California’s phase-out of diesel locomotives will affect rail service throughout the U.S. as interstate railroads divert billions of dollars from safety, maintenance and congestion projects to meet one state’s rule, according to court briefs filed by the railroad industry.

Two trade groups, whose members range from the largest railroads to short-line railroads that specialize in transporting agricultural products, are suing in federal court to overturn California’s locomotive regulation.

If approved by the Environmental Protection Agency, the rule will require companies to retire diesel locomotives early and replace them with expensive “cleaner” diesel or zero-emission locomotives.

The Association of American Railroads and the American Short Line and Regional Railroad Association claim that California’s unprecedented attempt to regulate railroads at a state level violates federal laws and will hinder interstate commerce.

The lawsuit also alleges the California Air Resources Board doesn’t know much about trains.

“Reflecting (the air resources board’s) lack of experience and understanding of the railroad industry, the regulation’s dictates are unworkable and counterproductive,” the lawsuit reads.

Rule orders business spending

The 14-member board, appointed by California’s governor, said the regulation will cut pollution and help the state attain its climate-change goals — the same justifications for board rules forcing the electrification of vehicles.

Washington, Oregon and 15 other states have intervened in lawsuits to defend California’s vehicle emission rules, which include bans on selling new conventional cars and pickups by 2035 and heavy-duty trucks by 2036.

Some 19 states are suing to repeal California’s vehicle standards, which could become de facto national standards as other states adopt them. The opposing states argue it’s unconstitutional to let one state set transportation policy.

Even if no other state embraces California’s locomotive rule, it will affect rail service nationwide, according to the railroad industry and air resources board staff reports.

To run in California, diesel locomotives can’t be older than 23 years beginning in 2030, even though locomotives last 40 years, according to the railroad industry. New engines on freight trains must be zero emission by 2035.

Railroads will have to switch locomotives at the border, or replace their nationwide fleets, according to the railroad industry.

An air resources board report anticipates companies will choose to convert their entire fleets. Some 72% of long-haul locomotives enter California at some point in the year, according to the report.

The railroad industry agrees. Given the interstate nature of railroad operations, it is not practical to convert to zero-emission locomotives and then run them in California only, according to the lawsuit.

Railroad companies will have to set aside money beginning in 2026 for the conversion based on what the air resources board calls a “conservative estimate of the health costs attributable to their California emissions.”

Union Pacific anticipates having to deposit $700 million a year into a state-supervised spending account. BNSF Railway anticipates depositing $800 million, or one-fifth of its capital budget for its 28-state system.

The payments may fall more heavily on short-line railroads. The San Joaquin Valley Railroad Co., a 371-mile rail line that transports agricultural products, anticipates depositing $5 million, more than half the company’s cash flow, according to General Manager Jessie Ugaitafa.

The hefty payments will take money from projects intended to improve safety, relieve congestion and respond to emergencies and force investments in unproven and commercially infeasible technology, the industry claims.

“Currently, there is no clear path to zero-emission locomotives,” Union Pacific Railroad executive Adrian Guerrero told the board shortly before it unanimously approved the rule in April.

California acknowledges the rules will cost railroads. Large railroads are unlikely to “experience business elimination,” according to a staff report.

As for short-line railroads, according to the report, “it is is possible some of these businesses would be eliminated.”

The railroad industry filed the suit in the U.S. District Court for the Eastern District of California. The suit alleges violations of the Interstate Commerce Commission Termination Act, the Locomotive Inspection Act, Clean Air Act and the dormant commerce clause.

California has moved to dismiss the lawsuit, arguing it’s premature for the district court to hear a challenge to a rule the EPA hasn’t approved.