Graef E&S Consulting Services — Hazardous Materials Safety Interpretation

Page 1of Transportation U.S. Department 400 Seventh St., S.W. Special Programs Research and AUG 8 2003 Washington, D.C. 20590 Administration Mr. Warren D. Graef, BAAS, CHMM Reference No.: 03-0190 Graef E&S Consulting Services 12323 Meadow Gate Stafford, Texas 77477 Dear Mr. Graef: This responds to your letter concerning the applicability of new security requirements adopted in a final rule issued under Docket HM-232. Your letter states that your client produces crude oil and moves it via flow lines to a storage tank where it is accumulated. The accumulated crude oil is offered for sale to an oil refiner or other oil company. The buyer accepts, transfers and arranges for the oil to be transported to its own storage facilities. Specifically, you ask if your client is subject to the security requirements. Assuming the crude oil meets the definition of a hazardous material under the Hazardous Materials Regulations (HMR; 49 CFR Parts 171-180), the answer is yes. The HMR, in the newly adopted § 172.800(b), require persons who offer for transportation or persons who transport hazardous materials in quantities that require placarding in accordance with subpart F, Part 172, of the HMR to develop and implement security plans. From your letter, it appears that the crude oil is being transferred to and transported in a cargo tank motor vehicle. Section 172.504 requires placarding of all bulk packagings, i.e., a packaging which has a maximum capacity greater than 450 L (119 gallons). Therefore, as an offeror, your client is subject to the security requirements. Also see Fact Pattern #3 on page 6762 of the enclosed formal interpretation. As we suggested in the preamble to the HM-232 final rule, we expect offerors to work with carriers to address en route security risks for the materials covered by the security plan. The regulation provides the flexibility necessary to enable offerors and carriers to determine the best methods for addressing en route security issues. An offeror and carrier may have a joint plan or they may have two separate security plans. An offeror should satisfy itself that the carrier that issessed security risks of the material to be transported, including risks related to the storage of vill be transporting its material has a security plan in place that adequately addresses the I hope this satisfies your inquiry. Hothe z mitchel Hattie L. Mitchell Chief, Regulatory Review and Reinvention Office of Hazardous Materials Standards Enclosure 172.800 030190#

Page 2GRAEF E&S CONSULTING SERVICES 12323 Meadow Gate Corbin Stafford, Texas 77477 Telephone (281) 240-7171 $172.800 July 17, 2003' Security Plans 03 - 0190 Mr. Edward Mazzulio Director for the Office of Hazardous Materials Security US DOT/RSPA (PHM-10) 400 zi St. SW Washington D.C. 20590 Re: HM-232 requirements for Security Plan Dear Mr. Mazzullo: I am an environmental and safety consultant with several Oil and Gas Production clients in Texas. We are aware of the new requirements stated in HIM 232 but are having difficulty determining applicability to my client's operations. The client produces CRUDE OIL from geological formations below the surface of the earth and moves it into a storage tank via flow lines to a tank battery. When in the tank, it is accumulated until about 200 barrels or less have been accumulated where it is offered for sale to an oil refiner or other oil company. Custody of the oil physically transfers from my clients to the oil company at the tank. The amount of transfer is measured by a meter in the transfer line. The oil company buying the oil accepts transfer and arranges for transportation of the crude oil to its own storage facilities. My clients are not involved in the transfer operation and in many cases are not even on site when the material is transferred. We do not know if the truck hauling the material is placarded or not since transportation is not our responsibility but rather the responsibility of the custody company. With this in mind, are the requirements for a security plan applicable to my clients since they are neither in the transportation business nor packaging for shipment any hazardous materials? We would like a ruling and an official interpretation of the rule as it applies to Oil and Gas Thank you for your assistance. Sincerely, Consultant Warren D. Graef, BAAS, CHAM#