Railroads challenge California’s hazardous material fee

BNSF and Union Pacific have filed a lawsuit challenging a California law that would create a Regional Railroad Accident Preparedness and Immediate Response Force funded by fees collected by the railroads.    Two Class I railroads, BNSF Railway Co. and Union Pacific Railroad Co., have filed a lawsuit in federal court challenging a California law, SB 84, which was passed by the California legislature and approved by Gov. Jerry Brown in June 2015.
   The two companies claim the law “compels railroads to collect from their customers and turn over to the State – under pain of civil and criminal penalty – a charge on the transportation of certain hazardous materials by rail.”
   The law would create a Regional Railroad Accident Preparedness and Immediate Response Force and use fees collected from the railroads to fund it. The force would provide “regional and onsite response and mitigation capabilities in the event of a release of hazardous materials from a rail car or a railroad accident,” according to SB 84.
   However, the railroads said in their complaint against the California State Board of Equalization filed in the U.S. District Court for the Northern District of California last week, “This hazmat charge defies federal law and economic logic. If exclusive federal jurisdiction over the economic relationship between railroads and their customers means anything, it means that a state cannot establish the charges to be collected for rail transportation, order a railroad to collect them from its customers, and depress rail revenues and customer demand in the process.”
   They ask that the court find the imposition of the hazmat charge as preempted by the Interstate Commerce Commission Termination Act of 1995 and a violation of the Interstate Commerce Clause of the U.S. Constitution.
   “The Interstate Commerce Clause and the Hazardous Materials Transportation Act forbid states from discriminating against interstate commerce and in favor of intrastate activity. And the federal Railroad Revitalization and Regulatory Reform Act recognizes that out-of-state railroads are easy prey for local tax assessors, and so forbids States from enforcing tax schemes that single out railroad activity for disfavored treatment,” the railroads said.
   “If the federal prohibitions on discrimination against railroads mean anything, they forbid a state from levying unique charges on rail activity that rail’s competitors – like trucks – do not have to pay,” the lawsuit said. “And in the end, California’s scheme will disserve the public interest, either by encouraging shippers to switch to riskier modes of transportation, or by simply discouraging interstate commerce in hazardous materials that are vital to the Nation’s industrial and agricultural economy. The SB 84 hazmat charge is unlawful and should be enjoined.”