Yogi Berra's famous quote, "It's déjà vu all over again" seems apropos when considering the latest slate of environmental regulations emanating from California. The California Air Resource Board (CARB) finalized regulations last year governing the operation of railroad locomotives in the state. Beginning January 1, 2030, the use of locomotives more than 23 years old will be prohibited unless they meet the cleanest emissions standard of the U.S. Environmental Protection Agency (EPA). Moreover, switch, industrial, and passenger locomotives built after 2029 must be operated in a zero-emissions configuration. The zero-emissions configuration applies to freight locomotives beginning in 2035. California is seeking a waiver from the EPA to enforce the regulation.

A paper by agricultural economists at North Dakota State University and the USDA Office of the Economist examines the new regulations and potential impacts for Midwest producers. California serves as an endpoint for major agricultural shipments from the Midwest. The economists indicate that about 10 percent of the total soybean meal and meat products from the Midwest are shipped to California. Moreover, West Coast ports served by rail are important for corn and soybeans exports as well. Figure 2 illustrates the shares of food and food products shipped by rail from Midwest to non-Midwest locations. According to the paper, between 0.2-8.2 percent of food and food products shipped by rail from Nebraska are destined for non-Midwest destinations.

Compliance with the regulation will result in higher freight charges. The economists write, "CARB has estimated that the regulation will cost $13.8 billion from 2023 to 2050 for new equipment and labor." They further note, "The California regulation may increase the cost of rail transportation, resulting in lower prices for agricultural producers and higher costs to their customers, which would affect farm income and export competitiveness and may carry global food security implications."

Déjà vu all over again-another California regulation affecting Nebraska agricultural producers. Does Proposition 12 come to mind? To be fair, not all California regulations have been negative for Nebraska producers. California's low-carbon fuel standards have spurred demand for ethanol and renewable diesel produced in the state. But it is still troublesome when actions taken by regulators in a state can have a less than desirous effect on persons in other states.

FIGURE 2. SHARE OF FARM & FOOD PRODUCTS SHIPPED BY RAIL FROM THE MIDWEST TO NON-MIDWEST LOCATIONS

Source: 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.