22/apph.pdf.
---------------------------------------------------------------------------
    It\\ is important to note that zero-emission rail transportation is 
nothing new. Electrified rail is more than 100 years old, and we once 
had electrified tracks throughout the nation, coast to coast. Advances 
in battery and hydrogen fuel cell technology have given railroads more 
options than 100 years ago. It is embarrassing and inexcusable that 
railroads remain some of the top polluters in the state given all of 
the tools available to them to do better.
---------------------------------------------------------------------------
    \3\ The Zero Emission Rail Project Dashboard was developed to view 
freight and passenger rail projects that utilize different zero-
emission technologies in one central location. It also serves to 
demonstrate the growing number of ZE locomotive projects both in North 
America and internationally https://ww2.arb.ca.gov/applications/zero-
emission-rail-project-dashboard.
---------------------------------------------------------------------------

     Figure 7: ZE Rail Dashboard_North America ZE Rail Projects \3\
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               Conclusion
    California's passenger vehicles, heavy-duty trucks, ocean-going 
vessels, and heavy off-road equipment, among other emissions sectors, 
are all doing their part. It is past time that the railroads did their 
part to clean up the air we breathe.

    Mr. Nehls. Thank you all for your testimony. We will now 
turn to questions for the panel. I recognize myself for 5 
minutes.
    Mr. Olvera, according to CARB's own analysis, short line 
and regional railroads won't be able to comply with the cost of 
the regulation and would cease to operate. I think short lines 
operate on routes that Class I's, pretty much they abandoned 
them, right? They abandoned them.
    So, did CARB consider the unique business structure of 
short lines?
    Mr. Olvera. So, many short lines in the State of California 
have very small operations. They operate on very thin margins 
and don't have the financial wherewithal to invest in Tier 4, 
and ultimately zero-emission locomotives, even with State and 
Federal funding.
    Our railroad consists of 11 locomotives, 9 of which we 
proactively signed up for clean air locomotives back in 2008, 
invested millions of dollars, along with the State of 
California.
    But now, well before the useful lives of those locomotives 
are over, we are being asked to scrap them and upgrade to more 
expensive Tier 4 locomotives and put money into a spending 
account in the tune of about $1 million annually.
    Those types of financial requirements really don't fit the 
financial model of my short line or any others.
    Mr. Nehls. Very well. Thank you.
    Mr. Nober, is it more accurate to describe this proposed 
rule as one that regulates new locomotive engines and emission 
controls, and not just the use of locomotives?
    Mr. Nober. I think the regulation as technically written 
really apply--it says it only applies to in-use, but I think 
that that is a--it is twisting the definition a little bit of 
``in-use'' because you can't use anything that hasn't been 
manufactured.
    Mr. Nehls. Sure.
    Mr. Nober. So, I would say that the clear goal is to incent 
and to create and to force manufacturers to be able to produce 
locomotives that can meet these emissions standards, or become 
zero-emissions standards.
    Mr. Nehls. Sure, yes.
    Mr. Nober. So, it is, as a practical matter, regulating 
manufacturer.
    Mr. Nehls. Sure. On the question of locomotive use, the 
Interstate Commerce Commission Termination Act and the various 
Surface Transportation Board decisions and court rulings have 
found that State in other attempts to regulate railroad 
operations are preempted by Federal law.
    And as former Chairman of the STB, should EPA follow the 
STB's recommendations and conduct its preemptive analysis and 
consider interpreting and applying CAA narrowly so as to avoid 
conflict with the ICCTA?
    Mr. Nober. I mean, clearly in the first blush, and I don't 
think it is 100 percent clear, whether the STB alone in a 
court, or the STB and the EPA alone could apply harmonization 
analysis.
    But the EPA certainly has the ability to look at the two 
statutes and decide whether one is in conflict with another, 
and we certainly would--I would, if they asked me, I would 
advocate that they do that.
    Mr. Nehls. Sure. Finally, in pursuing the regulation of 
locomotives via a waiver, EPA avoids statutes like the 
Congressional Review Act or the empaneling a small business 
advocacy panel under the Small Business Regulatory Enforcement 
Fairness Act.
    Shouldn't a proposal of this consequence, at a minimum, be 
conducted as an Administrative Procedure Act rule so the CRA 
and the SBREFA apply?
    Mr. Nober. Well, as now a scholar of regulatory process, I 
strongly believe that significant actions like this should be 
done under the most Administrative Procedure Act process, 
which, in this case, would be to either do a full rulemaking, 
which would have notice and comment.
    Now, they did open a proceeding, and people did comment, 
including many folks who are in the audience and myself, but 
the legal obligation to consider those comments and then to, 
again, have it be subject to the Congressional Review Act and 
cost-benefit analysis and many of the other portions of it, 
would be different if it were a full rulemaking.
    So, the more that it is a rulemaking, the more process 
there is and the stronger outcome it will be.
    Mr. Nehls. Very well.
    And, Mr. Yal, California AGC is a member of the Rebuild 
SoCal Partnership, which represents 2,750 contractors and over 
90,000 union workers. This group wrote in opposition to the 
CARB rule for many of the reasons you stated in your testimony, 
sir.
    Would it be fair to say that the CARB rule jeopardizes the 
Barstow Gateway Project in San Bernardino County?
    Mr. Yal. Yes, that is correct. That is a very large project 
that is planned by BNSF in that area. It is a big economic 
engine. It is one of the biggest mega projects in the area, and 
it is jeopardized by this.
    Mr. Nehls. Yes. And that is not what we should be doing 
here.
    I want to thank you all. I yield back the balance.
    I now recognize Ranking Member Wilson for 5 minutes.
    Ms. Wilson of Florida. Thank you, Mr. Chair.
    Ms. Arias, communities living near railroads and rail 
lines, which are most often historically underserved 
communities, are routinely exposed to high levels of air 
pollution and emissions stemming from the burning of diesel 
fuels.
    In just your State, CARB estimates that reducing locomotive 
emissions would prevent 3,200 premature deaths and save $32 
billion in healthcare costs.
    What are the steps that railroads could immediately make to 
reduce emissions in these communities?
    Ms. Arias. Thank you, ma'am. Yes, we are currently working 
with the rail lines. In fact, I want to actually applaud the 
Class III lines because they are taking immediate steps by, as 
mentioned earlier, applying for funds.
    They are coming forward. There are 200 Class III engines in 
our State. Thirty of those engines are currently under 
applications for State or Federal funds. So, that is a great 
step to make progress immediately.
    There are other things that could be done as far as 
maximizing use of the newer engines. There are things like 
ensuring that the engines idle the least amount as possible. 
There are things like working to utilize cleaner technology in 
the other equipment that is at the railroads. So, there are 
things that can be done now.
    We have also ensured that there are different pathways in 
the regs so that if any one of the industries have a different 
idea that may actually incentivize cleaner technologies sooner, 
they can come to us and work with us on an alternative 
compliance plan and get credit earlier, which allows for other 
opportunities later.
    Ms. Wilson of Florida. Can you tell us, or synthesize for 
us, how important it is to reduce emissions from locomotives?
    Ms. Arias. Yes, ma'am. Thank you. As far as locomotives are 
concerned in California, the Clean Air Act, as I mentioned 
earlier, does have requirements for attainment across the 
State. The locomotives are one-third of our emissions necessary 
to meet that final--sorry--Federal requirement.
    Outside of that, our State has also identified diesel as a 
toxics air contaminant in the late 1990s. The diesel engines 
that are running throughout the State are contaminating the 
nearby neighborhoods.
    If this rule were to go into place, we would see a 90-
percent reduction from the current diesel exposure to those 
communities.
    Ms. Wilson of Florida. Thank you. Diesel emissions are 
known to create higher health risks, childhood asthma, and 
cancer. Tier 4 locomotives have 90 percent lower particulate 
matter emissions and 80 percent lower nitrogen oxide emissions 
than a Tier 2 locomotive. How many Tier 4 locomotives do Class 
I railroads operate?
    Ms. Arias. Great question, ma'am. We only have data from UP 
and BNSF regarding locomotives that come into the South Coast 
air basin. We do not know what their total national fleet is.
    They have mentioned that they have a lot of Tier 4s. They 
have said many of them are parked. We have asked multiple times 
how many they have, and we do not have that data.
    Ms. Wilson of Florida. Well, can you tell us if railroads 
will be in compliance with this regulation if they operate Tier 
4 locomotives or remanufacture existing locomotives to Tier 4 
standards?
    Ms. Arias. If they operated Tier 4 locomotives, they would 
certainly make a huge dent in their requirement. Ultimately, 
over many decades, the goal is to transition to zero-emission 
operations.
    What could be done even today is a reconfiguration of their 
existing engines, so they wouldn't necessarily have to change 
the engine to a Tier 4. So, for example, if they are operating 
a Tier 1 or Tier 2, some of the much older engines that we 
discussed, they could reconfigure that engine, because the 
locomotive you see that is going down the line is actually all 
electric.
    There is a smaller diesel generator on that train that is 
providing the power. They can reconfigure that to allow for 
zero-emission operation. There are tender cars or catenary that 
can do that. That can make that engine a hybrid engine, similar 
to what you have seen in cars for many, many years.
    That hybrid engine could operate in zero-emission 
operations in our State, and even in other communities to 
remove or eliminate the diesel health exposure issue. That can 
happen today. Those technologies are available today. They are 
for sale today.
    Ms. Wilson of Florida. Wow, thank you. I yield back.
    Mr. Nehls. The gentlelady yields.
    I now recognize Mr. Rouzer for 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman.
    Mr. Nober, the California Air Resources Board claims 
railroads should do their part when it comes to emissions 
reductions, which sounds like a pretty subjective mission 
statement to me.
    Your testimony points out that if such regulations are 
necessary, then EPA should open a proceeding. Can you talk 
about why that is important, and what the fundamental 
difference is between agency rulemaking and the waiver process?
    Mr. Nober. Well, a waiver process is, strictly speaking, 
what is called an adjudication. So, it is CARB coming in and 
asking for the agency to take an action with respect to that 
request.
    So, CARB is standing as if there were any other applicant 
for something, and parties go to agencies and ask for waivers 
of rules all the time.
    A notice-and-comment rulemaking is doing a rule of general 
applicability, and that is one that is published in the Federal 
Register--now this was, too--you open a docket, the agency has 
an obligation to put out a Notice of Proposed Rulemaking.
    They then have to take comments. They have to respond to 
every comment. The rule has to then, since it is EPA, it would 
have--if it is a major rule, would have to go to OMB. It would 
have to have a cost-benefit analysis, and most importantly, I 
think a rule would be able to evaluate national impacts.
    So, the issue that I would have as a matter of practice 
here, is that CARB, as a California State agency, its legal 
obligation--and I may be wrong, Ms. Arias may correct me here, 
but is to look at impacts in the State of California.
    And EPA--let's say that the effect of this was to create 
mode shift so that ships would go farther and go to Houston or 
Savannah, and that more is going on truck, and that more cargo 
that is now going by rail through southern California is going 
in other places, that might increase diesel emissions to people 
in other parts of the country--EPA in a rulemaking would have 
to look at that. And in a waiver proceeding, those kinds of 
questions would be discretionary. It wouldn't automatically 
have to look at them.
    Mr. Rouzer. So, it is a much more thorough process?
    Mr. Nober. Absolutely. And it certainly can be more time-
consuming than a waiver process, without a doubt. And probably 
most stakeholders would be frustrated with the amount of time 
that most agencies took to do rules, but there is a plus and a 
minus to that.
    Now, a Tier 5, a new national locomotive standard would 
probably take a significant amount of time longer because they 
would have to study different technologies, different 
feasibilities, and make a national assessment on overall, you 
know, the ability to roll them out, and locomotives are 
difficult--I have seen--one of the reasons probably there 
aren't that many Tier 4 locomotives is that they performed 
poorly in the beginning when they first came out.
    Only one manufacturer has ever been able to even produce 
Tier 4 locomotives. There are two locomotive manufacturers, and 
one of them was never able to produce a Tier 4 locomotive. And 
the ones that have performed very poorly for many years, and 
so, those become disincentives, I think, to carriers perhaps 
investing more in them.
    Mr. Rouzer. All right.
    Mr. Yal, I am moving on slightly. What kind of supply chain 
disruptions is this going to cause, and what about the effect 
on inflation, how is this going to affect shippers?
    Mr. Yal. A lot of construction materials certainly come 
through rail, and any disruption into rail transportation 
traffic is going to impact our supply chain, both on the length 
of the projects because of delay times in getting the 
materials, as well as the cost of the materials due to the 
increased cost in transportation.
    What happens if there are disruptions in rail traffic is 
that starts to shift towards truck traffic, which then has also 
impacts on costs, the timeliness, and honestly, there is a lot 
of shortage in the trucking industry currently already that we 
are experiencing that is just going to overload the system and 
cause more impacts to us.
    Mr. Rouzer. Thank you.
    Ms. Arias, I can't help but ask this question. I was in 
California a couple years ago, and the smoke from the forest 
fires, I mean, you could hardly see from one end to the other. 
Not a very pleasant environment to be in.
    I understand more than 1 million acres of forest in 
California have burned in recent years. Is this a focus of your 
agency at all?
    It just seems to me like you got a lot of carbon hitting 
the atmosphere, and if there were a few preventive measures 
that were put in place, you could prevent a lot of those forest 
fires from happening.
    I think if you looked at all the carbon from forest fires 
versus everything else, it wouldn't even be close.
    Any thought to that or any studies or any work on that 
front?
    Ms. Arias. Yes, sir. Thank you for the question. As a 
matter of fact, absolutely, the State is looking at all of the 
emissions, including forest fires. It has been such an 
important issue that our legislators have also been very 
involved and lots of different actions have been passed.
    We are happy to follow up with you, if that would be 
helpful, to provide a list of actions that the State has done, 
but absolutely, a very critical reduction strategy as all of 
this is. We have to make sure that we get reductions across the 
board.
    Mr. Rouzer. Mr. Chairman, my time is expired.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. Moulton for 5 minutes.
    Mr. Moulton. Thank you very much, Mr. Chairman.
    Mr. Olvera, I once worked for a smaller railroad than 
yours. Now, I wasn't running the books. I was running engines 
and on a track crew, so, I can't speak exactly to the numbers, 
but it seemed like the railway was barely scraping by, with of 
course hardly any help from the Government in stark contrast to 
the trucking industry, which runs on roads and highways 
entirely subsidized by the American taxpayer.
    Now, you said that your railroad buys used locomotives, 
most of which don't meet these standards. What effect would 
buying brandnew Tier 4 or zero-emission locomotives have on 
your business?
    Mr. Olvera. Sure. New Tier 4 locomotives cost millions of 
dollars apiece. Most short lines operate on locomotives that 
cost a few hundred thousand dollars apiece.
    My railroad actually purchased Tier 3 locomotives that were 
about $1\1/2\ million apiece back in 2008 and have an extensive 
amount of useful life left.
    To be forced in a very abrupt timeline to scrap those Tier 
3s and move to Tier 4s, with Federal and/or State funding, 
would require about $1 million from our railroad for each 
locomotive.
    And with that, if we were able to comply, other safety-type 
projects, such as track enhancement and crossing enhancement, 
would have to be deferred in order to meet that standard. It 
would be very difficult to comply with.
    Mr. Moulton. I am actually amazed your railroad would still 
be able to stay in business because there are a lot of 
railroads that simply wouldn't be in business if that were the 
case.
    You noted in your testimony that California's short lines 
move about 260,000 carloads of freight annually. Each carload 
carries the equivalent of three to four trucks' worth of goods.
    So, this means that short lines in California alone keep 
about 1 million trucks annually off the highway. Is that right? 
Is that the right number?
    Mr. Olvera. Yes, that is correct. So, 1 rail carload 
typically equates to 3 or 4 truck carloads, and so, 260,000 
times 3 to 4 would be that number, north of 1 million.
    A lot of the short lines, just on an individual basis in 
the State of California, move thousands of carloads. My 
railroad moves 35,000 carloads annually. If those carloads were 
to be switched on truck and on our roads, that would result in 
about 120,000 trucks annually on the roads versus on rail.
    Mr. Moulton. And will that increase emissions?
    Mr. Olvera. Absolutely. Through congestion--traffic 
congestion and current gas house emission percentages, trucks 
today emit 23 percent of greenhouse gas emissions while 
railroads emit in total, 2 percent. And short lines actually 
are a small fraction of the 2 percent, so, emissions would 
immediately be impacted.
    Mr. Moulton. The CARB report actually predicts the fall of 
the short line industry because of the prohibitive costs of the 
proposed regulation, noting it is possible some of these 
businesses would be eliminated.
    Cost burdens, from the rule, on small business operators 
could range from 42 percent to 208 percent of their annual 
revenues.
    You can't run a business when your costs go up 208 percent 
of your annual revenues.
    Ms. Arias, Europe is well ahead of the United States on 
climate policy as I am sure you well know, and their 
transportation policy is focused on mode shift. What does 
``mode shift'' mean in this context?
    Ms. Arias. Yes, we are not interested in shifting the 
freight from rail to trucks. We absolutely understand the 
necessity to have both modes in our State. We do have the 
largest ports in the Nation. We are also a huge producer of 
agricultural products for the Nation. We must have all modes of 
freight to be able to move all of that and----
    Mr. Moulton [interrupting]. OK. But if you care about 
emissions----
    Ms. Arias [interposing]. Yes, sir.
    Mr. Moulton [continuing]. As Europe does----
    Ms. Arias [interposing]. Yes.
    Mr. Moulton [continuing]. You should know what their policy 
is with mode shift, and their mode shift policy is very 
deliberately to get trucks off the highways and move those 
freight moves to rail, because it is more efficient, because it 
produces fewer emissions.
    So, Europe, which is ahead of us on climate policy--and, 
look, I am a Democrat. I care about climate policy. I believe 
in the science. I want to reduce emissions.
    But if your rule shifts more traffic from rail to trucks, 
it will do the opposite of your intention. It will actually 
raise emissions, which is why Europe has a policy explicitly in 
the opposite direction.
    So, let's come up with a policy that shifts traffic off of 
trucks onto the railroads. It will not only be better for 
emissions, it will be better for public safety because accident 
rates, deaths from accidents on rail are much smaller than by 
truck. That is the policy that we need.
    California's going to spend about $30 billion this year 
subsidizing highways. If you came up with a policy to electrify 
railroads, you might have a winner.
    But this seems like a loser to me.
    Mr. Chairman, I yield back.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. LaMalfa for 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman. Thank you for this 
hearing.
    Ms. Arias, when you talk about, early on in your 
conversation, that within 1 mile of the tracks is 90 percent of 
the emissions, don't we have to acknowledge when towns are 
first built and settled? They were either along the coast, with 
ports, they were along rivers. And with the advent of railroads 
across the country, towns located right next to the railroad 
because in any case, they want major sources of transportation 
to move freight, people, et cetera.
    And so, kind of implied with what you're saying is that 
maybe all towns need to be at least a mile away from railroad 
tracks to not have emissions, and then you have to acknowledge, 
too, that sometimes the rails were there, sometimes the airport 
was there first, that property is cheaper next to those because 
it is not as desirable. And so, they move homes into those 
areas only because they are cheap and people with lower incomes 
can afford to move into them.
    So, whose fault is it really that people live near these 
areas: developers or people that choose to buy homes in these 
areas? You have to look at that on the other side.
    So, Ms. Arias, when CARB fully acknowledges that people are 
going to go out of business, especially short line railroads, 
which are an important integral part of what the long lines 
can't do and what we don't--what Mr. Moulton was even talking 
about, do we want to shift this to trucks?
    How can you, in good faith, develop a policy that you fully 
acknowledge is going to put an important sector out of 
business, and at the end of the day, drive up emissions? How 
does that work?
    Ms. Arias. Thank you for the question, sir.
    As it relates to the analysis that we have in our report, 
that report does not take into account any sort of the 
incentive programs or other opportunities we might be able to 
work with the Class III railroads. As mentioned earlier, there 
has been a significant application pool this year to help the 
Class IIIs get to compliant engines.
    In addition, we intend to support them and work with them 
to continue to seek those fundings as we are moving forward. We 
are also specifically talking to each of the class lines 
individually and trying to determine what is the cheapest and 
easiest way for them to move through the regulation----
    Mr. LaMalfa [interrupting]. OK. Let me stop you there 
because maybe there is no way for them to move through the 
regulation. They are small outfits. They don't make a ton of 
money in order to change this technology.
    Mr. Olvera, and Mr. Nober as well, when they talk about 
availability of Tier 4 engines, which my stats here show me if 
we are at Tier 4 engines, if you just took a breath for a 
minute at CARB and let everybody come up to Tier 4, you are 
achieving 85 to 90 percent cleaner versus older technology. 
That sounds like a win to me, but you are already jumping ahead 
to 5 or 6 or all-electric.
    And Ms. Arias, you are saying, like, well, we can take this 
diesel engine out of a Tier 3 or 2 or whatever, and we will put 
this newer one in. You don't say that you are going to put a 
new diesel engine in. You are talking about putting in an all-
electric thing that doesn't even exist yet.
    How does that work because--well, I want Mr. Nober or Mr. 
Olvera to talk about that for a moment. How is the Tier 4 
availability of those engines coming along here? Can we even 
replace everything with Tier 4 at this moment? Ms. Arias said 
there was new technology as of about 2015. That is only a few 
years ago. Do we expect all of these things to have been 
changed to Tier 4 by now?
    Mr. Olvera. Tier 4 engines are limited in availability, and 
with locomotives or railroads requiring their locomotives to 
all upgrade at an abrupt timeframe, that limited inventory is 
going to be taken over very quickly----
    Mr. LaMalfa [interrupting]. So, we are jumping past Tier 4 
with this mandate, right? We haven't even filled out Tier 4 
availability. They want 5 or 6, or whatever number you want to 
call it, right?
    Mr. Olvera. Yes. There are very few locomotives in the 
short line industry that are at Tier 4 level. My railroad was 
one of the pioneers jumping to Tier 3 engines back starting in 
2008. At the time, that was the best available, or highest tier 
available, but Tier 4 is just getting started.
    Mr. LaMalfa. Well, it is a lot like the trucks in 
California. They say, Hey, get up to this newest tier from 2011 
or newer, and you will be fine for a long time. And then, wham, 
they change the regs, and those trucks now have to be phased 
out by 2030. The same as people in good faith trying to do 
their local--Mr. Nober, touch on that, too, please, Tier 4 
availability and the massive 85, 90 percent cleaner if we were 
just all Tier 4.
    Mr. Nober. So, as I indicated before, when Tier 4s were 
first required, it took a long to time to iron out the 
operational issues with them, and only one manufacturer has 
ever actually been able to produce working Tier 4 locomotive--
--
    Mr. LaMalfa [interrupting]. Currently.
    Mr. Nober. Currently. When they first came out, then, 
again, there were many problems with them and they kept 
breaking down. And for a railroad, at least at BNSF where I 
used to work, they have to operate in Arizona in 120 degrees in 
the summer, and Montana and minus 50 in the winter on a 24-by-7 
basis.
    And if there is a failure, that becomes a significant issue 
in a network industry, and so, reliability is a very important 
factor, I think.
    Mr. LaMalfa. OK. Thank you.
    And here we are jumping past a tier that isn't even ready 
yet with new regs with nondiesel engines, right?
    Mr. Nober. I don't think that there are--I mean, again, I'm 
not a locomotive expert, but I don't think that there are 
feasible----
    Mr. LaMalfa [interrupting]. I guess I have got to yield 
back.
    Mr. Nober [continuing]. I don't think that there are 
feasible locomotives that----
    Mr. LaMalfa [interrupting]. I have got to reclaim my time, 
sir. Thank you. Sorry about that.
    Mr. Nehls. The gentleman yields. Thank you so very much.
    Mr. Carson, you are recognized for 5 minutes.
    Mr. Carson. Thank you, Chairman.
    Ms. Arias, opponents of California's and EPA's clean air 
standards complain about the cost of compliance as a burden to 
business profits. But for a valid analysis, there should be a 
review of the benefits compared to the costs. Yet, I am not 
hearing anybody really talk about the cost to human health and 
well-being in the long term and short term, especially of the 
damage of unchecked air emissions.
    This is especially a problem with disproportionately 
negative impacts on minority communities, and minority workers, 
quite frankly. Please describe some of the health dangers and 
costs of failing to fix these toxic emissions?
    Ms. Arias. Thank you, sir.
    When it comes to our regulation, there are multiple health 
impacts, including premature deaths, hospitalizations, asthma, 
lost workdays, on and on, heart issues. It goes on and on.
    When we did our regulation, we are required to provide an 
analysis to our board with all of the information that we have. 
We were able to provide a cost of the rule to industry, which 
we have mentioned, of $13.8 billion. We were also able to 
provide to the board what we call a monetized health benefit, 
which is the cost to Californians on their health as we achieve 
the rule.
    We were able to calculate that the benefits of this rule 
would be $32 billion for Californians. So, $13.8 billion cost 
to industry to comply, and we, as Californians, would save $32 
billion.
    We also added into the rule a cost should the whole fleet 
have to turn over nationwide. That cost would be $86 billion is 
our best estimate. We do not have the data to be able to 
provide you and the other Members what the monetized health 
benefits would be.
    If you could compel UP and BNSF to give that to us, we 
would be happy to do that, but on our best estimate, we believe 
that this rule could provide $200 to $300 billion in health 
benefits to the Nation for just one line, one class, UP and 
BNSF, not all of them.
    Mr. Carson. Thank you. I yield back, Chairman.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. Stauber for 5 minutes.
    Mr. Stauber. Thank you very much, Mr. Chair.
    There is a consistent message from this administration that 
electrification is good for the environment. However, my good 
friend, Mr. Westerman, challenged the Secretary of the 
Department of Transportation 2 weeks ago on whether it really 
is the most clean and efficient pathway forward.
    While Secretary Buttigieg and other elites can endorse 
electrification and feel good driving their EVs, it is really 
concerning that these people just shut their eyes and ears off 
to the world around them because electrification comes at a 
cost, and the supply chain to get the end product is full of 
pollution and human suffering. I am talking about child slave 
labor to get the cobalt for those batteries.
    We know without question that 33 percent of the cobalt is 
mined by child slave labor and that is a fact. Nobody disputes 
that. Fifteen of the nineteen mines in the Congo owned by the 
Chinese Communist Party use child slave labor. Zero 
environmental standards and zero labor standards.
    While Secretary Buttigieg admitted that child slave labor 
in the Democratic Republic of the Congo for critical minerals 
needed for electrification is wrong, and he committed to 
eliminating such horrors in our supply chain, the Secretary has 
not once called on the President to rescind the MOU with the 
DRC. It makes you wonder where the priorities really are, but I 
digress.
    We really can't talk about electrification until we are 
willing to have an honest conversation about the supply chain 
in its entirety.
    Mr. Nober, you made an interesting observation in your 
testimony about the CARB rule, similar to the one I just made 
on electrification as a whole, that certain decisions can make 
one group feel like they are making a good decision, yet 
completely neglect the fact that it comes at a great cost.
    Can you speak about the increased emissions we would likely 
see as a result of this rule?
    Mr. Nober. Well, Mr. Stauber, I think that, just to that 
point, CARB, when they--they did talk about the health benefits 
to Californians and the costs in California and then estimated 
health benefits nationwide, which could only come if their 
regulations forced railroads to adopt those technologies 
nationwide.
    The other alternative, though, is not to adopt technology 
that doesn't exist nationwide but, instead, to divert cargo 
that currently goes through California to other States. So, if 
cargo comes in and it goes by truck, that creates congestion. 
The congestion on both California roads and wherever else it 
might go is going to create pollution.
    And then, if cargo goes on ships longer, it goes to the 
gulf coast and it goes to the east coast, or it goes to other 
States on the west coast or to Mexico and Canada, then it is 
going to travel longer and then those emissions have to be 
looked at as well.
    So, yes, there are health benefits nationwide if all 
locomotives were zero emissions, but there aren't nationwide 
zero-emissions locomotives, and my understanding is that it is 
not going to be for a very long time.
    And instead, if you looked at increased truck traffic and 
increased rail traffic by other communities, would that offset 
the benefits? And that is what a nationwide rulemaking would 
look at, what is the effective mode shift and try to model 
that. I don't know what would happen.
    Mr. Stauber. Thank you.
    Mr. Nober. We have to look at that.
    Mr. Stauber. Thank you.
    Mr. Olvera, when you saw the CARB analysis noting that 
there would likely be elimination of businesses like yours, 
what was your reaction? And did the analysis feel flippant or 
apathetic?
    Mr. Olvera. Yes. I was, obviously, concerned for my 
railroad who employs 50 people in our community, but most of 
our customers employ thousands of folks in our community. I 
think the elimination of a cost-effective and efficient rail 
freight option to our shippers and our customers would increase 
their cost and alter their businesses as well and possibly 
jeopardize job opportunities in our community.
    Mr. Stauber. I will tell you that--in just the last couple 
seconds I have left--I think that, Ms. Arias, you have a tough 
job selling California standards to the rest of the Nation. I 
have been here going on 6 years, and I want nothing to do with 
California.
    I have had an expert sit in that same chair and tell me in 
