[00:00:05] Speaker 03:
of the next case to be argued, I believe, is United States versus multi-star industries.

[00:00:20] Speaker 03:
Multi-star is the appellate and should take the lead.

[00:00:39] Speaker 03:
This case is set for 20 minutes per side.

[00:00:42] Speaker 03:
And so if you'd like to make a rebuttal argument.

[00:00:46] Speaker 00:
Yes, I do, Your Honor.

[00:00:47] Speaker 00:
I would like to reserve five minutes of my time for rebuttal.

[00:00:50] Speaker 03:
OK, watch your time yourself.

[00:00:52] Speaker 03:
It will be your responsibility.

[00:00:54] Speaker 00:
Fine.

[00:00:55] Speaker 00:
I will take heed of that.

[00:00:56] Speaker 00:
Thank you.

[00:00:56] Speaker 03:
We'll try to remind you of it.

[00:00:59] Speaker 00:
I appreciate that.

[00:01:00] Speaker 00:
Thank you, Your Honor.

[00:01:04] Speaker 00:
Good afternoon.

[00:01:04] Speaker 00:
If it please the court, my name is David Rubino.

[00:01:08] Speaker 00:
Council for Appellant Multistar Industries.

[00:01:11] Speaker 00:
The matter before the court is one of regulatory interpretation, namely, whether Multistar reasonably believed that they were exempt from regulations issued by the US EPA pursuant to Section 112R of the Clean Air Act and Section 312 of the Emergency Community Right to Know Act during the temporary storage incident to transportation

[00:01:35] Speaker 00:
of rail cars owned and operated by Eastman chemical company that contained trimethylamine, a hazardous material, otherwise known as TMA, also manufactured by Eastman prior to the time that the TMA was transloaded from rail cars into the tanker trucks.

[00:01:55] Speaker 03:
Council, if I could interject a question, please.

[00:02:00] Speaker 03:
Before you get into your statutory and regulatory arguments about the exemptions, could you just please explain what would be the harm to the public if this TMA material, the hazardous material, had leaked

[00:02:24] Speaker 00:
Well, there's no question that if the TMA leaks, it is a hazard to the public.

[00:02:30] Speaker 00:
I mean, it's the reason why it is regulated.

[00:02:33] Speaker 00:
And it's regulated predominantly under the Department of Transportation regulations.

[00:02:37] Speaker 00:
So the rail cars that contain it have to have specific safety features and be specifically designed in order to be able to contain and hold the TMA while it is in transportation.

[00:02:50] Speaker 03:
Okay, thank you.

[00:02:53] Speaker 00:
Multistar operates a transloading operation in Othello, Washington.

[00:02:58] Speaker 00:
Transloading, in case someone doesn't know, is a transfer of material from one bulk container, transportation container, into another.

[00:03:07] Speaker 00:
So in this case, from a rail car into a tanker truck.

[00:03:11] Speaker 00:
The purpose of Multistar's transloading operation was to facilitate the shipment of TMA that was manufactured and shipped by Eastman Chemical

[00:03:23] Speaker 00:
from Eastman's facility in Pace, Florida, to Eastman's customer in Moses Lake, Washington.

[00:03:29] Speaker 00:
112R regulates stationary sources.

[00:03:36] Speaker 00:
EPGRA 312 regulates facilities.

[00:03:40] Speaker 00:
Rail cars are not expressly included in the definition of stationary source under section 112R, nor in the definition of facilities under EPGRA.

[00:03:52] Speaker 00:
There is also no definition for the word transportation in the regulations, nor the phrase storage incident to transportation, nor do those regulations contain any express time period when a transportation would otherwise be deemed stationary for purposes of the regulations.

[00:04:13] Speaker 00:
None of this is disputed by the government.

[00:04:18] Speaker 00:
Notwithstanding this,

[00:04:19] Speaker 00:
The district court found that a plain reading of the regulations was unambiguous.

[00:04:25] Speaker 00:
It held the regulations applied to Multistar's operation and that Multistar was in violation of them.

[00:04:32] Speaker 00:
The court did so, however, only after it inserted what is known as a motive power exception that it gleaned from the 1998 preamble to the 112R regulations.

[00:04:46] Speaker 00:
and by inserting an active shipping papers exemption under EPGRA, which is also not contained in the regulations.

[00:04:54] Speaker 04:
Let me ask you about the standard of review because we're here on de novo review, correct?

[00:05:03] Speaker 04:
Correct.

[00:05:03] Speaker 04:
But then the question is how we look at the agency determinations.

[00:05:08] Speaker 04:
And in the interim between when your case started and when the Supreme Court arrived at the Loper Bright case,

[00:05:15] Speaker 04:
there's been some change in the landscape.

[00:05:19] Speaker 04:
Some would say cataclysmic change, but there's a change in the legislative and regulatory landscape.

[00:05:28] Speaker 04:
So my question to you is, with respect to Our and Skidmore, don't they still apply?

[00:05:39] Speaker 04:
And what deference, in your view, do we give

[00:05:45] Speaker 04:
to the EPA's view in this case.

[00:05:50] Speaker 00:
So Flipper-Brite did not, for lack of a better term, kill Skidmore, Auer, and the like.

[00:05:59] Speaker 00:
Correct.

[00:06:00] Speaker 00:
I think a couple of the justices gave pretty clear indications that they would want to.

[00:06:06] Speaker 04:
Maybe those are next, but they're not here yet.

[00:06:08] Speaker 00:
Exactly.

[00:06:09] Speaker 00:
However, even under those,

[00:06:12] Speaker 00:
The agency is only entitled to deference if in fact it is regulating an area that is within its sphere of expertise.

