Thompson Hine | Oil and gas by rail
A Four Part Series from Oil + Gas Monitor
The Hidden Issues in Crude-by-Rail Contracting
Jeffrey O. Moreno
Page 1
DOT Compliance Responsibilities Increase for Rail Shipments of Crude Oil
In the Aftermath of Train Derailments
Karyn A. Booth and Jason D. Tutrone
Page 3
Liability Under Federal Environmental Law for Crude Oil Spills from Rail Cars
Terrence M. Fay
Page 5
New Rail Charges Could Cost Shippers Millions
Jeffrey O. Moreno
Page 7
The Hidden Issues in Crude-by-Rail Contracting
By: Jeffrey O. Moreno
At first blush, a rail transportation contract for shipping crude oil appears like any other commercial contract
negotiation. But scratch just beneath the surface and you will find all sorts of terms, phrases and industry
practices that create pitfalls for the unwary. This article identifies the most common issues any crude oil
shipper should know about.
Starting with the most basic issue, it is important to be aware of the distinction between rail transportation
governed by a contract versus a tariff. By default, all rail transportation is common carriage governed by tariffs.
Tariffs are public documents, usually published on a railroad’s website, that set out the railroad’s basic rates and
terms for transportation. If you do not have a valid contract with the railroad, those are the terms that will apply to
your transportation. Because tariffs are unilateral documents published by the railroad, a shipper can challenge
undesirable terms as unreasonable before the Surface Transportation Board, the federal agency responsible for the
economic regulation of railroads. In contrast, when a shipper and railroad enter into a contract, the rail service is
governed by the contract instead of tariffs and the contract is not regulated.
Merely entering into a contract, however, is unlikely to render tariffs irrelevant. Nearly every railroad contract
incorporates all of a railroad’s tariffs, along with many other industry documents that would apply but for the
existence of the contract. To the extent the contract and tariff terms conflict, the contract controls. But to the
extent the contract is silent on a subject, the tariffs still apply. So it is critical to read and be familiar with the
railroad’s tariffs, which may contain additional charges, impose additional obligations, limit the railroad’s liability to
you and assign third party liability to you. To the extent you object to any tariff terms, you will want to address
their subject matter in your contract with the railroad in order to supersede the tariff.
Although familiarizing yourself with the terms of referenced tariffs prior to executing a rail contract is a great start,
it is not enough. Tariffs incorporated by reference into a contract pose an additional challenge. Most tariffincorporation language applies the current version of the tariff at the time of each rail shipment. Because a railroad
may change a tariff unilaterally with just 20 days’ notice, it could add a potentially objectionable provision at any
time during the term of your contract, and that term would be binding upon you unless it conflicts with a different
provision in the contract itself. Although you could address this problem by freezing the applicable tariff terms as of
the contract’s effective date, railroads seldom agree to this, and there may be other reasons you would not find this
desirable. The most effective way to avoid this result, therefore, is to do your best to anticipate the most significant
issues that might arise and address them in the contract, which will supersede conflicting tariff terms.
A second issue is the distinction between joint and Rule 11 rates whenever the route of movement requires two or
more railroads. A multiple railroad route is known as a “through” movement. The railroads involved in a through
movement may price their services in one of two ways. A “joint rate” is quoted by the origin railroad for the entire
movement from origin to destination. The origin railroad issues a single invoice for the entire route, you pay only
the origin railroad and that railroad then pays the other railroads on the route. As the shipper, you typically will not
know how that rate is divided among the railroads. In contrast, a Rule 11 rate is invoiced separately by each railroad
for its services, and you pay each railroad individually. Aside from the obvious commercial differences, this
distinction is important legally because it affects your remedies for breach of contract and the apportionment of
liability under the contract.
