California Imposes New Fee on Rail Cars Carrying Dangerous Chemicals

SACRAMENTO -- California plans to levy a $45 fee later this year on rail cars carrying dangerous chemicals across the state.

The move follows several oil train derailments in the country, including in neighboring Oregon. A recent analysis conducted by the Office of Emergency Services found gaps in California's ability to handle such spills, prompting the state Legislature to order the fee program.

Railroad companies call the proposed fee illegal. Federal law prohibits states from imposing constraints on interstate commerce of railways.

The state compiled a list of 25 of the most hazardous materials shipped by rail. Each car carrying one of those materials will face the $45 fee. The list includes substances dangerous to humans by direct contact or because they are highly flammable, like oils, petroleum gases, fertilizers, acids and other chemicals.

Money collected — an estimated $10 million annually — will go to a fund designed to help the state improve its response capabilities, particularly in the gap areas identified in the analysis.

"When one of these trains derails, it puts lives, property and the economy at risk," State Fire and Rescue Chief Kim Zagaris said. "Right now, we don't have the surge capacity to deal with a major spill."

Twelve new, specially-trained hazmat teams will be created through the fund to cover these geographic regions. Some large fire departments already have similar teams.

Railroad and dangerous chemical shippers contend that the need for hazmat teams is overstated, suggesting that very few trains derail and most spills are small.

The Sacramento Bee's review of the state's rail spill database found that hundreds of hazardous material spills happen annually. A Roseville railyard saw 50 reported spills in 2015. And, while large spills are relatively rare, they can be harmful to wildlife and rural economies, the Bee found.

Under California's plan, companies that own the chemicals will pay the fee, rather than railroad companies.

Still, railroad companies, including major shippers Union Pacific and BNSF, say the fee interferes in their business transactions. They would be expected to collect the money from their shipping customers and send it to the state.

"No state can regulate the rates or charges a railroad collects from its customers," Union Pacific assistant vice president Phillip Christensen wrote in an email to the Bee. "This kind of 'economic regulation' is categorically prohibited" by federal interstate commerce law.

An organization representing hazardous materials shippers, the American Chemistry Council, said members are worried the state's fee implementation could lead to rail fees in other states with no certainty about where the money would go.

Despite these complaints, state Office of Emergency Services officials said they expect to impose the fee this year. They said conversations with railroad companies and hazardous materials shippers will continue as they fine-tune the fee program.