On April 27, 2023, the California Air Resources Board ("CARB") approved a first-in-the-nation regulation that limits the emission of greenhouse gases, criteria pollutants, and toxic air contaminants from locomotives in the state. Specifically, the "In-Use Locomotive Regulation" would ban locomotive engines that are more than 23 years old by January 1, 2030, increase the use of zero-emissions ("ZE") technology to transport freight from ports and throughout railyards, and prohibit locomotives that are equipped with automatic start/stop systems from idling for longer than 30 minutes. 

The regulation would also create spending accounts whereby certain locomotive operators are required to deposit funds annually into the spending account starting on or before July 1, 2024, and every July 1 thereafter, based on the amount of particulate matter and nitrogen oxide emissions emitted by locomotive operators during the previous calendar year. The spending account funds may only be used for the following:

• The purchase, lease, or rental of Tier 4 or cleaner locomotives, or for the remanufacture or repower to Tier 4 or cleaner locomotives until January 1, 2030. Tier 4 refers to the U.S. Environmental Protection Agency's emission-level standard that went into effect for new locomotives on January 1, 2015;
• The purchase, lease, or rental of ZE locomotives, ZE capable locomotives, or ZE rail equipment, or to repower to ZE locomotives or ZE capable locomotives. CARB has specified that a ZE capable locomotive is one that can be operated in a ZE capacity when in California; 
• The purchase of ZE infrastructure intended to support ZE locomotives, ZE capable locomotives, or ZE rail equipment; or 
• The pilot or demonstration of ZE locomotives or ZE rail equipment. 

The sweeping regulation has garnered criticism from the railroad industry, particularly on the basis it would be prohibitively expensive for rail companies as well as increase the cost of many goods. On June 16, 2023, the Association of American Railroads and American Short Line and Regional Railroad Association filed suit in federal court to challenge CARB's implementation of the regulation. The plaintiffs allege that the In-Use Locomotive Regulation contradicts the Interstate Commerce Commission Termination Act ("ICCTA") and violates the Clean Air Act ("CAA") and Dormant Commerce Clause. For example, the plaintiffs argue that the regulation violates the ICCTA because "state and local regulators are categorically precluded from enacting rules that have the effect of managing or governing rail transportation… ." Further, the plaintiffs allege that CARB is precluded from enacting such a regulation because the CAA "provides exclusive authority to the federal government to set emission standards for new locomotives [and] expressly preclude[es] state and local regulators from adopting or attempting to enforce such standards on their own." Following a stipulation and order on June 29, 2023, CARB has until August 21, 2023, to answer the complaint.

The case should be closely monitored, as the regulation has the potential to significantly shape the regulatory landscape involving locomotives and could serve as a model for other states and federal regulation of railroad emissions, as well as encourage other countries to enact similar regulations.

Read the full Climate Report.