Historically, when the origin railroad publishes a joint rate for a through movement, it enters into a principal-agent
relationship with the connecting railroads. This means the origin railroad is responsible for the actions of the other
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The Hidden Issues in Crude-by-Rail Contracting
railroads in the route. Due to recent high-profile derailments involving crude oil, however, some railroads are
expressly disclaiming the creation of a principal-agent relationship through the publication of a joint rate and require
the shipper to acknowledge the origin railroad is not responsible for the acts of connecting carriers. If the
connecting carriers are not parties to the joint rate contract in their own name, this creates a situation in which
there is no contractual privity between the shipper and the connecting railroads, which in turn generates substantial
uncertainty as to which terms and conditions govern the through movement while the shipment is in the possession
of a connecting railroad. One possible answer is that the connecting railroad is a common carrier whose unilaterally
published tariffs apply. In that case, however, there would be no contract terms to supersede undesirable tariff
terms, because the connecting railroad would not be a party to the contract. Thus it is important to ensure that
either connecting carriers are signatories to a joint rate contract or you have separate Rule 11 contracts with each
railroad in a through movement.
Due to the hazardous nature of crude oil and a spate of recent derailments, liability for third party and
environmental damages has become a point of contention in rail contract negotiations. Most railroad tariffs contain
provisions that require the shipper to indemnify the railroad against all claims to the extent not attributed to railroad
negligence. Effectively, this means that the shipper is responsible for any claims the railroad must pay due to the
shipper’s negligence, third party negligence or undetermined negligence. In addition, to the extent the railroad is
not negligent but a statute nevertheless imposes liability upon the railroad (i.e., strict liability), the shipper is
responsible. This situation is most likely to arise under environmental statutes for cleanup costs if a derailment
causes an oil spill. A railroad may or may not be willing to negotiate a narrower indemnity as part of a contract.
Whatever scope of indemnity you are able to negotiate by contract, you should attempt to mirror that indemnity as
much as possible in your contracts with customers, suppliers, agents and subcontractors so that you may recover
from them in the event their negligence contributed to a railroad’s indemnification claim against you. Your
insurance coverage also should be sufficiently broad to encompass your indemnity obligations.
The third issue concerns the railroad’s liability to you, the shipper. Even when railroad negligence causes damage to
the shipper, every railroad limits its liability. Typically there are two kinds of liability limit, and both are commonly
found in railroad tariffs. First, railroads limit their liability to a fixed amount that often is subject to negotiation in a
contract. Second, railroads disclaim all liability for special or consequential damages. As a practical matter, the
confluence of these two limits means a railroad will be liable to you only for the value of any crude oil spilled as a
result of the derailment. The railroad will not indemnify you for environmental cleanup and response costs you may
incur. Although every railroad offers a full liability option, shippers usually must pay a rate many times higher than
the contract rate for that option, so it is important to have sufficient insurance coverage.
These three issues are just a few of the more significant ones unique to rail transportation contracts. Many other
issues also can carry significant implications during the term of your rail contract. What’s more, there are many
potential variations and nuances to these issues. A failure to identify those issues before entering into a contract can
leave you with limited options down the road and, in a worst case scenario, unanticipated liabilities and
unrecoverable damages.
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DOT requirements increase in the aftermath of derailments
By: Karyn A. Booth & Jason D. Tutrone
In the wake of recent freight train derailments involving crude oil, U.S. regulators have issued various advisories
and alerts that companies need to incorporate in their assessment of the hazardous nature of their crude oil rail
shipments and proper tank car packaging. Specifically, the tragic Lac-Mégantic train accident in Quebec on July 6,
2013, followed by additional crude oil train derailments in the United States, triggered a flurry of regulatory
activity designed to increase the safe rail transportation of crude oil.
The Department of Transportation (DOT), through the Federal Railroad Administration (FRA) and Pipeline and
Hazardous Safety Administration (PHMSA), have issued multiple safety advisories and a safety alert advising
shippers who offer crude oil to rail carriers for transportation to reevaluate their processes for testing, classifying
and packaging crude oil. Under DOT regulations, “offerors” of hazardous materials are responsible for properly
classifying, describing and packaging hazardous material shipments.
The safety advisories emphasize the importance of proper classification and description of crude oil shipments,
including packing group designations under the Hazardous Materials Regulations (HMR). Class 3 crude oil
shipments may qualify as packing group (PG) I, II or III depending on the commodity’s characteristics, and the PG
designation can affect packaging requirements, trigger safety and security plan requirements, and impact emergency
response activities. The increased scrutiny of crude oil descriptions caused some offerors to designate all shipments
as PG I, which subjects them to the most stringent HMR rules. The voluntary assignment of PG I to their crude oil
shipments was presumed by some offerors to eliminate the need for routine testing of crude oil shipments for
classification purposes as required by the HMR.