northern Minnesota that me and my constituents have to take 
more scooters to work. It is 35 below. We are not taking 
scooters to work and from work.
    This is the problem. We have one State that tries to force 
this upon our great Nation. In fact, sometimes, oftentimes we 
look at California and do just the opposite, just the opposite. 
I really do believe you are well-intentioned, but I don't agree 
with the philosophy and how you are going about it.
    Mr. Olvera just said he would lose 50 workers if they shut 
him down and other Tier 1 suppliers. This is about jobs and 
economy. And you know what, you can follow the rules, meet the 
emissions, and it will still not be good enough for some 
people. You will still punish those railroads and other small 
businesses across this Nation that want to do right.
    And I yield back.
    Mr. Nehls. The gentleman yields.
    I recognize Ms. Foushee for 5 minutes.
    Mrs. Foushee. Thank you, Mr. Chairman, and thank you to the 
witnesses for being here with us today.
    Recently, Innovative Rail Technologies announced that it 
will deliver the first of two battery-electric switcher 
locomotives for operational use in Hertford County, North 
Carolina, in 2024 as part of a public-private partnership 
between the county and the Nucor Steel Corporation.
    Ms. Arias, can you speak to the current state of zero-
emissions locomotives development, and can you also touch on 
ways the railroad industry can work with CARB if it cannot meet 
the timeline set by the current regulation?
    Ms. Arias. Yes, ma'am. Thank you.
    There are, today, zero-emission locomotives available to be 
ordered, and in fact, UP and BNSF have ordered them. There are, 
in fact, switchers available today. There is one operating in 
our San Pedro port by PHL line, and, in fact, they worked with 
us to apply for four more.
    We know that today, you can buy zero-emission tender cars 
so that you can do the reconfiguration that we talked about 
earlier. We know that catenary is available, and you can do the 
reconfiguration that we talked about earlier. There is zero-
emission technology available today. We will continue to track 
it. We expect that it will continue to increase and cost will 
continue to go down.
    However, we also understand that that can be expensive. We 
understand that it may be harder for our smaller fleets like 
our Class IIIs. We have built in several opportunities within 
the reg so that they can come talk to us, work with us on 
alternative compliance plans. If we are able to approve an 
alternative compliance plan, they will not have the spending 
account obligation.
    There is also an alternative fleet milestone option, which 
a lot of our passenger train fleets have noted that they will 
take advantage of. We believe it could also be an option. Same 
thing, if we are able to work with the fleets and figure out if 
that path works for them, they will not have the spending 
account obligation.
    We also have various extensions in the rule. We do have 
hardship extensions. We have extensions if the OEMs are not 
able to deliver on time. We have extensions for manufacturer 
issues if any of the other parts they cannot get on time. We 
have extensions for infrastructure.
    Last, we have reached out to each and every operator in our 
State and are trying to work with them one-on-one to ensure the 
least cost, most health benefit option moving forward so that 
we can get to zero emission in the least costly way and 
continue to transition our fleet as we have done with all the 
other fleets.
    California has been able to transition our freight to zero 
in many cases, and we want to continue to do that, and we have 
been able to do it in a very successful economic way.
    Mrs. Foushee. So, the EPA introduced Tier 4 locomotive 
emission standards nearly two decades ago, requiring that 
emissions or particulate matter and nitrogen oxide be reduced 
by about 90 percent from Tier 3 levels. Since then, Class I 
railroads seem to have avoided making substantial upgrades 
needed to reduce emissions with only approximately 7 percent of 
active Class I locomotives being Tier 4.
    Can you speak to why Class I railroad companies have failed 
to make the investments needed to improve locomotive emissions 
after the current Federal standards were enacted?
    Ms. Arias. Thank you, ma'am.
    I wish I could speak to that. They have anecdotally told us 
multiple times that there are issues with Tier 4. Yet every 
time we ask for any sort of data or information as to what 
those issues are, we have never been able to receive it.
    So, we can't answer for you what they perceive to be the 
issues as it relates to Tier 4 engines.
    Mrs. Foushee. One final question.
    Emissions from the railroad industry in the form of carbon 
dioxide, nitrogen oxide, and particulate matter have 
significantly impacted the health of many vulnerable 
communities that live near rail yards and rail lines across the 
United States. What effect will CARB's in-use locomotive 
regulations have on the lives and health of these communities, 
a similar question that has been asked by a couple of my 
colleagues?
    Ms. Arias. Yes, ma'am. Thank you for that.
    The communities that are directly within a mile of the rail 
lines and the rail yards, 90 percent of those are disadvantaged 
communities, as you have mentioned. With this rule, the 
reduction of diesel of 90 percent reduction would reduce their 
cancer risk.
    On top of it, obviously, when we are starting to look at 
the regional aspects, the emissions from these engines don't 
stay just within 1 mile, unfortunately. They do impact the 
whole basin. That is where we start to look at the premature 
deaths, the hospital visits, the lost workdays, all the other 
health benefits.
    But back to the communities that are within that 1 mile, 
they certainly, on top of all of these other health benefits 
that we mentioned, are at much higher risk of cancer due to the 
exposure to diesel every day and ongoing.
    Mrs. Foushee. Mr. Chairman, I yield back.
    Mr. Nehls. Thank you.
    Mr. Johnson, you are recognized for 5 minutes.
    Mr. Johnson of South Dakota. Mr. Chairman, I would observe 
that a number of my colleagues have talked about railroads 
today, in really dark, I think, starkly dark terms, in essence, 
saying that their existence is a symbol of historic oppression 
to people of color. And, of course, I can't speak to 
everybody's experience or the experience of every community, 
but I can speak to my experience and the experience more 
generally of South Dakota.
    Growing up in Fort Pierre,I grew up near the railroad. 
Growing up or living in Vermillion, living in Mitchell, living 
in Pierre and all of these towns, there was the railroad right 
close to my house. That wasn't a coincidence. That wasn't an 
accident.
    If you overlay the historic map of where did the South 
Dakota towns go with where the railroad tracks had been built, 
you would find an almost perfect overlap. Every 10 miles 
another town was formed because that is where the locomotives 
needed to fill up with water.
    People didn't move there because of oppression. They didn't 
view this railroad as a symbol of somebody hating them or 
trying to drag them down. They viewed the railroad as a symbol 
of opportunity and economic activity. And I guess I just want 
to mention that to provide a little fuller picture of the 
historic impact of railroads on communities: without railroads 
there would be no South Dakota.
    In fact, in South Dakota, when you look at those 
communities, the densest communities of people of color, that 
would generally be on our Native American reservations. They 
are not well-served by rail, and they are almost, without 
exception, seeking investments in rail because they do not view 
that rail as a symbol of oppression. They view that rail as 
economic opportunity to lift themselves and their communities 
up.
    I just want to make sure we provide a fuller context before 
we move on.
    So, we have a proposed rule before us that would, I think, 
almost ridiculously cause Class I railroads moving goods from 
South Dakota into California to, once they reach the California 
border, to stop, take off that locomotive, and, instead, get a 
new zero-emission locomotive, a zero-emission locomotive which 
despite some of the other claims we have had today, let's be 
clear, are not widely available in the commercial sense today. 
In fact, we don't really know when they would be widely 
available. This is all very aspirational.
    There has also been some discussion about this cost-benefit 
analysis. Ms. Arias, give us a sense. The $86 billion impact 
that your agency calculated, what number did that put on the 
delays that would be felt as secondary and tertiary impacts up 
the supply chain?
    Ms. Arias. Good question. We do not do analysis of 
secondary impacts to the supply chain. It solely calculates the 
cost should the UP and BNSF determine that they would need to 
replace the whole fleet.
    Mr. Johnson of South Dakota. OK, so, let's be clear. The 
assumption of your analysis is that this is not a regulation 
that impacts California. It is a regulation that impacts the 
entire United States or, in essence, any place that is served 
by the UP and the BNSF. And I know, ma'am, you know enough 
about their networks to understand how incredibly far reaching 
that is.
    Ms. Arias. They have mentioned that they do not prioritize 
a fleet within the State, so, we understand that, and----
    Mr. Johnson of South Dakota [interrupting]. OK, so, 
California is attempting to make a rule not that governs 
Californians but that governs the United States of America.
    So, I want to make sure that I understand what you said, 
ma'am, because your analysis had a zero cost to supply chain 
impacts. I want to make sure I am understanding what you said. 
Did you say that there is not a single instance of a Class I 
railroad providing you any information on the challenges of 
securing Tier 4 locomotives? Is that accurate?
    Ms. Arias. That is correct.
    Mr. Johnson of South Dakota. Not a single instance?
    Ms. Arias. They have not given us any data to indicate what 
the actual issues are. They have anecdotally told us that there 
are issues with Tier 4, but every time we ask, we are not given 
the data as to what the issues are.
    Mr. Johnson of South Dakota. OK, so, they have not been 
forthcoming at all?
    Ms. Arias. They have not.
    Mr. Johnson of South Dakota. They just speak in 
generalities?
    Ms. Arias. They have not.
    Mr. Johnson of South Dakota. So, if your evidentiary record 
is that thin, ma'am, how can you possibly promulgate this far-
reaching rule that, by your own admission, governs America?
    I would just--I would hope my colleagues--now, listen. We 
don't do it perfectly either, ma'am, but I would hope we would 
have a little bit heftier evidentiary record before we decide 
to govern our country with such a far-reaching decision.
    Mr. Nober, let's turn to you. I have talked a little bit 
about the constitutional sort of preemption issues. In 30 
seconds, sir, what can you tell us?
    Mr. Nober. Well, as I talked about in my testimony, the 
Interstate Commerce Act is intended specifically to preempt not 
just State regulation of rail operations but other Federal laws 
that have the effect of impacting rail operations and 
regulating them, and that is what would happen here.
    So, you would either have to--the California actions would 
be, in my opinion, clearly preempted, and if the EPA authorized 
them, it is really to authorize in-use in the State of 
California, they would have to declare an emergency. They would 
have to show that there were--there are some other standards 
that they would have to meet.
    And then they, at the same time, they would also have to 
show that that could be harmonized with the Interstate Commerce 
Act, which I don't think they could.
    And just if I could add one more thing, in addition to the 
towns being 10 miles apart in South Dakota, major towns are 
probably 90 miles apart, because that is how far you had to 
service a steam locomotive.
    Mr. Johnson of South Dakota. I yield.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. DeSaulnier for 5 minutes.
    Mr. DeSaulnier. Thank you, Mr. Chair.
    This brings back some fond memories when I served. Ms. 
Arias, I don't know if you were there when I was on the air 
resources board.
    Ms. Arias. I was, sir. Nice to see you again.
    Mr. DeSaulnier. Nice to see you.
    I was a Republican then. I was appointed by Pete Wilson and 
served under three Governors, two Republicans and a Democrat, 
and that was in an age where there was a different perspective, 
at least in the California Republican party.
    And I am reminded that Richard Nixon signed the U.S. Clean 
Air Act, and Ronald Reagan, Governor Ronald Reagan signed the 
California Clean Air Act, which governs all of this that we are 
talking about.
    So, U.S. EPA, their standard reads, ``According to the 
Clean Air Act'' signed by Richard Nixon, ``section 209, State 
Standards, EPA shall grant an authorization under section 209, 
unless the Administrator finds that California,'' quote, ``was 
arbitrary and capricious in its finding that its standards are 
in the aggregate, at least as protective or of public health 
and welfare as applicable Federal standards.''
    Number two, ``does not need such standards to meet 
compelling and extraordinary conditions,'' or that 
``California's standards and accompanying enforcement 
procedures are not consistent with this section.''
    Ms. Arias, obviously, you and your attorneys feel like you 
have made that criteria.
    Ms. Arias. Yes, sir. We have put it in writing multiple 
times as to what we believe we have and how we have met those 
specific requirements.
    Certainly, this has not been an arbitrary effort. As you 
are very aware, we were working on trying to reduce emissions 
from rail even when you were on the board. This particular 
rulemaking has taken over 6 years to be able to bring to the 
CARB board for consideration.
    Certainly, the South Coast and San Joaquin air basins, as 
long as the toxic diesel contamination warrants and requires 
this legal action by us for the State.
    So, we have, in fact, believe met all of the requirements 
as necessary and encouraged EPA to approve our authorization as 
soon as possible.
    Mr. DeSaulnier. And could you speak a little bit to the 
public health benefits of the rule?
    Ms. Arias. Absolutely. The health benefits themselves are 
going to be a monetized health benefit of $32 billion just for 
the State of California. That compares to the $13.8 billion 
that we assume will cost the industry. As you know, those costs 
are very conservative. They definitely could do it cheaper, but 
we don't want to underestimate.
    The monetized health benefits are also not all the benefits 
we know we will achieve. There are other benefits like cancer 
reduction that we are not currently able to monetize. All we 
can do is tell the board how much we will reduce the exposure, 
which, in this case, is 90 percent.
    So, in reality, the monetized health benefits are certainly 
a lot higher. We just don't have the data to be able to provide 
that to the board.
    Mr. DeSaulnier. And you are required to do those cost 
benefits, as I remember, during----
    Ms. Arias [interposing]. Yes, we are.
    Mr. DeSaulnier [continuing]. Republican administrations by 
the California Clean Air Act.
    Ms. Arias. Yes, we are. And it is reviewed by the 
Department of Finance independently before we take it to the 
board.
    Mr. DeSaulnier. So, in terms of the questions, with all due 
respect to my friend, the chairman, we already did that, I 
would opine, at a higher level than would have been done under 
Federal law.
    I remember years ago sitting in hours in southern 
California in the valley on the diesel train idling rule and 
the EJ issues that the ranking member has brought up, and I 
remember, quote, at those hearings saying, ``you could have 
spent money on compliance,'' meaning the industry, ``or you 
could have spent money on lobbyists and lawyers.'' And I would 
add a caveat to campaign contributions. That strikes me as what 
is going on here.
    Yes, there is a burden to the industry, and I recognize 
that as a former small business owner, but the cost to my mind 
is long overdue. The valley particulate matter has been amongst 
the worst in the country.
    You made a comment in your opening comments about carbon. 
Yes, carbon is true, but particulate matter is what kills 
people. People die because of these emissions.
    The trucking industry didn't want to do it either. It took 
a long time. I remember sitting in those long hearings where 
the truckers drove around the EPA building in Sacramento for 
hours, and it was hard for small truckers, but we had them do 
it.
    So, it only seems fair to me for those people who have 
invested as other stakeholders in dealing with the public 
health issues and the cost to their business that you are 
required to do it.
    Ms. Arias, just quickly. I have four refineries in the 
county I represent. Two of them are changing to biodiesel. How 
soon can we expect that as a fuel that would help with this?
    Ms. Arias. Yes, we actually have been working on some data 
as it relates to drop-in fuel opportunities for the rail lines. 
We are interested in looking at that a little bit more. Again, 
it gets back to the alternative compliance plan option. None of 
the rail yards or none of the rail lines have come in and said 
that they are interested in that, but we certainly are 
interested in something that could be used now to achieve those 
additional reductions.
    Mr. DeSaulnier. Mr. Chairman, I will just comment. The 
petroleum companies believe they do have a model to comply and 
have biodiesel that will work in these locomotives.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. Mann for 5 minutes.
    Mr. Mann. Thank you, Mr. Chairman, and, Mr. Chairman, 
thanks for having this hearing. This has been very eye-opening, 
and this is why we do this. And you read the materials ahead of 
time, but it is very eye opening to me to hear that there is a 
regulation that's trying to be rolled out in California that 
there is no way to comply with. Meanwhile, the intention seems 
to be to roll this out to the rest of the country. A grave 
concern and that is why we need to have this hearing.
    I represent a big ag district in Kansas. Kansas is home to 
14 individual freight railroads that connect our manufacturers, 
our farmers, our producers, and our natural resources to 
domestic and foreign customers.
    Kansas is home to a robust series of short line operators 
with my district alone containing seven operators and 1,777 
miles of track--not 1,776--1,777 miles of track that facilitate 
rural communities, terminal operations around the Kansas City 
area and the agriculture industries. Combined, these railroads 
have nearly 40 million tons of freight across Kansas annually 
and serve as an economic driver for our economy.
    Communities across Kansas have been important rail hubs for 
more than a century, and the implementation of the CARB rule 
would jeopardize the reliability and affordability of freight 
rail transportation and disrupt our supply chains in Kansas.
    It was mentioned earlier, and I think we've got to not 
overlook the fact that this rule will be inflationary, and 
there is all of this talk about inflation, but one of the 
reasons is all of these rules and regulations that we have that 
just drives up cost, this will be inflationary and it will be 
passed on to consumers.
    A few questions, the first couple for you, Mr. Olvera. 
Please elaborate on the harmful effects that this rule will 
have on short line operators for you, and then if it is rolled 
out nationally. And specifically, will this rule jeopardize 
short line operators' ability to stay in business?
    Mr. Olvera. Yes. I will first speak to California short 
lines. The typical California short line is a very small 
business, small operator, operates on very thin margins. To 
propose, even with State and Federal funding, to upgrade their 
locomotives to the level that the CARB rule is requiring in 
such an abrupt period of time, they just financially can't do 
it. They will go out of business.
    Losing those types of efficient and cost-effective freight 
options will take their customers' product to be moved at a 
much higher cost, and that absolutely would pass on a higher 
cost to the end user, to the customer.
    For my railroad, we would, essentially, in order to comply, 
have to use all of our capital expenditure dollars hopefully 
coupled with Federal funding to transfer and upgrade our 
current 11 locomotive fleet to Tier 4 fleet. What that does is 
it jeopardizes the other capital expenditure projects that we 
would have in place.
    Most of the projects that we deal with are crossing-related 
and track-related. Crossing-related, you jeopardize the safety 
of the public. Thousands of cars in our community go over those 
crossings. You jeopardize the safety of our employees.
    And then on track upgrades, typically, we are upgrading 
those tracks to handle heavier loads and to help get rid of the 
potential derailments.
    Mr. Mann. Thank you.
    The feedback I am getting from short line railroads that 
operator in Kansas is exactly that. These are high-capital, 
low-margin businesses, and when you suck up all of their 
capital improvement dollars going towards just upgrading 
locomotives instead of making safety improvements on the track 
and other expansion, there is a cost to that for the overall 
society.
    I appreciate that. And by the way, short lines are telling 
me in Kansas if this rule goes into effect, they will go out of 
business, which means all of our farmers and ranchers that are 
trying--all of our farmers that are producing crops aren't 
going to have railheads to take their crop to, which means it 
is going to have to be truck which means more trucks on the 
road.
    If your only metric is the environment, it will be bad for 
the environment, not to mention the fact it is going to 
dramatically increase our food prices. We have got to be 
thoughtful about these regulations.
    A quick question for you, Ms. Arias. You said earlier that 
you had no interest in mode shifts from rail to truck. Won't 
this rule do just that?
    Ms. Arias. We don't believe so. We have looked at various 
analyses of mode shift. We have looked at various analyses of 
deferment of freight to other ports. We believe there is enough 
profit margin from a container moving on rail to allow for the 
upgrade of the technology.
    We also are very aware that there is almost a doubling of 
the amount of freight that is being projected to come through, 
and so, we will need all modes, but we need them to----
    Mr. Mann [interrupting]. Did your analysis look into the 
safety concerns of this? In other words, when railroads have to 
divert so many capital dollars to upgrading their engines away 
from crossings and everything, did the safety aspect of this 
hit your analysis?
    Ms. Arias. It did. It did come up. The railroads provided 
that information to us as well as provided it directly to our 
board.
    Mr. Mann. Thank you.
    I see my time has expired. Thank you, Mr. Chairman. I yield 
back.
    Mr. Nehls. Thank you. The gentleman yields.
    I now recognize Mr. Carter for 5 minutes.
    Mr. Carter of Louisiana. Thank you, Mr. Chairman, and thank 
you to our witnesses who are joining us today.
    My district in southeast Louisiana at the mouth of the 
Mississippi River is a critical point for national commerce. It 
is home to the Port of South Louisiana, one of the Nation's 
leaders in total tonnage, as well as the Port of New Orleans, 
the only deepwater port served by all six Class I railroads.
    Along with their neighboring deepwater ports near the end 
of the river, they account for approximately 70 percent of our 
Nation's grain exports, among other critical items. Continued 
rail operation through these ports is critical for both our 
local economy and the Nation at large.
    However, we bear the scars of industry and commerce. While 
I completely support industry, we must continue finding ways to 
make it safer, cleaner for the people that live in its close 
proximity.
    I live in an area that, unfortunately, is sometimes 
referred to as--I represent, rather, an area that is sometimes 
referred to as cancer alley, a distinction that we don't like, 
a distinction that we would like to correct.
    Because of the large amount of petrochemical plants, 
industry, and activity in that area, neighbors are forced to 
live with things that many other neighbors are not. We know 
that many of these plants and entities that emit problematic 
carcinogens or problematic particulates are situated in poor 
communities, communities of Black and Brown.
    While I support trade and commerce, it cannot continue to 
be at the expense of the health of our communities. I am 
committed to working with both industry to make sure that we 
have strong economies, but also making sure that we have 
healthy communities that are economically prosperous.
    So, my question, Ms. Arias, freight train routes run 
through or parallel to communities of color and low-income 
communities, which bear disproportionate health burdens due to 
their proximity to toxic emissions from locomotives.
    However, according to the EPA, Tier 4 locomotives have 90 
percent lower particulate matter emissions and 80 percent lower 
nitrogen oxide emissions than Tier 2. How have communities in 
California been impacted by the close proximity to these rail 
yards and rail lines? And how might this change with the 
implementation of cleaner locomotives?
    Ms. Arias. Yes, sir. Thank you for the question.
    Our communities, very much like your community, we see that 
90 percent of the communities within 1 mile of our rail lines 
and our rail yards are our disproportionate communities of 
color. They are at higher risk of cancer. They are at higher 
risk of other health impacts associated with these diesel 
engines.
    All of our communities within the nonattainment areas are 
also impacted because this pollution does not stay local. It 
does go regional, also global issues.
    From our rule alone, we are hoping to be able to save 3,200 
premature deaths. We are also hoping to save 1,500 ER visits 
and hospital visits. There are other benefits, as I mentioned 
earlier, a 90-percent reduction in exposure to these 
communities from this diesel toxic.
    Mr. Carter of Louisiana. Is there a safe threshold for 
which----
    Ms. Arias [interrupting]. There is no safe threshold to 
diesel.
    Mr. Carter of Louisiana [continuing]. People can breathe 
particulate matter?
    Ms. Arias. There is absolutely no safe threshold to diesel, 
which is why we need to transition to zero-emission operations.
    Mr. Carter of Louisiana. So, when we talk about lowering, 
we talk about modifying, none of it, none of it is acceptable?
    Ms. Arias. No.
    Mr. Carter of Louisiana. Is that correct?
    Ms. Arias. That is correct.
    Mr. Carter of Louisiana. And while commerce is clearly 
important and while industry is clearly important, nothing 
trumps the health of a community because if you have an 
unhealthy community, you cannot have a healthy economy.
    Mr. Olvera, you mentioned the rail line was the recent 
recipient of a CRISI grant funding to upgrade your locomotives 
to low-emitting Tier 4 vehicles. The CRISI program is now four 
times larger than before due to investments from the program of 
the Bipartisan Infrastructure Law. Would you like to continue 
to see the program funded at the same level going forward? What 
would that mean for operators like you who are trying to lower 
their emissions?
    Mr. Olvera. So, first off, it is essential for CRISI 
funding to continue and hopefully continue even at larger 
levels----
    Mr. Carter of Louisiana [interrupting]. So, that is a yes? 
You do support it and you would like to see it at higher 
levels?
    Mr. Olvera. I absolutely support CRISI funding. The short 
answer for us is that we are unable to comply with the CARB 
rule without the assistance of CRISI funding. Even with that, 
it is a big financial burden on our company, and, like I 
mentioned, other short lines just won't be able to comply.
    But it is estimated that short lines in the Nation have 
about $12 billion of needed funds to upgrade infrastructure, 
rail assets, and modernize their railroads.
    And so, in the most recent CRISI funding, there was a few 
hundred million dollars that were allocated to short lines, 
which is much appreciated, but you can see the discrepancy 
between the current funding and the ultimate need. We need it 
more often and more of it.
    Mr. Carter of Louisiana. Some of my colleagues intimated 
that they were concerned about these regulations threatening to 
possibly shut you down. If you did not have access to CRISI 
funds, would that likely threaten you even further to being in 
demise?
    Mr. Olvera. Absolutely. I will use an average of a new Tier 
4 locomotive costs several millions of dollars. When we 
recently applied and was awarded CRISI funding, our portion is 
approximately $1 million. But on a standalone basis, if my 
railroad had to pay $4 million-plus for each of our 11 
locomotives to be upgraded, it's just not feasible. We wouldn't 
be able to comply.
    Mr. Carter of Louisiana. My time has expired. Thank you, 
sir.
    I yield back.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. Yakym for 5 minutes.
    Mr. Yakym. Thank you, Mr. Chairman, and thank you to our 
witnesses for being here and for the time to sound the alarm 
and sound the alarm bell on this important issue.
    One of the reasons I love our system of Government is that 
it empowers States to be laboratories of democracy, to 
experiment with new policies and see what works.
    My home State of Indiana has a proud tradition of 
innovative thinking that has allowed us to not just craft 
policies that work best for Hoosiers, but even to export some 
of these ideas to other States or even to the Federal level. 
The Railroad Crossing Elimination Program is a great example of 
us doing just that.
    Now, California is a State blessed with natural beauty and 
fertile agricultural land, but its laboratory has been littered 
with, frankly, terrible ideas. It spent $24 billion to fight 
homelessness over the last 5 years, but has no data on whether 
the money actually reduced homelessness.
    California's high-speed rail boondoggle was initially 
estimated to cost $33 billion but nearly 20 years later, there 
is still no timeline for completion and it might need another 
$100 billion.
    Its defund-the-police policies have hollowed out once 
bustling city centers, and it managed to turn a $100 billion 
budget surplus into a $45 billion deficit in just 2 years. That 
might be a record.
    What I don't want and what Hoosiers in my district don't 
want is to be subject to yet another one of California's 
unworkable radical climate mandates.
    Mr. Nober, CARB has said that Class I railroads like Union 
Pacific and BNSF will likely pass on the cost of compliance, 
which is upwards of $800 million per year, quote, ``across the 
Nation.'' But CARB also argues that this mandate will only 
apply to California. Doesn't the fact that the cost will be 
spread beyond California mean that this rule impacts interstate 
commerce and is, therefore, preempted?
    Mr. Nober. Well, I don't think there is any question that 
the rule impacts interstate commerce and is, in fact, 
preempted, and I think much of the discussion you have heard 
today has been about the hope for national impact of this. And 
so, that is, while maybe well-meaning, is exactly what this 
committee prohibited when it passed the Interstate Commerce 
Commission Termination Act and set the law out.
    Now, the fact that the cost will be spread nationwide and 
the benefits would be local is probably further evidence of the 
fact that this is an interstate network system, and one that is 
very difficult to have stop at the State border. The same way 
that aircraft can't stop at the California State border and 
switch out their engines, just because that is just not the 
nature of interstate systems like this.
    Mr. Yakym. Thank you.
    And Mr. Olvera, CARB argues that freight rail operations 
like you should just raise rates to compensate for this new 
mandate. As a short line operator, can you tell me what this 
mandate means to you, your company, and your workers in terms 
of inflation and employment?
    Mr. Olvera. Yes. So, my railroad is a handling carrier. We 
receive our freight rates from our Class I operators. So, 
through contract provisions, our short line doesn't have the 
ability to raise rates to cover CARB regulation costs. So, we 
have no ability to do that.
    And the increase in rail freight, if it happens from this 
CARB rule, which it has been said that it will absolutely 
happen, then our market competitors, trucking, would have more 
of an advantage against the railroad and further hurt our 
business and our ability to achieve profits and growth.
    Mr. Yakym. Thank you.
    And Mr. Yal, do you generally agree with Mr. Olvera's 
assessment?
    Mr. Yal. Yes, I do. In fact, the point about these costs, 
their ability to do capital improvements, safety improvements, 
and operational improvements, and those budgets going to this 
instead of going into, from our side, the construction jobs and 
projects that we rely on, that is also a very real issue.
    And like Mr. Olvera said, it is just going to shift over to 
trucking. That is all that is going to happen.
    Mr. Yakym. Thank you.
    And Mr. Olvera, is this technology mandated by this rule 
readily available and feasible for short line railroads to 
acquire?
    Mr. Olvera. Did you say electric vehicles?
    Mr. Yakym. For short line railroads to acquire. Is the 
technology readily available and feasible for you to acquire?
    Mr. Olvera. So, first off, on the Tier 4 side, there is one 
U.S. manufacturer, Cummins, and those engines are limited in 
inventory manufacturing, and as railroads rush to upgrade, that 
inventory is going to be depleted.