[00:06:19] Speaker 00:
And our view is what the EPA tried to regulate here is beyond its sphere of expertise.

[00:06:24] Speaker 00:
That's the expertise of the Department of Transportation.

[00:06:27] Speaker 00:
So our view is, regardless of the fact that Kaiser remains on the books, it can be applied and still uphold the ruling that we are seeking because EPA is trying to regulate

[00:06:42] Speaker 00:
in areas that are beyond the expertise of the agency.

[00:06:45] Speaker 02:
Why would a stationary source be within Department of Transportation's expertise and not the EPA's and I guess related question is how long should a transportation container be stationary before I guess before in your view it would fall out of the ambit of the Department of Transportation?

[00:07:03] Speaker 00:
Well, let me answer the second part of your question first.

[00:07:10] Speaker 00:
If EPA wants to regulate

[00:07:13] Speaker 00:
Rail cars are stationary sources.

[00:07:15] Speaker 00:
EPA has the ability to do so.

[00:07:17] Speaker 00:
They need to put it in the regulations.

[00:07:18] Speaker 00:
They need to be clear about it.

[00:07:20] Speaker 00:
And in terms of the time frame, if there is a time frame within which they want to let the regulated public know that if you leave a rail car standing for a certain period of time, it will be deemed stationary, that too is within their purview.

[00:07:35] Speaker 00:
They simply need to enact regulations to do it.

[00:07:38] Speaker 00:
They attempted to do so while this appeal was pending and in the end elected not

[00:07:43] Speaker 00:
to insert any time period whatsoever.

[00:07:46] Speaker 00:
So a reading of the regulation gives you absolutely no idea how long a rail car can sit before it would be deemed a stationary source.

[00:07:57] Speaker 04:
Well, you have to use some common sense there when you're saying, well, it's in what?

[00:08:04] Speaker 04:
It's still in transit forever?

[00:08:07] Speaker 04:
Can it stay there forever?

[00:08:09] Speaker 00:
Well, let's take the exemptions that EPA seeks to apply.

[00:08:15] Speaker 00:
Their motive power exemption says if a rail car remains attached to the motive power that brought it, it's exempt from the regulation.

[00:08:24] Speaker 00:
There's nothing that requires that motive power or the rail car attached to it to be moved.

[00:08:29] Speaker 00:
So it could stay there one month, two months, a year if it was still attached.

[00:08:36] Speaker 00:
if it was attached.

[00:08:37] Speaker 00:
But if what you're looking to address is the risk of that rail car being there, that motive power exception makes no sense, which is only evidence that the EPA is trying to regulate an area it doesn't fully understand.

[00:08:51] Speaker 00:
If you need those rail cars moved or if you want attention paid to the rail cars, then enact a regulation that says you need to do that.

[00:08:58] Speaker 04:
EPA has not done that here.

[00:09:07] Speaker 04:
legislation, the Clean Air Act, or the regulation?

[00:09:10] Speaker 00:
Well, to the extent that you're interpreting stationary source under the statute or facilities under the statute, then clearly, Loper-Brite would say there's no difference given to the agency and you are interpreting... Well, not none.

[00:09:23] Speaker 04:
I mean, you can look at... True.

[00:09:27] Speaker 00:
That is true.

[00:09:28] Speaker 00:
But yes, you would be looking at it and the court would be interpreting it as the court believes appropriate.

[00:09:35] Speaker 00:
In the context of the regulations, which is where the transportation and storage incident transportation exclusions apply, that would be done under Kaiser.

[00:09:45] Speaker 00:
And the agency is only entitled to deference assuming they are regulating in an area where they have the requisite expertise.

[00:09:54] Speaker 00:
And our view is they don't.

[00:09:56] Speaker 00:
I mean, EPA does, their argument was we regulate mobile sources.

[00:10:01] Speaker 00:
We know how to do that.

[00:10:02] Speaker 00:
That's true.

[00:10:03] Speaker 00:
You regulate what the emissions limits can be from a tailpipe.

[00:10:07] Speaker 00:
You regulate what the emissions limits can be from a truck.

[00:10:11] Speaker 00:
But you don't regulate the safety features of the truck and you don't regulate the safety features or how the engine accomplishes the emissions limits you want to achieve.

[00:10:20] Speaker 00:
So EPA's expertise in that regard

[00:10:23] Speaker 00:
is to ensure air quality so they set emissions limit for parties to meet.

[00:10:28] Speaker 00:
That makes sense.

[00:10:30] Speaker 00:
But here they're at all due respect to the agency.

[00:10:32] Speaker 00:
They're out of their element when they're trying to regulate the safety features of how to safely transport hazardous materials in interstate commerce.

[00:10:43] Speaker 04:
One of the things you just mentioned earlier is that you didn't think this motive power made a lot of sense.

[00:10:49] Speaker 04:
But the government had made the argument that you somehow forfeited that argument.

[00:10:53] Speaker 04:
Would you respond to that?

[00:10:54] Speaker 00:
Oh, I don't believe we forfeited the argument whatsoever.

[00:10:57] Speaker 00:
I think what the government argued is that we forfeited a rolling stock argument.

[00:11:01] Speaker 04:
Okay, maybe I misunderstood that.

[00:11:03] Speaker 00:
No, no, that's fine.

[00:11:04] Speaker 00:
I don't believe we forfeited that either, but we certainly did not forfeit the motive power argument that is replete through our briefing.

[00:11:15] Speaker 02:
Just so I understand your position on this point, would

[00:11:18] Speaker 02:
Do you believe the Department of Transportation would still be able to regulate these rail cars while they're on the private siding or is your argument that nobody can really regulate?