Noting that Bakken crude may present an increased flammability risk and other hazards, PHMSA later advised in a
Safety Alert that it may be prudent to expand crude oil testing to address additional hazards, such as corrosivity,
sulfur content and dissolved gas content, even though such testing is not specifically required under the HMR. This
raised questions not only as to proper PG designations, but also as to whether all “petroleum crude oil” shipments
are appropriately classified as Class 3 material.
On March 6, 2014, the DOT issued an Amended and Restated Emergency Order (DOT-OST-2014-0025), which
promulgates binding requirements for rail shipments of crude oil transported in tank cars and provides greater
clarity as to offerors’ compliance obligations. First, it requires shippers to properly test and classify their crude oil
shipments with reasonable frequency. Second, it requires shippers to treat all PG III crude oil as either PG I or PG
II, except for hazard communication purposes. This essentially prohibits shippers from using AAR 211 tank cars to
ship crude oil. Finally, it prohibits shippers from reclassifying their crude oil shipments to avoid the order’s testing
and PG III requirements. Thus, offerors of crude oil for rail transportation cannot simply designate their shipments
as PG I to avoid having to regularly test and class their crude oil.
Although the Amended Emergency Order requires regular testing of crude oil, it fails to establish bright-line testing
standards. Instead, the DOT indicated that “testing must have been conducted within the reasonable, recent past to
determine flash point and boiling point in order to assign a proper PG”; the “offeror must continue to test with
sufficient frequency to ensure data regarding the characteristics of the petroleum crude oil subsequently offered for
shipment remain accurate and current”; and the “frequency of testing should account for the variability of the
material, including time, temperature, and location of extraction.” Thus, the DOT requires each offeror to evaluate
the circumstances and data associated with their individual crude oil shipments and to develop appropriate testing
protocols consistent with its broad testing parameters.
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DOT requirements increase in the aftermath of derailments
In addition to testing to determine PG designation, the Amended Emergency Order suggests additional
classification testing. PHMSA issued supplemental guidance on the Amended Emergency Order indicating that
testing crude oil for the following hazard classes would be “appropriate”:
• Division 2.1 (Flammable Gases)
• Division 2.2 (Non-Flammable Gases)
• Division 2.3 (Gas Poisonous by Inhalation)
• Class 3 (Flammable Liquids)
• Division 6.1 (Poisonous Materials)
• Class 8 (Corrosive Materials)
Based on the increased regulatory actions described herein, an offeror of crude oil should consider developing a
testing program that minimizes compliance risks by obtaining sufficient data to reasonably determine the hazard
class and packing group for each of its crude oil shipments transported by rail in tank cars.
The program should test samples in a manner that accounts for all variations of the shipper’s crude oil. For example,
it is advisable for a shipper to establish baseline data for the crude oil it ships and factor into its sampling plan that oil
from different wellheads and terminal storage tanks may have different characteristics. A shipper’s sampling plan
should also reflect that comingled crude oil may not exhibit the same characteristics of its source oils. This would
ensure that the shipper has adequate data to properly classify, describe and package each of its crude oil shipments.
Also, the program should call for initial testing at an increased frequency to establish the crude oil’s variability. By
evaluating its oil’s variability, the shipper can better determine whether to reduce or increase testing frequency. For
example, a shipper who loads railcars from a single storage tank that the same wellheads supply may start testing
with increased frequency, but reduce the frequency upon finding that the oil’s characteristics were consistent over
the initial testing period.
Moreover, a shipper does not need to conduct all of the required tests at the same interval. If the shipper
determines that the variability of certain hazard characteristics is low, the shipper could reduce the frequency of
tests for those characteristics. A shipper should not, however, completely eliminate any required testing for the
hazard classes that PHMSA identified in its supplemental guidance.
Ultimately, each testing program should be well documented. Each crude oil shipper should document both its
test data and its rationale for its testing decisions. If a shipper incorrectly classifies a crude oil shipment, it
could use this documentation to establish that its efforts to comply with regulatory obligations were reasonable
and seek a mitigated penalty.
