May 2015 Bar Bulletin
Federal Agencies and States Pursue New Regulations for Oil Trains; Face Court Challenges
By Richard Allan and Zachary Kearns
First of Two Parts
The North American oil boom, combined with absent or inadequate pipeline infrastructure, has resulted in an unprecedented increase in transportation of crude oil by rail car. Resulting rail accidents have spawned legislation and regulations designed to address safety concerns. The regulatory response has, in turn, resulted in litigation seeking to define the regulatory turf between federal and state agencies.
The dramatic upswing in crude-by-rail shipping has been accompanied by a number of significant train derailments. Though annual U.S. derailments resulting in a release of crude oil have remained in the single digits throughout this period, these accidents - with their explosions, fires, oil spills, and, at times, tragic loss of life - have captured the public's attention and moved federal, state, and private parties to act.
New federal rules aimed at improving the safety of tanker cars are expected presently, and pending litigation could result in additional federal action. State regulators are also attempting to enter the field, with California having recently enacted oil train legislation and Washington contemplating a similar move.
State regulation of railroads, however, raises significant questions with regard to federal preemption. These questions are already being litigated in a federal court in California; should other states follow California's lead in enacting oil train legislation, further litigation will inevitably ensue.
I. The Oil Boom: Why Rail?
A. Increased U.S. Crude Oil Production
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