    In terms of battery-charged locomotives, those are in 
prototype stages. As it was called out earlier, there might be 
a railroad that has one or two in some version of testing, but 
in terms of it being commercially available, that is not the 
case.
    Worst off, for the concept of a battery-charged locomotive, 
that requires maybe 24 hours of charging for 8 hours of use. My 
diesel engine runs 24/7. So, if I were to replace a diesel 
engine with a battery-operated locomotive, I may need two or 
three battery-operated locomotives to accommodate that change 
with a further larger cost and limited ability to comply.
    Mr. Yakym. And finally, it would be accurate to say then 
that they are mandating that you buy something that does not 
yet exist?
    Mr. Olvera. That is correct.
    Mr. Yakym. Thank you.
    Mr. Chairman, I yield back.
    Mr. Nehls. The gentleman yields.
    I now recognize Mr. Burlison for 5 minutes.
    Mr. Burlison. Thank you.
    Mr. Olvera, the freight rail industry is the most fuel-
efficient way of transporting goods across the country, and as 
we have heard today, even Republicans and Democrats agree that 
it is the cleanest form of transportation in the country. One 
would think that we would want to encourage a migration 
towards--anyone who would care about the environment would want 
to migrate, would want to move freight to rail.
    What do you think is the real motivation behind this 
mandate?
    Mr. Olvera. I think one of the biggest issues with the 
mandate is that there haven't been data analyzed for those who 
are impacted to truly understand all of the impacts of this 
cleaner air initiative. Short lines, and mine included, are not 
opposed to cleaner locomotives, but the timeframe in which we 
are asked to do this and before certain technology is 
commercially available is just not a possibility for us to 
comply.
    So, I think--so, yes, we are all for----
    Mr. Burlison [interrupting]. So, you are saying this is out 
of a motivation of an idealistic pipedream? That is what I 
would call it.
    Mr. Olvera. It is aspirational at best. Everybody would be 
for it, but the way to get there is not what is being proposed 
through the CARB rule.
    Mr. Burlison. I would say that the efforts are delusional 
at best.
    So, let me ask it in a different way. These efforts are 
almost so extreme, one might--it has me wondering if there is 
some rent-seeking occurring if companies--the few companies 
that make these Tier 4, class 4 engines, like KLW, Siemens, 
EMD, Brookville, I wonder, do they have a relationship with the 
California Air Resources Board?
    Mr. Olvera. I am uncertain. You would have to ask the CARB 
representative, but I can't speak to that.
    Mr. Burlison. But you are saying that--so, to get a better 
idea of the cost--I see what is frustrating, and, Ms. Arias, I 
am not asking a question. I am just talking to you. What is 
absurd is what California doesn't see that's happening.
    Across the country, States like Missouri are receiving 
people who are fleeing like refugees this draconian State to 
the tune of hundreds of thousands of people a year. They are 
coming at a net loss.
    California is reducing its size. And why? Because the cost 
of living is outrageous, the most expensive State in the 
contiguous 48, whether you are talking--in all factors. 
Transportation cost, the most expensive State. Housing cost, 
food cost. Everything is more expensive in California, and all 
you have to do is look at the people that are regulating the 
hell out of the cost.
    So, Mr. Nober, one might wonder, if you are trying to 
improve the supply chain, if you are trying to reduce cost, 
would this be a good avenue to do that?
    Mr. Nober. Well, I would come back to the point you made a 
little bit earlier, Congressman, which is that it is requiring 
the adoption of technology by a date certain that doesn't 
exist. And what winds up happening is that that deters the 
adoption of new technology because businesses don't know if 
what they are buying is going to be able to--they are going to 
amortize it over its useful life.
    And so, I think Mr. Olvera spoke earlier about having 
bought Tier 3 locomotives and halfway through their useful 
life, they are now going to be not useful and have to upgrade 
to Tier 4.
    And I think folks looking at this regulation might say, Why 
would we invest in any--I am just speculating, but--why would 
we invest in any locomotives until there are working zero-
emission locomotives that are operable in the demands of 
freight rail, which is 24 by 7 by 365. And the technological 
hurdles for that are significant, and I don't think there is an 
end date for when that kind of technology will be available.
    Mr. Burlison. And the sad part is the reach. You have these 
refugees who have migrated to States like Missouri and fleeing 
all of this regulatory State, and yet, now the arm of these 
California regulators is going to impact people across the 
United States financially.
    Mr. Nober. I think that is--that will be, one, either a 
goal or certainly an effect of the regulation.
    Mr. Burlison. Thank you.
    My time has expired.
    Mr. Duarte [presiding]. The gentleman yields back.
    I now recognize myself for 5 minutes.
    Well, Mr. Olvera, let's start with you, my fellow 
Modestoid. How long have you been at Modesto?
    Mr. Olvera. Pretty much all my life.
    Mr. Duarte. Fantastic. You look a little younger than me.
    I remember a few things in Beard Industrial tract where you 
worked that are not there anymore. I know Tri Valley Growers 
has been reformed as Signature Food products. Signature Foods, 
another major cannery for peaches, is gone. Del Monte is still 
there, but we are losing them.
    I mean, in fact, I just pulled up--my grandfather was a 
peach grower right there along highway--right there along the 
Santa Fe railroad lines. I didn't like the train whistles, but 
I never felt I was dying from them.
    I think we have been on that property for five generations, 
about a mile away from the Beard Industrial tract, as farmers.
    And we are losing a lot of commerce in Modesto. We are 
losing it, and it is sad because as we know, Modesto has got 
the Modesto Irrigation District, the second oldest irrigation 
district in the State; 1889 I think it was formed, right after 
Turlock in 1888.
    We have got hydroelectric power. We have got fresh surface 
water. We have got the infrastructure of both the railroads 
that you serve to the east and to the west of you, which is 
critical, and that is why we have the largest canneries, the 
largest wineries, the largest spaghetti sauce makers. We have 
got the highest tech Frito-Lay plant.
    We're not there inside the Tesla trucks and all of the--but 
right now, the United States produces .66 percent of the 
world's canned peaches. It has fallen 16.99 percent in the last 
year, and Brazil and the Netherlands have gone up.
    Now, I have always taken pride that Modesto feeds the 
world. I have taken pride that we have a local food system.
    Is cutting the last speck of emissions a bigger health 
priority than a diverse nutritious diet for Americans, 
especially a locally or domestically produced food-secure, 
domestic diet for Americans, working families especially? I ask 
that rhetorically to someone.
    No. We are giving up enormous food resources out of America 
because of these onerous, idiotic regulatory programs.
    Mr. Nober has done a good job today explaining how by doing 
this through a waiver, this is establishing national policy 
that disrupts our food supply in one of the most critical food 
producing regions in the Nation while avoiding the due process 
that we normally afford.
    If we had due process, we could take into account the 
dietary needs of American families and balance them against the 
air quality needs of American families. But we chose, we chose 
not to do that because we found a loophole, right, Ms. Arias? 
Wasn't this convenient not to have to weigh these matters?
    Ms. Arias. No, that is never our intention, to ignore 
impacts associated with the rule, and as we go through our 6-
year process, we are always interested in any of the impacts 
associated with our rules.
    Mr. Duarte. A 6-year impact where we know that Tier 4 
engines are going to be able to reduce nine-tenths of the air 
emissions that the Tier 0 did that Mr. Olvera invested in Tier 
3 and now you are getting your first Tier 4s.
    Mr. Olvera. Yes.
    Mr. Duarte. We are saying, well, we were agnostic as to 
whether we go from rail to truck or not, even though trucks are 
3X the emissions per ton of food delivered per mile as rail. 
But in California, we also know that if we had had a full 
transparent public policy process and hearing on this, we would 
know that California is not building freeways.
    Highway 5 was built when I was born in 1966. It is two 
lanes each direction from the bay area down to Bakersfield. We 
are building warehouses all up and down that corridor, and we 
are not building freeways. We are barely widening 99 to help 
people get to work.
    This is our food valley. This is the San Joaquin Valley, 
the fruit bowl of the Nation. We are not building the trucks we 
need. We are outlawing the trains we need. We are weighing the 
last air quality increment over affordability.
    Do you believe, Ms. Arias, that diet is a key health factor 
for working families, low-income families, all families, color; 
I don't care. Everybody needs a healthy and diverse diet and 
affordable diet.
    Ms. Arias. Yes. As an ag business major from Chico, I can 
tell you that the agricultural production in our State is very 
important.
    Mr. Duarte. Did that show up in your public comment program 
on this policy proposal?
    Ms. Arias. What do you mean, sir?
    Mr. Duarte. Did it show up? Did people say we need a 
domestic, diverse, nutritious food supply? We need a logistic 
system that will actually meet the need of a diverse food 
supply? Or was that bypassed by you going through a waiver and 
then calculating the benefits nationally but not taking public 
input on the cost?
    Ms. Arias. No, sir. The ag industry was very vocal about 
the necessity to be able to continue to produce agriculture as 
we promulgated the rule.
    Mr. Duarte. And did they agree with your idea that the last 
1 percent of emissions needed to be eliminated and that the 
balance of human health would be benefited by increasing the 
cost of food, pushing trucks onto overcrowded freeways that we 
have a policy in California not to increase the capacity of?
    Ms. Arias. The ag industry did not come in support of all 
the way through the rule. Yes, they are concerned about the 
movement of their product, but we are talking about one-third 
of the emissions necessary to meet the Clean Air Act.
    Mr. Duarte. Nine-tenths of which you could achieve with 
Tier 4 engines, and another three-quarters you can take out by 
not pushing it onto their freeways.
    Ms. Arias. We certainly are interested in Tier 4 engines. 
The industry----
    Mr. Duarte [interrupting]. I gavel myself. Thank you.
    Ms. Arias [continuing]. Has told us they are not. And if 
they were to purchase a Tier 4 engine, they can continue to 
utilize it well into the 2050s.
    Mr. Duarte. Thank you. I yield back.
    And I will recognize Mr. Fong for 5 minutes.
    Mr. Fong. Thank you, Mr. Chair, and the witnesses for being 
here.
    Ms. Arias, good to see you. I recently got elected and 
served in the State assembly on the Transportation Committee 
and on the Select Committee on Ports and Goods Movement.
    So, let me ask this question. In 2005, CARB entered into a 
voluntary agreement with BNSF and UP to reduce emissions at 
rail yards. The agreement stated, quote, ``The parties 
recognized that participating railroads are federally regulated 
and that aspects of State and local authority to regulate 
railroads are preempted.''
    It further stated, quote, ``The Federal Clean Air Act, the 
Interstate Commerce Termination Act, and many other laws 
established a uniform Federal system of equipment and 
operational requirements.''
    At that time, CARB acknowledged Federal preemption. So, 
what has changed since then?
    Ms. Arias. Yes. Thank you for that question. The biggest 
change is the technology that is available today. When you look 
at the opportunity to reconfigure the existing engines with the 
battery tenders or catenary, that was not an option before, and 
it is today. That allows us to access our authority to be able 
to promulgate a rule for in-use.
    We are not regulating the engine manufacturers. In some 
cases, they are providing zero-emission technology, but that is 
not because of our rule.
    The ability to be able to change the power source of an 
already electric engine is relatively new and something that 
now gives us the ability to do an in-use rule.
    Mr. Fong. So, I would say that we can't look at this 
regulation and this issue in a vacuum. CARB is imposing 
mandates and regulations on all aspects of the supply chain. 
So, we are discussing the rail impacts.
    CARB has imposed mandates on the trucking industry. CARB is 
imposing significant mandates on the ports. So, together, all 
of these regulations have devastating impacts on our Nation's 
distribution of goods and products.
    So, my question is, how does the State of California plan 
to mitigate these supply chain disruptions that are clearly 
acknowledged and there is a consensus on, and what does CARB 
say to the consumer when they have to pay more for goods and 
products?
    Ms. Arias. Yes, good question. We have, over the years, 
heard of many concerns related to our rules and how it is going 
to cause diversion of our freight and how it will disrupt the 
supply chain.
    However, we have also successfully seen these rules be 
implemented without supply chain diversion and without supply 
chain disruptions.
    Our port continue to be the largest ports in the Nation. We 
continue to process the largest amount of containers for the 
Nation. We continue to provide a lot of food for the Nation----
    Mr. Fong [interrupting]. Let me----
    Ms. Arias [continuing]. All while being able to transition 
to a cleaner freight transport system.
    Mr. Fong. Let me just say, though--I apologize for 
interrupting--but that empirically is not true. California 
ports are losing significant market share to other ports. As 
mentioned before by the other witnesses, goods and products are 
now not coming to California. They are going to other States, 
other ports.
    And you now are mandating--so, our trucking industry can't 
get engines, our railroads are struggling to afford new 
engines, engines that technically are not feasible at this 
moment, and then the ports are being mandated to the point 
where probably--there is going to be a volume cap on what goes 
into the ports, and all of those containers are going to go to 
other States.
    So, empirically, what you are saying is not true, and the 
supply chain inflation that has existed--has occurred in the 
past with the supply chain crisis that happened in the 
pandemic, consumers paid more.
    So, how does the State of California tell the average 
consumer they are going to pay more based on this regulation?
    Ms. Arias. We have published data that shows that this 
regulation could cost each household $36 a year.
    And as a point to the ports, they have actually been having 
record-breaking years. Yes, there is some diversion of 
discretionary containers, but the actual containers coming 
through are much higher than they have ever been, and we 
continue to project that they will actually double within the 
next several decades.
    Mr. Fong. So, does your assessment take into account all of 
these regulations together, or are you just taking----
    Ms. Arias [interposing]. Correct.
    Mr. Fong [continuing]. Are you taking this into account for 
just----
    Ms. Arias [interrupting]. Oh, the $36, sir?
    Mr. Fong. Yes.
    Ms. Arias. No, the $36 is just this reg.
    Mr. Fong. Just for rail?
    Ms. Arias. Per year, per household.
    Mr. Fong. Right. So, if you add in the trucking 
regulations, you add in the port regulations, you add in all 
the regulations to the entire supply chain, the system of 
systems that moves products; 40 percent of the goods and 
products that come into the United States of America come to 
the Port of L.A. and Long Beach. So, does your analysis take 
into account all of these regulations layered on top of each 
other, to the impact to the average consumer?
    Ms. Arias. No. We have not done an analysis that shows the 
total monetized benefits that we receive from all these rules 
compared to the cost per household of these rules.
    Mr. Fong. As a Californian, I would say that when it comes 
to strengthening our supply chain, California is not the model.
    Mr. Duarte. The Chair now recognizes Mr. Kiley for 5 
minutes.
    Mr. Kiley. Thank you, Mr. Chair.
    Ms. Arias, you are with CARB, you are the chief of the 
transportation and toxics division, correct?
    Ms. Arias. Correct.
    Mr. Kiley. Thank you for being here with us today, but I do 
have to ask, are you an elected official?
    Ms. Arias. I am not.
    Mr. Kiley. Is anyone at CARB an elected official?
    Ms. Arias. Some of our board members are, yes.
    Mr. Kiley. But are they acting in an elected capacity when 
they make policy at CARB?
    Ms. Arias. They are--some of them are elected, but they are 
all appointed by our senate and Governor.
    Mr. Kiley. They're appointed, not----
    Ms. Arias [interposing]. Correct.
    Mr. Kiley. OK.
    Ms. Arias. Well, they originally may be elected until----
    Mr. Kiley [interrupting]. So, you took this opportunity 
upon yourselves to issue this new regulation banning 
nonelectric trains? Is that correct?
    Ms. Arias. The staff promulgated the rule and took it to 
the board for their consideration, and they adopted it.
    Mr. Kiley. So, it wasn't voted on by the legislature?
    Ms. Arias. It was not.
    Mr. Kiley. It wasn't voted on by the people of California?
    Ms. Arias. It was not.
    Mr. Kiley. So, Mr. Chair, I am very glad you called this 
hearing because we have really a crisis of democratic 
legitimacy in California, where we have an agency, a massive 
bureaucracy, CARB, that is making tectonic changes to our 
society, not just in California but across the country, without 
any measure of democratic accountability and is enacting 
harebrained scheme after harebrained scheme that wouldn't even 
survive whatever modicum of rationality might be present in the 
supermajority legislature.
    And it is having dramatic impacts on our State. I mean, you 
could flip through the pages of dystopian fiction and not find 
an entity quite like CARB in terms of just how completely out 
of control and disconnected from the real world it has become, 
and I think that this regulation under consideration today 
banning nonelectric trains is a perfect example of that.
    So, Mr. Olvera, you testified about how currently railroads 
are already the most environmentally friendly way to transport 
freight across the country, correct?
    Mr. Olvera. That is correct. Today, railroads contribute 2 
percent of transportation-related greenhouse gas emissions, 
while our competitor, trucking, contributes 23 percent.
    Mr. Kiley. And you have also testified that the technology 
to comply with this regulation is not currently in existence. 
Is that correct?
    Mr. Olvera. That is correct.
    Mr. Kiley. And that because of this, short lines such as 
your company or others may be forced to shut down. Is that 
correct?
    Mr. Olvera. That is correct. To comply with the CARB ruling 
as written, many short lines in the State of California cannot 
comply. They would go bankrupt. And as I explained, my 
railroad, we would have to defer lots of other safety-driven 
projects in order to comply with the locomotive upgrade.
    Mr. Kiley. So, this would shift freight from more 
environmentally friendly to less environmentally friendly modes 
of transport?
    Mr. Olvera. That is correct. It would push more to truck. 
It would have a worse impact on emissions.
    Mr. Kiley. So, the whole purpose of this regulation, the 
ostensible purpose, which is to reduce emissions, it would 
actually do just the opposite. It is a self-undermining, self-
defeating regulation.
    But, of course, it does a lot more than that in terms of 
the collateral damage or cost. You testified that this would 
raise costs for consumers, correct?
    Mr. Olvera. That is correct.
    Mr. Kiley. Making the experience of inflation worse in 
California and across the country? Is that correct?
    Mr. Olvera. Yes, that is correct.
    Mr. Kiley. And in addition to that, you would have more 
vehicles on the road which would create more traffic for 
drivers, I assume?
    Mr. Olvera. More traffic, more congestion, and there were 
6,000 deaths related to heavy trucks last year, and that has 
been increasing year over year. To put more trucks on our 
roads, that number unfortunately would probably increase.
    Mr. Kiley. So, more wear-and-tear on the roads, more 
accidents, more injuries, more deaths?
    Mr. Olvera. That is correct.
    Mr. Kiley. And then you have also testified, Mr. Yal, about 
some of the other costs in terms of construction costs, 
correct?
    Mr. Yal. That is correct.
    Mr. Kiley. Is it fair to say that this regulation, by 
increasing the cost of construction, both in terms of the cost 
of materials and the cost of their transport, would increase 
the already high cost of housing in California?
    Mr. Yal. That is correct, yes.
    Mr. Kiley. And you also testified that it would make it 
more difficult for us to build new infrastructure. Is that 
correct?
    Mr. Yal. Yes. Our concern is that if the funds that are 
there for passenger rail operators and freight rail operators 
that would have been used for capital improvements, which is 
what we do, what our industry does, it is going to get diverted 
to this effort, and there will be a significant decrease in 
available funding through that, in addition to making the cost 
of projects bigger and more expensive. So, your dollar goes 
just less further.
    Mr. Kiley. So, if I have this right, we have an unelected, 
not democratically accountable body, that has decided on its 
own to make policy not just for California but effectively for 
the entire country, and has done so in the name of reducing 
emissions but has come up with a policy that will actually 
increase emissions, while also increasing costs and inflation 
for consumers by putting more vehicles on the road, creating 
more traffic, creating more wear-and-tear on our roads, 
reducing our road quality, creating more accidents means more 
injuries and more death, increasing the cost of construction, 
increasing the cost of housing, and making it more difficult to 
build new infrastructure.
    I am glad we had this hearing, Mr. Chair, because I think 
this is exactly the wrong policy for California and for our 
country. I yield back.
    Mr. Duarte. The gentleman yields back.
    We now recognize Mr. Molinaro for 5 minutes.
    Mr. Molinaro. Thank you, Mr. Chairman. I do feel a little 
bit out of place as a New Yorker, but I will offer to you that 
when California or New York institutes rules or regulations or 
new policy, the rest of the country should likely be afraid.
    Ms. Arias, I don't want to take issue with where California 
is as it relates to your economic activity. The State 
represents 14.5 percent of the entire national economy, but I 
do want to tell you the tale of once being the empire.
    I serve in a State that once was the largest population in 
the Nation, was the largest economy in the Nation, once was the 
ultimate location for cultural and economic activity--once.
    It is actually one of the reasons that we are referred to 
as the Empire State. We built the Midwest, thanks to the great 
work of the Erie Canal and others.
    But now we lead the Nation in outmigration. More people 
leave the State of New York to every other State in the Nation 
than any other State in the Nation. We shoulder the highest 
burden of taxation of any people in the country--even more than 
California.
    And the answer as to why is because policymakers, elected 
and appointed, established rules and regulations that are 
unachievable without consideration for the actual impact to the 
end user, the end user being the citizen, the taxpayer, the 
consumer.
    You reference, Ms. Arias, that your analysis, the CARB's 
analysis, is simply that there may be disruptions to the supply 
chain, but they are surmountable in the near term. Is that 
about right?
    Ms. Arias. No, we didn't talk about disruptions in the 
supply chain for this. I was referring to the overall supply 
chain. Sorry if that was----
    Mr. Molinaro [interrupting]. So, you acknowledge that this 
regulation, this rule, disrupts the supply chain?
    Ms. Arias. No, I would say it transforms the supply chain.
    Mr. Molinaro. That is a very--it is a lovely word that even 
I use. I love it because it avoids the actual truth, which is 
disruption is what happens in order for transformation to 
occur, if you can achieve it.
    But we recognize it is very hard to achieve the goal. In 
New York, thanks to California, New York, in establishing the 
climate leadership policy, CLCPA, uses basically the same 
standard.
    It looks across the river and says, we are going to cross 
this wild roaring river, but we are not going to tell you how 
to build the bridge, and we don't even care if you can build 
the bridge.
    It is an absurd kind of governance. If we want to get to 
the kind of economic and environmental benefit that perhaps 
policies like this seem to want to achieve, you must have the 
path to get there, and you can't get there from here.
    Mr. Olvera, just a few moments ago, Ms. Arias did suggest 
that this rule would have a de minimis impact on families 
across America. I think she said $36 a year.
    First, I will offer to you that that can't be possible, and 
second, I would offer to you, Mr. Olvera, that I don't judge 
what people can or cannot afford. I always appreciate--and I 
mean no disrespect. I was once an appointed official as well, 
but I always appreciate when people who aren't elected say to 
other people who have to pay the bills, it really won't cost 
you that much.
    It is sort of like when you say to your kid, it is going to 
hurt me more than it hurts you. I get that $36 doesn't sound 
like a lot of money. It is impossible that that is the limited 
impact, but without question, I am not going to judge what 
people can or cannot afford.
    CARB's own analysis suggests that this rule, in and of 
itself, creates $86 billion in nationwide compliance costs, and 
that, of course, these costs are going to disrupt, transform, 
and impact the supply chain.
    Can you speak to sort of humanize this? How do we expect 
the CARB rule to impact the cost of, let's say, groceries, to 
the average American family?
    Mr. Olvera. Sure. So, today, rail is a very cost-efficient 
freight option for our customers. I have heard from different 
customers at times, the savings by going through rail freight 
versus truck freight is three to four times less. So, that 
freight option, the rail freight option, if it was removed and 
mandated that our customers had to use a higher expense to move 
their goods, that decreases their bottom line, and the only way 
to make up for that is to pass on costs to the customer. That 
would absolutely increase cost of goods to the end user.
    Mr. Molinaro. Sure. And I remember not being here in 
Congress when the other side of the aisle did control both 
Houses of the legislature, imposed the Inflation Reduction Act. 
And I remember elected and bureaucratic leaders suggesting 
there would be no impact on inflation, and yet we experienced 
the highest rate of inflation in 40 years.
    I know, Mr. Olvera, and I won't ask you to answer this 
again, but you spoke to the impact that this rule has on 
smaller Class II and III railroads. In fact, the rule itself 
could exceed their annual operating budgets and likely result 
in the decline of those operations.
    I don't want to--I have 30 seconds, so, Mr. Nober, I just 
want to reference for you, obviously, other States can impose, 
and States like New York have imposed, similar rules as it 
relates to vehicle emissions.
    Can you just suggest to us what are the potential impacts, 
let's say, if New York were to--with a single party governing--
Democratic party governing in New York, what would happen if 
New York were to adopt a similar rule?
    Mr. Nober. Well, I mean, it would again create the kinds of 
problems that you don't want to see in interstate commerce, 
which is different operating rules and requirements in 
different States, so that you can't have interoperable 
equipment between--over the 50 States, and that kind of flies 
in the face of interstate commerce. So, that would create more 
and more patchwork issues, and it would show why this is 
preempted.
    Mr. Molinaro. Thank you, Mr. Nober.
    Thank you, Mr. Chairman.
    Mr. Nehls [presiding]. Thank you. The gentleman yields.
    Are there any further questions from any members of the 
subcommittee who have not been recognized? We have 8 minutes. 
We are voting right now, so, we have 8 minutes for the Members 
to get over there.
    I want to have a second round. I want to respect the hell 
out of the gentleman to my right, Mr. LaMalfa, but I don't 
know--I will tell you what, Mr. LaMalfa, you have got 2 
minutes--2 minutes.
    Mr. LaMalfa. All right. Thank you, Mr. Chairman. Appreciate 
it greatly.
    Ms. Arias, have you taken into account if the requirement--
65 percent of the locomotive fleet would be banned by the year 
2030? We have heard repeatedly that the technology for Tier 4, 
let alone the later tiers, isn't even working yet to any extent 
to replace that many locomotives.
    We heard General Van Ovost, who is the head of the U.S. 
Transportation Command for our military vehicles.
    Have you taken into account the effect of being able to 
deploy military vehicles and equipment across the country where 
it needs to be, in this study, in this idea?
    Because if we can't move that because an electric train can 
only go 100 miles or something, what is going to happen with 
that? Have you taken that into account as well as----
    Ms. Arias [interrupting]. Yes, sir. Military is exempt.
    Mr. LaMalfa [continuing]. Perishable ag goods?
    Ms. Arias. Yes. Military is exempt.
    Mr. LaMalfa. And they said it is OK?
    Ms. Arias. Yes. Military is exempt from the rule.
    Mr. LaMalfa. Oh, they are exempt from it?
    Ms. Arias. Yes.
    Mr. LaMalfa. OK. Mr. Olvera, touch on, please, to wrap it 
up, on the available--we have heard it glossed over, oh, we 
have the technology, we will just take the Tier 3 or 4 diesel 
engine out and put electric in, basically. Is that even close 
to practical?
    Mr. Olvera. The electric locomotive is not currently 
commercially available, and as I mentioned before, the 
replacement of an electric vehicle, replacing a diesel 
locomotive is completely different. Charge time on a battery-
operated locomotive is 24 hours for 8 hours of use. My diesel 
engine runs 24/7.
    I may need two to three electric locomotives to replace one 
diesel engine.
    Mr. LaMalfa. So, to replace 65 percent of the locomotives 
by 2030, no way, right? Quickly.
    Mr. Olvera. I don't see how that is commercially feasible 
and possible.
    Mr. LaMalfa. Mr. Yal, we are talking about this special 
account where they want to take massive amounts of money from 
the railroad operators and put it into a special account that 
is unavailable for capital for you.
    You have a very big project that is being looked at in 
Barstow which would massively increase efficiency for 
railroads. What is this special account thing tying up all your 
finances going to do to you?
    Mr. Yal. The project is a $1\1/2\ billion intermodal 
railroad facility. It is to be built by BNSF. And the concern 
is that this spending account is going to divert resources from 
BNSF's capital improvement fund which funds these intermodal 
facilities, this one, and there are others----
    Mr. LaMalfa [interrupting]. Quickly. Because it means you 
probably are not going to build it because your money is all 
tied up?
    Mr. Yal. That is what we are hearing, yes.
    Mr. LaMalfa. Yes. So, we are going to lose the efficiency 
of that new project? Yes.
    Mr. Yal. Correct.
    Mr. LaMalfa. Thank you, Mr. Chairman. I greatly appreciate 
the indulgence. Thank you.
    Mr. Nehls. Thank you. The gentleman yields.
    Mr. DeSaulnier is going to get the last word, and you have 
a minute.
    Mr. DeSaulnier. Mr. LaMalfa, I gave you the chance to have 
more time.
    Just briefly, there are elected officials on CARB. There 
always has been. It is required by the California Clean Air 
Act. Again, Ronald Reagan as Governor. I was one of those 
representing the districts.
    Ms. Arias. Correct.
    Mr. DeSaulnier. Number 2, just because CARB passes this 
doesn't mean that every State has to go on it as well. They 
have to----
    Ms. Arias [interrupting]. And, in fact, we have never had 
any other State pick up our offered rules.
    Mr. DeSaulnier. Right. So, they have to go through their 
own legislative process----
    Ms. Arias [interposing]. Correct.
    Mr. DeSaulnier [continuing]. And then ask for--so, if it is 
a national trend, it is not by statute.
    Ms. Arias. Correct.
    Mr. DeSaulnier. Thirdly, you are doing what you are 
required by statute because you have to comply and get these 
reductions. You can also use the alternative plan to get to 
those reductions.
    Ms. Arias. Correct.
    Mr. DeSaulnier. So, all of those things, I just wanted to 
clear up, and thank you, Mr. LaMalfa, and the chairman, for 
letting me talk.
    Mr. Nehls. Absolutely.
    Any further questions from any members of the subcommittee 
who have not been recognized?
    Seeing none, that concludes our hearing. I would like to 
thank each one of you for being here. I thought this was very 
informative, very insightful, and thank you for your testimony.
    The subcommittee stands adjourned.
    [Whereupon, at 4:32 p.m., the subcommittee was adjourned.]