The future path regulators will take to address the safety of crude oil transportation remains ambiguous, but it will
have significant implications for shippers. Regulators are under intense political pressure to take prompt action to
reduce the safety risks of crude oil transportation. Until now, they have addressed these risks primarily through
emergency orders, rather than the traditional rulemaking process, since issuing an emergency order allows for a
quick response to safety issues. But using emergency orders does not offer a sufficient opportunity for industry
input and often results in uninformed regulation.
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Liability Under Federal Law for Crude Oil Spills from Rail Cars
By: Terrence M. Fay
More crude oil was spilled from rail cars last year than in the nearly four decades since the federal government
began collecting data on such spills in 1975. According to data compiled by the Pipeline and Hazardous Materials
Safety Administration, more than 1.15 million gallons of crude oil was spilled from rail cars in 2013. By
comparison, from 1975 to 2012, 800,000 gallons of crude oil was spilled from rail cars.
There was a time in our history when a carrier could spill crude oil from a rail car and leave the resulting mess for
the impacted community to clean up. However, that time ended with the enactment of the oil and hazardous
substance spill provisions of the Waterway Improvement Act of 1972, subsequently included as Section 311 of the
Federal Water Pollution Control Amendments of 1972 (renamed the Clean Water Act (CWA) in 1977). In its
current incarnation, that section expressly prohibits the discharge of “harmful” quantities of oil into the navigable
waters of the United States from any “on-shore facility,” which is expressly defined to include motor vehicles and
rolling stock of any kind.
After decades of tinkering with Section 311 of the CWA, Congress decided to significantly restructure and expand
the federal regulation of oil spills previously contained in the CWA by amending it to include the Oil Pollution Act
of 1990 (OPA). Under the OPA, a “responsible party” is strictly, jointly and severably liable for cleanup costs and
other damages “for a … facility from which oil is discharged, or which poses the substantial threat of a discharge of
oil, into or upon the navigable waters or adjoining shoreline….” The term “responsible party” is defined to mean
the owner or operator of a “facility,” which is, in turn, defined to include any structure, equipment or device used
for storing, handling, transferring or transporting oil. A fortiori, that definition is broad enough to include rail cars.
A responsible party under the OPA is liable for any costs incurred to prevent, minimize or mitigate oil pollution,
whether those costs are incurred by the government, an Indian tribe or a private individual, including (1) natural
resource damages, which are recoverable by the United States; (2) real or personal property damages, which are
recoverable by the owner or lessee of the damaged property; (3) damages for loss of subsistence use of natural
resources; (4) damages equal to the net loss of taxes, royalties, rents or net revenues from the damaged natural
resources, which are recoverable by the United States and political subdivisions; (5) loss of profits and earning
capacity, which are recoverable by any claimant; and (6) damages for net costs of providing increased or additional
public services during spill clean up activities, which are recoverable by a state or political subdivision. In addition, a
responsible party can also be subject to significant monetary penalties, including penalties for failing to report a spill
of oil into the navigable waters of the United States to USEPA’s National Response Center.
Of course, liability under the OPA is triggered by an oil spill that reaches the “navigable waters of the United
States.” What about spills of crude oil from train cars where the spill does not reach navigable waters – does federal
law contain any mechanism for imposing liability for those spills? The answer is yes.
Although the federal Resource Conservation and Recovery Act (RCRA) is commonly thought of as the federal
hazardous waste act, some of RCRA’s provisions reach beyond chemical waste regulation. In particular, RCRA
prohibits the open dumping of any waste USEPA determines to be hazardous and imposes substantial
administrative, civil and criminal penalties for the open dumping of such waste.
Since the USEPA Administrator has, by regulation, determined that wastes having a flash point of 60°C or 140°F
are “hazardous” for regulatory purposes, if any waste resulting from oil spilled from a rail car, whether
contaminated soil or contaminated water, exhibits the threshold flash point, a hazardous waste has been disposed of
by open dumping in violation of federal law.
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Liability Under Federal Law for Crude Oil Spills from Rail Cars
However, even if the waste material generated by a crude oil spill does not have the requisite flash point, RCRA
still affords a mechanism, both to the government and to private citizens impacted by such a spill, to seek redress.
