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Federal Railroad Power versus Local Land-Use Regulation: Can Localities Stop Crude-by-Rail in Its Tracks?

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Document pages: 55 pages

Abstract: After Benicia, California successfully rejected a crude-by-rail offloading rack building permit, multiple localities have become emboldened and also denied refinery permit applications for the construction of offloading facilities. The question explored in this Note is whether, or perhaps to what extent, the ICC Termination Act preempts localities from using land-use permitting authority to deny a refinery’s permit application for construction of a crude offloading facility. The scope of the ICC Termination Act’s Preemption Clause depends largely upon the answer to two questions. First, whether Congress intended the ICC Termination Act to cover local regulations, such as land-use permits. And second, whether Congress intended refineries to be among the covered parties under the Act. To analyze these questions, this Note investigates how the ICC Termination Act’s textual definitions, legislative intent, and judicial application combine to create an unclear mandate that could threaten local control over matters of genuine local import. This Note proceeds in the following course: Part II explores refiner and producer motives to expand crude-by-rail into the Western market. The California market creates significant incentives and opportunities for crude producers, refiners, and railroad companies, but it also poses political risks and structural challenges. Part III evaluates the ICC Termination Act’s language and the relevant legislative history. This history demonstrates that, in an attempt to deregulate the railroad industry, Congress sought to draft a preemption clause that covered all “economic regulation,” but with room for preservation of some traditional local police powers. Part IV evaluates the broad, and sometimes incongruous, application of the ICC Termination Act in federal courts and the STB. Lastly. using the text, legislative history, and jurisprudence as a guide, Part V argues that under no circumstances should a refinery be considered a “rail carrier,” and therefore, the ICC Termination Act should not preempt local zoning laws impacting refineries. Ultimately, this Note counsels against a broad reading of ICC Termination Act preemption. Any preemptive result would dangerously threaten local autonomy and open every community in the United States to crude-by-rail delivery, no matter the concerns of the local government and the people.

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