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Is oil stored in an intermediate storage tank exempt from 311 and 312?

A transportation firm owns a pipeline that transports oil to an intermediate storage tank at their pumping station.  At the pumping station the oil is sold and sent by a secondary pipeline to the purchaser.  The transportation firm also owns the secondary pipeline until the pipeline reaches a valve in front of a purchaser's tank.

The transportation firm sends 10,000 gallons of oil to the intermediate storage tank.  Of this oil, 5,000 gallons are purchased by company A, so the transportation firm then directs the 5,000 gallons into the pipeline leading to Company A.  Is the oil stored in the intermediate storage tank exempt from Section 311 and 312 reporting under Section 327 transportation exemption?

Section 327 of SARA Title III exempts from any Title III reporting requirement other than the Section 304 notification obligation, substances or chemicals in transportation or being stored incident to transportation, including the transportation and distribution of natural gas.  In a final rule promulgated April 22, 1987 (52 FR 13378,13385) the Agency interpreted this provision to exempt from Title III reporting the transportation of substances in pipelines.  The Agency stated, "Title III does not apply to the transportation of any substance or chemical, including transportation by pipeline, expect as provided in Section 304."

As Title III does not itself define "pipeline", the Agency will refer to the definition found in regulations implementing the Hazardous Materials Transportation Act (HMTA) and promulgated by the Department of Transportation.  EPA believes the HMTA to be appropriate as a reference because of Congress' explicit reference to that Act in the legislative history referring to the Section 327 transportation exemption.  In the Conference Report, Congress stated that limiting the exemption for storage incident to transportation to those chemicals under active shipping papers was consistent with the HMTA.

Department of Transportation regulations implementing the HMTA define "pipeline" as "all parts of a pipeline facility through which hazardous liquid moves in transportation, including, but not limited to, line pipe, valves and other appurtenances connected to line pipe, pumping units, fabricated assemblies associated with pumping units, metering and delivery stations and fabricated assemblies therein, and breakout tanks."  "Breakout tanks" in turn, are defined under these same regulations as "a tank used to (a) relieve surges in a hazardous liquid pipeline system of (b) receive and store hazardous liquid transported by pipeline for reinjection and continued transportation by pipeline".

Because the intermediate storage tank owned by the transportation firm described above receives and stores hazardous liquid transported by pipeline for reinjection and continued transportation by pipeline, it meets this definition of "breakout tank" included within the Department of Transportation definition of "pipeline".  Therefore, EPA would interpret that the oil contained in such an intermediate tank would be exempt from reporting under the Section 327 transportation exemption.