Section 7003 of RCRA allows USEPA to seek injunctive (cleanup) relief against any person who contributes to the
past or present handling, transportation or disposal of solid or hazardous waste if an “imminent and substantial
endangerment” to the public health, safety or environment is created thereby. Oil-contaminated soil, at least, will
likely be a “solid waste” for purposes of RCRA Section 7003. RCRA Section 7002 provides a tandem citizen suit
remedy for private parties to seek injunctive (cleanup) relief if the government declines to act against the
responsible party after receiving proper notice. In either case, liability will fall upon any person found to have
“contributed” to the disposal of the solid waste posing the imminent and substantial endangerment, in this instance
the soil and, possibly, the water contaminated with oil from the spill. It would not be much of a reach for a federal
court to find that the rail carrier, the owner of the tank car from which the oil was spilled, and the owner of the oil
(if different) all in fact “contributed” to the spill, at least for purposes of RCRA Sections 7002 and 7003.
In addition to the OPA and RCRA, liability for oil spills can be triggered under Section 112 of the federal Clean Air
Act (CAA). Section 112(r) was originally intended to protect against the accidental emission of air pollutants,
including volatile hydrocarbon emissions that might accompany a crude oil spill, from what is referred to as a
“stationary source” (as distinguished from a “mobile source,” such as a locomotive). Section 112(r)(1) is known as
the General Duty Clause, and it requires owners and operators to identify hazards, design and maintain a safe
facility, and minimize the consequences of accidental emissions when they occur.
As interpreted by USEPA, the CAA’s definition of stationary source does not include air pollution sources used in
“transportation, including storage incident to transportation, of any regulated substance” governed by regulations
adopted by the U.S. Department of Transportation (USDOT). USEPA recognizes that containers used in
transportation or under active shipping papers are subject to exclusive regulation by USDOT under the Interstate
Commerce Act. That recognition notwithstanding, it is USEPA’s position that a rail car may become a “stationary
source” subject to Section 112(r) during loading, unloading, or when the container is being stored at a facility not
incident to transportation (i.e., not under active shipping papers).
In the event of a crude oil spill from a rail car not under active shipping papers, CAA Section 112(r) may impose
strict (no fault) liability, and allows USEPA to file an action seeking civil penalties of not more than $37,500 for
each day an owner or operator of a leaking rail car violates the General Duty Clause, as well as injunctive relief to
prevent further violations. In addition, in the 1990 amendments to the CAA, Congress gave the USEPA
Administrator an additional mechanism to enforce compliance with the CAA: the power to assess an administrative
penalty of up to $25,000 per day of violation.
Whether under the OPA, RCRA, CAA or any combination of those acts, USEPA and parties impacted by crude oil
spills from rail cars have ample authority to compel responsible parties to remediate crude oil spills and to impose
significant monetary penalties to deter future spills.
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New rail charges could cost shippers millions
By: Jeffrey O. Moreno
Major changes in how railroads handle the movement of empty privately owned tank cars could add millions of
dollars annually to the cost of shipping any commodity in tank cars, including crude oil. In December 2014, the
Union Pacific Railroad (UP) announced that effective January 1, 2015, it would begin assessing mileage-based
charges upon certain movements of empty private tank cars to and from repair facilities. BNSF Railway Company
(BNSF) announced in a January 30 press release that it would follow UP’s lead by assessing similar charges effective
March 1, 2015. Both railroads previously provided this service free of charge.
The UP charges, which are published in UP Tariff 6004, Item 55, apply to empty private tank cars moving to and
from a “Repair Facility,” which UP defines as any facility that cleans, lines, relines, maintains, modifies, repairs or
retrofits tank cars. These new charges apply except when the empty movement is immediately preceded by a loaded
line-haul revenue movement on UP, the empty car has been taken out of service by UP inspection and waybilled
under Rule 1 of the Association of American Railroad Interchange Rules, or the tank car was damaged by UP. Thus,
all movements into and out of facilities for cleaning, routine maintenance or inspection will be subject to the new
charge, unless UP was the last railroad to deliver that same car in loaded revenue service. Although that exception
would provide a free movement into the repair facility, the outbound movement still would be chargeable.
