The U.S. Court of Appeals for the Ninth Circuit last week ruled against Multistar Industries in its appeal of a district court’s decision to fine Multistar $850,000 for seven violations of the U.S. Environmental Protection Agency’s Clean Air Act Risk Management Program, and Emergency Planning and Community Right-to-know Act related to the “storage” of chemical tank cars at its transload facility in Othello, Washington.
The court’s Dec. 10 decision reads, in part: “Because the TMA [trimethylamine]-containing railroad cars were disconnected from motive power while stored on Multistar’s private tracks, we conclude that even those rail cars that were stationary for relatively short periods of time do not qualify for the Risk Management Program’s transportation exemption.”
The appeals court also stated that “the district court did not abuse its discretion when imposing its $850,000 penalty. The district court correctly estimated the maximum penalty based on the number of separate violations that Multistar committed, not the number of days that Multistar was out of compliance.”
Storage vs. in-transit activities
Multistar appealed the original court’s decision on multiple grounds, including that the “storage” in question actually is “storage incidental to transportation,” and, most importantly, EPA holds no authority over its Department of Transportation-regulated truck-to-rail transloading operation under the terms of a 1971 memorandum of understanding between DOT and EPA that establishes the policies and guidelines related to the definition of a transport facility.
Oral arguments took place Nov. 20 in Seattle, where the appeals court was not persuaded.
See also: EPA asserts right to regulate DOT-governed activities
“Storage was the principal purpose of Multistar’s holding of TMA; therefore, following the parties’ own arguments, that storage was not ‘subordinate’ or ‘incident to’ transportation,” the appeals court responded. “And, while EPA has not drawn a bright line indicating the length of time required for a stationary transportation container to fall out of ‘transportation,’ containers that sit stationary for more than a month plainly are not in transportation.”
The court further points to the lack of active shipping papers and connected motive power in its determination.
“We are persuaded by this interpretation because it provides a ‘reasonable’ approach for determining when a railroad car that is only stationary temporarily is in ‘transportation’ under the Risk Management Program; it is based on the agency’s ‘substantive expertise’ given that Congress directed EPA to regulate stationary sources; and it ‘reflects the agency’s fair and considered judgment, and represents the agency’s authoritative or official position’ because EPA included the interpretation in the preamble to the regulation in the Federal Register.”
Next steps for Multistar
Multistar now is weighing its options, which include another hearing with the Ninth Circuit “en banc” or petitioning the Supreme Court to hear the case. However, “both of these options cost money, and the government always has more money than anyone else,” Daniel Shelton, president of hazardous materials transportation consultancy HazMat Resources, wrote in a newsletter. “The facts for this selective and malicious enforcement by the Department of Justice are overwhelming: Multistar Industries is the only transloading facility in the United States that is subject to the CAA, and this came out in the District Court from the government.
“I am sure there is more to this story, and I am very confident the last chapter of this story has not been completed.”
Multistar continues to maintain “there is no locomotive requirement in the CAA or the EPCRA, only one’s opinion in a preamble published in 1998 that never made it to the final rule. The term ‘rail car’ is not mentioned nor defined in the CAA and is never used to characterize the phrase ‘other structures equipment or substance emitting stationary activities’ as used in the definition of a stationary source.
“Only when the hazardous material (HM) in the rail car has reached its final destination does the rail car become a stationary source and subject to the requirements of the CAA and the EPCRA.”
Potential ramifications for tank truckers
The fear among some in the tank truck industry is this decision could set a precedent for further federal oversight of an already heavily regulated industry by an agency with contradictory requirements, and carry game-changing consequences for any operators who handle hazmat tank cars, tank containers, and even tank trailers.
“[Transloaders] need to understand how this could impact the cost of operating very quickly,” Shorty Whittington, the founder of former CEO of Grammer Logistics, told Bulk Transporter in October. “It also opens the door for liabilities that shouldn’t be there. They’re already covered by other laws.”
Furthermore, if CAA and EPRCA regulations are applied to in-transit tank cars, what will stop EPA from extending those requirements to ISO tanks at depots—or even loaded tank trailers parked at terminals without a tractor attached?
“Where do they draw the line?” wondered David Clifford, Ventura Transfer Company director of operations. “There really is a very fine line between DOT and EPA regulations regarding the storage of chemicals—and they’re trying to blur it.”