[00:11:31] Speaker 00:
Our argument is that the Department of Transportation in fact does regulate them because as long as those rail cars are placarded, which they are, then they're required to be in compliance with all of the safety requirements of the Department of Transportation.

[00:11:45] Speaker 00:
The trans loading operation itself

[00:11:48] Speaker 00:
is also subject to Department of Transportation regulations, not EPA.

[00:11:53] Speaker 00:
And so it is clear the transloading is separate unto itself.

[00:11:57] Speaker 00:
It is not connected to any other stationary source or any other facility.

[00:12:02] Speaker 00:
So it is just literally it is a device.

[00:12:05] Speaker 00:
You hook up the rail car, you start the transloader and you hook it up to the tanker truck and you

[00:12:10] Speaker 00:
I don't know the full mechanics of it, but somebody presses the right buttons and the TMA is safely transferred from the rail car into the tanker truck.

[00:12:23] Speaker 04:
But in this notion of in transportation has to mean something, and could it mean forever?

[00:12:31] Speaker 04:
Well, I mean, I realize that's the far end, but what if somebody forgot it, got displaced, and it was forever?

[00:12:39] Speaker 04:
Is that in transportation?

[00:12:42] Speaker 00:
Well, if it's, one could argue, if it is left and forgotten about, then it's probably heading towards a place where it isn't.

[00:12:49] Speaker 00:
But that's not the issues we have here.

[00:12:51] Speaker 00:
This TMA, when it arrives at Multistar, the only purpose for it is to be transloaded for final shipment to Moses Lake.

[00:13:00] Speaker 04:
So in terms of... Well, that's the purpose, but that doesn't necessarily have to, with all respect,

[00:13:07] Speaker 04:
It doesn't help me try to understand what does in transportation mean.

[00:13:11] Speaker 02:
Right.

[00:13:11] Speaker 02:
That's why I asked how long?

[00:13:14] Speaker 02:
How long?

[00:13:14] Speaker 00:
Well, once again, I guess I would put it back.

[00:13:17] Speaker 00:
It's not upon the agency to tell people how long they want that to be.

[00:13:22] Speaker 00:
If they want to put a limit on it, then the agency can regulate that and they can say no more than three days, no more than a week, no more than a month.

[00:13:30] Speaker 04:
Well, they can, but they haven't.

[00:13:32] Speaker 04:
And so that's, you know, we're always in the situation where

[00:13:37] Speaker 04:
An agency doesn't tell you every jot and tittle of the whole world.

[00:13:42] Speaker 04:
And that's why we have ours, Gidmore, and now Loper-Brite.

[00:13:45] Speaker 04:
So if they make a determination that it's not, if it's in storage at some point, or the other not in transit, why would they have to have a regulation that says,

[00:14:01] Speaker 04:
while it ends after a week or it ends after two weeks?

[00:14:06] Speaker 04:
That would be nicer, but is it required?

[00:14:09] Speaker 00:
It certainly would be nicer, and I would argue that, in fact, it really should be required.

[00:14:16] Speaker 00:
Because if you're going to impose obligations on the regulated community, the regulated community should be able to read the regulation and have a fairly clear idea of what it is they need to do and when they need to do it.

[00:14:29] Speaker 00:
I mean, by analogy.

[00:14:30] Speaker 00:
I drove up here from Portland yesterday and along I-5 I went through different areas and at different speed limits.

[00:14:37] Speaker 00:
The speed limit signs didn't say don't speed.

[00:14:41] Speaker 00:
No, they had very specific numerics.

[00:14:43] Speaker 04:
Are you still in transit?

[00:14:45] Speaker 00:
I'm not anymore because I got... But during the time that I was, the point just is it was very clear what the rules of the road for me were.

[00:14:55] Speaker 00:
I knew exactly how fast I was permitted to go.

[00:14:58] Speaker 00:
And if I went beyond it, that was at my own risk.

[00:15:01] Speaker 00:
But if it had just said don't speed, there's no context.

[00:15:04] Speaker 00:
I really don't know what it is.

[00:15:05] Speaker 04:
That's kind of Montana used to have that where they didn't want you to speed, but they didn't have speed limit.

[00:15:10] Speaker 04:
Yeah.

[00:15:10] Speaker 00:
Yeah.

[00:15:12] Speaker 00:
So the point is, I mean, we're dealing with serious materials.

[00:15:16] Speaker 00:
There's no question about it.

[00:15:18] Speaker 00:
And to the extent the agency wants to address the risks that are involved in moving these materials, more clarity is better than less.

[00:15:26] Speaker 00:
they should be able to give clear guidance to those who are engaged in the enterprise what they need to do and when they need to do it.

[00:15:33] Speaker 00:
But more to the point, if they're not going to give that level of guidance, then if they're going to turn around and in a first of its kind enforcement action against a transloading facility, then they should be a little more reasonable with the way they're going to try and penalize and enforce against the party.

[00:15:50] Speaker 00:
Because there's really no fair notice there.

[00:15:53] Speaker 00:
And regulations are meant

[00:15:54] Speaker 00:
to give fair notice to the regulated entities what they need to do.

[00:15:59] Speaker 04:
And in this case... What do you think or what do you think we should do and interpret this 1998 preamble and 2000 guidance document?

[00:16:11] Speaker 00:
Well, it depends on how you end up viewing the language of the regulation.

[00:16:15] Speaker 00:
If the regulation is in fact unambiguous, then you read the regulation as written.

[00:16:20] Speaker 00:
And the words say what they are, and you enforce the words as they're to be enforced.

[00:16:23] Speaker 00:
If you do that, there is no railroad cars in the definition of facility.

