Repost from The Sacramento Bee
[Editor’s UPDATE: Download the complaint here.  – RS] 

Railroads say California lacks authority to impose safety rules on oil shipments

By Tony Bizjak and Curtis Tate, Oct. 8, 2014

The battle over crude oil trains in California intensified this week, reaching into the legal sphere with potential national repercussions.

The state’s two major railroad companies, Union Pacific and the BNSF Railway, went to federal court Tuesday to argue that neither California nor any other state can legally impose safety requirements on them because the federal government already does that.

The lawsuit came days after California Attorney General Kamala Harris joined other officials in challenging one crude-by-rail project, in the Bay Area city of Benicia. In a letter to Benicia officials, Harris said the city has failed to adequately analyze the potential environmental consequences of Valero Refining Company’s plan to ship two 50-car oil trains daily through Northern California to its Benicia refinery.

Those shipments would run through downtown Sacramento and other Valley cities.

The Valero project and similar plans by other oil companies prompted the state Legislature this summer to pass a law ordering railroad companies to submit an oil spill prevention and response plan to the state, and to provide proof to the state that they have enough money to cover oil-spill damages.

Railroads fired back this week, filing a lawsuit in the U.S. District Court in Sacramento. Their argument: Federal law pre-empts the state from imposing safety restrictions on the railroads.

The suit was filed by the two largest railroads in the Western United States, Union Pacific and BNSF Railway Co. The industry’s leading trade group, the Association of American Railroads, is listed as co-plaintiff.

The fight involves a long-standing friction point between railroads and U.S. states and cities. Railroads contend that local governments cannot place requirements or restrictions on freight travel because federal laws cover that ground.

The railroads have used the federal pre-emption argument to stop states from trying to impose speed limits on trains and ban certain types of shipments. In one notable case, railroads got the courts to overturn a Washington, D.C., law that attempted to ban trains carrying hazardous materials from using tracks within 2 miles of the U.S. Capitol.

“Federal law exempts this entire regime,” the railroads declared in the California lawsuit. Citing “a sweeping set of intricate federal statutes and regulations,” the lawsuit argues that allowing states to impose a “patchwork” of requirements on railroads essentially interferes with interstate commerce.

In a separate email statement Wednesday, BNSF spokeswoman Lena Kent said, “The state gives the industry no choice but to challenge the enforcement of the new law so as to not inhibit the efficiencies and effectiveness of the freight rail industry and the flow of commerce.”

Officials at the state Office of Spill Prevention and Response, the state agency listed as the defendant in the case, declined comment Wednesday, saying the agency does not publicly discuss pending litigation. Harris’ office is listed as a co-defendant.

The U.S. Department of Transportation in July proposed a rule that would require railroads to have oil spill response plans for trains carrying large volumes of crude oil. But that proposal could be months away from becoming law.

National transportation law and safety experts say the onus may be on California to prove that it is not usurping federal law or impeding interstate commerce.

“The state has to prove it is tackling what is a local or statewide issue, that it is not incompatible (with federal law) and doesn’t unreasonably burden interstate commerce,” said Brigham McCown, an attorney and former head of the federal Pipeline and Hazardous Materials Safety Administration. “That is a high bar.”

California might have an opening in a 2007 law Congress passed after the 9/11 Commission issued its recommendations. The 9/11 Act required rail companies to develop security plans and share them with state and local officials. The requirement was not limited to planning for a terrorist attack, but for any rail disaster, including derailments and spills involving hazardous materials.

“Those plans are required to be done and required to be shared,” said Denise Rucker Krepp, the former senior counsel on the House Homeland Security Committee, who wrote the provisions.

The Transportation Security Administration has not enforced the requirement, Krepp said, partly because of its focus on aviation security. But now that the railroads have taken California to court, Krepp said the state could use the 9/11 Act as leverage to get what it tried to get from the railroads through legislation.

“It’s never been tested like this,” Krepp said of the federal law.

It was unclear Wednesday whether the railroads also are challenging the section of the California law that imposes a 6.5-cent fee on oil companies for every barrel of crude that arrives in California on rail, or that is piped to refineries from inside the state. The resulting funds, estimated at $11 million in the first full year, will be allocated for oil spill prevention and preparation work, and for emergency cleanup costs. The efforts will be focused on spills that threaten waterways, and will allow officials to conduct response drills.

Crude-oil rail shipments have risen dramatically in the last few years. Those transports, many carrying an unusually flammable crude from North Dakota, have been involved in several spectacular explosions, including one that killed 47 residents of a Canadian town last year. Federal officials and cities along rail lines have been pushing for safety improvements. California officials have joined those efforts, saying they are concerned by estimates that six or more 100-car oil trains will soon be rolling through the state daily on the way to coastal refineries.

Harris, the state’s top law enforcement official, sent a letter to Benicia city planners challenging that city’s conclusion in an environmental impact report that the Valero rail shipment plan poses an insignificant threat of derailment. The report, she writes, “underestimates the probability of an accidental release from the project by considering only a fraction of the rail miles traveled when calculating the risk of a derailment.”

“These issues must be addressed and corrected before the City Council of Benicia takes action” on the project, Harris wrote.

Harris’ letter repeats earlier criticism leveled by the state Office of Spill Prevention and Response and state Public Utilities Commission.

The letter is one of hundreds Benicia has received in the past few months in response to the city’s initial environmental study. Benicia interim Community Development Director Dan Marks said the city and its consultants would review the comments and prepare responses to all of them, then bring those responses to the city Planning Commission for discussion at an as-yet undetermined date.

Under the Valero proposal, trains would carry about 1.4 million gallons of crude oil daily to the Benicia refinery from U.S. and possibly Canadian oil fields, where it would be turned into gasoline and diesel fuel. Valero officials have said they hope to win approval from the city of Benicia to build a crude-oil transfer station at the refinery by early next year, allowing them to replace more costly marine oil shipments with cheaper oil.

A representative for the attorney general declined comment when asked if Harris would consider suing Benicia to force more study of the project.

“We believe the letter speaks for itself,” spokesman Nicholas Pacilio said. “We expect it will be taken seriously.