Liability Under Federal Environmental Law for Crude Oil Spills from Rail Cars

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)(1) natural resource damages, which are recoverable by the United States; (2)(2) real or personal property damages, which are recoverable by the owner or lessee of the damaged property; (3)(3) damages for loss of subsistence use of natural resources; (4)(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)(5) loss of profits and earning capacity, which are recoverable by any claimant; and (6)(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.

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.