[00:16:29] Speaker 00:
There's no railroad car in the definition of stationary source.

[00:16:34] Speaker 00:
There's no definition applied to transportation or what is incident to transportation.

[00:16:40] Speaker 00:
And if you're going to look at the preamble, you can certainly look for some level of guidance and interpretation.

[00:16:47] Speaker 00:
But I would posit what shouldn't be done

[00:16:50] Speaker 00:
is the importation of a specific criteria into a regulation that didn't make it in the language.

[00:16:56] Speaker 00:
It's one thing to say, this is what we think, and this is what we want.

[00:17:00] Speaker 00:
It's an entirely different thing if you don't write it down.

[00:17:03] Speaker 04:
But they do cross some outer limits because it says on this motive power that if it remains attached, then it's still in transportation.

[00:17:19] Speaker 04:
some guidance, right?

[00:17:22] Speaker 00:
Potentially, but then no guidance on what I need to do with it afterwards.

[00:17:25] Speaker 00:
And there's nothing within that.

[00:17:27] Speaker 04:
But if you unhook it, then we know it's not in transportation anymore, right?

[00:17:32] Speaker 04:
It's kind of a binary formula.

[00:17:36] Speaker 00:
Well, yes, that would be a binary form, but then the question is whether it's reasonable for them to be regulating that way in an industry that they don't otherwise have expertise in, and whether it is even feasible

[00:17:49] Speaker 00:
to accomplish that type of regulation as they're positing.

[00:17:53] Speaker 02:
I know you wanted to say five minutes.

[00:17:54] Speaker 02:
You're down to 315.

[00:17:55] Speaker 02:
I'll agree with Judge Gould as to whether to give you a little bit more on request.

[00:18:00] Speaker 00:
Well, no.

[00:18:00] Speaker 00:
With that, I'll reserve my time unless you have any other questions, and then I'll be happy to come back.

[00:18:05] Speaker 00:
Thank you.

[00:18:05] Speaker 00:
Thank you very much for your time.

[00:18:21] Speaker 01:
Good afternoon, Your Honors, and may it please the Court, David Frankel on behalf of the United States.

[00:18:30] Speaker 01:
When Multistar warehoused up to 10 rail cars full of extremely hazardous TMA on its private track, it was not engaged in storage incident to transportation that would be exempt either under the Clean Air Act's risk management program or under EPGRA.

[00:18:47] Speaker 01:
Statutory programs designed to protect workers, communities, and first responders from the risks of hazardous chemicals.

[00:18:55] Speaker 01:
The text of the similarly worded exemptions confirms that storage is incident to transportation only if it occurs during and is a subsidiary part of the act of transportation.

[00:19:06] Speaker 01:
And all the indicia here that are plausibly relevant to that analysis point in the same direction.

[00:19:12] Speaker 01:
The TMA-filled railcars were not in transportation,

[00:19:16] Speaker 01:
and were not performing exempt storage incident to transportation.

[00:19:20] Speaker 01:
And I'll go through some factors here.

[00:19:22] Speaker 01:
Multistar held the TMA for weeks or months at a time, more typically months.

[00:19:27] Speaker 01:
They were held in immobile rail cars that had chocks by the wheels to prevent movement.

[00:19:31] Speaker 02:
Let me just stop you at the first factor you mentioned that they were stored for weeks or months.

[00:19:36] Speaker 02:
How dispositive is that?

[00:19:38] Speaker 02:
What if it had been a day, two days, removed from motive power?

[00:19:42] Speaker 02:
Would that change the analysis?

[00:19:44] Speaker 01:
Sure.

[00:19:47] Speaker 01:
It would, I mean, the analysis is different.

[00:19:50] Speaker 01:
So what I'll say is that, so EPA has this motive power rule.

[00:19:59] Speaker 01:
That is sort of the touchstone and the guidepost that they use for implementing this.

[00:20:04] Speaker 01:
So it's sort of a safe harbor, that if an entity is storing it and it remains connected to motive power, at that point the entity, I think, can claim exemption.

[00:20:12] Speaker 01:
EPA has advised that they will not,

[00:20:15] Speaker 01:
enforce against that entity, at least in some very unusual circumstance.

[00:20:19] Speaker 01:
Barring that, there is some, you know, de minimis amount of time.

[00:20:25] Speaker 01:
If there is, you know, a switching of rail cars just for a second, EPA would exercise its discretion not to enforce.

[00:20:34] Speaker 01:
If there was, you know, some trouble that caused disconnection for a brief period of time, EPA would exercise discretion likely not to enforce.

[00:20:41] Speaker 01:
But by providing this mode of power interpretation, what they've done is provide a pretty clear signal

[00:20:45] Speaker 01:
to the regulated community about a test where you're on one side or the other, that this is really the central guidepost that EPA uses in understanding it.

[00:20:53] Speaker 01:
And so, you know, if it were some really de minimis time, the analysis could well be different.

[00:20:58] Speaker 01:
I think that's a harder case.

[00:21:00] Speaker 01:
But what you have here is you have something that is so far on the other end of the spectrum.

[00:21:03] Speaker 04:
What's your... Go ahead.

[00:21:05] Speaker 04:
No.

[00:21:05] Speaker 04:
What about... I think a big argument made by Multistar is, well,

[00:21:12] Speaker 04:
We're even talking to the wrong agency.

[00:21:13] Speaker 04:
You're the, you know, under the Clean Air Act, we're regulating air.

[00:21:18] Speaker 04:
And the EPA doesn't have experience or expertise if you unplug the power and then it's stationary there.

[00:21:26] Speaker 04:
What happens?

