California’s new fee on hazardous railroad shipments being challenged by railroads

By Bill Holloway

California’s new fee on rail deliveries of certain hazardous chemicals, including crude oil, is being challenged in federal court by BNSF and Union Pacific railroads. As noted in the LA Times, the new state regulation, set to take effect this year, requires railroad companies to collect a $45 fee from their customers for each rail car carrying any one of 25 hazardous materials into the state. The funds are to help the state pay for improvements to its emergency response capabilities so it can better respond to spills resulting from train derailments. Specifically, the state will be trying to remedy gaps in its ability to handle spill types that were identified in an analysis conducted by the state’s Office of Emergency Services.

The railroads contend that the fee violates federal interstate commerce law and that the fee would interfere with their business activities. The American Chemistry Council, which represents hazardous materials shippers, told the LA Times that its members were concerned about the regulation leading other states to levy fees as well.

Bill Holloway is a Transportation Policy Analyst at SSTI.