Based upon BNSF’s press release, its tariff will be similar to UP’s tariff. The principal difference is that the BNSF
tariff would treat movements of empty tank cars to BNSF repair facilities differently than movements to repair
facilities on other railroads. A movement to a non-BNSF repair facility would not incur a charge if it is immediately
preceded by a loaded line-haul revenue movement on BNSF, whereas movement to a BNSF repair facility would
incur charges regardless of the immediately preceding movement. Also, BNSF intends to publish different rates for
single car movements and unit train movements. As of the writing of this article, however, the actual text of the
BNSF tariff was not available.
As a result of these tariffs, crude oil shippers could incur significantly increased rail transportation costs, especially
those who own large fleets of tank cars that move in unit train service. The larger the fleet, the greater the financial
impact. The near-term effects will be felt most significantly by tank car owners who are responsible for payment of
these charges. A tank car owner is any shipper which has purchased its tank cars or the leasing company which
leases tank cars to shippers. Although shippers which lease their tank cars may not be affected immediately,
the lessors who own the tank cars likely will attempt to pass through this new transportation cost to their
lessees in new tank car leases.
These tariffs are controversial because they reverse a longstanding practice of providing free movements of tank cars
for nearly all purposes. That practice, which has treated tank cars differently from most other car types, was largely
attributable to the fact that nearly all tank cars are privately owned. As part of their common carrier obligation,
railroads must provide the means (i.e., rail cars) of carrying the commodities they transport. A railroad may fulfill
its obligation either by providing the rail cars or by compensating a third party for permitting the railroad to use
its cars. Given the nature of products that require tank cars and the specialized requirements for tank cars,
railroads have preferred that the shipper provide those cars. Nevertheless, because railroads would incur the
cost of empty tank car movements if they provided the cars, the movement of empty private tank cars
by railroads historically has been free.
Until 1987, in fact, it was unlawful for railroads to charge for most empty tank car movements to or from repair
facilities. Some railroads, however, argued that this was unfair to them because they bore a disproportionate burden
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New rail charges could cost shippers millions
of free repair movements relative to the loaded line-haul revenue they received. These primarily were switching
carriers with large repair facilities on their lines to and from which they were required to provide free
transportation even though they received little, if any, revenue from the cars when loaded. Based on that argument,
in a 1987 case the Interstate Commerce Commission (ICC) eliminated the prohibition against charging for empty
tank car repair movements.
After the ICC removed the ban, a multitude of short-line carriers imposed charges for empty tank car movements
to and from repair facilities on their lines. But the only Class I railroad to do so was Kansas City Southern (KCS),
and then only in connection with a particular facility in Louisiana. All other Class I railroads continued to provide
free empty tank car repair movements, presumably because, unlike the short-line carriers and KCS, they benefited
significantly from the use of these cars in line-haul revenue movements. In 2010, the Canadian Pacific Railroad (CP)
became the second Class I railroad to publish a tariff charge for empty tank car movements to repair facilities, but it
had only a minor impact on most shippers. The UP and BNSF tariffs will have a much more significant financial
impact on shippers because both railroads handle considerable volumes of tank car traffic and have multiple repair
facilities on their rail networks.
Despite the ICC’s decision, the lawfulness of the recent UP and BNSF tariffs remains uncertain. The decision was
predicated upon a need to more fairly allocate the burdens of empty tank car repair movements across all railroads
in proportion to their loaded revenue movements, which is why short lines have been virtually the only railroads
to assess repair movement charges since 1987. In contrast, UP, BNSF and even CP receive substantial loaded
tank car revenues.
Furthermore, the mechanism that the ICC assumed would fairly allocate the cost of empty tank car repair
movements has not functioned as initially believed. The ICC never intended that car owners or shippers bear the
brunt of tank car repair movement costs; that cost was supposed to remain with the railroads as part of their
common carrier obligation. Although car owners would pay repair movement charges to the railroads, those
charges would be returned to the car owners through the mileage allowances that railroads would pay for each mile
of loaded revenue service as compensation for the cost of owning, operating and maintaining their private tank cars.