[00:21:26] Speaker 04:
They say we don't, you know, there's no guidance.

[00:21:31] Speaker 01:
I mean, I think we would dispute that.

[00:21:33] Speaker 01:
It is true that the Department of Transportation regulates the hazardous chemicals while they are in transportation.

[00:21:41] Speaker 01:
But even under the DOT regulations here, it is clear that hazardous chemicals sitting in stationary railcars on private track are not in transportation.

[00:21:50] Speaker 01:
That is not a function that DOT regulates.

[00:21:53] Speaker 01:
That is not storage that would be within DOT's purview.

[00:21:56] Speaker 01:
And it's EPA that's the agency that's charged with preventing accidental releases when hazardous chemicals sit for extended periods at stationary sites.

[00:22:05] Speaker 01:
And that's exactly what's happening in this case.

[00:22:09] Speaker 01:
EPA isn't trying to tell Multistar how to build the rail cars or how the rail cars should travel along track, but what EPA is saying is that when rail cars are stored at a facility for extended periods, that storage at stationary sites is exactly what EPA was charged with regulating, that EPA is charged directed by Congress

[00:22:34] Speaker 01:
to prevent accidental releases from stationary sources.

[00:22:36] Speaker 01:
And here, where you have chemicals sitting for long periods in immobile rail cars that are disconnected from motive power that are not covered by any active shipping papers, all of the indicia show that this is not in transportation.

[00:22:51] Speaker 02:
What is your response to Multistar's argument that this motive power factor is basically irrational because you could have, I guess, a rail car connective

[00:23:03] Speaker 02:
connected to motive power, sit on the siding for months or for years, and I guess it wouldn't that wouldn't be problematic for the EPA.

[00:23:12] Speaker 02:
But if it's there for a week, not connected to motive power, that is a problem.

[00:23:16] Speaker 01:
I mean, the problem with any sort of bright line rule is that sure, it can be gamed.

[00:23:21] Speaker 01:
I mean, if an entity wanted to keep some car hooked up to motive power and then try to argue in court that even though it sat for a year or two years, it should still be exempt to motive power.

[00:23:31] Speaker 01:
So be it, but the fact is, I think it's a good proxy here.

[00:23:34] Speaker 01:
What EPA is trying to do with the motive power test is it's saying, like, what is the key function of transportation?

[00:23:40] Speaker 01:
And the key part of transportation is whether something is moving or not.

[00:23:44] Speaker 01:
I mean, those words are largely synonymous, and transportation has to entail movement.

[00:23:49] Speaker 01:
And so at the point where a rail car is disconnected from the motive power source that gives it the capability of movement, that is just a very strong proxy.

[00:23:58] Speaker 01:
The EPFL would give very strong guidance to the regulated community in a fairly simple way about how they should understand whether they would or would not be subject to enforcement action.

[00:24:08] Speaker 01:
I mean, I will say that, you know, we do ask this court for deference, but that is really our secondary argument.

[00:24:16] Speaker 01:
I mean, our primary argument is that

[00:24:18] Speaker 01:
The Clean Air Act risk management regulation at issue here and the EPGRA statute at issue here are unambiguous.

[00:24:26] Speaker 01:
They're really whatever factors you think could plausibly go into that analysis, that all of them align in their circumstance.

[00:24:33] Speaker 01:
If you look at the length of time, if you look at whether the rail cars were connected from mode of power, if you look at whether they were subject to active shipping papers, all of those point to the same direction, which is that this was not in transportation or being stored incident to such transportation.

[00:24:49] Speaker 01:
And storage here was really plainly, it was a principal purpose of Multistar's business.

[00:24:53] Speaker 01:
I mean, Multistar wasn't just taking in these rail cars, hooking them up to a translator, and sending them on their way.

[00:25:00] Speaker 01:
But Multistar had contracted to operate a regional TMA storage depot to serve Eastman's needs.

[00:25:06] Speaker 01:
It agreed to serve as the warehousement of Eastman's TMA inventory in exchange for a daily storage fee.

[00:25:13] Speaker 04:
And from what do we divine or derive

[00:25:18] Speaker 04:
the definition of stationary source.

[00:25:22] Speaker 01:
Well, you start with the statute and the Clean Air Act here.

[00:25:25] Speaker 01:
I mean, so this is the Clean Air Risk Management Program.

[00:25:27] Speaker 01:
Start with the statute and the statute is very broad.

[00:25:31] Speaker 01:
The statute says any equipment, structures, et cetera, from which an accidental release may occur.

[00:25:37] Speaker 01:
And so clearly that comes within the statute.

[00:25:40] Speaker 01:
Clearly, you know, stationary railcars are stationary equipment or stationary structures from which a release could occur.

[00:25:46] Speaker 01:
And then you go to the regulation and the regulation I think adds some clarification and actually narrows the definition a little bit.

[00:25:54] Speaker 01:
So it does confirm, it confirms that transportation containers like railcars can be part of a stationary source.

[00:26:01] Speaker 01:
I think are presumed to be part of a stationary source, but if they are in transportation,

[00:26:06] Speaker 01:
and performing storage incident to transportation, they are outside of that.

[00:26:11] Speaker 01:
So I think you start with the statute which is very broad and then you go to this regulatory definition which gives you a little bit of clarity and I think narrows it.

[00:26:19] Speaker 01:
You know, I do not think this is a case where you can get around the regulation because this is a case where

[00:26:26] Speaker 01:
the appellants here are relying on that regulation.

[00:26:30] Speaker 01:
They are relying on that transportation and incident to transportation exemption.

[00:26:34] Speaker 01:
They're not saying that's, you know, not within the statutory definition.

