If you have been a long time follower of Art of Supply, you know that I choose some of the topics I discuss based on real-time happenings in the procurement and supply chain world. Sometimes, we see those stories unfold start to finish. Other times, we're left waiting to see where things land.
One story I covered back in episode 114 focused on the transition from diesel-powered to electric heavy duty trucks, most notably Class 8s, used to keep supply chains running. I kept an eye on this story for two reasons: one, to watch for answers to legitimate questions about the feasibility of the EPA rule’s timing, and two, to see the priority shift as we enter President Trump's new term.
The story recently gained some momentum, and I have developments to report. Nebraska Attorney General Mike Hilgers published an op-ed in theWall Street Journalthat summed up the legal activity his state is leading to prevent disruption in the trucking industry. He also cited state regulators, the EPA, and heavy-duty truck manufacturers as the “unelected actors” his state is pushing back on.
California is in a unique position with regard to emissions regulation
Because California had emissions standards before the EPA did, they are the only state that can define their own vehicle emission standards separate from the federal government. Other states can either adopt California's stricter standards or comply with the federal standard.
That said, California, and the 16 other states that have signed on to their emission standards, can't enforce those standards until the EPA grants a waiver to do so. Once they have that waiver, those combined states can influence national change – if truck manufacturers need to make changes for these states, they'll make them across the board.
Remember the concerns about the change of administrations? California just withdrew a waiver submitted in 2023, believing they would not receive it from the Trump Administration– even though they hadn't received approval from the Biden Administration either. The EPA has now closed the file on the rule that Nebraska and a 24-state coalition had challenged.
Hilgers believes each “actor’s” position is illegal
Before California withdrew their waiver request, Nebraska had filed a formal comment letter to the EPA that was signed by an additional 24 states. With the withdrawal of the waiver, that letter is being touted as successful.
Nebraska is now leading a separate 17-state coalition against the California Air Resources Board, the state’s equivalent to the EPA, which reveals an interesting 3-way split. Seventeen states will join the coalition, another 17 are going with stricter emission standards, and a further 16 states are on the federal standard but won't join the Nebraska-led lawsuit.
So while some states are willing to raise emission standards, Nebraska still has plenty of support behind their efforts.
Even within California, certain groups are pushing back. The California Trucking Association (CTA) asked a federal court to block the Advanced Clean Fleets (ACF) implementation, claiming that a state can implement its own requirements on within-border vehicle sales “only when those mandates strictly comply with federal requirements.”
The Federal Aviation Administration Authorization Act (F4A) also blocked a state from passing a regulation that impacts a “price, route or service” offered by a trucking company.
Nebraska isn't stopping at one lawsuit against California. They’re taking on heavy duty truck manufacturers as well.
Nebraska Sues Four of the Major Truck Manufacturers and Their Trade Association
In November of 2024, AG Hilgers filed a lawsuit against Daimler, Paccar, Navistar, and Volvo as well as the Truck and Engine Manufacturers Association, claiming the “Clean Trust Partnership” they signed onto serves as a restriction on output, and therefore constitutes a classic antitrust case.
Although ACF cannot be ruled unlawful since California withdrew the waiver and cannot enforce it, the manufacturers together agreed to proceed as if it had been approved. Hilgers argues that qualifies as collusion, since the major players’ agreement to work together will significantly reduce the availability of diesel fuel trucks.
This combination of rules, commitments, waiver withdrawals, and legal action leaves us in an odd place.
Where do we find a middle ground?
California – and 16 other states that want to apply their emission standards – have an unenforceable law on the books that cannot be ruled as legal or illegal. As manufacturers proceed as though the law was passed, many questions about the feasibility of EV trucking and the expected timeline hang in the balance.
The transition to EV trucking is paramount for businesses, countries, and the environment, but we need to look at both sides of the argument.
On one hand, California is right, recognizing and using regulation as a way to drive change. They've positioned themselves to lead the way in driving down emissions, with a third of the country ready to follow them.
Nebraska is also right. Middle America still lacks the infrastructure and equipment to successfully make the switch from diesel to EV trucks. Even if they could handle the costs, which they're not currently able to do, trying to force this change before more states are ready will only cause mass disruption.
At some point, the two truths will come close enough together that the opposite will be true, and disruption will be downgraded to discomfort. That is when it will be time to move on these goals.
