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Environment & Energy Report

INSIGHT: Freight Transportation—The Ring for State v. Federal Preemption Fights

Oct. 28, 2019, 8:01 AM

Recent events reveal once again that freight transportation remains a hotbed of conflict between federal regulation and state and local laws.

In July, the Pipeline and Hazardous Materials Safety Administration invited public comment on a new Washington state law that establishes a maximum vapor pressure of 9 psi for crude oil loaded or unloaded (into or out of a railroad tank car) in the state.

Various details surround application of the law, but its overall effect is to severely curtail if not prevent the transportation of Bakken crude oil from North Dakota and Montana into the state for refining—an effect the law’s proponents have all but admitted was their goal.

The two Bakken-producing states have challenged the Washington state law as preempted under federal law, but the broader issue inherent in the controversy—namely, the conflict between state/local attempts at regulation and the federal interest in uniformity—is one that commonly arises in freight transportation, especially transportation of hazardous materials. Preemption means that any state or local law is “without effect” if it conflicts with federal law, due to the supremacy of federal law.

Conflict Between State, Local, Federal Law Common

The conveniences of modern industrial society require the constant movement of raw materials and finished goods throughout the country every day, enabling consumer products, fresh food, electricity, and other necessities (and luxuries) of contemporary life to be readily available to Americans in all 50 states. However, the transportation of these raw materials and finished goods inevitably has wide-ranging impacts on the communities through which they are transported. In light of frequent state and local efforts to regulate or curtail freight transportation, conflicts with federal law inevitably arise.

Transportation is heavily regulated at the federal level, and interstate commerce issues are implicated in the movement of most goods and raw materials. State and local laws that affect freight rail transportation are frequently preempted by the federal Interstate Commerce Commission Termination Act (ICCTA), which includes a broad statement of federal jurisdiction over rail transportation..

A wide variety of state and local actions have been preempted under ICCTA, including Delaware’s attempt to limit nighttime noise caused by idling railroad locomotives, an effort by the city of Alexandria, Va., to affect rail shipments to an ethanol transloading facility by limiting the trucks that could exit the site, and a city ordinance in Sebree, Ky., that required a railroad to obtain city council approval before changing the grade at a railroad street crossing.

ICCTA does not preempt all state and local actions that could affect interstate rail transportation, but its sweeping impact can cause consternation among those who seek more local control.

ICCTA’s expansive effect was dramatically and directly addressed just two years ago in another fossil fuel-related dispute in Washington state. A Spokane resident submitted a citizen initiative to the city council that have would amended the city code to prohibit the rail transportation of coal and oil through the city. The initiative had some support on the city council, but not enough to overcome preemption concerns that caused the council to refuse to place the initiative on the general election ballot.

Unhappy with the council’s decision, the resident filed suit against the United States in federal court, acknowledging the preemptive effect of ICCTA but alleging that this preemption violated his constitutional right to a healthy and livable environment.

The judge dismissed the plaintiff’s attack on ICCTA, effectively finding it premature, reasoning that ICCTA had not been utilized to invalidate any state or local law because the city council had never enacted a law that conflicted with federal law. See Holmquist v. United States, No. 2:17-cv-0046 (E.D. Wash., July 14, 2017).

ICCTA is only one possible basis for federal preemption. Others exist. The transportation of hazardous materials is heavily regulated at the federal level, meaning that state and local efforts at hazmat regulation can also be preempted. For example, a federal court recently found that preemption under the federal Hazardous Materials Transportation Act (HMTA) barred the enforcement of a California law requiring railroads to collect a $45 per rail car hazmat fee from shippers for all hazardous materials shipped into or loaded within the state.

HMTA also provides the basis on which the states of North Dakota and Montana have challenged the recent Washington state crude oil vapor pressure law. If their HMTA challenge fails, the two states may well attempt a challenge based on ICCTA.

Washington’s effort to effectively ban the transport of Bakken crude into the state is an important reminder of the potential for preemption whenever a state or local government takes an action that affects interstate freight transportation.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

David E. Benz is counsel in Thompson Hine’s Transportation practice group. He focuses his practice on matters involving freight railroad regulation, contracting and strategy. In particular, he assists clients in understanding their rights under federal law, in reducing their rail transportation shipping costs, and in meeting regulatory requirements of the Surface Transportation Board and other federal agencies.