Thus, the mileage allowance system was the vehicle by which the burdens of empty tank car repair movements
would be allocated more equitably to those railroads that most benefitted from loaded tank car revenue
movements. But that is not how the mileage allowance system works today.
While the mileage allowance program still exists on paper, it barely functions in practice. Because most tank car
lessors recover their car ownership costs through their leases to shippers, they also pass-through their right to
receive mileage allowance payments from the railroads to their shipper-lessees. But most railroads, through
contracts and tariffs, insist that shippers, whether they own or lease their tank cars, waive their rights to receive
mileage allowance payments. Thus, railroads seldom pay mileage allowances on tank cars anymore. Consequently,
the UP and BNSF tariffs have shifted the cost of empty tank car repair movements to shippers, which was not the
ICC’s intent when it permitted railroads to assess repair movement charges.
The UP and BNSF charges for empty tank car repair movements could increase the cost of rail transportation by
millions of dollars annually for the largest users of tank cars. For the crude oil industry, this comes as plummeting
oil prices have placed substantial cost pressures on shale oil production, which is most dependent upon rail
transportation. Whether or not this significant shifting of costs is lawful is a question the industry should be
evaluating very carefully.
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About the authors
The Hidden Issues in Crude-by-Rail Contracting
New rail charges could cost shippers millions
Jeffrey O. Moreno | Partner, Transportation
Jeff is a partner in the firm’s Transportation practice group, where he handles both
commercial and regulatory transportation issues, with a heavy focus upon transportation
by rail and truck. Based upon interviews with clients and peers, Chambers USA has
recognized him as one of the top leading lawyers nationwide who represent shippers in
rail transportation matters.
Jeff represents major utility, petrochemical, mining, agricultural, metals, automotive
and other industrial interests. He advises shipper clients and transportation
intermediaries on transportation contract matters, service issues, loss and damage
claims, hazardous materials liability, rail line purchase and construction, rail
abandonments, rail car leases, and a host of related transportation issues. This includes
litigation or arbitration, when necessary.
Jeff has extensive experience in matters before the Surface Transportation Board (STB)
and agencies within the Department of Transportation, including the National Highway Traffic Safety
Administration (NHTSA), the Federal Motor Carrier Safety Administration (FMCSA), the Federal Railroad
Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA). He handles all rail
regulatory matters within the jurisdiction of the STB. Before the NHTSA, Jeff advises auto equipment
manufacturers on various vehicle equipment safety requirements and safety recalls. At the FRA and FMCSA, he
advises clients on rail and motor carrier safety requirements, respectively. In addition, Jeff handles hazardous
material enforcement and compliance matters before the FRA and PHMSA.
In today’s capacity-constrained transportation markets, Jeff has been particularly active in helping clients address
their service and cost concerns. He has been at the forefront of changes in rail rate regulation, having represented a
large coalition of shippers in the STBs revisions to its small rate case regulations and having successfully prosecuted
the very first cases filed under those new rules. More recently, he has represented several chemical and plastics
companies in some of the most complex large rate cases ever filed at the STB. Jeff also has represented shippers and
trade associations in regulatory proceedings concerning the safety and security of hazardous materials
transportation, as well as the common carrier obligation of rail carriers to haul hazardous materials.
Contact:
202.263.4107
[email protected]
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About the authors
DOT requirements increase in the aftermath of derailments
Karyn A. Booth | Partner, Practice Group Leader, Transportation
Karyn is a partner and leader of the firm’s Transportation practice group. Based upon
interviews with clients and peers, Chambers USA has recognized Karyn as one of the
leading lawyers nationwide who represent shippers in rail transportation matters, and
she was also identified for her work in road transportation matters.
Karyn represents multinational corporations, trade associations, and transportation
intermediaries, such as 3PLs, NVOCCs, freight forwarders and brokers, in domestic and
international matters involving multimodal transportation and logistics services. Her
practice covers the carriage of goods by rail, motor, vessel and air carriers. Karyn serves
as the general counsel to The National Industrial Transportation League, the nation’s
oldest and largest shipper organization.