                      Submissions for the Record

                              ----------                              

  Letter of April 22, 2024, to Hon. Michael S. Regan, Administrator, 
Environmental Protection Agency, from Casey Katims, Executive Director, 
 U.S. Climate Alliance, Submitted for the Record by Hon. Frederica S. 
                                 Wilson
                                                    April 22, 2024.
The Honorable Michael S. Regan,
Administrator
U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW, 
        Washington, DC 20004.

Docket ID No. EPA-HQ-OAR-2023-0574

    Dear Administrator Regan,
    I write to you on behalf of the U.S. Climate Alliance (Alliance), a 
bipartisan coalition of 24 governors committed to climate action that 
together represent approximately 60 percent of the U.S. economy and 55 
percent of the U.S. population. The Alliance appreciates the 
opportunity to comment on California's request for an authorization 
under the Clean Air Act (CAA) for the In-Use Locomotive Regulation 
(IULR), which supports our shared goals to confront the climate crisis, 
reduce harmful air pollution, advance environmental justice, and 
protect public health. The Alliance has long supported state 
flexibility in the CAA that permits California to adopt, and allows 
other states and territories to follow, regulations that can be more 
protective of public health and welfare than applicable federal 
standards. We strongly support authorization of California's IULR rule, 
which was promulgated consistent with CAA requirements,\1\ and 
encourage EPA to grant it without delay.
    Transportation remains the largest source of greenhouse gas 
emissions across the Alliance. We agree with the Biden administration 
that a rapid deployment of zero-emission (ZE) technologies across all 
transportation modes \2\ must be a central component of the U.S. Long-
Term Strategy to confront the climate crisis. Importantly, IULR sets ZE 
operating requirements for locomotives that can help achieve these 
goals. Granting this authorization will ensure California and other 
Alliance members can continue to lead on transportation 
decarbonization--driving reductions in transportation emissions at the 
state level while ensuring the U.S. does not fall behind in our 
national efforts to limit global warming.
    California's IULR is also expected to significantly reduce harmful 
NOx and PM2.5,\3\ improving public health for tens of millions of 
residents in the state. For other Alliance states and territories,\4\ 
granting the authorization would provide a critical new mechanism to 
support compliance with National Ambient Air Quality Standards and 
protect public health in their jurisdictions. Emissions reductions 
achieved from the rule would avoid premature deaths, hospitalizations 
for cardiovascular illness, hospitalizations for respiratory illness, 
and emergency room visits, yielding billions in health benefits.\3\ 
IULR also advances environmental justice by reducing disproportionate 
exposure to vehicle pollution concentrated in frontline communities, 
particularly those surrounding locomotive operations at railyards, 
industrial facilities, and rail corridors.\3\
    ZE rail technology, such as overhead catenary, is a proven and 
established technology in passenger and freight applications both in 
the United States and around the world.\5\ Additionally, private 
operators along with state and local transportation agencies are 
already investing in, testing, and deploying new emerging ZE and ZE-
capable rail technologies like battery-electric, hydrogen fuel cell, 
and hybrid.\6\ Recognizing the potential of these technologies, the 
U.S. Department of Transportation is also supporting their deployment 
with recent federal investments.\7\ IULR will advance these efforts by 
driving further innovation and investment, and by increasing the market 
availability of ZE locomotives in California and across the country.
    The Alliance stands firmly in support of California's authority as 
permitted under the CAA to adopt its own requirements for locomotive 
operations and emissions standards for non-new locomotives and engines, 
as well as the authority of other states and territories to voluntarily 
adopt those regulations.\1\ Such regulations can play a vital role in 
states' ability to improve air quality, protect public health, advance 
environmental justice, and tackle climate change. California's 
authorization request meets the conditions required by the law, and the 
state's promulgation of IULR is consistent with the requirements of the 
CAA. We support full approval of the authorization request without 
delay.
    Thank you again for the opportunity to comment and for the 
Administration's collaboration with states and territories to confront 
the climate crisis.
            Sincerely,
                                              Casey Katims,
                         Executive Director, U.S. Climate Alliance.
_______________________________________________________________________

\1\ 42 U.S.C. Sec.  7543 (2010), https://www.govinfo.gov/content/pkg/
    USCODE-2010-title42/pdf/USCODE-2010-title42-chap85-subchapII-partA-
    sec7543.pdf; U.S. Environmental Protection Agency, Locomotives and 
    Locomotive Engines; Preemption of State and Local Regulations 
    (Washington, DC), https://www.federalregister.gov/documents/2023/
    11/08/2023-24513/locomotives-and-locomotive-engines-preemption-of-
    state-and-local-regulations.

\2\ U.S. Department of State and the Executive Office of the President, 
    The Long-Term Strategy of the United States: Pathways to Net-Zero 
    Greenhouse Gas Emissions by 2050 (Washington, DC), https://
    www.whitehouse.gov/wp-content/uploads/2021/10/US-Long-Term-
    Strategy.pdf.

\3\ California Air Resources Board, Updated Informative Digest: 
    Proposed In-Use Locomotive Regulation (CARB, Sacramento, CA), 
    https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2022/
    locomotive22/uid.pdf.

\4\ Including Vermont, which is in the Ozone Transport Region, but 
    excluding Hawaii.

\5\ For recent examples of rail electrification conversion using 
    overhead catenary technology, see: Nick Ferris, How India 
    electrified 45% of its railway network in just five years (Energy 
    Monitor), https://www.energymonitor.ai/tech/electrification/how-
    india-made-45-of-its-railway-network-electric-in-just-five-years/; 
    Railway Gazette International, Indian Railways starts double-stack 
    electric operation (Railway Gazette), https://
    www.railwaygazette.com/freight/indian-railways-starts-double-stack-
    electric-operation/56733.article.

\6\ California Air Resources Board, Appendix F: Technology Feasibility 
    Assessment for the Proposed In-Use Locomotive Regulation (CARB, 
    Sacramento, CA) https://ww2.arb.ca.gov/sites/default/files/barcu/
    regact/2022/locomotive22/appf.pdf; Richard Clinnick, Siemens to 
    build 73 trains for Amtrak including first battery-hybrid 
    (International Railway Journal), https://www.railjournal.com/fleet/
    siemens-to-build-73-trains-for-amtrak-including-first-battery-
    hybrid; BNSF, BNSF Sustainability Overview, https://www.bnsf.com/
    in-the-community/environment/sustainability-overview-2023/
    index.html; Union Pacific, Union Pacific Railroad to Assemble 
    World's Largest Carrier-Owned Battery-Electric Locomotive Fleet, 
    https://www.up.com/media/releases/battery-electric-locomotive-nr-
    220128.htm; California Department of Transportation, Arriving Soon 
    in California: First Intercity Zero-Emission, Hydrogen Passenger 
    Trains in North America (Caltrans, Sacramento, CA), https://
    dot.ca.gov/news-releases/news-release-2023-034; Marybeth Luczak, 
    Pennsylvania Awards $8.7MM for `Green' Power (Railway Age), https:/
    /www.railwayage.com/freight/switching-terminal/pennsylvania-awards-
    8-7mm-for-green-power/.

\7\ U.S. Department of Transportation--Federal Railroad Administration, 
    FY 2022 Consolidated Rail Infrastructure and Safety Improvement 
    Program Selections: Project Summaries (FRA, Washington, DC), 
    https://railroads.dot.gov/sites/fra.dot.gov/files/2023-09/
    FY%202022%20CRISI%20Program%20Selections%20-
    %20Project%20Summaries_PDFa.pdf.

                                
   Letter of July 9, 2024, to Hon. Troy E. Nehls, Chairman, and Hon. 
    Frederica S. Wilson, Ranking Member, Subcommittee on Railroads, 
   Pipelines, and Hazardous Materials, from Kristen Swearingen, Vice 
 President, Legislative and Political Affairs, Associated Builders and 
      Contractors, Submitted for the Record by Hon. Troy E. Nehls
                                                      July 9, 2024.
The Honorable Troy Nehls,
Chairman,
House Committee on Transportation and Infrastructure, Subcommittee on 
        Railroads, Pipelines, and Hazardous Materials, U.S. House of 
        Representatives,
        Washington, DC 20515.
The Honorable Frederica Wilson,
Ranking Member,
House Committee on Transportation and Infrastructure, Subcommittee on 
        Railroads, Pipelines, and Hazardous Materials, U.S. House of 
        Representatives,
        Washington, DC 20515.
    Dear Chairman Nehls, Ranking Member Wilson and Members of the House 
Committee on Transportation and Infrastructure Subcommittee on 
Railroads, Pipelines, and Hazardous Materials:
    On behalf of Associated Builders and Contractors, a national 
construction industry trade association with 67 chapters representing 
more than 23,000 members, I appreciate the opportunity to comment on 
today's hearing, ``An Examination of the California Air Resources 
Board's (CARB) In Use Locomotive Regulation.''
    On Nov. 7, 2023, the California Air Resources Board requested that 
the U.S. Environmental Protection Agency authorize its In-Use 
Locomotive Regulation pursuant to section 209(e) of the Clean Air Act. 
This regulation would ban all locomotives 23 years or older from 
operating within California and mandate zero-emissions locomotives by 
2030.
    To date, no commercially viable, zero-emission locomotives exist 
that would comply with CARB's rule, imposing unfeasible restrictions 
that could have a devastating impact on the construction industry. 
EPA's authorization of the CARB rule would impose enormous compliance 
costs and likely have national impacts on the railway system, creating 
new logistical challenges for a key part of the supply chain. This 
could potentially lead to significantly increased construction 
materials prices, which are already 41% higher [https://www.abc.org/
News-Media/News-Releases/abc-construction-materials-prices-decrease-in-
may-for-the-first-time-since-december] than they were at the start of 
the pandemic.
    While ABC joined a wide range of industry stakeholders in 
submitting comments [https://www.abc.org/
LinkClick.aspx?fileticket=MycJTZ0Xvjk%3d&portalid=1&
language=en-US] urging the EPA to deny this request, it is critical 
that the EPA understands the significant risks associated with 
authorizing this rule, including closure of short-line operators unable 
to afford compliance, soaring supply chain costs and delays to critical 
infrastructure projects.
    While ABC recognizes the importance of maintaining environmental 
safeguards, CARB's regulatory overreach threatens America's contractors 
that work to deliver construction projects on time and on budget. ABC 
appreciates the subcommittee's efforts to investigate this harmful 
rule. Our members stand ready to build and maintain America's 
infrastructure without undue regulatory burdens.
            Sincerely,
                                        Kristen Swearingen,
                   Vice President, Legislative & Political Affairs,
                               Associated Builders and Contractors.

                                 
   Letter of July 8, 2024, to Hon. Troy E. Nehls, Chairman, and Hon. 
    Frederica S. Wilson, Ranking Member, Subcommittee on Railroads, 
 Pipelines, and Hazardous Materials, from Ryan Bowley, Vice President, 
Government Affairs, The Fertilizer Institute, Submitted for the Record 
                         by Hon. Troy E. Nehls
                                                      July 8, 2024.
The Honorable Troy Nehls,
Chairman,
Subcommittee on Railroads, Pipelines and Hazardous Materials, Committee 
        on Transportation and Infrastructure, U.S. House of 
        Representatives, 2029 Rayburn House Office Building, 
        Washington, DC 20515.
The Honorable Frederica Wilson,
Ranking Member,
Subcommittee on Railroads, Pipelines and Hazardous Materials, Committee 
        on Transportation and Infrastructure, U.S. House of 
        Representatives, 589 Ford House Office Building, Washington, DC 
        20515.
    Dear Chairman Nehls & Ranking Member Wilson:
    Over sixty percent of fertilizer moves by rail year-round in the 
United States, making an efficient rail system essential to ensuring 
that fertilizers are available to U.S. farmers during key application 
windows. In many cases, rail is the only way to transport fertilizer 
products long distances, and as a single rail tank car is the 
equivalent to four tank trucks, rail is often the most efficient and 
safest way to ship fertilizers.
    The fertilizer industry is also committed to environmental 
stewardship, with many companies at the forefront of increasing energy 
efficiency and working towards decarbonizing manufacturing sites to 
increase the sustainability of fertilizers while ensuring agricultural 
productivity.
    With these factors in mind, we are concerned about the impacts from 
the California Air Resources Board (CARB) In-Use Locomotive Regulation 
on freight rail operations and the ability of our member companies to 
meet the needs of their customers--America's farmers--who depend upon 
timely delivery of these critical plant nutrients. As you know, the 
CARB rule would ban most locomotives more than 23 years old beginning 
in 2030 and require a switch to zero emissions equipment for new line-
haul locomotives beginning in 2025. This mandate from CARB was 
established despite the reality that zero emissions locomotive 
technology is not commercially available today.
    As noted by the Association of American Railroads in its recent 
comments to the Environmental Protection Agency (EPA), the Regulation 
``would effectively ban the operation in California of locomotives more 
than 23 years old . . . if CARB's regulation is authorized, more than 
\2/3\ of the locomotive fleet could not enter California.'' Such an 
artificial limitation of railroad capacity would cause significant 
disruption to the operations of the rail carriers serving the West 
Coast, with ripple effects across the country impacting fertilizer 
deliveries and shipments of farm products after harvest. This risks 
additional food price inflation impacting American consumers.
    The likely impacts of CARB's rule on the agriculture sector were 
highlighted in a recent article from agricultural economists published 
by the University of Illinois Urbana-Champaign.\1\ The article, which 
is enclosed with this letter, focuses on the importance of ``efficient 
and cost-effective rail transportation to move agricultural commodities 
to West Coast ports'' for the nearly $100 billion in agricultural and 
food exports from the Midwest. As noted by the authors, ``the potential 
economic implications [from CARB's In-Use Locomotive Regulation] . . . 
could be significant.''
---------------------------------------------------------------------------
    \1\ Steinbach, S., S. Arita, S. Meyer, and S. Sydow. ``How 
California's New Locomotive Regulation Could Impact Midwest 
Agriculture.'' farmdoc daily (14): 121, Department of Agricultural and 
Consumer Economics, University of Illinois at Urbana-Champaign, June 
28, 2024.
---------------------------------------------------------------------------
    These impacts include ``elevated shipping costs [that] diminish the 
competitiveness of U.S. agricultural products'' and ``logistical 
inefficiencies [that] can restrict access to vital markets and decrease 
market share.'' The authors go on to note that California's rules have 
the potential to be adopted by other states, ``possibly impacting other 
rail transportation routes to key markets and ports, such as those in 
the Pacific Northwest.'' While the article focuses on farm and food 
products, it's conclusions reinforce TFI's concern that CARB's rule 
will impact the fertilizer industry directly through increased costs 
and greater challenges in transporting products to farmers and 
indirectly as those farmer customers similarly face additional economic 
and operational challenges in transporting their goods to markets.
    In a previous letter to EPA regarding the Regulation, TFI and 
others across the agriculture industry further noted that CARB's 
regulation ``would require railroads and rail customers to meet 
regulatory goals that cannot be reached . . . zero emissions 
locomotives would have to be purchased . . . but such locomotives are 
not yet commercially viable and won't be in the foreseeable future.'' 
\2\ Additionally, the Regulation's ``Spending Account'' provisions risk 
creating disruptive financial burdens to short line railroads who often 
provide critical service to farm communities and customers.
---------------------------------------------------------------------------
    \2\ Agriculture Transportation Work Group, Comment on California 
State Nonroad Engine Pollution Control Standards; In-Use Locomotive 
Regulation; Requests for Authorization (April 5, 2024). https://
www.regulations.gov/comment/EPA-HQ-OAR-2023-0574-0080.
---------------------------------------------------------------------------
    TFI appreciates the Subcommittee holding a hearing on CARB's In-Use 
Locomotive Regulation, the impacts of the Regulation, and its legality 
under the Clean Air Act and federal preemption statutes prohibiting 
state and local regulation of rail transportation. Speaking to the 
interstate commerce impacts of CARB's rule, the Surface Transportation 
Board, rightly noted its ``potentially highly significant impact . . . 
on interstate rail transportation,'' in some cases ``directly managing 
or governing rail transportation.'' \3\ The significant impacts of 
CARB's action--impacts that will be felt by rail customers and 
ultimately American consumers--demand close Congressional attention and 
scrutiny.
---------------------------------------------------------------------------
    \3\ Surface Transportation Board, Comment on California State 
Nonroad Engine Pollution Control Standards; In-Use Locomotive 
Regulation; Requests for Authorization (April 23, 2024). https://
www.regulations.gov/comment/EPA-HQ-OAR-2023-0574-0155.
---------------------------------------------------------------------------
    Thank you again for your attention on this important issue. Should 
you have any questions, please contact me.
            Sincerely,
                                               Ryan Bowley,
      Vice President, Government Affairs, The Fertilizer Institute.
                               __________
                               Attachment
    How California's New Locomotive Regulation Could Impact Midwest 
                              Agriculture
    [The 10-page document is retained in committee files and is 
available online at https://farmdocdaily.illinois.edu/2024/6/how-
californias-new-locomotive-regulation-could-impact-midwest-
agriculture.html]

