January 23, 2025

Impacts of a Trump EPA on Chemical Transporters' Reliance on In-Transit Exemptions

Holland & Knight Transportation Blog
Andy Emerson | Jameson B. Rice | Meaghan A. Colligan | Alexandra E. Ward | Amy O'Brien
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The global bulk chemical shipping industry relies on chemical transportation depots to be responsive to market demands by temporarily holding trailers and containers of chemical products en route to their final destinations at customer facilities. Since the 1970s, the temporary storage operations at these depots have been governed by regulations overseen by the U.S. Department of Transportation (DOT). As a result of being subject to DOT regulations, and to avoid regulatory overlap and conflict, these depots have historically been subject to "in-transit" exemptions under certain environmental frameworks overseen by the U.S. Environmental Protection Agency (EPA), including the "storage incident to transportation" exemption under Section 112(r) of the Clean Air Act's (CAA) Risk Management Program (RMP) and the Emergency Planning and Community Right to Know Act (EPCRA).

Nonetheless, these exemptions have recently been subject to significant attention by EPA and industry, including an EPA proposed rulemaking in early 2024 that attempted to limit the CAA's RMP in-transit exemption to eliminate those transportation containers that had been "disconnected from motive power" for 48 hours. Even without a new rule in place, EPA has challenged use of the in-transit exemption, including a case decided by the U.S. Court of Appeals for the Ninth Circuit in December 2024, United States v. Multistar Industries, Inc. No. 23-3765 (9th Cir. Dec. 10, 2024) (Multistar).

In Multistar, the Ninth Circuit affirmed a 2023 district court decision that concluded that railcars containing Trimethylamine (TMA, a regulated hazardous substance) stored at Multistar's facility did not satisfy the criteria for the CAA and EPCRA's in-transit exemptions. Specifically, the Ninth Circuit concluded that, because the railcars were disconnected from motive power while stored on site at Multistar's facility (in most instances, for more than one month), they did not satisfy the exemptions.

The Multistar decision leaves open many unanswered questions for the chemical transportation industry, including what impact this decision will have on the jurisdictional limits of EPA and DOT to regulate hazardous chemicals in interstate commerce and how those authorities may overlap or need to be coordinated via rulemaking or new legislation. In the interim, chemical transporters are left to wonder what actions may be taken by the Trump Administration to limit or distinguish the boundaries of agency authority and/or rely upon the decision to initiate enforcement actions against chemical transporters, transloaders and depot facilities.

This blog provides an overview of the Ninth Circuit's decision and opines on how the industry may expect the Trump Administration's EPA to address these uncertainties.

The Ninth Circuit's Decision

On Dec. 10, 2024, the Ninth Circuit's decision in United States v. Multistar Industries, Inc. affirmed the 2023 decision of the U.S. District Court for the Eastern District of Washington that railcars containing TMA at Multistar's facility in Washington state did not satisfy the criteria for transportation exemptions from the CAA's RMP requirements and EPCRA.

The district court previously held that the railcars that sat at Multistar's facility prior to transloading for final delivery to the customer did not qualify for the "storage incident to transportation" exemptions under EPCRA and the CAA for four reasons:

  • Some of the railcars sat on Multistar's rails for a significant length of time (between six days and 26 weeks after delivery).
  • The railcars were not connected to motive power while at Multistar's facility.
  • Multistar's contracts with the TMA producer supported a finding that the primary purpose of Multistar's operations was "storage," not transportation.
  • The railcars were not under active shipping papers (i.e., bill of lading) while at Multistar's facility.

In its unpublished opinion, the Ninth Circuit largely relied on the first two factors (length of time and motive power) to affirm the lower court's decision and proffer a bright line of one month as the length of time that stationary transportation containers may be stored before they are no longer in transportation, noting EPA's lack of such standard. Specifically, the court concluded that TMA-containing railcars sitting stationary for more than one month "plainly [were] not in transportation" and that storage was the "principal purpose."1 For railcars that sat at Multistar's facility for less than one month, the court relied on EPA's "motive power" standard to conclude that, because the railcars were disconnected from motive power while at Multistar's facility, they must be considered a "stationary source" under the CAA, regardless of any other factor.2 The court also briefly noted the lack of active shipping papers in support of its decision but did not analyze this factor in further detail.

The Ninth Circuit's decision did not address the jurisdictional argument raised by Multistar's counsel that EPA is attempting to exercise authority over an area that is outside of its jurisdiction and expertise – and already regulated by DOT – and appeared to argue that it should defer to EPA's technical expertise (over environmental matters) without consideration of alternate expertise in transportation matters that might arguably better sit with DOT.

Looking Forward

Though EPA's recent focus on the in-transit exemptions and the Multistar decision raise many uncertainties for the bulk chemical industry, it is anticipated that the Trump Administration's touted focus on deregulation may prove favorable to the industry. It is anticipated that the Trump Administration will be more likely than the previous administration to defer to the long-held delineation between DOT and EPA authority that has been relied upon by the chemical transportation industry in determining their regulatory compliance obligations. Accordingly, to the extent it is able to exert control over EPA's regional leadership and enforcement personnel, the Trump Administration may choose to essentially revert to the status quo, neither implementing a new rulemaking nor focusing on enforcement actions to implement the court's ruling in the Multistar decision.

Alternatively, given the apparent disconnect between EPA headquarters, which dropped this issue during prior rulemaking by removing the 48-hour window, and its regional enforcement personnel and the U.S. Department of Justice, which has argued that a container is no longer in transit as soon as it is detached from motive power, the Ninth Circuit's decision may further refined through litigation. Multistar may seek en banc review of the Ninth Circuit's opinion or an eventual appeal to the U.S. Supreme Court is also possible. Should that occur, the scope of the exemptions or agency jurisdiction may be further limited by judicial decisions. Chemical transport companies can ready themselves for any outcome by ensuring that they have a full understanding of the CAA's RMP regulations and EPCRA requirements and take steps to evaluate how their operations could comply with these requirements.

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Notes

1 Decision, at 4.

2 Id.

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