United States v. Multistar Industries, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 10, 2024
• Docket: 23-3765
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 10 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 23-3765 D.C. No. Plaintiff - Appellee, 2:21-cv-00262-TOR v. MEMORANDUM* MULTISTAR INDUSTRIES, INC.,

Defendant - Appellant.

Appeal from the United States District Court for the Eastern District of Washington Thomas O. Rice, District Judge, Presiding

Argued and Submitted November 20, 2024 Seattle, Washington

Before: McKEOWN, GOULD, and H.A. THOMAS, Circuit Judges.

This appeal involves the United States’ (“the Government’s”) enforcement

of Section 112(r) of the Clean Air Act (“CAA”) and the Environmental Protection

Agency’s (“EPA’s”) implementing regulations (the “Risk Management Program”),

and the Emergency Planning and Community Right-to-Know Act (“EPCRA”)

against Multistar Industries, Inc. (“Multistar”) for storing railroad cars containing

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. trimethylamine (“TMA”), a regulated hazardous substance, without following the

required safety and notification measures to prevent and reduce risks from

accidental releases. The district court ruled on summary judgment that Multistar

violated several provisions of the Risk Management Program and EPCRA, and that

Multistar did not qualify for the Risk Management Program or EPCRA’s similarly

worded transportation exemptions such that it could avoid liability. In a bench

trial, the district court imposed a civil penalty of $850,000. Multistar now appeals

the district court’s order on cross-motions for summary judgment and its civil

penalty determination, arguing that Multistar is exempt from liability under the

Risk Management Program and EPCRA and that the district court abused its

discretion in calculating its penalty.

We have jurisdiction under 28 U.S.C. § 1291. We review a district court’s

grant of summary judgment de novo. Los Padres ForestWatch v. United States

Forest Serv., 25 F.4th 649, 654 (9th Cir. 2022). Given no contrary language in the

statutes, we review for abuse of discretion a district court’s determination of

penalties under EPCRA and the CAA, as we do regarding other environmental

statutes. See Natural Res. Def. Council v. Southwest Marine, Inc., 236 F.3d 985,

1001 (9th Cir. 2000). We affirm.

Section 112(r) of the CAA, 42. U.S.C. § 7412(r), imposes duties on the

owners or operators of “stationary sources” whose processes involve more than a

2 23-3765 threshold quantity of a regulated substance. Congress defined “stationary source”

under Section 112(r) as follows:

any buildings, structures, equipment, installations or substance emitting stationary activities (i) which belong to the same industrial group, (ii) which are located on one or more contiguous properties, (iii) which are under the control of the same person … and (iv) from which an accidental release may occur.” 42 U.S.C. § 7412(r)(2)(C).

EPA’s Risk Management Program clarified that “[t]he term stationary

source does not apply to transportation, including storage incident to

transportation, of any regulated substance.” 40 C.F.R. § 68.3.

Section 312 of EPCRA, 42 U.S.C. § 11022, and its implementing

regulations at 40 C.F.R. Part 370 impose duties on owners and operators of

facilities that handle hazardous materials. The statute defines “facility” as “all

buildings, equipment, structures, and other stationary items” under common

control at a particular location. 42 U.S.C. § 11049(4). Like the CAA’s Risk

Management Program, EPCRA by its own terms “does not apply to the

transportation, including the storage incident to such transportation, of any

substance or chemical subject to the requirements of this chapter.” 42 U.S.C. §

11047.

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. And, while EPA has not drawn a bright line

3 23-3765 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. None of Multistar’s TMA-storing rail cars were

under active shipping papers—suggesting that even those containers that were

stationary for even shorter periods of time were not in transportation. (The

Government does not request deference to its use of active shipping papers as a

“guidepost” in EPCRA administration. We look to this history of use “for

guidance,” but we “do not defer to the agency.” Lopez v. Garland, 116 F.4th 1032,

1036 (9th Cir. 2024); see also Loper Bright Enterprises v. Raimondo, 144 S. Ct.

2244, 2262 (2024); Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).)

This leaves undetermined the status under the CAA of briefly stationary

containers. The “standard tools of interpretation” leave some ambiguity in the

CAA and Risk Management Program as they pertain to briefly stationary

transportation containers and thus do not fully resolve the parties’ interpretive

dispute. League of California Cities v. F.C.C., 118 F.4th 995, 1012–13 (9th Cir.

2024). We therefore turn to the agency’s interpretations of the Risk Management

Program regulations to resolve this narrow issue.

EPA’s “motive-power” interpretation of the Risk Management Program’s

transportation exemption states that a container is in transportation and eligible for

the exemption “as long as it is connected to the motive power that delivered it to

4 23-3765 the site.” 63 Fed. Reg. 640, 643 (Jan. 6, 1998). 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. See League of California Cities, 118 F.4th at

1013 (cleaned up) (quoting Kisor v. Wilkie, 588 U.S. 558, 574–79 (2019)).

Because the TMA-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 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. 42 U.S.C. § 7413(b) (civil penalties to be

calculated “per day for each violation”) (emphasis added); 42 U.S.C. 11045(c)(1),

(3) (civil penalties to be calculated “for each . . . violation,” with each day of non-

compliance “constitut[ing] a separate violation”). See also Borden Ranch

5 23-3765 Partnership v. U.S. Army Corps of Engineers, 261 F.3d 810, 817 (9th Cir. 2001),

aff’d, 537 U.S. 99 (2002) (construing similar language as requiring a per-violation,

not per-day, calculation). The district court considered all the required factors, and

the amount of the penalty is well below the maximum penalty.

AFFIRMED.

6 23-3765