Koch Mineral Services, LLC — Hazardous Materials Safety Interpretation

Page 1U.S. Department of Transportation MAY 26 2004 Washington, D.C. 20590 400 Seventh St., S.W. Special Programs Research and Administration Director of Transportation Compliance Mr. Stephen P. Nowicki Reference No.: 04-0008 Koch Mineral Services, LLC 4111 East 37h Street North Wichita, KS 67220 Dear Mr. Nowicki: This is in response to your letter regarding inspection of tank cars prior to movement under the scenario: Hazardous Materials Regulations (HMR; 49 CFR Parts 171-180). You describe the following contained Petroleum Gas, Liquefied (Propylene), 2.1, UN1075" sitting idle at the Superior, KHLP (Koch Hydrocarbon LP) had five full-service leased tank cars containing "Residue, last Wisconsin facility of a supplier not corporately related to any Koch Industries, Inc. company. All five cars had been at this facility for approximately six weeks when, through no action of KHLP, they were tendered back to the serving carrier, BNSF, with no stated destination. The Superior facility did not tender a bill of lading or other shipping paper to the railroad. When to that point. The Superior facility refused to provide shipping documents and, therefore, KHLP KHLP ultimately decided on the next loading point it asked the Superior facility to bill the cars prepared the necessary documentation. We note concerning your letter that the tank cars in question were not "empty;" rather, they contained residue amounts of Liquefied Petroleum Gas. You ask these questions: Q1. Did KHLP have a duty to physically inspect the railcars to meet the requirements of 173.31(d)? A1. Yes, once KHLP decided to prepare the shipping documents, it became an offeror and was responsible to "determine that the tank car is in proper condition and safe for transportation." Q2. Hypothetically, would the Superior facility have a duty to physically inspect the railcars according to 173.31(d) before "releasing" them to a railroad without billing? ШИННІШ 173.31 040008#

Page 2A2. Yes. When the Superior facility tendered the cars back to the railroad, it was responsible as an offeror to make the same determination that KHLP had to make when KHLP decided to prepare the shipping documents. In fact, given the facts as stated by you, when the Superior facility "released" the cars without shipping papers, it was in violation of § 172.200 et seg. Further, and again relying on the facts as you state them, it appears that BNSF was in violation of$ 174.24 for accepting and moving the cars without receiving shipping papers. Q3. If the Superior facility did physically inspect the cars, would KHLP also have to inspect the cars as the most current offeror of the empty tank cars? A3. The HMR place a duty on the offeror of a tank car containing hazardous materials to determine that the car is in proper condition and safe for transportation. Section 173.31(d) lists the minimum external visual inspection that must be performed prior to offering the car. Under the HMR, more than one entity may be responsible for the performance of offeror functions prior to offering a shipment for transportation. In the scenario you describe, if the Superior facility physically inspected the cars while KHIP prepared the shipping documentation for the cars, both entities would be considered offerors for purposes of the HMR and would be responsible for performing their respective offeror functions in accordance with the HMR. In this case, KHILP would not be required to perform the physical inspection of the cars required under § 173.31(d). I trust this satisfies your request. Sincerely, Relave dE. Magall Edward T. Mazzullo Director, Office of Hazardous Materials Standards#

Page 3Date: 01/13/04 Time: 01:12 PM To: Office of Hazmats; DHM-10 # 1-202-366-3012 KBS, LP Page: 001-002 To: 'Office of Hazmats; From: Kelly Nebergall, ISA Admin. Company: Office of Hazmats; DHM-10 Fax Number: Company: 1-202-366-3012 Koch Legal Department Fax Number: 316-828-9063 Phone Number: Phone Number: 316-828-6060 Subject: RE: Question: Use of Tank Cars; Corbin Date: Tuesday, January 13,2004 $/73.31 • Pages: 2 Tank Cars Can you advise when you expect to respond to the below request? -----Original Message-- 040008 Sent: From: Nowicki, Steve Subject: To: 'Office of Hazmats; DHM-10' Monday, December 22,2003 10:12 AM RE: Question: Use of Tank Cars; Examination before shipping The below request was faxed to DHM-10 on December 8th. Have you had a chance to consider this request? From: ----Original Message-.. Sent: Monday,December 08,2003 12:10 PM Nowicki, Steve To: Subject: Question: Use of Tank Cars; Examination before shipping "infocntr@rspa.dat.gov' Koch Hydrocarbon LP (KHLP) has 3 questions with respect to the requirement in 49 CFR part 173.31 (d) and its applicability to a specific situation we encountered. The questions are identified at the end of this hazardous material or a residue of a hazardous material unless that person determines that the tank car The requirement: 173.31 (d) says: (1) No person shall offer for transportation a tank car containing a transportation must perform an external visual inspection that includes: is in proper condition and safe for transportation. As a minimum, each person offering a tank car for piping, valves,... shell and heads.. missing bolts... protective housings... pressure relief... thermal protection rupture discs... markings inspection date. •Gas, Liquefied (Propylene), 2.1, UN1075" sitting idle in Superior, WI for about 6 weeks. These tank cars The situation: KHLP had 5 KHLP full service leased tank cars of "Residue: last contained Petroleum was discharged in Conway, KS. Due to market demand fluctuations, it was decided that these 5 cars had returned empty to the loading facility in Superior under a typical empty bill of lading after the product their serving carrier, the BNSF, without a bill of lading provided to the BNSF as there was no known were no longer needed in Superior, and as a result they were "released" by the Superior facility back to disposition on the cars at that time. KHLP ultimately decided on a next loading point for these 5 cars and#

Page 4Dato: 01/13/04 Time: 01: 12 PM To: Office of Hazmats; DHM-10 | 1-202-366-3012 RBS, LP Page: 002-002 requiring KHLP to submit billing. Prior to billing the cars, KHLP questioned: a) whether we should asked the Superior facility to bill the cars to that point. However, the facility refused to do so, thus to examine the railcars to meet the requirements of 173.31 (d), or conversely, if the facility ir nspect these cars to reduce the risk of a problem enroute; and b) whether we had a responsibility further wondered if the last party to have examined the cars to meet the requirement in 173.31 (d) Superior had a duty to do the same prior to them having "released" the cars to the BNSF. We was sufficient evidence that the empty cars were safe for transportation. The resolution: KHLP decided to physically examine the 5 cars to reduce the risk of a problem enroute and, as the current offeror of these cars; to meet what we thought was our duty outlined in 173.31 (d). We then empty billed the cars to their destination. Questions: Given the situation noted above: 1. Did KHLP have a duty to physically inspect the railcars to meet the requirements of 173.31 (d)? to 173.31 (d) before "releasing" them to a railroad without billing? 2. Hypothetically, would the Superior facility have a duty to physically inspect the railcars according as the most current offeror of the empty tank cars 3. If the Superior facility did physically inspect the cars, would KHLP also have to inspect the car: Thank you in advance for your consideration. We look forward to your reply. Director of Transportation Compliance Stephen P. Nowicki Koch Mineral Services, LLC Phone: 316-828-7217 4111 East 37th Street North, Wichita, KS, 67220 Fax: 316-529-6165 Email: nowickis@kochind.com#