                                
 Statement of Ian N. Jefferies, President and Chief Executive Officer, 
  Association of American Railroads, Submitted for the Record by Hon. 
                             Troy E. Nehls
                              Introduction
    On behalf of the members of the Association of American Railroads 
(AAR), thank you for the opportunity to submit this statement for the 
record about the California Air Resources Board's (CARB) regulation on 
emissions from in-use locomotives.
    At the outset, let me be clear that the rail industry shares the 
goal of CARB, the Environmental Protection Agency (EPA), and members of 
Congress to improve air quality and reduce greenhouse gas (GHG) 
emissions related to rail transportation. Railroads know that, as 
cumulative global emissions continue to rise, emissions reductions and 
policies aimed at transitioning toward a net-zero economy are 
desirable.
    Those policies, though, must be realistic, lawful, and reasonable 
from a cost-benefit standpoint. The policies cannot assume that 
technology that does not exist can simply be willed into existence. And 
the policies must not unduly impair the efficient functioning of the 
national freight rail network. Unfortunately, as explained below, 
CARB's regulation fails on all these fronts, which is why the EPA 
should deny the authorization necessary for it to take effect.
     Railroads Are Crucial for Economic and Environmental Progress
    Freight railroads play an outsized role in keeping our economy 
moving. They serve our industrial and agricultural economies by moving 
enormous quantities of raw materials and finished goods to and from 
production areas. Without railroads, international trade as we know if 
could not exist: railroads connect our farmers, mining operations, and 
manufacturers with both domestic markets and markets in Canada, Mexico, 
and overseas. Millions of Americans work in industries that are more 
competitive in the tough global economy thanks to the affordability and 
productivity of America's freight railroads. Railroads also make it 
possible for retailers to fill their shelves with the products we want 
to buy. In short, it is virtually impossible to overstate freight 
railroads' contribution to our economic well-being, standard of living, 
and quality of life.
    Railroads are already an environmentally preferred way to move 
freight. On average, railroads move a ton of freight nearly 500 miles 
on one gallon of fuel. Railroads are three to four times more fuel 
efficient than trucks, and a single train can replace several hundred 
trucks on our already congested highways. Railroads account for 
approximately 40 percent of U.S. long-distance freight volume (measured 
by ton-miles) but account for just 1.8 percent of total U.S. 
transportation-related GHG emissions and just 0.6 percent of total U.S. 
GHG emissions.
    Railroads, though, are not satisfied with the status quo: they are 
continually seeking out further emissions reductions, both voluntarily 
and as the result of cooperative partnerships with local and state 
regulators. They have invested in zero-emission support infrastructure, 
expanded the use of biofuels to reduce their carbon footprint, and 
integrated new technologies to minimize fuel consumption, further 
reducing emissions.
    AAR's members have also been working with locomotive manufacturers 
to develop and test low- and zero-emission battery-powered locomotives, 
and several railroads are also investigating the potential of hydrogen 
fuel-cell locomotives. However, these locomotives are still firmly at 
the development and testing stage and are nowhere near commercial 
viability.
                     What CARB's Regulation Entails
    CARB's regulation, if authorized, would prohibit railroads, 
beginning in 2030, from operating locomotives in California that are 
more than 23 years beyond their original manufacture date. This means 
locomotives originally built in 2007 or earlier would effectively be 
banned in California. The regulation also states that, beginning in 
2030 for industrial, switch, and passenger locomotives and 2035 for 
line-haul locomotives, newly purchased locomotives operated in 
California must be zero-emission.\1\
---------------------------------------------------------------------------
    \1\ Generally speaking, switch locomotives are lower horsepower 
units used primarily to move railcars in rail yards and short distances 
outside rail yards. Line-haul locomotives are generally higher 
horsepower units used predominantly on mainline tracks for long-
distance movements.
---------------------------------------------------------------------------
    Of the approximately 23,000 locomotives in the U.S. Class I 
railroad locomotive fleet today, more than 15,000--nearly two-thirds--
were built before 2007. Non-Class I railroads operate several thousand 
additional locomotives. According to CARB, as of 2020, the average age 
of non-Class I locomotives in California was 43 years old.\2\
---------------------------------------------------------------------------
    \2\ Class I railroads--there are six today--are those with 2022 
revenue of at least $1.03 billion. They account for roughly 95 percent 
of U.S. rail industry revenue. The more than 600 non-Class I railroads, 
also called short line and regional railroads, range in size from tiny 
operations handling a few carloads a month to much larger entities 
operating across several states. Non-Class I railroads rarely purchase 
new locomotives, but instead typically purchase used units from Class I 
carriers, leasing companies, rail equipment dealers, or other non-Class 
I railroads.
---------------------------------------------------------------------------
    CARB's regulation also requires railroads to deposit funds into an 
escrow account overseen by the state to be used exclusively to purchase 
and test zero-emission technology. Initial estimates from BNSF and 
Union Pacific, the two Class I freight railroads operating in 
California, indicate the required deposit would amount to $700-$800 
million per year per railroad. Non-Class I railroads too would be 
required to pay up to several million dollars into this fund each 
year--far exceeding what some could absorb without facing insolvency.
       The CARB Regulation Would Cripple Interstate Rail Traffic
    A key feature of the North American rail network is its 
interoperability, which underlies its efficiency and cost 
effectiveness. Locomotives cross state lines and national borders 
thousands of times a day, seamlessly pulling trains from one end of the 
country to the other and everywhere in between. Railroads do not, and 
could not, have dedicated fleets for each state. It therefore makes 
little sense to speak of a ``California rail industry'' or a ``New York 
rail industry'' or a ``Missouri rail industry.'' Rather, we have a 
truly national, completely interconnected freight rail industry. 
Indeed, a rail car or locomotive could find itself in Texas one day, in 
California a week later, in Illinois a week after that, and in 
Pennsylvania a week after that.
    Yet CARB's regulation would force railroads to adopt such a model. 
This means that if CARB's regulation were authorized, more than two-
thirds of the U.S. Class I locomotive fleet could not enter California 
(and any state that replicated the CARB rule). According to data from 
the Surface Transportation Board, California is sixth in the nation in 
the volume of rail carloads that originate, terminate, or move through 
a state--6.8 million carloads for California in 2022.\3\ Moreover, 
California is home to the two largest intermodal ports in the United 
States. A huge variety of imported goods arrive at these ports and move 
inland by rail, while exports from throughout the country make their 
way by rail to those ports for shipment overseas.
---------------------------------------------------------------------------
    \3\ See https://www.stb.gov/wp-content/uploads/CARSSTATE-2022.xlsx.
---------------------------------------------------------------------------
    CARB's regulation would therefore hamstring interstate commerce. 
Under the best-case scenario, locomotives would need to be switched at 
the California border--assuming a compliant locomotive were available 
and railyards were subsequently constructed at every intersection point 
along the state borders. If no compliant locomotive were available, 
freight coming into California would need to be transferred from train 
to trucks. The result would be supply chain disruptions and widespread 
diversions of freight from rail to trucks that are less fuel efficient 
and less cost effective than railroads. Truck-caused highway damage 
would also increase. Supply chains would become hopelessly snarled and 
logistics costs would skyrocket.
    It is not just rail track and carloads that are interconnected. At 
any given moment, 5% to 10% of the line-haul locomotives operated by 
Class I railroads are owned or leased by another railroad, a practice 
known as ``locomotive run-through interoperability.'' As a result, it 
is a regular occurrence, for example, for trains to leave Chicago for a 
destination in California without a change to the locomotive(s) pulling 
that train. This practice allows railroads to maximize operational 
efficiency and reduces transportation time by eliminating the need to 
exchange locomotives when moving from one railroad's line to another's. 
Therefore, CARB's regulation of emissions from locomotives ``that 
operate in California'' is tantamount to the nationwide regulation of 
locomotive emissions.
    The regulation would force railroads to set aside massive funds 
each year to support a premature transition to zero-emission 
technology. Forcing railroads to set aside this level of funding will 
almost certainly increase the cost of rail service in California and 
elsewhere, ultimately driving up prices for consumers and pushing more 
rail traffic to trucks. For many small railroads, the required set 
aside will lead to their insolvency. A policy that leads to such an 
outcome cannot possibly be considered sound.
    Finally, if EPA were to authorize CARB's regulation, California 
would be the first state to adopt these standards, but not the only 
one. Other states are given the authority to adopt an identical 
regulation to California's if EPA does grant that authorization. 
Comparing this regulation to equivalent ones on passenger vehicles and 
the trucking sector, it is probable that anywhere from a dozen to 
eighteen other states could chose to adopt California's regulation into 
their own state laws. This would further degrade the interoperability 
of the network and compound the financial obligations of the spending 
account provision as the regulation spreads across the country.
                The CARB Regulation Violates Federal Law
    Congress has provided neither CARB nor EPA the authority to mandate 
the rapid and technologically infeasible decarbonization of the rail 
industry. Moreover, Congress has long recognized that if the rail 
network is going to function safely and efficiently while meeting the 
economic needs of the nation, railroads cannot be subject to a 
patchwork of different state and local regulations across the country.
    In addition to violating the Clean Air Act's prohibition on states 
regulating emissions from new locomotives, CARB's regulation violates 
the ICC Termination Act (ICCTA) of 1995 because it runs afoul of 
ICCTA's federal preemption provisions. Policymakers have long 
recognized that the integrated nature of the industry is crucial to its 
success. For example, in 1970, Congress found that the railroad 
industry `` . . . has a truly interstate character calling for a 
uniform body of regulation and enforcement . . . The integral operating 
parts of these companies cross many State lines. In addition to the 
obvious areas of rolling stock and employees, such elements as 
operating rules, signal systems, power supply systems, and 
communication systems of a single company normally cross numerous State 
lines. To subject a carrier to enforcement before a number of different 
State administrative and judicial systems in several areas of operation 
could well result in an undue burden on interstate commerce.'' \4\
---------------------------------------------------------------------------
    \4\ H.R. Report No. 91-1194, 1970.
---------------------------------------------------------------------------
    Congress adopted this same sound reasoning when it passed ICCTA. 
Congress recognized that the federal government should retain exclusive 
control over the regulation of railroad operations due to the inherent 
interstate nature of freight railroading. Specifically, ICCTA grants 
the Surface Transportation Board (STB) exclusive jurisdiction over 
``transportation by rail carriers, and the remedies provided . . . with 
respect to rates, classifications, rules . . . practices, routes, 
services, and facilities of such carriers.'' Under ICCTA, 
``transportation'' refers to ``a locomotive, car, vehicle, vessel, 
warehouse, wharf, pier, dock, yard, property, facility, 
instrumentality, or equipment of any kind related to the movement of 
passengers or property, or both, by rail'' and ``services related to 
that movement.''
    Courts have held that ICCTA plainly preempts local environmental 
regulations targeting railroads, such as rules imposing reporting 
requirements related to emissions and restricting the idling time 
allowed for locomotives. Indeed, CARB itself has acknowledged that 
attempts to regulate the rail industry were preempted by federal law.
    By specifically targeting the rail industry, CARB's rule violates 
ICCTA's preemption sections. The rule's spread would create an 
unworkable, fragmented patchwork of state regulations for locomotive 
emissions that would cause far more problems and entail far more costs 
than other, better alternatives that could be pursued instead.
   Commercially Viable Zero-Emission Freight Locomotives Do Not Exist
    In recent years, the rail industry and their suppliers have made 
significant investments in developing and testing prototype battery 
electric and hydrogen fuel cell locomotives. Significant progress has 
been made and much promising work continues.
    That said, given the current stage of development of zero-emission 
locomotive technologies, compliance with the time frames found in this 
regulation is not feasible. Today, zero-emission locomotives are still 
in the early testing phase of development and are not close to 
widespread commercial viability. The premature retirement of older 
locomotives, without availability of zero-emission replacements, simply 
makes no sense.
    CARB's regulation goes also goes beyond what the U.S. Department of 
Energy (DOE) believes to be technologically feasible. In its Fiscal 
Year 2025 Budget Request, DOE requested $35 million to, among other 
items, demonstrate a 50% reduction in GHG emissions in a locomotive 
engine by 2030.\5\ This stands in stark contrast to the portion of 
CARB's regulation which would require all new locomotives purchased for 
use in California to be fully zero-emissions beginning in 2030.
---------------------------------------------------------------------------
    \5\ U.S. Department of Energy, FY 2025 Congressional Justification, 
Vehicle Technologies, Decarbonization of Off-Road, Rail, Marine, and 
Aviation Technologies (March 2024) https://www.energy.gov/sites/
default/files/2024-03/doe-fy-2025-budget-vol-4-v2.pdf
---------------------------------------------------------------------------
    In addition to the lengthy timelines needed to commercialize zero-
emission locomotives, railroads would also need to build out a national 
network to supply power to these new locomotives. No matter the power 
source, new infrastructure will require permits and environmental 
reviews, which would take years even in a best-case scenario. It would 
be impossible to meet either the 2030 or 2035 timelines established in 
the regulation, even if an adequate number of theoretical zero-emission 
line-haul locomotives actually existed.
    CARB itself does not suggest that zero-emission locomotives are 
available now or will be by 2030. Rather, CARB says only that zero-
emission technology might be possible at some point. CARB fails to 
consider if the technology will be safe, reliable, maintainable, or 
operable on the North American rail network. CARB's regulation relied 
on flawed literature and interviews with non-rail personnel who lack 
the requisite knowledge needed on this topic.
                               Conclusion
    In the past, railroads and CARB have worked collaboratively to 
drive significant reductions in emissions. These initiatives have 
helped pave the way for more sustainable rail operations across the 
nation. It is deeply unfortunate that CARB has decided to forego the 
proven path of collaboration in favor of flawed assumptions, 
regulations that lack legal authority, and a casual and willful 
disregard for technological realities. While the spirit behind CARB's 
regulation is consistent with the rail industry's environmental 
commitment, the regulation itself is unworkable and infeasible. EPA 
should therefore deny the authorization needed for CARB's regulation to 
be enforced.

                                
  Letter of April 10, 2024, to Hon. Michael S. Regan, Administrator, 
Environmental Protection Agency, from U.S. Chamber of Commerce et al., 
             Submitted for the Record by Hon. Troy E. Nehls
                                                    April 10, 2024.
The Honorable Michael S. Regan,
Administrator,
Environmental Protection Agency, 1200 Pennsylvania Avenue NW; 1101-A, 
        Washington, DC 20460.

Re:  CARB's Clean Air Act Authorization Request (EPA-HQ-OAR-2023-0574)

    Dear Administrator Regan:
    We urge you to deny the California Air Resources Board's (CARB) 
application to exempt its In-Use Locomotive Regulation (Regulation) 
from the Clean Air Act.
    The overreach of the CARB Regulation is stunning. It would mandate 
zero-emissions locomotives in some cases by 2030 and across-the-board 
by 2035, even though the technologies necessary to achieve these 
reductions do not exist.
    Despite moving 40% of the nation's long-distance freight by ton-
mile, the sector accounts for only 0.6% of U.S. GHG emissions. 
Moreover, railroads are an essential freight transportation option for 
American businesses--including those in manufacturing, agriculture, 
retail, and energy production--in which scale of operations is critical 
to competing in the global market.
    Allowing the Regulation to move forward would cause enormous and 
destructive impacts to America's supply chains and economy, and likely 
increase greenhouse gas emissions.
      California Regulation Would Be National Regulation. A 
very large portion of the locomotive fleet moves through the state of 
California each year, so railroads operating as far away as Montana, 
Pennsylvania, North Carolina, and even Maine and Florida would be 
forced to comply with California's standard.

      The CARB Regulation Threatens the U.S. Supply Chain. 
Railroads are developing new technologies to reduce emissions, but 
there are no viable, zero-emission locomotives that could be deployed 
at scale to meet the demands of the CARB Regulation. Without proven 
technology in place, the logistical challenges of complying with this 
Regulation would be enormous and complicate critical supply chains for 
energy products, food, intermodal deliveries, and service to America's 
ports.

      Freight Would Be Forced from Rail to Roads. It is hard to 
envision a scenario whereby trains would stop at the California border 
to change locomotives without significant impact on national supply 
chains, making diversion of freight off the rail network the most 
likely outcome.

      The CARB Regulation Would Drive Short Line Railroads Out 
of Business. In California alone, short lines handle more than 260,000 
carloads per year. Nationally, short line railroads handle 20 percent 
of rail cars at origin and destination, serving virtually every 
industry. Short lines do not have the capacity to replace their entire 
locomotive fleets to comply with the deadlines.

      The CARB Regulation Would Harm the Largest Railroads and 
their Customers. Estimates suggest that Class I railroads would be 
required to deposit as much as $800 million per year, per railroad, for 
compliance with spending account provisions of the proposal. This 
capital drain could force major infrastructure improvements to be 
shelved, including those designed to reduce operations emissions and 
improve safety. Moreover, Union Pacific recently estimated that a fleet 
renewal as stipulated by the CARB Regulation would lead to more than 
$14 billion in cost increases passed on to consumers.

    Ultimately, the CARB Regulation would undermine efficiency and 
dramatically slow commerce, thereby undermining the integrity of the 
integrated supply chain and the reliability of railroads to meet 
demand. Ironically, it would also harm ongoing efforts to reduce 
greenhouse gas emissions in the freight rail industry. We urge you to 
reject CARB's application.
    Sincerely,
U.S. Chamber of Commerce.
Agricultural Retailers Association.
Aiken Chamber of Commerce.
Alaska Chamber.
Albany Area Chamber of Commerce (OR).
Arkansas State Chamber of Commerce / Associated Industries of Arkansas.
Ascension Chamber of Commerce.
Associated Industries of Florida.
Berkeley Chamber of Commerce.
Billings Chamber of Commerce.
Brea Chamber of Commerce.
Buckeye Valley Chamber of Commerce.
Buellton Chamber of Commerce.
Burlington Chamber of Commerce.
Cadillac Area Chamber of Commerce.
California Business Roundtable.
California Farm Bureau.
Campbell County Chamber of Commerce.
Canby Area Chamber of Commerce.
Carlsbad Chamber of Commerce.
Central Fairfax Chamber of Commerce.
Chamber Southwest Louisiana.
Chandler Chamber of Commerce.
Chicagoland Chamber of Commerce.
Chino Valley Chamber of Commerce.
Columbia Montour Chamber of Commerce.
Colusa County Chamber of Commerce.
Corsicana & Navarro County Chamber of Commerce.
Davis Chamber of Commerce.
Decatur Chamber of Commerce.
Detroit Regional Chamber.
Duchesne County Chamber of Commerce.
Eden Prairie Chamber.
Edwardsville/Glen Carbon Chamber of Commerce.
Fort Worth Chamber of Commerce.
Fountain Hills Chamber of Commerce.
Gateway Chambers Alliance.
Georgia Chamber of Commerce.
Glendora Chamber of Commerce.
Green Oaks, Libertyville, Mundelein, Vernon Hills Chamber of Commerce.
Grant County Chamber of Commerce.
Greater Binghamton Chamber of Commerce.
Greater Cheyenne Chamber of Commerce.
Greater Coachella Valley Chamber of Commerce.
Greater Flagstaff Chamber of Commerce.
Greater Grass Valley Chamber of Commerce.
Greater High Desert Chamber.
Greater Lafayette Commerce.
Greater Lawrence Chamber of Commerce.
Greater Mankato Growth.
Greater North Dakota Chamber.
Greater Omaha Chamber.
Greater Phoenix Chamber.
Greater Rochester Chamber of Commerce.
Greater Shreveport Chamber.
Greater Spokane Valley Chamber of Commerce.
Greater Topeka Chamber.
Habersham County Chamber of Commerce.
Harbor Association of Industry and Commerce.
Huber Heights Chamber of Commerce.
Illinois Chamber of Commerce.
Indiana Chamber of Commerce.
Inland Empire Economic Partnership.
Iowa Association of Business and Industry.
Joliet Region Chamber of Commerce & Industry.
Kalispell Chamber of Commerce.
Kentucky Chamber of Commerce.
Kingman Area Chamber of Commerce.
Louisiana Association of Business and Industry (LABI).
Laguna Hills Chamber of Commerce.
Laguna Niguel Chamber of Commerce.
Lewistown Area Chamber of Commerce.
Long Beach Area Chamber of Commerce.
Longview TX Chamber of Commerce.
Los Angeles Area Chamber of Commerce.
Los Angeles County Business Federation (BizFed).
Loudoun County Chamber of Commerce.
Maryland Chamber of Commerce.
Minneapolis Regional Chamber.
Minnesota Chamber of Commerce.
Missouri Chamber of Commerce and Industry.
Modesto Chamber of Commerce.
Montana Chamber of Commerce.
Moses Lake Chamber of Commerce.
Murrieta/Wildomar Chamber of Commerce.
Nebraska Chamber of Commerce & Industry.
Nevada Farm Bureau Federation.
New Jersey State Chamber of Commerce.
Newark Regional Business Partnership.
Newport Beach Chamber of Commerce.
North Carolina Chamber of Commerce.
North Country Chamber of Commerce.
North San Diego Business Chamber.
Norwalk Chamber of Commerce.
Orange County Business Council.
Oregon Business & Industry.
Palm Desert Area Chamber of Commerce.
Palos Verdes Peninsula Chamber of Commerce.
Payson Santaquin Area Chamber of Commerce.
Pennsylvania Chamber of Business and Industry.
Pocatello-Chubbuck Chamber of Commerce, Inc.
Port Hueneme Chamber of Commerce.
Prattville Area Chamber of Commerce.
Queen Creek Chamber of Commerce.
Queens Chamber of Commerce.
Rancho Mirage Chamber of Commerce.
Rio Rancho Chamber of Commerce.
Roseburg Area Chamber of Commerce.
San Angelo Chamber of Commerce.
San Gabriel Valley Economic Partnership.
San Marcos Chamber of Commerce.
Santa Barbara South Coast Chamber of Commerce.
Santa Paula Chamber of Commerce.
Santee Chamber of Commerce.
Schuylkill Chamber of Commerce.
Simi Valley Chamber of Commerce.
South Bend Regional Chamber.
South Dakota Chamber of Commerce & Industry.
South Valley Chamber of Commerce.
St. Paul Area Chamber.
Streetsboro Area Chamber of Commerce.
The Chamber of Grand Forks / East Grand Forks.
The Greater Houston Partnership.
The Greater Springfield Chamber of Commerce.
The Mansfield Area Chamber of Commerce.
Tulare Chamber of Commerce.
Union County KY Chamber of Commerce.
Utah Valley Chamber of Commerce.
Vegas Chamber.
Washington County (MD) Chamber of Commerce.
West Ventura County Business Alliance.
White Pine Chamber of Commerce.
Will County Center for Economic Development.
Willits Chamber of Commerce.
Yorba Linda Chamber of Commerce.

                                
Letter of April 22, 2024, to the Environmental Protection Agency, from 
  Daniel J. Erspamer, Chief Executive Officer, Pelican Institute for 
  Public Policy et al., Submitted for the Record by Hon. Troy E. Nehls
                                                    April 22, 2024.
U.S. Environmental Protection Agency,
EPA Docket Center,
Office of Air and Radiation, Docket EPA-HQ-OAR-2023-0574, Mail Code 
        28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

a-and-r-docket@epa.gov

Subject:  Opposition to the California Air Resources Board In-Use 
Locomotive Regulation

    Administrator Regan,
    We, the undersigned individuals, and representatives of state 
public policy organizations, write to you today to express our strong 
opposition to the California Air Resources Board (CARB) rule targeting 
the freight rail industry. We believe this CARB rule, now under review 
by your agency as it pursues a waiver, poses significant threats to the 
engines of our economy and the broader supply chain. State economies 
could be particularly affected, as well as infrastructure and supply 
chains that vary by location.
    The CARB rule suffers from several critical and fatal flaws.
    Namely, it unfairly burdens the freight rail industry and their 
customers without acknowledging the limitations of current 
technologies. The rule fails to consider the ongoing challenges and 
complexities faced by the industry to convert or eliminate locomotives 
when the feasibility, practicality, and technology do not exist. CARB's 
lack of meaningful consultation and dialogue with key stakeholders, 
including railroads, shippers, and stakeholders, is evident with the 
drafting and implementation of this arbitrary and misguided rule.
    Furthermore, the CARB rule significantly underestimates its 
potential negative impact on commerce and consumers. By unfairly and 
unjustly targeting the freight rail industry, this regulation is likely 
to inflate costs for businesses and shippers that rely on rail 
transportation. These increased costs will inevitably translate to 
higher prices for American consumers who are already burdened with 
record inflation.
    Diesel locomotives are critical components of the nation's 
transportation network and should be celebrated as an environmental 
success story. They facilitate the safe and efficient movement of 
essential commodities, goods, and products, from agriculture to 
automobiles. In fact, the freight rail industry has invested billions 
of dollars to modernize and upgrade their fleet to reduce emissions 
through voluntary initiatives, resulting in substantial reductions in 
emissions. The proposed CARB rule, with its additional regulatory 
burdens, could be counterproductive to this effort.
    In addition to the economic and environmental concerns outlined 
above, the CARB rule threatens to disrupt the efficiency and flow of 
the entire nation's supply chain. This could lead to increased delivery 
delays and disruptions, inefficiencies, and inequities across state 
lines, and impede industry-leading technological innovations and 
investment.
    Critically for this group of signers, if the EPA rubber stamps this 
rule, it could effectively set a precedent that allows one state to 
unilaterally dictate environmental and transportation policy for the 
other 49 states. One state should not be empowered--explicitly or 
implicitly--to dictate policy for the rest of the country. This is the 
opposite of federalism.
    We believe that environmental protection should be balanced with 
the need for a robust and resilient transportation system that supports 
economic growth and future prosperity. This CARB rule, as it stands, 
tilts the scales dangerously out of balance as it cripples one of our 
nation's economic engines.
    We urge the EPA to unequivocally reject the proposed CARB rule and 
safeguard the interests of our citizens, our commerce, and our 
communities.
    Thank you for your time and consideration of our comments.
            Sincerely,
Stephanie Smith,
  President & CEO, Alabama Policy Institute.
Lance Christensen,
  Vice President, Education Policy & Government Affairs, California 
Policy Center.
Garrett Ballengee,
  President & CEO, Cardinal Institute for West Virginia Policy.
Andre J. Beliveau,
  Senior Manager of Energy Policy, Commonwealth Foundation.
Tim Hoefer,
  CEO, Empire Center for Public Policy.
Kyle Wingfield,
  President & CEO, Georgia Public Policy Foundation.
Heather Curry,
  Director of Strategic Engagement, Goldwater Institute for Public 
Policy.
Ronald M. Nate, Ph.D.,
  President, Idaho Freedom Foundation.
C.J. Szafir,
  CEO, Institute for Reforming Government.
Lindsay Killen,
  Vice President of National Strategy, James Madison Institute.
Matthew Gagnon,
  CEO, Maine Policy Institute.
Douglas Carswell,
  CEO, Mississippi Center for Public Policy.
Chris Cargill,
  President & CEO, Mountain States Policy Center.
John Tsarpalas,
  President, Nevada Policy Research Institute.
Daniel J. Erspamer,
  CEO, Pelican Institute for Public Policy.
Jim Vokal,
  CEO, Platte Institute.
Mike Stenhouse,
  Founder & CEO, Rhode Island Center for Freedom & Prosperity.
Paul Gessing,
  President, Rio Grande Foundation.
Bette Grande,
  Co-Founder & CEO, Rough Rider Policy Center.
Derrick Max,
  President, Thomas Jefferson Institute for Public Policy.
Mandy Ludtke,
  Executive Director, Wyoming Liberty Group.
Carol Platt Liebau,
  CEO, Yankee Institute for Public Policy.

                                
 Letter of July 9, 2024, to Hon. Troy E. Nehls, Chairman, Subcommittee 
on Railroads, Pipelines, and Hazardous Materials, and Hon. Rick Larsen, 
 Ranking Member, Committee on Transportation and Infrastructure, from 
   David Williams, President, Taxpayers Protection Alliance et al., 
             Submitted for the Record by Hon. Troy E. Nehls
                                                      July 9, 2024.
The Honorable Troy Nehls,
Chair,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, 
        Committee on Transportation and Infrastructure, U.S. House of 
        Representatives, 2165 Rayburn House Office Building, 
        Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
Committee on Transportation and Infrastructure, U.S. House of 
        Representatives, 2165 Rayburn House Office Building, 
        Washington, DC 20515.