Karyn’s practice includes a full range of services with a focus on regulatory compliance
and counseling; proceedings before the Surface Transportation Board (STB), Department of Transportation (DOT),
Federal Motor Carrier Safety Administration (FMCSA), Federal Railroad Administration (FRA), Federal Maritime
Commission (FMC), Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Homeland
Security (DHS), Transportation Security Administration (TSA), Customs and Border Protection (CBP), and Federal
Aviation Administration (FAA); transportation contracting; transportation security; legislation; and litigation/
arbitration of transportation-related disputes.
Contact:
202.263.4108
[email protected]
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About the authors
DOT requirements increase in the aftermath of derailments
Jason D. Tutrone | Associate, Transportation
Jason is an associate in the firm’s Transportation group. He advises multinational
corporations, trade associations, and transportation intermediaries on domestic and
international matters involving logistics services and transportation. These matters
include: regulatory compliance; regulatory enforcement; agency rulemaking;
legislative concerns; service issues; loss and damage claims; transportation
security; contract drafting and negotiation; and rate disputes before the
Surface Transportation Board (STB).
Jason’s practice is multimodal, involving air, motor, ocean and rail transportation, and
encompasses a wide variety of logistics services, such as warehousing and terminal
services. In addition, his practice involves the regulation of transportation and
transportation-related activity by the Bureau of Alcohol, Tobacco, Firearms, and
Explosives, Census Bureau, Customs and Border Protection, U.S. Department of Transportation (DOT), Federal
Aviation Administration, Federal Maritime Commission, Federal Motor Carrier Safety Administration, Federal
Railroad Administration, National Highway Traffic Safety Administration, Pipeline and Hazardous Materials Safety
Administration, and STB.
Prior to joining Thompson Hine, Jason was a law clerk in the general counsel’s office of a global maritime freight
carrier and at an enforcement office of the DOT. Jason also was an airline pilot and holds aircraft dispatcher,
commercial pilot, and certified flight instructor certificates.
Contact:
202.263.4143
[email protected]
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About the authors
Liability Under Federal Law for Crude Oil Spills from Rail Cars
Terrence M. Fay | Partner, Environmental Practice Group
Terry is a partner and a member of the firm’s Environmental practice group. He has
more than 32 years of experience in all aspects of environmental and public law. Terry is
a former Assistant Attorney General of Ohio, former Chief Civil Attorney of the
Environmental Enforcement Section of the Ohio Attorney General’s Office, former
Chief Counsel to the Ohio Board on Unreclaimed Strip-Mined Lands, and the former
judicial clerk to the Chief Administrative Law Judge of the Ohio Power Siting Board.
While in public service, he participated in some of the most important events in
environmental and public law in Ohio during the last three decades, including the Erie
Nuclear Power Station power siting proceedings, the filing of the first state cost
recovery action under the federal Superfund Act, the extensive re-drafting of Ohio’s
hazardous waste and strip-mining laws and regulations to conform them to the
requirements of federal law, the defense of the exclusive licensing provision of Ohio’s
hazardous waste laws, and the letting of millions of dollars in state contracts for the clean up of unreclaimed
strip-mined lands in Ohio.
Since leaving public service for private practice, he has been involved in major civil and criminal environmental
litigation on behalf of firm clients, and has counseled companies ranging in size from publicly traded Fortune 500
companies to small family businesses in the environmental aspects of the acquisition and divestiture of business units
and real property. He has also counseled private companies in securing and defending public contracts and the legal
restrictions on gifts made to federal and state public officials, successfully enjoined the threatened termination of a
multi-year, multimillion-dollar public contract, and he has counseled debtors and creditors on the treatment of
environmental liabilities under the federal Bankruptcy Code.
Contact:
614.469.3259
[email protected]
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Links to the articles on Oil + gas Monitor
Article Links:
The Hidden Issues in Crude-by-Rail Contracting
DOT Compliance Responsibilities Increase for Rail Shipments of Crude Oil in the Aftermath of Train Derailments
Liability Under Federal Environmental Law for Crude Oil Spills from Rail Cars
New Rail Charges Could Cost Shippers Millions
Copyright © 2015
Oil + Gas Monitor | www.OilGasMonitor.com | Special Report ID: 150601
This publication may not be reproduced in any form without express consent of the publisher.
Reprints of this publication can be obtained by contacting:
Oil + Gas Monitor
[email protected]
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