Monday March 28, 2016
The American Fuel & Petrochemical Manufacturers is a trade association that represents “high-tech American manufacturers of virtually the entire U.S. supply of gasoline, diesel, jet fuel, other fuels and home heating oil.” AFPM sued SKV’s client BNSF Railway Company, the largest carrier of crude oil in North America, in federal court in the Southern District of Texas for alleged violations of the Hazardous Materials Safety Act. AFPM claimed that a $1,000 charge BNSF imposed for the carriage of crude oil in DOT 111 tank cars amounts to a surcharge that is in violation of BNSF’s common carrier duty to provide service under the Interstate Commerce Commission Termination Act. BNSF, which does not own the tank cars themselves, claimed that the DOT 111s were “the oldest, least safe tank cars currently authorized to haul crude oil.” The federal agency with authority over use of the cars had promulgated a new set of rules that called for gradually phasing out the use of DOT 111s. AFPM alleged that BNSF imposed its charge to force the DOT 111s into “premature retirement” by making their use “financially impractical.”
SKV partners Craig Smyser and Justin Waggoner, along with co-counsel Steptoe & Johnson, filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction alleging that AFPM’s Complaint is actually a challenge to BNSF’s rates rather than its common carrier obligation. BNSF asserted (1) that the case should be heard by the Surface Transportation Board because the STB has exclusive jurisdiction over railroad rates; (2) that the Complaint failed to state a claim under federal law; and, alternatively, that if the Court determined it had subject matter jurisdiction, the Court should dismiss in deference to the STB’s primary jurisdiction.
On March 11, 2016, the Court granted BNSF’s Motion to Dismiss for Lack of Subject Matter Jurisdiction. The Court held that the case in fact was a dispute over BNSF’s rates and thus falls under the exclusive jurisdiction of the STB.