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NewsTranscript
00:00to the gentleman from Texas, Mr. Babin, you're recognized for five minutes.
00:04Thank you very much, Mr. Chairman, and thank you to the witnesses for being here.
00:09Your testimony also served on transportation and infrastructure,
00:12and this very morning we were talking about the new emissions rule coming down in California.
00:20Mr. Baker, in your testimony you mentioned that the California Air Resources Board
00:25acknowledged that their rule would potentially bankrupt the short-line industry
00:30and stated that it is possible that some of these businesses would be eliminated
00:34if they failed to comply with the rule.
00:37CARB sees the elimination of a critical player in the supply chain as a cost of doing business.
00:44Can you speak to the unique nature of short-line business practices
00:48and why meeting CARB's mandate by 2035 is not feasible
00:53because of its potential crippling effects?
00:56Yes, sir, I appreciate the question.
00:58The unique nature of short lines, which I know you're very familiar with
01:02from your time on the T&I Committee, the origin story of short lines really is
01:07we're keeping lines viable that are really on the margins, right?
01:12We got them from Class I railroads in the first place because they didn't make any money,
01:18and we've done everything we can to run as lean, as efficiently as possible,
01:23try to get one more customer, try to do everything we can for existing customers,
01:28and it's widely considered a pretty good American success story
01:31that most agencies we've encountered would like to double down on and improve.
01:37But CARB's rule contemplates such a dramatic exponential increase
01:43in how much we would have to pay for locomotives and motive power
01:47that it would put us out of business,
01:49and that's so obvious that they had to acknowledge it themselves in the rule.
01:54And then, you know, from our point of view, the consequences of that are relatively obvious.
01:58But if we're out of business, that freight can't move by rail anymore,
02:03and that destroys the seamless integrated rail network.
02:06That's bad for the economy. That's bad for the environment.
02:09It's bad for public safety.
02:10Thank you very much.
02:12Mr. Jeffries and Mr. Baker, you all touched on this in your testimonies,
02:17but if this misguided policy goes into effect,
02:20what will the impacts of this rule be on constituents outside of the state of California
02:25and on supply chains across the country?
02:30Maybe I'll take a first crack, and Chuck can clean up my mess.
02:35So, you know, there is no such thing as a one-state regulation
02:41when it comes to the interstate rail network.
02:43That's why there's such strong federal preemption in law,
02:46because, as I mentioned in my opening statement,
02:49nearly 70 percent of our locomotive fleet moves in and out of the state of California in any given year.
02:54And so what does that do?
02:56One, at the very base case scenario,
02:59this rule dramatically increases the cost of providing rail transportation
03:04and most likely shifts a lot of freight onto the highways.
03:08And so what does that do?
03:10It makes our customers pay more.
03:14It makes consumers pay more.
03:16It adds stress to the public infrastructure by pushing more traffic onto the highways,
03:22increasing congestion, impacting the daily consumer.
03:25Mr. Obernolte and I just talked about the desire to get trucks off the highway and onto the rail.
03:31If you want to reduce emissions right now, let's get trucks off the highway and onto the rail,
03:35four times more efficient when it comes to that.
03:37And so, you know, you can't understate the impacts across the board.
03:41Right. Thank you.
03:43Mr. Baker.
03:44He said that very well.
03:46I would note that there is a long history, for better or for worse, of other states copying CARB's rules.
03:53So if this rule goes into effect, if EPA approves it, I think we could expect some number of other states,
03:59you know, maybe around 10 or 15 is a reasonable estimate,
04:03that we would copy this rule and make it even more national.
04:07But I would say California is so big and nobody would dispute that.
04:11California is so big a California rule is essentially a de facto national rule as it affects the interstate rail network.
04:18So all the problems we've talked about that would come in California would be you'd see nationwide very quickly.
04:25Thank you very much.
04:27Less than a half a minute.
04:28Mr. Baker, it seems like the California Air Resources Board is choosing winners and losers here.
04:34If they are able to move ahead with this rule, short line railroads look to be slated for the losers list.
04:40Can you talk about, just for a second,
04:42why short lines in particular are not going to be able to comply with CARB's compliance deadline
04:47and what it means for short lines around the country?
04:50Appreciate that question.
04:52Going back again to the origin story of short lines and how we have to really make a small business try to run as efficiently as possible.
05:01A typical short line is buying a used locomotive, maybe about $100,000.
05:06They tend to make them last 40, 50, 60 years.
05:10The idea of a rule that would say no locomotive older than 23 years old can run in California is,
05:17if it weren't so serious, I would almost say it's laughable.
05:21I say that to short line railroads and they look at me with disbelief.
05:25Well, all of our railroads, all of our locomotives are older than 23 years old.
05:30Thank you. My time is up. Thank you.
05:33The gentleman yields back.
05:34We'll go next to my colleague from California, Congressman Mullen.
05:37You're recognized for five minutes.
05:38Nice job on the baseball field.