[00:26:37] Speaker 01:
They really have to use that to get where they want to go here.

[00:26:41] Speaker 01:
And once you're in that world of the regulation, I think the text shows first that something could be stored incident to transportation.

[00:26:49] Speaker 01:
only if it occurs as an activity that itself qualifies as transportation.

[00:26:54] Speaker 01:
And again, when you're talking months on end of in stored in immobile rare cars, you're out of that universe.

[00:27:01] Speaker 01:
And I think the history and purpose here are also illuminating.

[00:27:05] Speaker 03:
So Council, can I interject with the question?

[00:27:10] Speaker 03:
Assuming for sake of argument for a moment that

[00:27:15] Speaker 03:
that the regulation should not or does not apply.

[00:27:21] Speaker 03:
Could the EPA be affirmed here based solely on the statute, on the Clean Air Act?

[00:27:34] Speaker 01:
Yes.

[00:27:35] Speaker 01:
I mean, I think the Clean Air Act is broad, and it has some limitations.

[00:27:40] Speaker 01:
I think it has to be stationary.

[00:27:42] Speaker 01:
It has to be equipment or structures.

[00:27:44] Speaker 01:
It has to be capable of an accidental release occurring.

[00:27:49] Speaker 01:
And so it meets all of the statutory factors.

[00:27:52] Speaker 01:
I haven't heard an argument from the opposing side that it doesn't fall within the basic statutory definition.

[00:27:58] Speaker 01:
I think they need the regulation.

[00:28:00] Speaker 01:
I think they need the regulation to try to claim that what they're doing is in fact exempt from the requirements of the risk management program.

[00:28:10] Speaker 01:
But they also haven't challenged the regulation.

[00:28:12] Speaker 01:
Actually, they couldn't challenge the regulation because to challenge, they can't contest the validity of an RNP regulation in an enforcement proceeding.

[00:28:20] Speaker 01:
They would have had to bring a timely petition for review in the D.C.

[00:28:24] Speaker 01:
Circuit to do that.

[00:28:25] Speaker 01:
They haven't done it.

[00:28:26] Speaker 01:
So I think we are in a world where the regulation clearly applies and governs in this case.

[00:28:31] Speaker 01:
And I think the history and purpose is also really illuminating.

[00:28:34] Speaker 01:
So as with the statute,

[00:28:36] Speaker 01:
When interpreting a regulation, you look to largely the same set of tools.

[00:28:40] Speaker 01:
And history and purpose are two of those central ones in determining what a regulation means, whether it's ambiguous.

[00:28:46] Speaker 01:
And here, what the history shows is that EPA considered and rejected proposals to categorically exclude all transportation containers when it drafted the exemption.

[00:28:58] Speaker 01:
And instead, it adopted the current language precisely to confirm that a container,

[00:29:02] Speaker 01:
like a rail car, would not be exempt if it remained immobile at a location for an extended period, and thereby posing the exact same hazards as any other stationary storage container.

[00:29:13] Speaker 01:
I mean, in some sense, it's not so different.

[00:29:16] Speaker 01:
Whether hazardous materials are stored for extended periods in a rail car or a shipping container or a VAT, in all of those situations, they come within the basic purpose of the risk management program in EPGRA.

[00:29:29] Speaker 01:
which is making sure those who work with it, the surrounding communities that are exposed to it, and the first responders who would respond to an accident are adequately informed and reducing the risks here.

[00:29:41] Speaker 04:
And this is- You made a statement a moment ago about they need the regulation in order to then invoke the exemption.

[00:29:49] Speaker 01:
That's right.

[00:29:50] Speaker 04:
But then you also said it's too late to challenge it at this late date in this proceeding.

[00:29:57] Speaker 04:
Is that absolutely true under the Supreme Court's new corner post rationale?

[00:30:04] Speaker 01:
So forgive me for not brushing up on corner post.

[00:30:07] Speaker 01:
I think corner post is about the statute of limitations.

[00:30:09] Speaker 04:
When you need to challenge, and they're basically saying, well, only when you're impacted.

[00:30:14] Speaker 04:
And they're now saying, now I'm impacted.

[00:30:17] Speaker 01:
Right.

[00:30:20] Speaker 01:
is that you cannot challenge the validity of an RMP regulation as a defense to an enforcement action.

[00:30:28] Speaker 01:
And that's clearly within the statute.

[00:30:32] Speaker 01:
There's a footnote we have in our supplemental brief that notes that.

[00:30:36] Speaker 01:
But the way you have to challenge it is by petition for review in the DC Circuit.

[00:30:42] Speaker 01:
So putting aside timeliness, I mean, they would be in the wrong court to challenge the validity of the regulation.

[00:30:47] Speaker 01:
And I don't think they have.

[00:30:48] Speaker 01:
I mean, it's also an argument that's been forfeited because it simply hasn't been presented here.

[00:30:53] Speaker 01:
I mean, there is no argument that we should disregard the regulation, which has the exemption language that they hang their hat on, I think because they need it for their case to prevail.

[00:31:08] Speaker 01:
So, I mean, one thing I will say from hearing opposing counsel's argument here is that I still haven't heard what their interpretation is.

[00:31:19] Speaker 01:
I mean, there's a lot of saying this shouldn't be the rule or that shouldn't be the rule or EPA should have been more clear, but the fact is we're dealing with language in a regulation, in a statute, and we think that all of the indicators that you could plausibly look to

[00:31:33] Speaker 01:
to determine whether those apply in these set of facts all point in the same direction.

[00:31:37] Speaker 01:
And I'm still not clear what their theory of the case is.

