Why what happens in California doesn’t always stay in the Golden state

It’s not the first time that California’s regulations have impacted farmers and ranchers across the nation, and it likely won’t be the last.

You may have heard about Proposition 2 and Proposition 12, which set minimum space requirements for veal calves, breeding pigs and egg-laying hens. Both have had major impacts on agricultural production practices and prices beyond California’s borders.

Next up: Locomotives

Now, California is proposing a change to how locomotives, which often carry agricultural goods from the rest of the country, must operate.

The California Air Resources Board finalized rulemaking for the In-Use Locomotive Regulation last year with an effective date of Jan. 1, 2024. The regulations are designed to achieve emission reductions from diesel-powered locomotives and increase the use of zero-emission technology to meet California’s public health, air quality and climate goals.

The goal is to transition all locomotives to zero-emissions by 2047. However, if implemented, the regulations would ban diesel-powered locomotives more than 23 years old starting in 2030.

CARB has estimated that the regulation will cost $13.8 billion from 2023 to 2050 for new equipment and labor.

For the two largest railroads operating in California—Union Pacific and BNSF—new switch engines, the smaller locomotives that pull freight throughout rail yards or for short distances outside railyards, would have to be zero emission by 2030. Freight line haul locomotives would have to meet zero-emission standards by 2035.

Because these new regulations differ from federal emissions standards, EPA must grant California a waiver to adopt and enforce the regulation, which is consistent with the Clean Air Act.

The EPA held a public hearing in March, and the comment period closed on April 22, 2024, with 2,600 comments coming in.

Not surprisingly, farm and railroad stakeholders expressed their opposition. They are concerned about the cost of compliance that could fall back on to producers and, eventually, raise food prices. There’s also a concern that California could prompt efforts in other states, potentially creating a patchwork of state regulations. Even the Surface Transportation Board submitted comments to the EPA, raising concerns about the significant impact on interstate rail transportation as well as the potential for patchwork regulation that is preempted under the ICC Termination Act of 1995.

In a recent  report posted on farmdoc daily, economists from North Dakota State University and USDA’s Office of Chief Economist noted that the regulation’s impact on agriculture products could include increased transportation costs, shifts in logistic strategies, lower prices for agricultural producers and higher costs for their customers worldwide. 

The report also indicates that alternative transportation methods, such as trucking, lack the capacity required for transporting agricultural products effectively.

The economists say the rail and export data demonstrate a “high dependence of Midwest agriculture on rail lines leading to West Coast states.” They warn that California’s rail regulations could significantly hinder the competitiveness of U.S. agricultural products.

Regulatory implications

This regulatory impact will extend beyond California, affecting other states, the report said. It noted that soybeans, which rely on rail for coast-to-coast transport before export, account for 30% of Midwest farm and food product export value, with corn contributing 17%. 

The growth of the United States exports “depends on efficient and cost-effective rail transportation to move agricultural commodities to West Coast ports,” the report added. 

If CARB’s rule is approved by the EPA, Midwest agricultural exporters may need to re-evaluate transportation strategies more broadly, the farmdoc daily report suggests.

“For instance, shifting traffic to road transport could increase congestion and associated costs, given that nearly 30% of Midwest agricultural products are transported to West Coast ports by rail. Using Gulf ports via the Mississippi barge system is another export route to Asia. However, this would add further demands on the river transportation system on top of its already aging infrastructure and drought concerns. Furthermore, this option is not cost-effective for farmers in the Upper Midwest who rely on rail access to the PNW for cost-effective access to Asian markets.”

The authors also say that the locomotive rules would have a broader national impact than California’s regulations on egg and pork production.

Under propositions 12 and 2, “costs have fallen mainly on California consumers. … California is now proposing a change to locomotives operating in the state with uncertainty regarding railroad operational changes and the scope of potential impacts,” the report says. 

For now, all we can do is wait and see what EPA decides. The agency has not yet issued a decision, but we do know about key parts of their analysis. These three issues are supposed to guide the decision: Is California’s decision arbitrary and unfair? Does the state need the standards to address unique air quality and public health conditions? Do California’s standards conflict with federal law?

Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications, Inc., www.Agri-Pulse.com.