Re:  Opposition to the California Air Resources Board In-Use Locomotive 
Regulation Docket EPA-HQ-OAR-2023-0574

    We, the undersigned individuals and representatives of national 
organizations and think tanks representing millions of taxpayers and 
consumers, write to express our strong opposition to the California Air 
Resources Board (CARB) rule regarding diesel locomotives. As advocates 
for accountable and responsible governance, economic opportunity and 
prosperity, consumer welfare, and taxpayer protection, we believe that 
this regulation sets a dangerous precedent for American commerce and 
consumers. This will have negative consequences that are not restricted 
to California. Therefore, we urge the Environmental Protection Agency 
(EPA) to reject the Clean Air Act (CAA) waiver request.
    CARB's recent mandate for diesel locomotives, as reported in 
various media outlets including National Review, The Wall Street 
Journal, and Washington Examiner, is deeply concerning. The new rule 
would put in place emissions standards that are both unreasonable and 
unworkable. CARB's unilateral imposition of unachievable and 
unrealistic technological requirements on locomotive manufacturers 
threatens to disrupt vital supply chains and transportation links on 
which American consumers and industry rely. Their rule will exacerbate 
delays and disruptions and increase inflationary pressures.
    CARB's failure to engage productively with the industry or their 
millions of customers during the drafting of this onerous mandate 
demonstrates that the rule prioritizes politics over practical public 
policy. A lack of industry dialogue has highlighted the infeasibility 
of CARB's proposed rule due to significant resource and technological 
challenges.
    Freight rail locomotives play a crucial role in hauling commercial 
cargo and industrial products across vast distances efficiently and 
safely. American freight railroads are recognized as the cleanest and 
safest means of long-haul transportation in the nation. Yet, CARB 
continues to target the rail industry with unparalleled regulations.
    The primary concern with CARB's rule is its imposition of deadlines 
and standards that exceed current technological capabilities. Reputable 
institutions, such as the Alliance for Innovation and Infrastructure, 
the Competitive Enterprise Institute, The Heritage Foundation, and the 
Washington Legal Foundation, have emphasized the technological 
infeasibility of CARB's emission mandate. Such unrealistic requirements 
place an excessive burden on manufacturers, railroads, and suppliers. 
This will hinder economic growth, stifle supply chains, and threaten 
innovation and investment.
    Additionally, the CARB regulation mandates railroads deposit 
significant funds into a California-created and California-managed 
account. This diverts crucial resources away from capacity 
enhancements, infrastructure upgrades, safety and service projects, and 
technology improvements. Redirecting as much as 20 percent of annual 
investments into one account threatens the ability of railroads to 
invest in their future, especially when it comes to equipment, service, 
and the workforce.
    Furthermore, approving this California rule would set a troubling 
precedent of federal acquiescence to state overreach. Allowing 
individual states to dictate nationwide standards undermines regulatory 
consistency and creates a patchwork of conflicting regulations that 
will only serve to hinder interstate commerce in freight rail, an 
already over-regulated industry. Unelected bureaucrats and regulators 
in California should not be able to dictate national supply chain 
standards or transportation policy for the rest of the nation.
    Ultimately, the negative impact of this CARB rule on commerce and 
consumers cannot be overstated. It will drive up labor, production, 
shipping, and supply chain costs. This will create higher prices for 
goods and services for consumers of goods reliant on rail 
transportation. At a time when the federal government is focused on 
driving down inflation, this is the last thing the administration 
should consider or approve.
    We urge the agency to reject CARB's request for a CAA waiver, and 
instead advocate for a more balanced, collaborative, and scientific 
approach. Protecting communities and the environment need not require 
burdensome regulation. Rather, a sensible approach would engage 
industry stakeholders, foster economic growth, promote innovation, and 
protect taxpayers and consumers.
    Thank you for your consideration of this critical issue.
            Sincerely,
David Williams,
  President, Taxpayers Protection Alliance.
Melissa Melendez,
  Director of State Chapters & Executive Director for AFPI-California, 
America First Policy Institute.
Douglas Holtz-Eakin,
  American Action Forum.\\
Phil Kerpen,
  President, American Commitment.
Steve Pociask,
  President & CEO, The American Consumer Institute.
Tom Pyle,
  President, American Energy Alliance.
Richard Manning,
  President, Americans for Limited Government.
Marc Marie,
  Regulatory Policy Fellow, Americans for Prosperity.
Ryan Ellis,
  President & CEO, Center for a Free Economy.
Craig Rucker,
  President, Committee for a Constructive Tomorrow.
Patricia Patnode,
  Research Fellow, Competitive Enterprise Institute.
Matthew Kandrach,
  President, Consumer Action for a Strong Economy.
Yael Ossowski,
  Deputy Director, Consumer Choice Center.
David H. Safavian,
  Executive Vice President and General Counsel, CPAC.
David Wallace,
  Founder, FAIR Energy Foundation.
Phillip L. Bell,
  Director of External Relations, FreedomWorks.
George Landrith,
  President, Frontiers of Freedom.
James Taylor,
  President, The Heartland Institute.
Cameron Sholty,
  Executive Director, Heartland Impact.
Ryan Walker,
  Executive Vice President, Heritage Action.
David R. Henderson,
  Hoover Institution, Stanford University.\\
Andrew Langer,
  President, Institute for Liberty.
Tom Giovanetti,
  President, Institute for Policy Innovation.
Ike Brannon,
  Jack Kemp Foundation.\\
Alfredo Ortiz,
  CEO, Job Creators Network.
Charles Sauer,
  President, Market Institute.
Patrick McLaughlin,
  Mercatus Center, George Mason University.\\
Pete Sepp,
  President, National Taxpayers Union.
John Tamny,
  President, Parkview Institute.
Karen Kerrigan,
  President & CEO, Small Business & Entrepreneurship Council.
Stephen Moore,
  Co-Founder, Unleash Prosperity Now.
Norm Singleton,
  Senior Fellow, U.S. Policy.
James L. Martin,
  Founder/Chairman, 60 Plus Association.
Saulius ``Saul'' Anuzis,
  President, 60 Plus Association.
  
  

 Organization listed for identification purposes only

                                
  Letter of April 22, 2024, to Hon. Michael S. Regan, Administrator, 
   Environmental Protection Agency, from Herman Haksteen, President, 
Private Railcar Food and Beverage Association et al., Submitted for the 
                      Record by Hon. Troy E. Nehls
                                           Submitted Electronically

                                                    April 22, 2024.
The Honorable Michael S. Regan,
Administrator,
U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW; 
        1101-A, Washington, DC 20460.

Re:  Docket ID No. EPA-HQ-OAR-2023-0574

    Dear Mr. Administrator,
    The Private Railcar Food and Beverage Association, American Forest 
and Paper Association, Consumer Brands Association, Freight Rail 
Customer Alliance, National Coal Transportation Association, National 
Industrial Transportation League, and Western Coal Traffic League 
(otherwise referred to as ``Joint Associations''), is pleased to submit 
these comments on the California Air Resources Board's (CARB) request 
for U.S. Environmental Protection Agency (EPA) authorization of its In-
Use Locomotive Regulation (Regulation) in the above-referenced docket.
    We urge EPA to deny CARB's request. As major transportation 
stakeholders and some of the largest users of freight rail, Joint 
Associations' members are extremely concerned that the rule is both 
technically and economically infeasible, and therefore inconsistent 
with Clean Air Act (CAA) requirements. In addition, the Regulation is 
clearly preempted by the ICC Termination Act, 49 U.S.C. Sec. Sec.  
10101 et seq (ICCTA) as the Regulation would greatly interfere with 
rail transportation.
    The Private Railcar Food and Beverage Association (PRFBA) is 
comprised of 16 global food and beverage companies and manufacturers, 
headquartered in North America. These members include Frito-Lay 
(PepsiCo), Molson Coors Beverage Company, KraftHeinz Food Company, 
General Mills, Inc., McCain Foods USA, Inc., Nortera Foods/Bonduelle 
Americas, Tropicana Brands Group, Boardman Foods, Inc., G3 Enterprises, 
Inc., JD Irving/Cavendish Farms, Simplot, Lamb Weston Holdings, Inc., 
Univar Solutions, Land O' Lakes, Inc., National Sugar Marketing, LLC, 
and Leprino Foods. All are major rail shippers that rely on the 
railroads to produce and distribute their food and beverage products 
that are vital to the health and welfare of our nation and essential to 
feeding its citizens. Without adequate rail service, their food and 
beverages will not be on American store shelves.
    Moreover, PRFBA members all own or lease railcars. As such, they 
absorb costs associated with equipment ownership, operation, and 
maintenance. This regulation would greatly affect the ability to fully 
utilize PRFBA members' rail cars. If there is a shortage of 
locomotives, this would result in ``parking'' these railcar assets 
which is seldom a wise financial decision. PRFBA members invest 
millions of dollars in rail cars.
    The American Forest and Paper Association (AF&PA) is comprised of 
small, medium and large companies in rural and urban communities across 
the country making roughly 87% of the pulp, paper, paper-based 
packaging and tissue products made in the United States.
    The Consumer Brands Association (CBA) champions the industry that 
makes the products you choose and the brands you trust. From household 
and personal care to food and beverage products, the consumer packaged 
goods industry plays a vital role in powering the U.S. economy, 
contributing $2 trillion to U.S. GDP and supporting more than 20 
million American jobs.
    The Freight Rail Customer Alliance (FRCA) is an umbrella membership 
organization that includes large trade associations representing more 
than 3,500 electric utility, agriculture, chemical, and alternative 
fuel companies, and their consumers. The mission of FRCA's growing 
coalition of industries and associations is to obtain changes in 
Federal law and policy that will provide all freight shippers with 
reliable rail service at competitive prices.
    The National Coal Transportation Association (NCTA), is a non-
profit corporation comprised of electric utilities, coal producers, 
shippers of coal-related commodities, and entities that produce, 
repair, and manage all facets of railcar component parts and systems, 
as well as provide services for railcar operations. Its primary purpose 
is to promote the exchange of ideas, knowledge, and technology 
associated with the transportation and beneficial uses of coal.
    Founded in 1907, the National Industrial Transportation League 
(NITL) , has been a trade association representing The Voice of the 
Shipper across truck, rail, intermodal, ocean, and barge. NITL members 
represent a wide variety of commodities and businesses, who rely on 
efficient, competitive, and safe marine, rail, and highway 
transportation systems within the United States and beyond to meet 
their supply chain requirements and the needs of their customers. 
NITL's shipper members include those who move consumer goods, 
manufacturers, agriculture, chemicals, steel, forest products, fuels, 
food and more. NITL's 200 members spend billions on freight dollars 
annually and employ millions of people.
    The Western Coal Traffic League (WCTL) was founded in 1977. It is 
comprised of consumers of coal products produced from United States 
mines located west of the Mississippi River.
    The CARB rule would ban most locomotives more than 23 years old 
starting in 2030. It would require new passenger, switch, and 
industrial locomotives to be zero emissions beginning in 2030 and 
require new line-haul locomotives to be zero emissions beginning in 
2035. However, no commercially viable technology exists today for zero 
emission locomotives for line haul service.
    The CARB rule would require dramatic advances in locomotive 
technology. It would also require sweeping upgrades to the nation's 
electrical transmission system and interconnection permitting process 
that we believe are infeasible by the implementation deadlines. These 
issues raise serious concerns that the CARB regulation violates the 
CAA. As discussed in EPA's February 27, 2024, Federal Register Notice 
(89 FR 14484), EPA has previously held that state standards and 
enforcement procedures are inconsistent with section 202(a) of the CAA 
if ``there is inadequate lead time to permit the development of the 
necessary technology, giving appropriate consideration of the cost of 
compliance within that time.'' Following the precedent of these 
previous decisions, EPA should deny authorization of the CARB 
requirements.
    The Joint Associations strongly support a uniform federal 
regulatory framework for the nation's freight rail network. Allowing 
California and other states to adopt unique rules governing locomotives 
would be contrary to the ICC Termination Act of 1995, which largely 
preempts local or state laws that have a regulatory impact on 
railroads. If the CARB regulations were authorized by EPA, we believe 
freight rail carriers and their rail customers, including the 
respective members of the Joint Associations, would be significantly 
hindered financially and operationally. The inevitable increases in 
transportation costs and introduction of operational inefficiencies for 
shippers and receivers, especially for those who are rail-dependent or 
captive, would also result in further inflation. For these and other 
reasons, we believe there is substantial merit to the claims by the 
Association of American Railroads and the American Short Line and 
Regional Rail Association in their pending legal challenge of the rules 
in the U.S. District Court for the Eastern District of California that 
all or a significant part of CARB's regulations are preempted by 49 
U.S.C. Sec. 10501(b), which gives the Surface Transportation Board 
(``STB'') exclusive jurisdiction over the operations and other 
activities of freight railroads in interstate commerce, and as written 
preempts all state and federal laws that are in conflict. The District 
Court affirmed the legitimacy of the railroads' preemption arguments in 
an order issued February 16, 2024.
    The Ninth Circuit Court of Appeals (Court) in Ass'n of Am. R.Rs. v. 
S. Coast Air Quality Mgmt. Dist. (AAR), 622 F.3d 1094 (2010), has 
already held that idling rules and related reporting requirements that 
``apply exclusively and directly to railroad activity'' were 
``plainly'' preempted by the ICCTA. 622 F.3d at 1098. The Court 
explained that the ICCTA and STB precedent preserve a potential role 
for state and local environmental regulators, but it is limited: (1) 
state and local agencies may promulgate ``EPA-approved statewide 
plans'' under the CAA, which are sometimes ``possible to harmonize with 
ICCTA,'' or (2) state and local regulators may ``enforce their 
generally applicable regulations in a way that does not unreasonably 
burden railroad activity.'' Id. Here, no ``EPA-approved'' Statewide 
Implementation Plan is at issue. The provisions of the ``In-Use 
Locomotive Regulation,'' Cal. Code Regs., tit. 13, Sec.  2478 (emphasis 
added), are not ``generally applicable regulations,'' AAR, 622 F.3d at 
1098. Thus, under AAR, categorical preemption cannot be avoided merely 
because the Regulation is intended to address air pollution. As in AAR, 
the provisions here apply ``exclusively and directly to railroad 
activity'' and ``have the effect of managing or governing rail 
transportation.'' 622 F.3d at 1098 (quotation marks omitted); see also 
Delaware v. STB, 859 F.3d 16, 22 (D.C. Cir. 2017) (Del.) (upholding the 
STB's determination that locomotive idling rules were categorically 
preempted because the law directly and exclusively ``regulates rail 
transportation by prohibiting locomotives from idling in certain places 
at certain times'').
    In applying ICCTA categorical preemption, courts ask if the 
specific ``statutes or regulations'' at issue target railroad 
operations. Del., 859 F.3d at 19, 22. Thus, in AAR, the Court held that 
``rules'' imposing idling and reporting requirements ``plainly'' were 
not of ``general applicability,'' 622 F.3d at 1098, even though the 
South Coast ``regulated numerous sources of pollution'' other than 
locomotives.
    The ICCTA preempts state laws ``with respect to the regulation of 
rail transportation,'' 49 U.S.C. Sec.  10501(b)(2) (emphasis added), 
and courts have reasoned that when laws of general applicability are 
enforced against railroads--e.g., ``standard building, fire, and 
electrical codes''--the incidental impact on railroads is different 
than direct regulation. But there is nothing remote or incidental about 
the Regulation's effect on rail transportation. The provisions at issue 
apply ``exclusively and directly to railroad activity'' and govern how 
railroad operators must engage in railroad transportation in 
California. AAR, 622 F.3d at 1098.
    Allowing this Regulation would subvert the ICCTA's core objective 
of ``national uniformity in laws governing rail transportation.'' The 
STB has explained that non-federal rules regulating locomotive idling 
and imposing reporting obligations would ``directly interfere'' with 
the purpose of the ICCTA by subjecting railroads ``to fluctuating rules 
as they cross state lines.'' U.S. EPA, Petition for Declaratory Order, 
No. FD 35803, 2014 WL 7392860, at *6, *8 (S.T.B. Dec. 29, 2014) 
(describing locomotive idling rules adopted or considered by other 
states). If ICCTA categorical preemption evaporated whenever a state 
imposed supposedly analogous regulations on another industry, the 
railroad regulatory scheme would devolve into a balkanized system of 
state-by-state regulations--precisely what Congress sought to avoid by 
prioritizing ``the uniformity of Federal standards.'' H.R. Rep. No. 
104-311, at 96 (1995).
    In addition to the significant legal issues here, compliance costs 
and supply chain reliability are at stake for rail shippers and their 
customers across the country. Rail carries about 40 percent of long-
distance freight in the U.S. While this regulation is ostensibly 
imposed within California, the impact of this costly and burdensome 
regulation will be felt nation-wide. It is estimated that railroads 
will need to deposit up to $800 million per year in a ``Spending 
Account'' for purchase and testing of zero-emission equipment that does 
not exist or is viable. This compliance cost alone is estimated to 
increase costs to customers by $14 billion for just one Class I 
railroad. These costs of course will be passed on to customers, 
including those respective members of the Joint Associations.
    Further, the Joint Associations are concerned that the ``Spending 
Account'' provisions of the rule would impose significant financial 
burdens on railroads, which may be untenable for some short line 
railroads. If these carriers are unable to continue operations, it 
could create additional supply chain disruptions and negatively impact 
large segments of the economy, including manufacturers, farmers, and 
energy producers. Short line railroads handle 20 percent of rail cars 
at origin and destination and are a critical link for manufacturers and 
other businesses to access the national rail network. Short line 
railroads in California and railroads in other states that could 
subsequently adopt the California standards cannot absorb the costs to 
upgrade locomotive fleets and other compliance costs associated with 
this regulation, potentially leaving customers along any routes that go 
out of service without access to this mode of transportation. At worst, 
investments in other critical network upgrades or projects benefiting 
the environment will be diverted in order to pay for compliance with 
this regulation.
    In addition to the compliance costs, this standard threatens rail 
reliability by forcing adoption of unproven technology to power 
locomotives. Since the COVID-19 pandemic, the nation has seen the mess 
resulting from, and costs associated with, supply chain delays and 
disruptions.
    Voluntarily introducing unproven and potentially unreliable 
technology into this critical portion of the transportation sector is 
inviting future costly and time-wasting supply chain disruptions that 
can be entirely avoided by rejecting CARB's authorization request.
    The Joint Associations strongly oppose EPA granting CARB's request. 
We urge EPA to carefully consider the feasibility of the CARB rule as 
well as its potential impacts on freight shippers that rely on rail 
service to deliver essential products throughout the nation.
    Thank you for your consideration of our comments.
            Sincerely,
Herman Haksteen,
  President, Private Railcar Food and Beverage Association.
Julie Landry,
  Vice President, Government Affairs, American Forest & Paper 
Association.
  
Thomas Madrecki,
  Vice President, Campaigns & Special Projects, Consumer Brands 
Association.
Ann Warner,
  Spokesperson, Freight Rail Customer Alliance.
John Ward,
  Executive Director, National Coal Transportation Association.
Nancy O'Liddy,
  Executive Director, National Industrial Transportation League.
Bette Whalen,
  President, Western Coal Traffic League.
  
  

                                
   Letter of July 9, 2024, to Hon. Troy E. Nehls, Chairman, and Hon. 
    Frederica S. Wilson, Ranking Member, Subcommittee on Railroads, 
Pipelines, and Hazardous Materials, from Michael W. Johnson, President 
     and Chief Executive Officer, National Stone, Sand, and Gravel 
 Association, and Robert Dugan, President and Chief Executive Officer, 
California Construction and Industrial Materials Association, Submitted 
                  for the Record by Hon. Troy E. Nehls
                                                      July 9, 2024.
The Honorable Troy E. Nehls,
Chairman,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, 
        Washington, DC 20515.
The Honorable Frederica Wilson,
Ranking Member,
Subcommittee on Railroads, Pipelines, and Hazardous Materials, 
        Washington, DC 20515.
    Dear Chairman Nehls and Ranking Member Wilson:
    Ahead of the Railroads, Pipelines, and Hazardous Materials 
Subcommittee's July 9th Hearing entitled ``An Examination of the 
California Air Resources Board's (CARB) In Use Locomotive Regulation'' 
we write on behalf of the members of the National Stone, Sand & Gravel 
Association (NSSGA) and California Construction and Industrial 
Materials Association (CalCIMA), to express our concerns over the 
California Air Resources Board's (CARB) request for EPA authorization 
of its In-Use Locomotive Regulation.
    The CARB rule would ban most locomotives that are more than 23 
years old starting in 2030. It would require new passenger, switch, and 
industrial locomotives to have zero-emissions beginning in 2030 and new 
line-haul locomotives to have zero-emissions beginning in 2035. 
However, no commercially viable technology exists today for zero-
emission locomotives for line haul service, making the petition 
unreasonable, arbitrary, and capricious. We are concerned that the rule 
is technically and economically infeasible, and therefore inconsistent 
with the Clean Air Act (CAA) requirements. We urge EPA to deny CARB's 
request.
    Our organizations represent aggregates producers and those who 
manufacture equipment and services that support the construction 
industry. Our members are essential to the work of this country. Our 
members employ thousands of hard-working men and women, who are 
responsible for the essential raw materials found in every home, 
building, road, port, dam and public works project.
    The CARB rule would require dramatic advances in locomotive 
technology. It would also require sweeping upgrades to the nation's 
electrical transmission system and interconnection permitting process 
that we believe is infeasible by the implementation deadlines. 
California lacks statutory authority for each of these endeavors.
    These issues raise serious concerns that the CARB regulation 
violates the CAA. As discussed in EPA's Feb. 27, 2024, Federal Register 
Notice (89 FR 14484), EPA has previously held that state standards and 
enforcement procedures are inconsistent with section 202(a) of the CAA 
if ``there is inadequate lead time to permit the development of the 
necessary technology, giving appropriate consideration to the cost of 
compliance within that time.'' Following the precedent of these 
previous decisions, EPA should deny authorization of the CARB 
requirements.
    We are further concerned that the ``Spending Account'' provisions 
of the rule would impose significant financial burdens on railroads, 
which may be untenable for some short-line railroads who are often the 
first mile and last mile for critical commodities and have significant 
Impacts the interstate commerce they enable including critical 
infrastructure and essential consumer goods. If these carriers are 
unable to continue operations, it could create additional supply chain 
disruptions and negatively impact large segments of the economy, 
including construction materials producers. manufacturers, farmers, and 
energy producers.
    We strongly support a uniform federal regulatory framework for the 
nation's freight rail network. Allowing California and other states to 
adopt unique rules governing locomotives would be contrary to the ICC 
Termination Act of 1995, which largely preempts local or state laws 
that have a regulatory impact on railroads. Furthermore, it would 
undermine the national framework that supports the interoperability of 
rail equipment across the network, potentially harming the reliability 
and efficiency of rail service for our industries.
    Thank you for your consideration of our concerns. We urge EPA to 
carefully consider the feasibility of the CARB rule, as well as its 
potential impacts on freight shippers that rely on rail service to 
deliver essential materials throughout the nation.
            Sincerely,
                                        Michael W. Johnson,
      President and CEO, National Stone, Sand & Gravel Association.
                                              Robert Dugan,
 President and CEO, California Construction & Industrial Materials 
                                                       Association.

cc:  The Honorable Sam Graves
    The Honorable Rick Larsen

                                
 Letter of April 22, 2024, to Karl Simon, Director, Transportation and 
      Climate Division, Office of Transportation and Air Quality, 
  Environmental Protection Agency, from Rob Benedict, Vice President, 
     Petrochemical and Midstream, American Fuel and Petrochemical 
     Manufacturers, Submitted for the Record by Hon. Troy E. Nehls
                                                    April 22, 2024.
Karl Simon,
Director, Transportation and Climate Division,
Office of Transportation and Air Quality, Environmental Protection 
        Agency,
        1200 Pennsylvania Avenue, N.W., Washington, DC 20460.

RE:  California State Nonroad Engine Pollution Control Standards; In-
Use Locomotive Regulation; Requests for Authorization, Docket ID No. 
EPA-HQ-OAR-2023-0574