[00:31:40] Speaker 01:
I mean, I am not clear what exactly they think the rule should be about when something is incident to transportation or not incident to transportation.

[00:31:49] Speaker 01:
Other than that, they don't like the tests that EPA has applied, or they don't think the factors that would weigh against them in this case should apply.

[00:31:57] Speaker 01:
And I think at the top... Is it their job to tell you

[00:32:03] Speaker 04:
what the regulations should be or what the parameters should be as opposed to saying, as applied, we got the statute, we got the regulation, and they don't, they're not sufficient to tell us what the parameters are.

[00:32:21] Speaker 01:
Well, I think it's their job to tell this court what those think.

[00:32:24] Speaker 01:
I mean, they think if they are here and saying that a statute unambiguously weighs in their favor, then they should be able to say what that unambiguous reading is that that weighs in their favor.

[00:32:34] Speaker 01:
And I still haven't heard that.

[00:32:36] Speaker 01:
I mean, I think they conflate that a little bit with the idea of notice.

[00:32:41] Speaker 01:
Again, I don't think they ever raised any sort of due process argument or notice argument.

[00:32:45] Speaker 01:
I think it would be well forfeited at this point.

[00:32:47] Speaker 01:
But the fact is that EPA announced that it would use motive power as a central guidepost for enforcing the regulation decades ago.

[00:32:57] Speaker 01:
That EPA has issued guidance documents consistently informing the regulated community of how it would approach these sorts of cases.

[00:33:04] Speaker 01:
And that there is a history of EPA enforcement actions over the past decade or so where EPA has enforced in exactly these circumstances that entities that were storing hazardous materials in rail cars disconnected from mode of power on private track is exactly the situation where this does apply.

[00:33:23] Speaker 01:
And had they done adequate diligence here, they would have been well informed from statements in the Federal Register, guidance, and from enforcement history

[00:33:30] Speaker 01:
And the fact is, once they did ask counsel what they should do, counsel advised them to comply in this case.

[00:33:38] Speaker 01:
That fades a little bit into an argument that they've made about the appropriate scope of the penalty here.

[00:33:43] Speaker 01:
You know, and their claim that they never had notice.

[00:33:45] Speaker 01:
But even setting aside all of those factors that should have put them well on notice of how the statute would be enforced, even after EPA said that they were violating the statute, they continued not to comply.

[00:33:57] Speaker 01:
They submitted an incomplete and inaccurate initial risk management plan.

[00:34:02] Speaker 01:
And when they were advised of deficiencies, Multistore simply put its foot down and decided they refused to comply.

[00:34:08] Speaker 01:
And even after the district court rejected their legal theories, they continued to not comply.

[00:34:13] Speaker 01:
So I really think the notice argument is a bit of a red herring to any of the arguments presented here.

[00:34:21] Speaker 01:
I'm happy to answer any further questions this court has about the application of the statute.

[00:34:29] Speaker 01:
I will just quickly turn to the civil penalty idea and just to say that the court

[00:34:35] Speaker 01:
considered all the required factors here and was well within its ample discretion to select an amount that was about one-tenth of one percent of the statutory maximum in this case.

[00:34:45] Speaker 01:
The court has no further questions on that.

[00:34:47] Speaker 01:
I'm happy to see my remaining few minutes.

[00:34:49] Speaker 01:
I mean, I think it would be helpful for me, at least, to hear on rebuttal what exactly the interpretation is that appellants are offering, where none of the indicia that we think matters, where the motive power is out the door.

[00:35:00] Speaker 01:
Well, what does matter?

[00:35:01] Speaker 01:
Because it's hard to imagine a test where, in the unambiguous language here, they are in transportation or performing storage incident to transportation.

[00:35:10] Speaker 04:
You're reading my mind.

[00:35:11] Speaker 04:
I just had written that down.

[00:35:13] Speaker 01:
Perfect.

[00:35:14] Speaker 01:
Thank you.

[00:35:15] Speaker 04:
Thank you.

[00:35:16] Speaker 03:
Thank you, counsel.

[00:35:18] Speaker 03:
I have your questions from the panel.

[00:35:21] Speaker 03:
So we'll go to a rebuttal argument by the appellant.

[00:35:29] Speaker 00:
Thank you.

[00:35:30] Speaker 00:
With only three minutes, 14 seconds, I'm going to try and speed through as much as I can.

[00:35:34] Speaker 03:
Well, it's an important case, a difficult case, so why don't you take five minutes.

[00:35:40] Speaker 00:
Thank you, Your Honor.

[00:35:41] Speaker 00:
I greatly appreciate the extra time.

[00:35:43] Speaker 04:
Would you be willing to begin with my question, which somewhat dovetails with the government's, and that is, from the plaintiff's perspective, what is the unambiguous reading in your favor?

[00:35:57] Speaker 00:
That is exactly where I was going to go, Your Honor.

[00:36:00] Speaker 00:
The unambiguous reading is reading the regulation,

[00:36:03] Speaker 00:
And it says that it doesn't mention rail cars, and it says items in transportation are exempt, including storage incidents transportation.

[00:36:18] Speaker 00:
As to multi-store, this arrangement was a continuous shipment from Pace, Florida,

[00:36:25] Speaker 00:
transloading in Othello, Washington for final delivery to Moses Lake.

[00:36:30] Speaker 00:
That was the transaction.

[00:36:31] Speaker 00:
This was always in transportation.

[00:36:36] Speaker 00:
And the plain reading is you read the regulations, and the regulations don't say any particular time.

[00:36:43] Speaker 00:
The regulations don't list the motive power exception.

[00:36:46] Speaker 00:
And according to the government's counsel, the burden is then on

[00:36:54] Speaker 00:
my client to not just read the regulations that they can pull up, but to then go back in history and be reading 1998 preambles and 2000 guidance.

