In March 2024, the EPA issued its final Safer Communities by Chemical Accident Prevention Rule (SCCAP rule), which became effective on May 10, 2024. The SCCAP rule amends the Risk Management Program (RMP) regulations that were established to prevent the accidental release of toxic and explosive substances, reduce the severity of any accidents that may occur, and improve the communication between facilities and the community.
“As major and other serious and concerning RMP (Risk Management Program) accidents continue to occur, the record shows and EPA believes that this [SCCAP] final rule will help further protect human health and the environment from chemical hazards through advancement of process safety based on lessons learned,” the final rule states. “These amendments seek to improve chemical process safety; assist in planning, preparedness, and response to [RMP]-reportable accidents; and improve public awareness of chemical hazards at regulated sources.”
Chemicals in transit
The final SCCAP rule removed “hotly contested proposed language that would have imposed a 48-hour limit on how long a chemical containing certain hazardous substances could be held in transit and could have had drastic impacts on the country’s chemical transport, tank cleaning and transportation depot industry,” according to law firm Holland & Knight LLP. “Commentors and industry observers expressed significant concerns in their comments on the proposed rule that such provisions would be highly disruptive to the global bulk chemical shipping industry, which relies on chemical transport facilities to provide elasticity in the transportation market by temporarily holding intermodal tank containers and liquid tank trailers containing products for brief periods while en route to their ultimate destinations at customer facilities.”
Recent case law referenced in the final SCCAP rule outlines “business practices and factors that could trigger what is considered ‘in-transit’-related activity,” which “leaves open risk of EPA authority and involvement in the transportation industry,” Holland & Knight continues. This case law “suggests that regional EPA officials will continue to try to tighten the definition of what it means for a chemical container to be ‘in transit,’ and facility operators should take heed of the four factors identified in the U.S. District Court for the Eastern District of Washington’s recent decision in U.S. v. Multistar Industries to determine whether the EPA may consider their facilities to be stationary sources subject to various EPA regulations.”
Background
Multistar operates an intermodal transfer facility in Othello, Washington, where it receives rail cars containing the hazardous substance trimethylamine (TMA), shipped from third party Eastman Chemical Company, which is a TMA manufacturer located in Pace, Florida. Eastman uses the Multistar 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. The dispute in this case was in determining whether the rail cars, when disconnected from a power source, are considered a stationary source under the Clean Air Act (CAA).
As Holland & Knight notes, the court looked at four factors in determining whether the rail cars constituted a stationary source:
- “Length of Time at Facility. A key factor in the court’s determination that the railcars constituted a stationary source was the fact that they sat on Multistar rails for between six days and 26 weeks after delivery.
- Connection to Motive Power. The court emphasized that the railcars sat at the Multistar facility unconnected from any mode of power. The court cited the 1998 RMP Rule amendments, which explain that a container is in transit as long as it is connected to the motive power that delivered it to the site. As such, it concluded that a transportation container not connected to motive power is not in transit and, thus, is a stationary source.
- Primary Purpose of the Facility’s Operation. Multistar and the federal government presented competing interpretations of the ‘Warehousing Services Agreement’ that governed the relationship between Multistar and the TMA producer. The government argued that the ‘railcar storage fee’ and ‘railcar terminal fee’ paid to Multistar for each day that the railcars sat on Multistar’s rails were proof that storage, not transportation, was the primary purpose of Multistar’s operations. In contrast, while Multistar conceded that the agreement contemplated storage, it disagreed with the government’s characterization of storage as the ‘express purpose’ of the agreement rather than transportation. Ultimately, the court sided with the government and ruled that the railcars were used as storage outside the scope of transportation.
- Bill of Lading. In ruling that the [Emergency Planning and Community Right-to-Know Act (EPCRA)] transportation exemption does not apply, the court emphasized that the first bill of lading expired upon delivery to Multistar and that the second bill of lading covered only the TMA while it was transloaded and shipped to the ultimate customer. Accordingly, the court ruled that there were no active shipping papers covering the railcars while they were stored at Multistar and, therefore, the railcars were not in transit.”
Although Multistar has filed an appeal in the case, Holland & Knight advises industry to be aware that this case indicates the EPA could begin to bring legal actions against other organizations “to further constrict the exemption from regulations for storage incident to transportation.”