    Dear Director Simon:
    The American Fuel & Petrochemical Manufacturers (``AFPM'') asks the 
Environmental Protection Agency (``EPA'') to deny the California Air 
Resources Board's (``CARB'') request that EPA grant a waiver for CARB's 
In-Use Locomotive Regulation pursuant to section 209(e) of the Clean 
Air Act (``CAA'').\1\ As one of the largest users of freight rail, AFPM 
members would be directly impacted by these technically and 
economically infeasible regulations that are inconsistent with CAA 
requirements. The arbitrary and capricious regulation set forth by 
California threatens to dramatically slow national commerce and 
undermine the integrity of the integrated supply chain and the ability 
of railroads to meet demand.
---------------------------------------------------------------------------
    \1\ See 89 Fed. Reg. 14484 (Feb. 27, 2024), ``California State 
Nonroad Engine Pollution Control Standards; In-Use Locomotive 
Regulation; Requests for Authorization.'' EPA-HQ-OAR-2023-0574-0001.
---------------------------------------------------------------------------
    AFPM members make the fuels and petrochemicals that make modern 
life possible and keep America moving. To produce these essential goods 
and bring them to market, AFPM members depend on safe and efficient 
rail transportation to move their feedstocks and products to and from 
refineries and petrochemical facilities. More than two and half million 
carloads of fuel and petrochemical feedstocks and products move by rail 
every year.
    AFPM members are committed to environmental stewardship, and we 
support technology-neutral, free market solutions that provide consumer 
choice. However, AFPM opposes government electrification mandates that 
create an unlevel playing field and fail to achieve cost-effective 
emission reductions. We have serious concerns about the CARB petition 
and the impacts an EPA approval will have on the U.S. freight rail 
system and rail-dependent manufacturing sectors.
      California Cannot, and Should Not, Dictate National Rail or 
                          Environmental Policy
    Congress intended that the federal government serve as the sole 
regulator in this sector. Federal statutes such as section 209(e)(1) of 
the Clean Air Act (``CAA'') and the ICC Termination Act (``ICCTA'') of 
1995 make clear that approval of CARB's authorization request would be 
inappropriate and unlawful. A significant share of the locomotive fleet 
moves through California, meaning interstate and international commerce 
likely would be affected if railroads are forced to abide by a unique 
set of rules in California. Given the national scope and inter-
connectedness of the U.S. rail system, it is unlikely trains will 
change locomotives at the California border without significant delays 
and other impacts on the national supply chain. EPA should reject this 
proposal that will harm supply chains by forcing transition to 
technologies that do not yet exist.
    As acknowledged in EPA's February 27, 2024, Federal Register Notice 
(89 FR 14484), EPA has historically interpreted CAA section 
209(e)(2)(A)(iii)'s ``consistency'' inquiry harmonious with other 
section 209 waivers' consistency requirements, meaning that these state 
standards and enforcement procedures must provide adequate ``lead time 
to permit the development of the necessary technology, giving 
appropriate consideration to the cost of compliance within that time.'' 
\2\ EPA must adhere to the statute and deny California's request for a 
preemption waiver, since it does not afford adequate lead time and does 
not appropriately consider the cost of compliance. These costs are 
ultimately born by all rail shippers and, by extension, the general 
public.
---------------------------------------------------------------------------
    \2\ Ibid.
---------------------------------------------------------------------------
    Further, California's request impacts the refining industry and 
numerous other industries beyond rail, and raises significant grid 
reliability issues and national security concerns. The U.S. does not 
have adequate supplies of the critical minerals and metal needed for 
the level of electrification caused by this and other CARB rules such 
as the Advanced Clean Cars II (``ACC II'') regulations.\3\ The forced 
electrification of the railroad industry is a major policy question 
that Congress has not directly authorized. CARB's request for 
authorization also raises other statutory and constitutional concerns, 
including conflicts with the import-export clause, privileges and 
immunities clause, full faith and credit clause, equal sovereignty 
doctrine, dormant commerce clause, regulatory takings, and dormant 
foreign affairs preemption doctrine.\4\
---------------------------------------------------------------------------
    \3\ See ``California Air Resources Board--Advanced Clean Cars II'' 
All of AFPM's same concerns with ACC II apply to this rulemaking. See 
generally Final Brief for Private Petitioners, Ohio v. EPA, No. 22-1081 
(D.C. Cir. April 20, 2023) (incorporated herein by the reference); See 
Comments Submitted by the American Fuel & Petrochemical Manufacturers 
on California State Motor Vehicle Pollution Control Standards; Advanced 
Clean Cars II Regulations; Request for Waiver of Preemption; 
Opportunity for Public Hearing and Public Comment, 88 Fed. Reg. 88,908 
(Dec. 26, 2023), Docket ID EPA-HQ-OAR-2023-0292-0060.
    \4\ See U.S. Constitution Article I, Section 10, Clause 2; Article 
IV, Section 2; Article IV, Section 1; Amendment 10.4.3; Amendment 5; 
and Article I, Section 8, Clause 3
---------------------------------------------------------------------------
 Granting the Request Would Create Significant Supply Chain Disruptions
    This regulation from CARB could significantly disrupt the supply 
chain for all sectors of the U.S. economy, especially manufacturers and 
shippers who rely on consistent, reliable rail service. It could lead 
to delays for businesses and increased costs for both shippers and 
consumers that could ultimately lead to a massive supply chain crisis. 
The locomotive technology and the infrastructure needed to power it are 
not available. Further, CARB's efforts to analyze these hurdles are 
insufficient and fall far short of overcoming the legal standard need 
to proceed.
    For example, as the Rail Customer Coalition noted in their letter 
to this docket, a broad cross-section of manufacturing, agricultural, 
and energy industries that depend on the railroads to deliver reliable 
and affordable service are set to be negatively impacted. These 
industries are essential to a healthy U.S. economy, with operations and 
employees throughout the country collectively providing more than 7 
million jobs and producing more than $4.8 trillion in economic output. 
CARB's request puts all these industries at risk.
                      The Request Is Not Feasible
    The CARB rule would require dramatic advances in locomotive, and 
related, technologies on a timeline and scale that are not feasible. 
The CARB rule would ban most locomotives more than 23 years old 
starting in 2030. It would also require new passenger, switch, and 
industrial locomotives to be zero emissions beginning in 2030 and 
require new line-haul locomotives to be zero emissions beginning in 
2035. However, no commercially viable technology exists today for zero 
emission locomotives for line haul service, making the request 
unreasonable, arbitrary, and capricious.
    It would also necessitate sweeping upgrades to the nation's 
electrical transmission system and interconnection permitting process 
that are infeasible by the implementation deadlines. Our current grid 
simply cannot support electrified locomotives in any appreciable way. 
According to the U.S. Department of Energy's National Transmission 
Needs Study, the national electric transmission infrastructure would 
need to grow 57% by 2035 to reach the Biden Administration's clean 
energy goals for light-, medium- and heavy-duty vehicles.\5\ Yet at the 
historical pace of approximately 1% annual growth for these 
infrastructure projects, the transmission system could not support the 
requirements of this rule. In fact, more than half a century is needed 
for the Administration to achieve its stated goals for only light duty 
vehicles. This challenge is exacerbated by mandates to electrify 
multiple modes of transportation, coupled with permitting system that 
delays much needed power, mining, and charging projects for years if 
not decades.
---------------------------------------------------------------------------
    \5\ See Department of Energy, Grid Development Office, ``National 
Transmission Needs Study''. Published October 30, 2023.
---------------------------------------------------------------------------
    California lacks statutory authority for each of these endeavors. 
Despite aggressive research and development and innovation in the rail 
sector and significant private investments, deployment of the 
technologies within the timeframe of this rule is unreasonable, 
arbitrary, and capricious.
             The In-Use Locomotive Regulations are Unlawful
    The CAA preempts the In-Use Locomotive Regulations because they do 
not qualify for a waiver under section 209(e) of the Act. Under that 
provision, CARB cannot ``adopt or enforce'' these regulations until 
receiving a preemption waiver from EPA. Here, CARB acted prematurely 
and ``adopted'' the regulation before EPA issued a waiver. That said, 
EPA cannot grant California a preemption waiver if (1) CARB's 
determination regarding the In-Use Locomotive Regulations is arbitrary 
and capricious, (2) California ``does not need'' these regulations to 
meet ``compelling and extraordinary conditions,'' or (3) California's 
standards and the accompanying enforcement procedures are not 
consistent with section 209 of the CAA, 42 U.S.C. Sec.  7543.\6\ CARB 
has not adequately shown these regulations are needed to address 
compelling and extraordinary conditions and that they are as protective 
as federal standards. CARB's failure to address issues of central 
relevance to the regulation renders its determination arbitrary and 
capricious.\7\
---------------------------------------------------------------------------
    \6\ See 42 U.S.C. Sec.  7543(e)(2)(A)(i)-(iii).
    \7\ See 40 CFR Subchapter C Part 92.
---------------------------------------------------------------------------
    CARB failed to demonstrate it ``needs'' the In-Use Locomotive 
Regulations to address ``compelling and extraordinary conditions.'' The 
state's local air pollution analysis was incomplete at best, and 
greenhouse gas (``GHG'') emissions, by nature, are not a local problem. 
Despite generating 40% of the nation's long-distance freight by ton-
mile, the locomotive sector accounts for a minuscule 0.6% of U.S. GHG 
emissions.\8\ Section 209 was designed to address distinct localized 
problems, not global problems that are shared with the many other areas 
in the U.S. As such, California's request to address conditions related 
to global climate change cannot qualify for a section 209 waiver. Given 
how small a proportion of worldwide GHG emissions are represented by 
California's locomotive emissions, this regulation will have no 
discernible impact on GHG emissions or impacts on California and thus 
California cannot ``need'' this regulation.
---------------------------------------------------------------------------
    \8\ See Association of American Railroads, ``Freight Railroads and 
Climate Change''. March 2021.
---------------------------------------------------------------------------
    Similarly, an exceedingly small portion of the California's 
nitrogen oxide and particulate matter emissions are attributed to 
trains.\9\ Therefore, this Regulation cannot ``address compelling and 
extraordinary conditions'' related to criteria pollutants.
---------------------------------------------------------------------------
    \9\ CARB's Criteria Pollutant Emission Inventory Data (2017) (see 
mobile and stationary source data). In addition, absent a true 
lifecycle assessment, CARB has not quantified the claimed benefits of 
this regulation.
---------------------------------------------------------------------------
    Finally, section 209(b)(1) mandates that California determine 
whether its proposed regulation is at least as protective of public 
health ``and'' welfare as applicable federal standards. CARB never 
conducted a full life cycle analysis of electric locomotive engines, 
nor did CARB conduct a comparative analysis as to why its proposed 
regulations option would accomplish public health goals more 
effectively than alternative scenarios, such as evaluating without 
considering alternative emissions reduction scenarios such evaluating 
the public health and welfare benefits of Tier 3 and Tier 4 standards 
for all locomotives.
    Instead, CARB arbitrarily and capriciously concludes regulation set 
forth by California threatens to dramatically slow national commerce 
and undermine the integrity of the integrated supply chain at great 
cost and for limited environmental benefit, if any, particularly on a 
true lifecycle emissions basis. Finally, California's conditions 
related to global climate change are not ``extraordinary.''
                               Conclusion
    Thank you for your consideration of these comments. AFPM strongly 
urges EPA to carefully consider the legality and feasibility of the 
CARB rule as well as its potential impacts on freight shippers that 
rely on rail service to deliver essential products throughout the 
nation.
            Sincerely,
                                              Rob Benedict,
                         Vice President, Petrochemical & Midstream,
                       American Fuel & Petrochemical Manufacturers.

                                
   Letter of April 5, 2024, to Hon. Michael S. Regan, Administrator, 
   Environmental Protection Agency, from Agricultural Producers and 
     Agribusinesses, Submitted for the Record by Hon. Troy E. Nehls
                                           Submitted Electronically

                                                     April 5, 2024.
The Honorable Michael S. Regan,
Administrator,
U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW; 
        1101-A, Washington, DC 20460.

Re:  CARB's Clean Air Act Authorization Request (EPA-HQ-OAR-2023-0574)

    Dear Mr. Administrator:
    The undersigned groups representing agricultural producers and 
agribusinesses urge you to deny a request from the California Air 
Resources Board (CARB) for authorization of regulations that would 
target key aspects of the operation of freight locomotives in 
California. The proposed regulations would (1) levy annual fees on rail 
carriers for deposit in accounts that can only be used to comply with 
the regulations; (2) require the decommission of locomotives 23 years 
or older beginning in 2030 and require that new switch, industrial 
(used by rail customers) and passenger locomotives operate in zero-
emission configuration (2035 for new line haul locomotives); (3) 
attempt to regulate locomotive emissions by requiring railroads to shut 
them down while in transit in certain circumstances; and (4) impose 
certain reporting and ``administrative payments.''
    If the CARB regulations were authorized by EPA, we believe freight 
rail carriers and their rail customers would be significantly hindered 
financially and operationally. The inevitable increases in 
transportation costs and introduction of operational inefficiencies for 
agricultural shippers and receivers would result in food price 
inflation. For these and other reasons, we believe there is substantial 
merit to the claims by the Association of American Railroads and the 
American Short Line and Regional Rail Association in their pending 
legal challenge of the rules in the U.S. District Court for the Eastern 
District of California that all or a significant part of CARB's 
regulations are preempted by 49 U.S.C. Sec. 10501(b), which gives the 
Surface Transportation Board (``STB'') exclusive jurisdiction over the 
operations and other activities of freight railroads in interstate 
commerce, and as written preempts all state and federal laws that are 
in conflict. The District Court affirmed the legitimacy of the 
railroads' preemption arguments in an order issued February 16, 2024.
    Moreover, the proposed rules would require railroads and rail 
customers to meet regulatory goals that cannot be reached. 
Specifically, zero emissions locomotives would have to be purchased to 
replace the decommissioned locomotives, but such locomotives are not 
yet commercially viable and won't be in the foreseeable future.
    Presumably, battery technology would need to be utilized to meet 
the zero-emission requirement. While battery powered locomotives have 
been tested, they are not presently commercially viable primarily due 
to a limited operating range.
    In summary, we believe the proposed CARB regulations pose a 
significant danger to U.S. agriculture and the broader U.S. supply 
chain and that as written they are legally questionable. We therefore 
urge you to reject the request for authorization.
    Thank you for your consideration of our concerns with CARB's 
request for authorization of its in-use locomotive regulation.
            Sincerely,

                         National Associations

Advanced Biofuels Association.
Agricultural Retailers Association.
Agriculture Transportation Coalition--AgTC.
American Farm Bureau Federation.
American Feed Industry Association.
AmericanHort.
American Soybean Association.
Consumer Brands Association.
Corn Refiners Association.
National Aquaculture Association.
National Association of Wheat Growers.
National Cattlemen's Beef Association.
National Chicken Council.
National Corn Growers Association.
National Cotton Council.
National Council of Farmer Cooperatives.
National Grain and Feed Association.
National Oilseed Processors Association.
National Sorghum Producers.
North American Millers' Association.
North American Renderers Association.
Pet Food Institute.
Soy Transportation Coalition.
Specialty Soya Grains Alliance.
The Fertilizer Institute.
USA Rice.

                      State/Regional Associations

Agribusiness Council of Indiana.
Alaska Farm Bureau.
Arizona Farm Bureau Federation.
Arkansas Soybean Association.
Association of California Egg Farmers.
California Farm Bureau.
California Grain and Feed Association.
California Poultry Federation.
California Seed Association.
California Warehouse Association.
Colorado Farm Bureau.
Grain and Feed Association of Illinois.
Idaho Farm Bureau Federation.
Illinois Farm Bureau.
Illinois Soybean Association.
Indiana Farm Bureau.
Iowa Soybean Association.
Kansas Agribusiness Retailers Association.
Kansas Farm Bureau.
Kansas Grain and Feed Association.
Kentucky Soybean Association.
Louisiana Farm Bureau Federation.
Michigan Agri-Business Association.
Michigan Farm Bureau.
Michigan Soybean Association.
Mid-Atlantic Soybean Association.
Minnesota Grain and Feed Association.
Minnesota Soybean Growers Association.
Mississippi Farm Bureau Federation.
Mississippi Soybean Association.
Missouri Farm Bureau.
Missouri Soybean Association.
Montana Farm Bureau Federation.
Montana Grain Growers Association.
Montana Wheat & Barley Committee.
MT Agricultural Business Association.
Nebraska Farm Bureau.
Nebraska Soybean Association.
Nevada Farm Bureau Federation.
New Mexico Farm and Livestock Bureau.
New York Farm Bureau.
North Carolina Farm Bureau.
North Dakota Agricultural Association.
North Dakota Grain Dealers Association.
North Dakota Soybean Growers Association.
Ohio AgriBusiness Association.
Ohio Farm Bureau Federation.
Ohio Soybean Association.
Oregon Farm Bureau.
Pacific Coast Renderers Association.
Pacific Egg & Poultry Association.
Pennsylvania Farm Bureau.
South Carolina Corn & Soybean Association.
South Dakota Farm Bureau.
South Dakota Soybean Association.
Tennessee Farm Bureau Federation.
Texas Grain and Feed Association.
Virginia Farm Bureau.
Virginia Soybean Association.
Washington Farm Bureau.
Wisconsin Agri-Business Association.
Wisconsin Farm Bureau Federation.

CC:  Senate Committee on Agriculture, Nutrition and Forestry
     House Committee on Agriculture
     Senate Committee on Commerce, Science, and Transportation
     Senate Committee on Environment and Public Works
     House Committee on Transportation and Infrastructure
     Senate Committee on Health, Education, Labor and Pensions
     House Committee on Energy and Commerce
     The Honorable Tom Vilsack
     The Honorable Pete Buttigieg
     The Honorable Martin Oberman
     The Honorable Karen Hedlund
     The Honorable Robert Primus
     The Honorable Patrick Fuchs
     The Honorable Michelle Schultz


                                Appendix

                              ----------                              


  Questions to Dillon Olvera, President and Chief Executive Officer, 
 Modesto and Empire Traction Company, on behalf of the American Short 
    Line and Regional Railroad Association, from Hon. Troy E. Nehls

    Question 1. In her testimony before the Committee, CARB Chief Arias 
claimed the CARB Rule's alternative compliance plans offer an 
opportunity for Class II and Class III operations to comply with the 
Regulation.
    Are these options a viable alternative for Class II and Class III 
operations?
    Answer. These options are not viable for the Modesto and Empire 
Traction Company (MET). My understanding is that there are two 
alternatives that are offered by CARB:
    The first alternative is the Small Business Hardship Extension. 
This offers a 3-year extension from the initial compliance date for 
locomotive operators that fall under $5 million \1\ in annual gross 
revenue. Given our current locomotive fleet and their remaining useful 
lives, this alternative would need to be between a 10 to 15-year 
extension to provide any benefit. During their rulemaking process, CARB 
failed to understand that most short line locomotives begin their 
service with our industry used, often already fifteen or more years 
old, and then we will use them for very long lifespans of many decades 
more. Because of this misunderstanding, the CARB requirements for 
equipment lifespans and this extension option were wholly inappropriate 
given the operational and economic conditions of short line railroads.
---------------------------------------------------------------------------
    \1\ Adjusted annually for inflation by the U.S. Consumer Price 
Index.
---------------------------------------------------------------------------
    Because of the capital intensity of small railroads, the CARB 
revenue threshold for this option is likely to exclude many Class II 
and III operators who have greater revenue but with very slim margins 
typical of short line railroads. This is why the Small Business 
Administration (SBA) sets the federal size standard for small business 
short line railroads at 1,500 employees. For unknown reasons, CARB 
chose not to utilize this SBA threshold in crafting their rule and 
instead created their own revenue measure that is not appropriate given 
the economics of small railroads.
    The second option is the Alternative Compliance Plan. This allows 
for regulated entities to receive credit towards the locomotive 
requirements by reducing the targeted emissions by taking other 
measures at their operations, which must occur within three miles of 
their locomotive operations, in the case of PM and NOX reductions. The 
MET does not possess any such assets where such a scale and type of 
emissions reductions could be achieved, and I don't believe many other 
Class II or Class III railroads possess such assets either.

    Question 2. Businesses need to earn an adequate rate of return to 
justify the time, effort, risk, and opportunity costs of operating the 
business. Workers make similar judgments when looking for or changing 
jobs. Do you believe the bureaucrats that draft these regulations 
appreciate these realities? Do they acknowledge the inherent tradeoffs 
of their policies?
    Answer. In my opinion, the CARB team failed to properly consider 
the economics of the small railroads that would be impacted during 
their regulatory impact assessment. They did not understand the scale 
of the costs their regulation would impose on small railroads, nor how 
those costs would impact those businesses' viability over the medium 
and long term.
    Two key tradeoffs in benefits were not considered during CARB's 
analysis:
    First, the regulation mandates a huge increase in investments in 
locomotives over historical costs that will displace years of spending 
on other valuable activities at railroads like ours. For example, 
investments will have to be commensurately reduced in areas like 
railroad track and grade crossing protection, which would otherwise 
improve safety for railroad workers and the public.
    The second tradeoff not properly considered is the risk of 
diversion of rail traffic to truck. Especially for the smallest short 
line railroads, the cost burden imposed by the regulation--an order of 
magnitude over traditional motive power fleet capital costs--could 
result in line segments or even entire railroads becoming unprofitable. 
This could lead to a small railroad's freight traffic being shifted to 
truck, with the associated impacts in areas like road congestion and 
accidents, pavement damage and higher logistics costs for shippers.
    I also believe that CARB's forecasts for adoption of zero-emissions 
truck technology are unrealistically aggressive. If my expectation 
turns out to be true, then the tradeoff of such a modal shift would be 
the impacts of a much greater emissions profile per unit of freight 
transported by diesel trucks instead of rail, multiplied by each 3-4 
trucks replacing each railcar in trains transporting many railcars at a 
time.

    Question 3. In your opinion, should issues of this scope and 
magnitude be considered as agency regulations? Specifically, should 
such a far-reaching regulation be subject to the Administrative 
Procedure Act?
    Answer. I feel strongly that this issue is wholly a federal one. 
The only appropriate venue for government action on locomotive 
emissions should be a formal rulemaking process carried out by the 
Environmental Protection Agency. As argued in our industry's litigation 
\2\ that is underway against CARB over their regulation, state action 
in this area is preempted by at least three provisions of federal law: 
the Interstate Commerce Commission Termination Act, the Clean Air Act, 
and the Locomotive Inspection Act. This preemption has been repeatedly 
upheld in decades of case law. Unfortunately there is a mechanism in 
the CAA that facilitates avoidance of elements of the Administrative 
Procedure Act that Congress intended to be applied to protect the 
public interest when significant rulemakings are carried out.
---------------------------------------------------------------------------
    \2\ Assoc. of American Railroads et al. v Liane Randolph et al. 
Case No. 2:2023cv01154 filed June 16, 2023 https://dockets.justia.com/
docket/california/caedce/2:2023cv01154/429700

    Question 3.a. Has agency use of waivers and guidance provided an 
end-run around normal rulemaking procedures? Are they being used to 
create loopholes in the rulemaking process?
    Answer. The provisions of the Clean Air Act that enable 
California's stricter-than-federal emissions regulations to be 
``authorized'' by the Environmental Protection Agency, and to 
subsequently be adopted by other states, in my opinion, do create a 
hugely problematic loophole.
    Section 209(e)(2) of the Clean Air Act \3\ establishes the 
California waiver process for nonroad engines, under which CARB has 
petitioned EPA for approval of their regulation. This will be the first 
time this has been tried with locomotives, but a sister provision, 
Section 177 of the CAA, governing road vehicle emissions, has been 
utilized for many authorizations. Those regulations have been 
subsequently adopted by many states, with tremendous resulting national 
impacts. The scale of the California market and the CAA authorization 
and state adoption process has been used repeatedly to de facto 
establish national standards for emissions without having to carry out 
a federal rulemaking process with associated safeguards, or to consider 
the federalism implications of the action.
---------------------------------------------------------------------------
    \3\ 42 USC 7543(e)(2)

    Question 3.b. Can you detail the consequences of allowing an agency 
to circumvent the rulemaking process?
    Answer. In the case of this CARB regulation, one consequence is 
that an agency action that would qualify as a major rulemaking \4\ 
avoids the detailed scrutiny, public engagement, Congressional review 
and rigorous cost-benefit analysis that would accompany a formal 
rulemaking process. The impacts of the rule entering effect in 
California alone would trip this threshold, were it a formal 
rulemaking, and the ability for it to propagate to other states 
multiplies the impact potential. Because this is not a rulemaking, the 
Congressional Review Act requirements are not triggered. Among the 
protections established in law by Congress that are avoided are those 
under the Regulatory Flexibility Act and Small Business Regulatory 
Enforcement Fairness Act. These provisions are specifically designed to 
protect America's small businesses during the process of development of 
major rules, such as by enabling small business advocacy review panels 
between EPA, the Small Business Administration and OMB's Office of 
Information and Regulatory Affairs (OIRA). A formal rulemaking process 
for a major rule also provides a more elaborate venue and extended 
process facilitating the participation of other agencies in the 
process. I noted that even for this informal authorization process by 
EPA, both SBA and the Surface Transportation Board did each file 
comments expressing serious concerns with the legal and practical 
implications of federal authorization of the CARB In-Use Locomotive 
Regulation.
---------------------------------------------------------------------------
    \4\ In the case of the Congressional Review Act a rule anticipated 
to have an annual effect on the economy of $100m or more, among other 
criteria.

    Question 4. In your testimony, you provided an example of how 
Modesto Empire Traction Company had partnered with state entities to 
reduce its operational emissions. Now, this same state appears to be 
undoing that very same collaboration. Can you please elaborate on the 
status of this collaboration?
    Answer. Beginning in 2008, the MET worked closely with California 
to apply for state grants. Nine of our 11 locomotives were upgraded 
from Tier 0 to Tier 3 due this work. There are three different grants 
in place today that have obligations that will be completed through 
2032, yet the new regulation requires us to repower these locomotives 
to Tier 4 by 2030. In addition, the MET still has debt tied to these 
Tier 3 locomotives and made millions of dollars of our own investment 
into these locomotives with the expectation that they would be 
compliant in the state of California for 30-40 years after acquiring 
them.
    MET has applied for funding for locomotive investments from the 
U.S. DOT's Consolidated Rail Infrastructure and Safety Improvements 
(CRISI) grant program. If won, this grant would support repowering the 
MET's Tier 3 locomotives to Tier 4 to enable compliance with the new 
CARB regulation.
    In my opinion, CARB, in their development of the regulation, did 
not consider the interplay of their regulation with previous public 
investments made to reduce locomotive emissions. Implementation of the 
regulation will result in the abandonment of these earlier 
improvements, which is a waste of tax dollars. CARB has taken a 
maximalist approach that fails to recognize the huge reductions in 
emissions that can be and have been achieved at short line locomotive 
fleets within the EPA tiers below Tier 4. The agency also failed to 
understand the economic realities of short line motive power 
investments. Short lines have always almost exclusively established 
their fleets by acquiring used locomotives on the secondary market. 
Even with public assistance, the match funding amounts alone that must 
be provided by the short line for repowers or acquisitions of the 
latest locomotives are still typically a multiple of the historical 
average used locomotive acquisition costs for these firms and are not 
achievable.

 Questions to Roger Nober, Director, GW Regulatory Studies Center and 
 Professor of Practice at the Trachtenberg School of Public Policy and 
Public Administration, George Washington University, from Hon. Troy E. 
                                 Nehls

    Question 1. As discussed at the hearing, in 2005 CARB entered into 
a voluntary agreement with BNSF and UP to reduce emissions at rail 
yards.\1\ The agreement stated: ``The parties recognize that 
Participating Railroads are federally regulated and that aspects of 
state and local authority to regulate railroads are preempted.'' \2\ It 
further stated, ``the Federal Clean Air Act, the Interstate Commerce 
Termination Act and many other laws establish a uniform federal system 
of equipment and operational requirements.'' \3\ CARB acknowledged 
Federal preemption in this agreement. When I asked CARB Chief Arias 
``what changed'' she responded that the ``technology changed.'' \4\
---------------------------------------------------------------------------
    \1\ Cal. Air Resources Board, ARB/Railroad Statewide Agreement: 
Particulate Emissions Reduction Program at California Rail Yards (June 
2005), available at https://ww2.arb.ca.gov/sites/default/files/2020-06/
2005%20MOU%20Remediated%2003102020.pdf.
    \2\ Id.
    \3\ Id.
    \4\ An Examination of the California Air Resources Board's (CARB) 
In-Use Locomotive Regulation: Hearing Before the H. Comm. on Transp. 
and Infrastructure, 118th Cong. (July 09, 2024), (statement of Heather 
Arias, Chief, Transportation and Toxics Division, California Air 
Resources Board).
---------------------------------------------------------------------------
    However, preemption determinations are not based on the 
availability of technology, nor do they compel adoption of new 
technology under Federal law. What Federal law is CARB relying on to 
support the request for authorization to supersede Federal preemptive 
law?
    Answer. I am not aware of any provision of the Interstate Commerce 
Act, the Federal Clean Air Act or any other provision of federal law 
dealing with transportation where a determination of whether an action 
of a State is preempted depends on the availability or feasibility of 
the technology being imposed by such State. A preemption determination 
is predicated on whether the action being taken by the State falls 
within the zone of activities that were covered by the Federal 
assertion of preemption in the Federal statute. The availability or 
feasibility of technology is not a consideration.

    Question 2. In your opinion, is this a climate rule masquerading as 
a hazardous emissions rule?
    Answer. In my opinion, the principal reasons for CARB adopting this 
in use locomotive rule are related to CARB's desire to eliminate 
internal combustion engines in transportation. My opinion is based on 
CARB's actions and statements over the years as well as the statement 
at a meeting I attended when I was at BNSF by the former Chairman of 
CARB that the agency intended to eliminate internal combustion engines.

    Question 3. During the hearing it was discussed whether CARB 
considered the full economic impact of the regulation, including 
secondary and tertiary impacts on supply chains. Ms. Arias responded, 
``[w]e did not do analysis of supply chains.'' \5\ In your opinion, can 
you explain whether a policy of this magnitude be considered under the 
Administrative Procedure Act process?
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
    Answer. In my testimony I discussed my strong belief that 
locomotive emissions regulation may only be done by the Environmental 
Protection Agency in a notice and comment rulemaking that would be 
subject to the Administrative Procedure Act and all other requirements 
that govern federal notice and comment rulemakings. It is particularly 
important that an action which will have significant national effects 
be done at the federal level, where all interested parties may comment 
and the federal agency reviewing the comments is legally required to 
consider all potential impacts, not just those on one particular state.

    Question 4. In her testimony, Ms. Arias reiterated the claim that 
the In-Use Locomotive Regulation ``are not regulating engine 
manufacturers''.\6\ Please elaborate on why this is a distinction 
without a difference.
---------------------------------------------------------------------------
    \6\ Id.
---------------------------------------------------------------------------
    Answer. Any locomotive that is purchased by a rail carrier, either 
passenger or freight, only has utility and value if it is used in 
revenue service. The CARB regulation, while not purporting to regulate 
engine manufacturers, attempts to create a de facto national use 
standard. Were such a standard to go into effect, then locomotive 
purchasers could only use locomotives that complied with the in-use 
standard and thus if a manufacturer wanted to sell any, it would need 
to sell use-compliant units. Importantly, part of CARB's analysis 
included discussions with locomotive manufacturers to ascertain the 
feasibility of such compliant locomotives, thus demonstrating the 
importance of manufacturers to the CARB proposal.