[00:37:07] Speaker 00:
And that just sort of flips it on its head to be perfectly candid.

[00:37:11] Speaker 00:
If the government wants something, including a motive power exception, then put it in the regulation.

[00:37:17] Speaker 00:
Make it clear.

[00:37:18] Speaker 00:
Make it easy to see.

[00:37:20] Speaker 00:
Because if anyone is looking in theory to game the system

[00:37:23] Speaker 00:
That's more where the government's going.

[00:37:27] Speaker 00:
Essentially what they've said is there are times when, well, we see it as a safe harbor, we'll use our discretion, and we won't enforce it here, and maybe we won't enforce it there.

[00:37:38] Speaker 00:
But what they're not telling you very clearly is, okay, so when are you going to enforce it?

[00:37:42] Speaker 00:
And that's what the regulated community is entitled to know.

[00:37:45] Speaker 00:
When will you enforce this against me?

[00:37:48] Speaker 00:
Is it going to be the moment I disconnect?

[00:37:50] Speaker 00:
Because if it is the moment I disconnect, then be consistent.

[00:37:53] Speaker 00:
and make sure that you enforce against everybody the moment they disconnect.

[00:37:57] Speaker 00:
But if you don't do that, then that bright line isn't a guidance to anybody.

[00:38:02] Speaker 00:
What we get to is the government deciding when and if they want to decide to enforce.

[00:38:08] Speaker 00:
And that means you're going to have inconsistency, and that's not the way these regulations are meant to be enforced.

[00:38:15] Speaker 00:
Moreover, to the point of have they enforced against transloading operations, they've cited basically three cases, two out of region one,

[00:38:23] Speaker 00:
and one which is a North Carolina state case.

[00:38:25] Speaker 00:
Let's discuss the federal enforcement both out of Region 1 out of Boston.

[00:38:30] Speaker 00:
One case is in 2014, so predates when Multistar started.

[00:38:33] Speaker 00:
The other is 2021, and it happened afterwards.

[00:38:36] Speaker 00:
In both cases, those rail cars were physically connected to an anhydrous ammonia facility.

[00:38:43] Speaker 00:
So the rail cars were

[00:38:45] Speaker 00:
formally connected to a stationary source.

[00:38:47] Speaker 00:
There was no dispute.

[00:38:48] Speaker 00:
And Multistar will not dispute that if those are the circumstances under which you want to enforce, the statute gives you the right to do it.

[00:38:57] Speaker 00:
These rail cards were never connected to any stationary source.

[00:39:01] Speaker 00:
The cases they cite are inapposite.

[00:39:05] Speaker 00:
What makes it even worse

[00:39:06] Speaker 00:
They obtained an $850,000 penalty.

[00:39:11] Speaker 00:
This is a level 3 facility to them, the most risk.

[00:39:15] Speaker 00:
They never once have gone down to inspect the transloading operation.

[00:39:20] Speaker 00:
Not once.

[00:39:23] Speaker 00:
These other facilities that they cite out of Boston, those were both subject to physical EPA inspections.

[00:39:31] Speaker 00:
where the EPA inspectors were on site, observed things, observed physical defects with the equipment that was there.

[00:39:39] Speaker 00:
And in one case, $114,000 penalty and come into compliance with statute.

[00:39:45] Speaker 00:
In the other case, $305,000 penalty, come into compliance with the statute.

[00:39:50] Speaker 00:
But at least it was based on real evidence.

[00:39:53] Speaker 00:
You had people who went there and observed defects.

[00:39:57] Speaker 00:
Region 10 has not seen fit.

[00:39:59] Speaker 00:
to send its inspectors out to go look at this facility.

[00:40:05] Speaker 00:
That's wrong.

[00:40:06] Speaker 00:
That's not consistent.

[00:40:08] Speaker 00:
That is not the way the government should be enforcing regulations.

[00:40:13] Speaker 00:
In terms of the incomplete RMP, we would actually posit that the RMP is complete.

[00:40:21] Speaker 00:
And the EPA is the one that's saying it's not.

[00:40:23] Speaker 00:
Well, maybe it's because they haven't visited the site to actually look and see what they're talking about.

[00:40:29] Speaker 00:
But this is a legitimate dispute about whether or not the risk management plan is complete or not.

[00:40:36] Speaker 00:
It is not a question of not being in compliance.

[00:40:38] Speaker 00:
It is a question that we technically disagree with the agency.

[00:40:41] Speaker 00:
And if the agency's position carries the day, that means you may not do that.

[00:40:46] Speaker 00:
And that is wrong.

[00:40:52] Speaker 00:
Unless you have any other questions, I will lower my temperature and I will take my seat.

[00:40:57] Speaker 03:
Thank you, counsel.

[00:41:01] Speaker 03:
This case shall now be submitted.

[00:41:04] Speaker 03:
I thank counsel on both sides of the case for their excellent arguments.

[00:41:13] Speaker 03:
I also want to thank Dean Lawson and the UW Law School once more for

[00:41:21] Speaker 03:
generously hosting us and inviting us here to hear the arguments.

[00:41:28] Speaker 03:
With that comment, I'll again say thanks and the court will adjourn for the day.

[00:41:40] Speaker 04:
My understanding is that our law clerks will remain to talk with the students and then some of us will come back after

[00:41:50] Speaker 04:
taking off our robes, et cetera, and also talk with the students and entertain questions.

[00:41:55] Speaker 04:
And, of course, you can imagine we won't entertain any questions about today's cases.

[00:41:58] Speaker 04:
So thank you.