Short-line operator: California’s new locomotive emissions rule could ‘kill’ industry

May 16, 2023

Kennan H. Beard III doesn’t think it’s an exaggeration that the new California Air Resources Board rule on locomotive emissions will wipe out many short-line railroad operations in the state.

Not only would costs be too high to replace a fleet of locomotives in order to meet compliance, but the high costs would prevent short lines from being able to invest in their companies between now and 2030, which is when the regulation would kick in. Furthermore, if short lines go under as a result of the new rule, it could result in shifting track to trucks — which, although facing their own emissions regulations, could result in increased congestion on the highways, says Beard, who is president of the California Short Line Railroad Association as well as president and CEO of the Sierra Northern Railway. Sierra Northern ships agricultural products, lumber and chemicals, among other commodities.

“This regulation is going to potentially destroy an industry that puts out two-tenths of a percent of the emissions of all diesel emissions in the state. I mean, we’re such a small, small portion of the emissions in the state, but it could kill the entire short-line industry” in California because of the modal shift to trucks, Beard told FreightWaves.

“I don’t think they’ve taken everything into consideration, and even by their own admittance, they didn’t worry about the move to trucks. They said it was too hard to calculate. They weren’t going to calculate it. And we asked about the increased highway deaths by modal shift, and they said highway deaths were not their concern. They were only concerned about deaths from locomotive emissions. So we don’t think the regulation is as thought out as it should be,” Beard said.

The new regulation, which must go through an approval process with California’s Office of Administrative Law before being implemented, requires railroad operators in California to use “zero-emissions configurations” starting as early as 2030. CARB defines zero-emission configurations as a zero-emission locomotive or a zero-emission-capable locomotive, according to a fact sheet on the regulation.

The new rules, which CARB says are aimed at reducing the emissions of locomotives operating within California, have two notable deadlines: Switch, industrial and passenger locomotives built in 2030 or after will need to operate in zero-emissions configurations, while locomotives built in 2035 for freight linehaul operations will need to comply with the zero-emissions configurations.

The new rules also limit locomotive idling to 30 minutes except for certain circumstances, such as maintaining air brake pressure or providing heat or cooling to the locomotive cab, and they require locomotives operating in California to register with CARB and annually report on their activity, emission levels and idling data. These two conditions would go into effect in 2024.

To help companies with the transition, they can set up and deposit monies into a spending account that will go toward purchasing or upgrading to cleaner locomotive technologies, CARB said.

There is also some flexibility for companies needing to comply with the rules if technologies aren’t available or an emergency situation arises, CARB said.

However, even though short lines would have access to a savings account, the act of saving money to purchase new locomotives puts other capital needs at risk, Beard argued.

“The California short lines don’t have the capital and the wherewithal to be replacing our locomotives every 23 years… Short lines typically run locomotives for upwards of 50 to 60 years before they’re being replaced. So replacing them in a shortened life cycle of 23 years is going to be insurmountable for many, many railroads,” said Beard, who has 15 to 20 locomotives currently in use, with some additional locomotives in storage. Some of the locomotives are Tier 3 units but others are Tier 0.

The different tiers pertain to when the locomotives were manufactured, with each tier having its own emissions standards, according to the U.S. Bureau of Transportation Statistics. Tier 3 units were manufactured between 2012 and 2014, while Tier 0 units were manufactured between 1973 and 1992.

“In the case of my railroad, the Sierra Northern Railway, based on the locomotives we’re running currently and the amount of fuel we’re running, if the regulation was enacted today, based on 2022 numbers it would cost my railroad somewhere around $2 million a year to put into what they call their savings account. That’s a lot of money. We’re small businesses, and to make that kind of money to just set it aside on the hopes and dreams that we can buy an upgraded locomotive down the road, we won’t have any money for capital improvements or reinvestment in the railroad.”

While state funding has helped short-line railroads purchase cleaner locomotives such as Tier 3 units via CARB’s Carl Moyer fund, that funding is available to short lines if it’s not related to regulation compliance, Beard said.

Other funding sources include the U.S. Department of Transportation’s Consolidated Rail Infrastructure Safety Improvements, also known as the CRISI grant program, and the Environmental Protection Agency’s Diesel Emissions Reduction Act, according to the American Short Line and Regional Railroad Association (ASLRRA).

But even if short lines had adequate access to funding and savings, the question of whether there will be supporting infrastructure and technology available at a widespread level by 2030 is another of Beard’s concerns.

Beard shared his concerns even as he is involved in building what he describes as a battery-hybrid, zero-emissions locomotive that uses hydrogen fuel cells. The locomotive test unit, built in conjunction with some partnerships and the California Energy Commission, should be up and running by the end of the year, with testing occurring in 2024.

“It’s the first of its kind, [but] it’s going to take several iterations and more development before we can even think that it’s going to replace some of the switcher units in California. There’s no way it’s going to do the work that all of them do,” Beard said. “So even our solution by building the hydrogen [locomotive], we might have something up for production by 2030 but that’s just barely getting there. And that doesn’t address that all of a sudden we have to replace — I don’t know — 270 locomotives in the state of California by 2030.”

He continued, “We feel that we’re going to be in a good position by 2030 to start transitioning to zero emissions. The CARB regulation requires all the Tier 3 and older [locomotives] to go away by 2030, and a lot of people will be investing in Tier 4s for that 23-year life span, so they won’t really have to transition to zero emission until 2053. We think we’ll be transitioning a little sooner if we don’t have to put all our capital into that savings account. … I can’t continue my development in zero-emission technology if I’m having to bury all that capital in a state-held savings account.”

Short-line operators like Beard, along with ASLRRA and the Association of American Railroads, are considering their next steps should the regulation become law.

One possibility is to pursue litigation, with the argument that the regulation inhibits interstate commerce.

“CARB has demonstrated extraordinarily little flexibility or even awareness of the unique nature of short lines as it finalized its rule. We will consider all options as we look to save threatened short lines in California, seeking a win-win-win result for the environment, short lines, and our shippers, not a lose-lose-lose result as this rule would provide,” ASLRRA President Chuck Baker said in a May 1 news release.

ASLRRA says short lines “are committed to lowering their environmental impact” via actions such as exploring hydrogen and battery-electric powered locomotives with government funding, installing fuel optimization software and anti-idling technology, testing biodiesel and renewable diesel, and exploring fuel additives to lower emissions, in addition to upgrading locomotives to higher tier levels when practical.

Beard said, “We’re not against clean air. We just want to be able to do it in a pattern and method we can afford.”

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