California announced the strongest railway emissions regulations in the US. Freight companies are suing.

Yes, this seems to be the consideration that the California Air Resources Board (CARB) is making with its public comment periods. It's predictable that the Association of American Railroads (AAR) and other freight rail lobbying organizations would fight regulation in general, but actually reading the documents they present, it doesn't take an industry expert to recognize that there are some challenges here. As the author of this article remarks:

Like all negotiations, each party starts with demands and expectations on the extremes, and ultimately end up somewhere near the middle. If the AAR fights back too hard, it may be perceived as anti-clean air. In the case of CARB vs. the AAR, expect certain elements to prevail, like faster adoption of Tier 4 locomotives and accelerated obsolescence of Tier 0 and non-modified Tier 1 units. I expect diesel locomotives will be around a lot longer than CARB envisions, otherwise the U.S. economy could be significantly impacted. This is evidenced by the slower-than-expected adoption of electric vehicles. Despite enormous investment during the past 12 years, EVs represent only 7% of current auto sales in the U.S., most of that coming from Tesla. Frustratingly, EV penetration has only been realized through massive government subsidies. Will those same stimuli be available for ZE locomotives?

From the AAR fact sheet: “U.S. freight railroads, on average, move one ton of freight nearly 500 miles per gallon of fuel. On average, railroads are three to four times more fuel efficient than trucks.” Yet we continue to lose market share. The fuel efficiency argument doesn’t pack the same punch it once did. Modern trucks are gaining steadily. We now need to focus on the overall value proposition—fuel efficiency, service, timeliness, cost—and drive down the rail industry’s impact on GHG emissions along with localized NOx and PM. That means utilizing far more clean/cleaner diesel locomotives longer. Delaying the implementation of Tier 4 locomotives signals that U.S. railroads have not prioritized emissions, and potentially invites further backlash from CARB and the EPA, something we don’t wish for.

My summary was very critical of industry, but they see the writing on the wall and aren't completely oblivious to the realities of the world. Clean, zero-emissions operation is something the public desires, at least in California. Railroads are well aware of this preference, though their business model has traditionally been fairly reliant on the transportation of coal, so they have some obvious incentives to downplay "environmental sustainability" and "global warming" as concepts. Still, the kind of locomotive regulation CARB is proposing (and that the AAR is decrying) is not related to coal specifically but rather to diesel engine efficiency. It's not like running a clean operation has zero advantages for these companies: happier neighbors can make a big difference in a relatively decentralized democracy like ours, for instance. And fully electric locomotives can reduce operational expenses to some extent, depending on the system, infrastructure and acquisition notwithstanding.

Indeed, they claim that "for years, the rail industry worked collaboratively – and successfully – with CARB to reduce locomotive emissions in California" and slightly patronizingly criticize CARB for choosing to "forego the proven path of collaboration" (LOL). I think that statement requires a [citation needed] or at least a [misleading], because historically the railroads have never been interested in investing in emissions-reducing technology except in order to appease regulatory agencies and the public. However, the reality of regulation is that it does have an effect on business profits. That ultimately has an effect on the economy. Because this regulation asks companies to make expensive capital expenditures on new rolling stock, it disproportionately affects small railroads, which is why this document is filed in conjunction with the American Short Line and Regional Railroad Association (ASLRRA):

CARB’s Second Modified Rule would cost railroads that operate within the state billions of dollars annually. The fees would apply to short line railroads that provide critical first- and last-mile service on lower density branch lines and are capital-intensive, low-margin small businesses. CARB has conceded the costs of implementing the rule would bankrupt some short lines and has failed to acknowledge the impacts of the elimination of short line rail service to California, including eliminating an efficient means to market, rising costs of products, and a modal shift to trucks with possible safety, infrastructure, and environmental impacts. It is hard to see how this rule advances the best interests of Californians, but it is not hard to see how it will set back progress towards reduction of greenhouse gases in the state.

Emphasis mine. It's the modal shift that's ultimately the most concerning, for reasons that are obvious if you know what a friction coefficient is (and, well, if you look at a train; you can't beat that capacity [see Exhibit 1 on p. 7]). However, the emergence of a consumer market for electric vehicles corresponds to an understanding of electric as "normal" and diesel as "undesirable" or at least "antiquated." In the general consciousness, rail transport (both for freight and passengers) is already understood as antiquated, even though it's ridiculously efficient regardless of energy source. Whether or not diesel rail is actually more environmentally sustainable than electric automobiles (it basically always is), the public does not have that perception. It eventually becomes difficult for policy-makers to agree to fund railroad projects if their constituents are under the impression — true or false — that doing so "harms the environment" (in the Californian or American understanding of that phrase).

People just don't have a good understanding of automobile externalities, including the production and operation of the vehicles themselves but also the poor land use of roadways, the emissions involved in asphalt and concrete production, the impact of impermeable surfaces on flood prevention and soil makeup, ground pollution from tires, and so on. This stuff is too intangible, and mostly invisible. (It's not that rail infrastructure has no emissions, but it isn't even close to that of automobiles.) It's challenging to change that lack of understanding when our culture fundamentally values entertainment more than education (or critical thinking).

But "emitting toxic, carcinogenic, cancer-causing gases into the air that you and your children breathe" is a comparatively tangible and immediately recognizable phenomenon. You can smell it. Also, "the children!!1!" At some point in the near-ish future, when commercial trucking operations have largely switched to electric—and I could be convinced that this is coming sooner than 2040, at least in a place like California—justifying investment into diesel trains becomes politically untenable. We need to make sure that the rail industry has moved beyond that perception before it becomes a problem whose knee-jerk solution is something ridiculous like "[effectively] ban freight trains [by making current operations immediately unprofitable]." The AAR is making this regulation out to be said reaction, but they exaggerate. If railroads don't get fully on board with zero-emissions this decade, the EPA can and will annihilate the industry over the next several.

The government has a role in making this work. They can't just lay out a set of punitive regulations and hope for the best. As the article suggests, railroads need subsidies for zero-emission locomotives to become dominant. Otherwise, they risk too much modal loss to trucking. And that requires legislators to come up with funding sources, which is a lot harder for them than publishing a set of documents. For constituents to be truly emissions-conscious, we have to recognize not only that "corporations are evil arhghahsfkjasfh" but also that the government probably needs more tax dollars to do things that ultimately help constituents.