Questions to Heather Arias, Chief, Transportation and Toxics Division, 
        California Air Resources Board, from Hon. Troy E. Nehls

    Question 1. In response to a question from Representative Foushee 
concerning the state of zero emissions locomotive technology, you 
stated that catenary systems are a viable compliance option.
    However, an analysis found that catenary systems would be 
prohibitively expensive and provides less pulling power than is 
necessary for Class I freight.\1\ In addition, the electric grid in the 
State of California is already stretched and experiences frequent 
mandatory brownouts. The same analysis determined that the In-Use 
Locomotive Regulation will require California to invest between $780-
$830 million or up to $2.1 billion in added power capacity just in 
California. As the rule is expected to require the industry to shift 
its entire locomotive fleet, according to CARB, this will result in 
similar costs incurred in other states. Any such build-out would 
require addressing difficult technological challenges and necessary 
permitting, which adds time frames measured in years.
---------------------------------------------------------------------------
    \1\ Brattle Memorandum, Review of CARB's Proposed Regulation, (Apr. 
22, 2024) at 7, available at https://www.regulations.gov/comment/EPA-
HQ-OAR-2023-0574-0168.
---------------------------------------------------------------------------
    Answer. The California Air Resources Board (CARB) disagrees with 
the premises of this question. For example, CARB disagrees that 
catenary rail would be prohibitively expensive or would provide 
inadequate pulling power. Catenary rail is used throughout the world to 
move freight and, historically, was employed in many areas of the 
United States. The Brattle Memorandum referenced above relies on an 
outdated technology assessment. Current catenary technology powers 
trains with some of the heaviest hauls in the world.\2\
---------------------------------------------------------------------------
    \2\ See analysis by Moving Forward Network, Support for Granting 
California's Authorization Request for the In-Use Locomotive 
Regulation, Docket No. EPA-HQ-OAR-2023-0574, (Apr. 22, 2024), at 29-31, 
available at https://www.regulations.gov/comment/EPA-HQ-OAR-2023-0574-
0167.
---------------------------------------------------------------------------
    CARB also disagrees that California experiences frequent brownouts. 
California's energy grid has not experienced energy demand-driven 
outages in some time due in part to steps the state has taken to 
improve reliability including expanding its clean energy portfolio and 
increasing battery storage.\3\ California's robust energy planning is 
discussed further below.
---------------------------------------------------------------------------
    \3\ Daniel Dale and Ella Nilsen, Fact check: Trump falsely claims 
California had `blackouts all over the place this summer,' (Nov. 4, 
2023), available at https://www.cnn.com/2023/11/04/politics/fact-check-
trump-california-blackouts-electricity-grid/index.html.
---------------------------------------------------------------------------
    CARB also disagrees that the In-Use Locomotive Regulation 
(Locomotive Regulation) will require railroads to make changes outside 
of California.

    Question 1.a. Has CARB considered whether the State's grid will 
have the capacity to serve the rail industry and other energy users?
    Answer. Yes. As part of CARB's rulemaking process CARB prepared a 
Final Environmental Analysis for the Proposed In-Use Locomotive 
Regulation \4\ addressing long-term operation-related impacts on energy 
within California. The analysis concluded that long-term energy impacts 
associated with the Regulation would be less than significant due to 
the forecasted increase in California's energy capacity.\5\ California 
has robust planning processes in place to forecast energy demands and 
ensure grid reliability. These processes involve the utilities and 
their regulator (the California Public Utilities Commission), the 
California Independent System Operator that operates the part of the 
grid that serves most of California, the California Energy Commission 
(CEC), and CARB. A key part of these processes is the long-term 
forecast analysis conducted by the CEC, which plans for projected 
increases in demand and will include the energy demands of the 
Locomotive Regulation.\6\
---------------------------------------------------------------------------
    \4\ CARB, Final Environmental Analysis for the Proposed In-Use 
Locomotive Regulation (April 14, 2023), available at https://
ww2.arb.ca.gov/sites/default/files/barcu/regact/2022/locomotive22/
locomotive_final_ea.docx.
    \5\ Id. at 73-74.
    \6\ See California Energy Commission, Integrated Energy Policy 
Report--IEPR, last visited Aug. 9, 2024, available at https://
www.energy.ca.gov/data-reports/reports/integrated-energy-policy-report. 
See also California ISO, Transmission Planning, last visited Aug. 9, 
2024, available at https://www.caiso.com/generation-transmission/
transmission/transmission-planning; Zero-Emission Vehicle 
Infrastructure Joint Statement of Intent, last visited Aug. 9, 2024, 
available at https://ww2.arb.ca.gov/sites/default/files/2023-04/
ZEV%20Infrastructure%20Joint%20Statement
%20of%20Intent%204-20-23%20final.pdf.

    Question 1.b. How has CARB accounted for the feasibility and 
logistics of power generation and grid construction capacity in 
formulating the In-Use Locomotive Rule?
    Answer. The processes for energy forecasting and planning described 
above address the need for additional power generation and grid 
capacity for the Regulation, as they do for all anticipated changes in 
energy demand.

    Question 1.c. How did CARB estimate the impact of this regulation 
on the State's broader economy-wide electrification strategy? Assuming 
CARB conducts such analysis, are they done in isolation according to 
each proposed policy or rule, or are they aggregated to measure impacts 
across the entire power network?
    Answer. Again, California's processes for energy forecasting and 
planning described above comprehensively address present and future 
energy demands in the state, including demands from the Locomotive 
Regulation and other CARB regulations.

    Question 2. During your testimony, you stated that CARB has been 
working with California Class III railroads on incentive and 
alternative compliance programs. But it is our understanding that this 
outreach to date has been minimal and that CARB employees have not 
visited many railroad sites to obtain valuable insight into short line 
operations.
    Question 2.a. How many Class III railroad sites did CARB personnel 
visit during preparation of the Regulation?
    Answer. CARB went to three railroad sites and held multiple virtual 
meetings with Class III operators to get their input on the Locomotive 
Regulation. Those meetings were generally virtual (rather than in-
person) because of the COVID-19 Pandemic. The California Short Line 
Railroad Association (CSLRA) and CARB also met virtually on multiple 
occasions. CARB also held four public workshops as it developed the 
Regulation. CSLRA and individual Class III railroads were invited to 
all of these and CSLRA and many Class III railroads attended.
    CSLRA and its members were sent information about funding 
opportunities available through State and local government for zero 
emission rail. The CSLRA and other Class III operators were invited to 
a webinar for the Grant Orientation for Zero Emission Rail Operation 
(GO ZERO) program CARB started in November 2023 to assist Class III 
operators in obtaining federal grant funds. As a result, CARB has 
applied for federal funding on behalf of three Class III operators to 
replace 10 diesel locomotives with zero emission locomotives.

    Question 2.b. Please describe your outreach plan to Class III 
railroads related to the In-Use Locomotive Regulation in California.
    Answer. CARB has had communication with Class III operators and the 
CSLRA during the outreach and regulatory development phases of the 
Locomotive Regulation and after CARB Board approval. On April 27, 2023, 
the Board directed CARB staff to continue outreach efforts to ensure 
that affected industry are aware of the requirements of the Locomotive 
Regulation, with a focus on Class III and industrial operators, and 
available incentive funding opportunities. In response to this 
Resolution, CARB launched the GO ZERO program as discussed above, to 
help California's Class III and industrial operators adopt and use zero 
emission rail technologies with minimal costs. Additionally, each 
operator has been informed of the opportunity to meet with CARB staff 
individually to discuss funding and compliance pathways.

    Question 2.c. It is unacceptable the short lines be forced to cease 
operations as a result of this regulation. Please explain how CARB will 
work with short lines who are not able to utilize the alternative 
compliance plans that are provided in the regulation.
    Answer. CARB disagrees with the premise of the question. Moreover, 
due to the smaller size of their fleets, short lines would typically 
need to modify (or acquire, if the railroad so chooses) only a handful 
of locomotives to qualify for the Alternative Fleet Milestone Option. 
And, as stated, CARB has developed and provided a number of tools for 
railroads to identify potential grant funding opportunities to assist 
in meeting the requirements of the Locomotive Regulation. There are 
several examples of Class III railroads obtaining millions in grant 
funds to upgrade their older locomotives. For example, Watco received 
$15.7 million in federal funding through the 2023 CRISI program to 
convert eight Tier 0 locomotives into battery-powered ZE 
locomotives.\7\ In addition, as of July, the Volkswagen (VW) 
Environmental Mitigation Trust for California has received applications 
to fund up to $1.6M per locomotive for the replacement of 35 diesel 
locomotives (27 pre-Tier 0, 1 Tier 1, and 7 Tier 3) with 19 Tier 4 and 
6 zero emission locomotives. This year alone the VW Mitigation Trust 
and GO ZERO program will assist with the funds to replace 20% of all 
California short line locomotives. Thus, it is plausible that most 
short line railroads will be able to obtain the necessary funds to 
comply if they do not have sufficient funding. CARB is always willing 
to help any railroad identify funding opportunities that may be 
available to them.
---------------------------------------------------------------------------
    \7\ FY 2022 Consolidated Rail Infrastructure and Safety Improvement 
Program Selections: Project Summaries, accessed July 23, 2024, https://
railroads.dot.gov/sites/fra.dot.gov/files/2023-
09/FY%202022%20CRISI%20Program%20Selections%20-
%20Project%20Summaries.pdf; see also Exeter gets on board with world's 
cleanest diesel trains, accessed July 23, 2024, https://
thesungazette.com/article/news/2020/03/04/exeter-gets-on-board-with-
worlds-cleanest-diesel-trains/.
---------------------------------------------------------------------------
    Further, in the event that a short line railroad's annual gross 
revenues do not exceed $5 million, it can obtain relief from the 
Locomotive Regulation under the small business hardship exemption in 
the regulation.\8\
---------------------------------------------------------------------------
    \8\ Cal. Code Regs., tit. 13, Sec.  2478.14.
---------------------------------------------------------------------------
    CARB anticipates that short lines with more than $5 million in 
revenues would have the resources to seek and obtain funding and/or 
otherwise comply with the Regulation through one of the various 
compliance paths. In the event an individual short line faces 
particularly difficult circumstances, CARB is always willing to discuss 
those circumstances with the short line, to advise on various 
compliance and funding options.

 Question to Heather Arias, Chief, Transportation and Toxics Division, 
          California Air Resources Board, from Hon. Vince Fong

    Question 1. In 2005, CARB entered into a voluntary agreement with 
BNSF and UP to reduce emissions at rail yards.\9\ The agreement stated: 
``The parties recognize that Participating Railroads are federally 
regulated and that aspects of state and local authority to regulate 
railroads are preempted.'' \10\ It further stated, ``the Federal Clean 
Air Act, the Interstate Commerce Termination Act and many other laws 
establish a uniform federal system of equipment and operational 
requirements.'' CARB acknowledged Federal preemption in this agreement. 
When I asked ``what changed,'' you responded that the ``technology 
changed.''
---------------------------------------------------------------------------
    \9\ Id.
    \10\ Id.
---------------------------------------------------------------------------
    However, none of these laws base or limit preemption on technology, 
nor do they compel adoption of new emissions limits under Federal law. 
Section 209(e)(1) of the Clean Air Act explicitly precludes state or 
political subdivisions from adopting or attempting to enforce any 
standard or other requirement related to the control of emissions from 
either of the following new nonroad engines or nonroad vehicles subject 
to regulation under this chapter, including new locomotives or new 
engines in locomotives.\11\
---------------------------------------------------------------------------
    \11\ 42 U.S.C. Sec.  7543(e)(1); see also, 42 U.S.C. Sec.  7543 
(e)(1)(B).
---------------------------------------------------------------------------
    In addition, as CARB acknowledged as part of the 2015 Agreement, 
the Interstate Commerce Committee Termination Act ``preempts all state 
laws that may reasonably have the effect of managing or governing rail 
transportation.\12\ Mr. Roger Nober of the George Washington University 
Regulatory Studies Center noted as such in his written and oral 
testimony.\13\
---------------------------------------------------------------------------
    \12\ Assoc. of Am. R.R. v. S. Coast Air Quality Mgmt., 622 F.3d 
1094, 1098 (9th Cir. 2010).
    \13\ An Examination of the California Air Resource Board's (CARB) 
In-Use Locomotive Regulation, Hearing Before the Subcomm. on Railroads, 
Pipelines and Hazardous Materials of the H. Comm. on Transp. and 
Infrastructure, 118th Cong. (July 9, 2024), (Statement of Mr. Roger 
Nober).
---------------------------------------------------------------------------
    CARB acknowledged as part of the 2015 Voluntary Agreement with BNSF 
and UP that state and local-based regulation of emissions is preempted 
under Federal law. From what source does CARB draw legal authority to 
negate Federal preemption of the In Use Locomotive rule?
    Answer. Neither the text quoted in the referenced documents nor 
anything else in those documents establishes that CARB previously 
adopted the broad view of ICCTA preemption suggested by the question. 
As the quoted text indicates, CARB has previously indicated it 
understands that ``aspects of state and local authority to regulate 
railroads are preempted.'' CARB has not changed this view; it still 
understands that ICCTA preempts certain state and local regulations. 
Nothing in those quotations or the referenced documents, however, 
indicates that CARB ``acknowledged'' that all state ``regulation of 
emissions is preempted under Federal law.''
    Rather, the documents indicate that CARB understood it would face 
litigation risk if it sought to regulate locomotive emissions because 
the railroads would likely take the position that any such effort by 
CARB is preempted by ICCTA. Far from asserting that state-level 
regulation of locomotive emissions is always preempted, CARB noted that 
``neither the STB nor the courts have to date addressed the specific 
substantive matters included in the Agreement''--i.e., the emission 
control measures in the Agreement. CARB further noted the ``likelihood 
of a legal challenge by the railroads'' should CARB adopt regulations 
similar to the measures in the Agreement. Accordingly, CARB believed--
at the time and in the circumstances present there--that the Agreement 
was preferable in order to achieve ``immediate statewide emission 
reductions.''
    Two railroad trade associations have challenged the Regulation on 
ICCTA preemption grounds (among others). CARB has asserted its views in 
its filings in that case which are publicly available, one of which is 
attached hereto.\14\ For example, CARB has noted that the Clean Air Act 
expressly preserves authority--subject to EPA authorization--for 
California to regulate emissions from non-new locomotives.\15\ CARB 
declines to reiterate or expand on its views here, considering pending 
litigation.
---------------------------------------------------------------------------
    \14\ ECF No. 51-1, Case No. 2:23-cv-01154-DJC-JDP (E.D. Cal) at 26-
33.
    \15\ 42 U.S.C. Sec.  7543(e)(2) (describing authorizations 
available ``[i]n the case of any nonroad vehicles or engines other than 
those referred to in subparagraph (A) or (B) of paragraph (1)) 
(emphasis added); see also id. Sec.  7543(e)(1)(B) (addressing ``[n]ew 
locomotives'') (emphasis added).

    [Editor's note: In response to Hon. Vince Fong's question, Ms. 
Heather Arias of the California Air Resources Board enclosed the 
following document, which is retained in committee files: ECF No. 51-1, 
Case No. 2:23-cv-01154-DJC-JDP (E.D. Cal) at 26-33 (46 pages total).]

Questions to Heather Arias, Chief, Transportation and Toxics Division, 
 California Air Resources Board, from Hon. Henry C. ``Hank'' Johnson, 
                                  Jr.

    Question 1. Ms. Arias, in your testimony, you highlight significant 
health benefits that is projected to reduce emergency room visits and 
hospitalizations by 1,500 cases related to respiratory illnesses and 
other health impacts caused by diesel particulate matter and nitrogen 
oxide emissions.
    Can you elaborate on the strategies or provisions within the 
regulation are specifically targeted at mitigating the health impacts 
from diesel particulate matter and nitrogen oxide emissions, and how 
are these expected to contribute to reducing emergency room visits and 
hospitalizations?
    Answer. The Locomotive Regulation is designed to reduce emissions 
from non-new locomotives operating in California. Locomotives generate 
significant emissions of PM2.5 and NOx, contributing approximately 650 
tons per year (tpy) of PM2.5 and 30,000tpy of NOx in California.\16\ 
Human exposure to diesel particulate matter and nitrogen oxides can 
cause heart and lung damage and lead to emergency room visits and 
hospitalizations. Reduction of emissions leads to less exposure, and 
thus less emergency room visits and hospitalizations. CARB estimates 
that these emissions reductions will prevent approximately 3,200 
premature deaths, 1,100 hospital admissions and 1,500 emergency room 
visits in California.\17\
---------------------------------------------------------------------------
    \16\ CARB Initial Statement of Reasons for In-Use Locomotive 
Regulation, at 179-180, available at https://ww2.arb.ca.gov/sites/
default/files/barcu/regact/2022/locomotive22/isor.pdf.
    \17\ Id. at 25.

    Question 2. In your testimony, you highlighted the significant role 
of locomotives as a source of criteria pollutants in California. This 
is particularly concerning as it affects vulnerable residential 
communities already highly impacted by nitrogen oxide (NOx) and toxic 
diesel particulate matter, for which there is no known safe level of 
exposure.
    Could you elaborate on the specific impacts affecting marginalized 
communities and the comprehensive measures being implemented to 
mitigate pollution near railyards and similar facilities?
    Answer. Over 90% of railyards in California are within one mile of 
at least one Disadvantaged Community defined by California Senate Bill 
535. People living in Disadvantaged Communities experience unjust 
inequities and disproportionate pollution. Diesel exhaust emitted by 
locomotives can cause cancer in humans,\18\ and people living closer to 
railyards experience higher diesel exhaust exposure and higher cancer 
risk.\19\\,\ \20\ High diesel exhaust exposure is also linked to heart 
and lung disease.\21\ Switcher locomotives operating in railyards are 
often the dirtiest, worsening the inequitable impacts to people living 
near railyards. Vibrations, noise pollution, and light pollution near 
railyards are also a significant concern.
---------------------------------------------------------------------------
    \18\ International Agency for Research on Cancer, IARC: Diesel 
Engine Exhaust Carcinogenic, June 12, 2012. (Weblink: https://
www.iarc.who.int/wp-content/uploads/2018/07/pr213_E.pdf)
    \19\ CARB, Initial Statement of Reasons Appendix H: Health Analyses 
for the Proposed In-Use Locomotive Regulation pp. 15-21, September 20, 
2022. (Weblink: https://ww2.arb.ca.gov/sites/default/files/barcu/
regact/2022/locomotive22/apph.pdf)
    \20\ CARB, Health Risk Assessment for the Four Commerce Railyards, 
November 30, 2007. (https://ww2.arb.ca.gov/sites/default/files/classic/
railyard/hra/4com_hra.pdf)
    \21\ CARB, Initial Statement of Reasons Appendix H: Health Analyses 
for the Proposed In-Use Locomotive Regulation pp. 32-33, September 20, 
2022. (Weblink: https://ww2.arb.ca.gov/sites/default/files/barcu/
regact/2022/locomotive22/apph.pdf
---------------------------------------------------------------------------
    Research shows that pollution exposures disproportionately impact 
people of color.\22\ This inequity persists when looking specifically 
at rail activity. Communities with the highest pollution exposures from 
major railyards in California have larger proportions of people of 
color. This disproportionality was identified in previous studies 
looking at specific California railyards. For example, in Los Angeles 
County in 1980, around the time when a major railyard was being 
approved for construction, more than half of a nearby community 
consisted of people of color.\23\ In comparison, Los Angeles County at 
that time was more than half non-Hispanic white. In San Bernardino, 
Hispanics/Latinos comprised more than 71% of people surveyed from a 
region that was on average 1.9 miles from a major freight railyard.\24\
---------------------------------------------------------------------------
    \22\ Apte et al., A Method to Prioritize Sources for Reducing High 
PM2.5 Exposures in Environmental Justice Communities in California, 
November 21, 2019. (Weblink: https://ww2.arb.ca.gov/sites/default/
files/classic/research/apr/past/17rd006.pdf)
    \23\ Hricko et al., Global Trade, Local Impacts: Lessons from 
California on Health Impacts and Environmental Justice Concerns for 
Residents Living near Freight Rail Yards, February 2014. (Weblink: 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3945577/)
    \24\ U.S. Census Bureau., American Community Survey, 2012. 
(weblink: https://data.census.gov)
---------------------------------------------------------------------------
    CARB established the Community Air Protection Program (CAPP) to 
focus on reducing air pollution exposures in such EJ communities in 
response to Assembly Bill (AB) 617. This first-of-its-kind statewide 
effort includes community air monitoring and community emissions 
reduction programs. In addition, the Legislature appropriated funding 
to support early actions to address localized air pollution through 
targeted incentive funding to deploy cleaner technologies in these 
communities, as well as grants to support community participation in 
the AB 617 process. Out of the ten Assembly Bill 617 communities from 
the first year of this program, nine of them have rail activity as a 
contributing factor.
    The Locomotive Regulation will significantly benefit marginalized 
communities, both broadly by reducing non-new locomotive emissions 
across California and specifically by creating incentives to operate ZE 
technology in Disadvantaged Communities.\25\
---------------------------------------------------------------------------
    \25\ See Cal. Code Regs., tit. 13, Sec.  2478.4(g)(4).
---------------------------------------------------------------------------
    CARB has taken other steps to reduce pollution near railyards as 
well. The Advanced Clean Fleets regulation will work in conjunction 
with the Advanced Clean Trucks regulation to reduce emissions from 
drayage trucks operating at seaports and railyards. Amendments to the 
Transportation Refrigeration Unit (TRU) regulations will reduce 
particulate matter emissions and transition a portion of TRUs, which 
operate near railyards and ports, to zero emissions. Significant 
pollution reductions and health benefits will also be achieved by the 
Ocean-Going Vessel Fuel, Ocean-Going Vessel At Berth, Heavy-Duty Low 
NOx, Small Off-Road Engine, Commercial Harbor Craft, Advanced Clean 
Cars II, and In-Use Off-Road Diesel-Fueled Fleets regulations.

Questions to Heather Arias, Chief, Transportation and Toxics Division, 
         California Air Resources Board, from Hon. Doug LaMalfa

    Question 1. In questioning the scope of the CARB In-Use Locomotive 
Regulation, you stated that military traffic and shipments by rail are 
``exempt'' from the regulation. You reiterated this point many times.
    Although military owned and operated locomotives are exempted, 
military equipment is often transported across the country by 
commercial shippers, including Union Pacific and BNSF, that are most 
definitely not exempt from the In-Use Locomotive Regulation. In a 
national emergency, the military will contract with these private 
shippers to move millions of tons of military vehicles, armaments, and 
associated equipment via road and rail through California to airports 
and shipping ports for deployment. As equivalent zero emission 
locomotive technology does not exist, this would have very negative 
ramifications for our national security. CARB's own analysis determined 
that the Regulation would impact the nationwide fleets of BNSF and 
Union Pacific.
    Question 1.a. Given this reality, does CARB stand by its claim that 
all military rail traffic is exempted?
    Answer. Military locomotives are exempt from the Locomotive 
Regulation, and it will not affect military rail traffic in a national 
emergency. While military rail traffic served by private operators is 
not explicitly listed as an exemption, the Locomotive Regulation has 
flexibility that would allow for emergency military rail traffic to 
continue without requiring the operator transporting the military cargo 
to meet Locomotive Regulation requirements. Please see part b below for 
details.

    Question 1.b. How would CARB exempt military rail shipments moving 
on private carriers from the Regulation?
    Answer. Operators carrying military rail shipments during national 
emergencies and unable to comply with the Locomotive Regulation during 
this time would be able to obtain a Temporary Operating Extension under 
Section 2478.6(a)(2) of the regulation. Temporary Operating Extensions 
are available for emergency events beyond an operator's control, 
including, but not limited to, ``fires, floods, earthquakes, embargoes, 
epidemics, quarantines, war, acts of terrorism, riots, strikes, or 
lockouts''. National military emergencies would qualify as an emergency 
event beyond an operator's control.

    Question 1.c. In the 2022 CARB Staff Report: Initial Statement of 
Reasons, CARB explained that it was ``necessary to exempt military 
locomotives from the Proposed Regulation as it may limit military 
operators' ability to maintain surge capacity to respond to emergencies 
and security threats.'' Please elaborate on the specific technical 
findings by your agency that led you to conclude that the regulation 
could limit DOD's freight transportation capacity relative to the 
operational requirements that must be met by their locomotive fleet.
    Answer. The Locomotive Regulation does not limit DOD's ability to 
respond to emergencies and security threats when it comes to freight 
transportation capacity. Please see part b above for details on how 
emergency military rail traffic does not need to meet In-Use Locomotive 
Regulation requirements.

    Question 1.d. How many military locomotives in California fall 
under this exemption, and what EPA emissions tiers do those locomotives 
meet?
    Answer. Data from the latest Military and Industrial Locomotive 
Emission Inventory shows there are 13 military locomotives operating in 
California. All 13 military locomotives are Pre-Tier 0.\26\
---------------------------------------------------------------------------
    \26\ CARB, 2022 Military and Industrial Locomotive Emission 
Inventory, July 2022. (Weblink: https://ww2.arb.ca.gov/sites/default/
files/2022-07/2022%20MI%20Locomotive%20Emission
%20Inventory%20Document%2007112022%20ADA%20Checked.pdf).

    Question 1.e. During the development of the Regulation, did you 
consult with the Department of Defense (DoD) on the issue of military 
locomotives being subject to the Regulation? If so, please provide all 
communications with DoD on this issue.
    Answer. As the DoD's military locomotives are categorically exempt 
under the Regulation, it was not necessary for CARB to discuss the 
details of the Regulation with DoD. DoD did not submit comments during 
any of the public comment periods for the Regulation or otherwise 
contact CARB regarding any concerns about the Regulation. DoD likewise 
did not submit comments during EPA's comment period on CARB's 
authorization request, although other federal agencies did so.

    Question 1.f. Please provide a summary of CARB's understanding of 
the role that freight locomotives, subject to the regulation, play in 
the transportation of military cargo in California. Approximately what 
proportion of military cargo moving by rail in the state are carried by 
trains hauled by locomotives that are not exempt from your regulation? 
It is our understanding that a significant amount of military cargo 
moves on railroads that would be subject to this Regulation.
    Answer. CARB understands that private freight operators may 
occasionally transport military cargo. However, quantitative 
information about military cargo in California and military cargo that 
private operators transport in California is not publicly available. 
Such information was not provided--either by DoD or any of the 
railroads who commented--during the public comment periods or pre-
rulemaking outreach for the Locomotive Regulation. It is notable that, 
concerns about military cargo traffic were not raised by private rail 
operators who otherwise commented extensively on the Regulation. CARB 
would welcome any new information the railroads would like to provide--
including quantitative information regarding military cargo transport--
and would consider that information as appropriate and relevant.

                                  [all]