AGC Testifies on Supply Chain and Construction Material Costs

AGC member Ural Yal testified before Congress on how California’s zero emission locomotive regulation would increase construction costs nationwide.

On Tuesday, July 9, the House Committee on Transportation and Infrastructure’s Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing on the California Air Resources Board’s (CARB’s) In Use Locomotive Regulation. Ural Yal, Flatiron Construction’s Senior Vice President – Corporate Preconstruction Group, testified before the committee on behalf of AGC of California.

CARB’s regulation would require freight railroads to convert their locomotive fleets from using traditional diesel-powered engines to zero emissions technologies and stipulates that engines more than 23 years old must be phased out by 2030. In November 2023, CARB requested the Environmental Protection Agency (EPA) grant it a waiver under the Clean Air Act to implement this rule. While railroads have made strides to develop environmentally friendly locomotive technologies, commercially viable zero-emission locomotives are still unavailable. Additionally, federal statute has previously stipulated that the federal government, not the states, has oversight of the nation’s freight system.

Yal’s stated that while AGC of California supports the goal of a more environmentally friendly state, if CARB’s regulation is granted, it will have significant adverse effects on infrastructure development, the construction supply chain and job creation. Roughly 40 percent of container freight moves through California ports, and according to Union Pacific, 52% of rail traffic is bulk commodities, including construction materials. CARB’s requirement would create additional costs for the construction industry’s freight rail partners, which would increase construction costs and make it harder to transport construction materials.

Requiring major freight rail lines, such as BNSF and Union Pacific, to replace their entire fleet nationwide to comply with the regulation, could create higher business costs that could lead to more expensive construction projects, or even the cancellation of projects. For example, BNSF, one of the larger freight lines operating in California, has a planned $1.5 billion construction project to build the Barstow International Gateway, a state-of-the-art, rail facility that will help reduce traffic stemming from the Ports of Los Angeles and Long Beach. This project also has the potential to create over 20,000 direct and indirect jobs. If this waiver is approved by EPA, the path forward on the project would be unclear and in question due to the added regulatory costs BNSF would face.

AGC of America thanks Ural Yal for his testimony and the staff at AGC of California for their help preparing for the hearing. The full hearing may be viewed here and CARB’s waiver before EPA can be found here.

For more information, contact John Chambers at [email protected].


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