United States v. MultiStar Indus.

• Decision Date: 07 February 2023
• Docket Number: 2:21-CV-0262-TOR
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. MULTISTAR INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — District of Washington

UNITED STATES OF AMERICA, Plaintiff,
v.
MULTISTAR INDUSTRIES, INC., Defendant.

No. 2:21-CV-0262-TOR

United States District Court, E.D. Washington

February 7, 2023

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

THOMAS O. RICE UNITED STATES DISTRICT JUDGE

BEFORE THE COURT are Defendant's Motion for Summary Judgment (ECF No. 36) and Plaintiff's Motion for Partial Summary Judgment (ECF No. 50). These matters were submitted for consideration with oral argument on February 1, 2023. Michael B. Gillett appeared on behalf of Defendant. Andrene E. Dabaghi and Katherine L. Matthews appeared on behalf of Plaintiff. The Court has reviewed the record and files herein, considered the parties' oral arguments, and is fully informed. For the reasons discussed below, Defendant's Motion for Summary Judgment (ECF No. 36) is DENIED and Plaintiff's Motion for Partial Summary Judgment (ECF No. 50) is GRANTED.

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BACKGROUND

This matter relates to the transport of a regulated hazardous substances, trimethylamine (“TMA”), via railcar from Pace, Florida to a transloading facility in Othello, Washington. The following facts are not in dispute except where noted.

Defendant operates an intermodal transfer facility in Othello, Washington. ECF No. 36 at 3, ¶ 2. Defendant's facility has the capacity to receive and store up to 10 rail cars on its private rail siding. ECF No. 44 at 2, ¶ 4. The facility also has transloading equipment that is used to transfer materials from rail cars into cargo tank motor vehicles. Id. at 3, ¶ 6. In this case, Defendant's private rails and transloading equipment are used to receive rail cars containing TMA that are shipped from third-party Eastman Chemical Company (“Eastman”), which is a TMA manufacturer located in Pace, Florida. ECF No. 36 at 3, ¶ 2. Eastman uses Defendant's facility because it enables Eastman to store 400,000 pounds or more of TMA, which can be delivered within a few days to Eastman's customer in Moses Lake, Washington. ECF No. 44 at 2, ¶ 4.

The Moses Lake customer used to receive its TMA shipments directly from Eastman via truck. ECF. No 50-1 at 2, ¶ 3. However, in September 2017, Eastman and Defendant entered a “Warehousing Services Agreement” under which Defendant agreed to receive, on behalf of Eastman's Moses Lake customer, the rail cars containing TMA. Id. at 2, ¶ 2; 44 at 1-2, ¶¶ 2-3. When Eastman ships

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the rail cars containing TMA to Defendant, Eastman issues a bill of landing that identifies Defendant as the consignee. Id. at 7, ¶¶ 25-26. Once the rail cars are delivered to Defendant's location, they are disconnected from their motive power source. Id. at 4, ¶ 13. Defendant then takes “operational control of the railcar” and “accepts care, custody and control of the railcars and product contained therein regardless of the unloading date or date of the warehouse receipt.” Id. at 4, ¶ 12. The rail cars containing TMA remain at Defendant's location until Eastman notifies Defendant, via a subsequent bill of landing, that the Moses Lake customer is ready to take delivery of the TMA. ECF Nos. 44 at 2, ¶ 3; 50-1 at 7, ¶ 27. Defendant then transloads the TMA from the rail cars into the cargo trucks, which are driven to the Moses Lake customer. ECF No. 44 at 3, ¶ 6; at 4, ¶ 8. Each cargo truck can carry nearly 40,000 pounds of TMA. ECF No. 50-1 at 5, ¶ 19. At oral argument, Defendant indicated it takes multiple trips to deliver the complete TMA order to the Moses Lake customer.

During the time the rail cars containing TMA are located at Defendant's facility, Defendant charges Eastman a “railcar storage fee,” also referred to as a “railcar terminal fee.” Id. at 3-4, ¶¶ 10-11. Each rail car has the capacity to hold 150,000 to 158,000 pounds of TMA, and Defendant's rail siding can hold at least 10 rail cars at a time. ECF No. 44 at 2, ¶ 4. Historically, the TMA has remained in

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the rail cars at Defendant's location anywhere from 6 days to 26 weeks. ECF No. 50-1 at 4, ¶ 16.

On September 1, 2021, Plaintiff filed a Complaint seeking injunctive relief and civil penalties for Defendant's alleged violations of the Clean Air Act, 42 U.S.C. § 7412(r)(7), and the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11022. ECF No. 1. Defendant moved to dismiss the claims, but the motion was denied on January 27, 2022. ECF No. 22. The present motions before the Court are essentially cross motions for summary judgment on Defendant's liability. ECF Nos. 36, 50.

DISCUSSION

I. Legal Standard

The Court may grant summary judgment in favor of a moving party who demonstrates “that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In ruling on a motion for summary judgment, the court must only consider admissible evidence. Orr v. Bank of America, NT & SA, 285 F.3d 764 (9th Cir. 2002). The party moving for summary judgment bears the initial burden of showing the absence of any genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to identify specific facts showing there is a genuine issue of material fact. See Anderson v. Liberty Lobby, Inc.,

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477 U.S. 242, 256 (1986). “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Id. at 252.

For purposes of summary judgment, a fact is “material” if it might affect the outcome of the suit under the governing law. Id. at 248. Further, a dispute is “genuine” only where the evidence is such that a reasonable jury could find in favor of the non-moving party. Id. The Court views the facts, and all rational inferences therefrom, in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). Summary judgment will thus be granted “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

Defendant moves for summary judgment, arguing the EPA reporting requirements do not apply to its TMA operation because the rail cars are not stationary sources under the CAA nor are they facilities under EPCRA. ECF No. 36. Plaintiff moves for partial summary judgment on Claims 1, 2, and 5 under the CAA and Claims 6 and 7 under EPCRA on the grounds that Defendant failed to comply with the regulatory reporting requirements. ECF No. 50.

A. Clean Air Act (CAA)

The CAA, 42 U.S.C. § 7412(r)(7), and its implementing regulations at

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40 C.F.R. Part 68, impose a duty on owners and operators of stationary sources that store more than a threshold quantity of a regulated substance to identify hazards that might result from release of the substance and to take steps to mitigate the accidental release of the regulated substance. Explicitly exempt from regulation are hazardous substances that are stored incident to transportation. 42 U.S.C. § 11047; 40 C.F.R. § 68.3. Defendant argues the transportation exemption applies to its TMA operation. ECF No. 36.

Under the CAA transportation exemption, a container used to transport regulated materials is not subject to EPA regulation so long as the container is still considered to be in transportation, even if the container is used as “storage incident to transportation.” 40 C.F.R. § 68.3. The regulations do not define what constitutes “storage incident to transportation” and the parties dispute how this language should be interpreted. Defendant contends storage is incidental to transportation when storage is subordinate to the principal purpose of transporting the material to the end customer. ECF No. 36 at 15.

In the context of Defendant's TMA operation, Defendant argues transporting the TMA is the primary function of its operation; any storage is subordinate to the transport. Id. at 13. Defendant asserts it simply acts as an intermediary between Eastman and Eastman's Moses Lake customer, and storage of the TMA occurs as part of the...