Ultimate Contract Services, Inc. — Hazardous Materials Safety Interpretation

Page 1U.S. Department of Transportation Washington, D.C. 20590 400 Seventh Street, S.W. Pipeline and Hazardous Materials Safety Administration MAY -5 2006 Mr. Thomas Radwick President Ref. No.: 06-0095 Ultimate Contract Services, Inc. 8380 Flick Road Tipp City, Ohio 45371 Dear Mr. Radwick: This responds to your April 19, 2006 letter requesting clarification of the term "offeror" for purposes of the Hazardous Materials Regulations (HMR; 49 CFR parts 171-180). Specifically, you ask whether the term includes brokers, freight forwarders, and agents and accordance with 49 CFR Part 107, Subpart G. whether brokers, freight forwarders, and agents are required to register with DOT in As provided in § 171.8 of the HMR, an "offeror" is any person who: (1) performs, or is responsible for performing, any pre-transportation function required under the HMR for transportation of a hazardous material in commerce; or (2) tenders or makes the hazardous are functions specified in the HMR that are required to assure the safe transportation of a material available to a carrier for transportation in commerce. Pre-transportation functions hazardous material in commerce, including, but not limited to: (1) determining the hazard class of a material; (2) selecting a packaging; (3) filling a packaging; (4) securing the preparing a shipping paper; (7) providing and maintaining emergency response closures on a filled or partially filled packaging; (5) marking and labeling a package; (6) information; and (8) certifying that a hazardous material is in proper condition for transportation in conformance with HMR requirements. If a broker, freight forwarder, or agent performs one or more pre-transportat.on functions to prepare a hazardous materials offeror under the HMR and is subject to all applicable regulatory requirements. A third shipment for transportation in commerce, then the broker, freight forwarder, or agent is an behalf of the original shipper is not considered an offeror for purposes of the HMR unless party logistics company or broker who contracts with a carrier to transport a shipment on it also performs one or more pre-transportation functions to prepare the shipment for transportation in commerce. The registration requirements in 49 CFR Part 107, Subpart G apply to persons who offer forwarder, or agent who performs one or more pre-transportation functions for the types of and persons who transport certain hazardous materials in commerce. A broker, freight hazardous materials shipments specified in 49 CFR 107.601 must register with PHMSA possession of a valid registration certificate is not an endorsement of regulatory and pay a registration fee. Note that under the registration system as currently structured, compliance or of a carrier's safety fitness nor does it indicate that the certificate holder complies with applicable security requirements. 171.8 060095#

Page 22 materials to apply for a safety permit. To obtain a safety permit, a carrier must have a Subpart E) require motor carriers transporting certain types and amounts of hazardous The saley permity ra last, (raply ao motorcarial, (ra ceportinigh a bivesay route- liquefied natural gas. A carrier may not transport any of the listed materials unless it has a valid safety permit. not comply with applicable security regulations. In accordance with Subpart I of Part 172 According to your letter, you are concerned that brokers, freight forwarders, and agents do of the HMR, persons who offer for transportation or transport certain hazardous materials in commerce must develop and implement security plans addressing personnel, unauthorized access, and en route security. The types and quantities of hazardous broker, freight forwarder, or agent meets the definition of an "offeror or person who materials for which a security plan is required are listed in § 172.800(b) of the HMR. If a offers" in § 171.8 for one or more of the hazardous materials listed in § 172.800(b), then the broker, freight forwarder, or agent must develop and implement a security plan covering the security risks associated with the functions he or she performs. Moreover, n the United States. Thus, foreign-based persons who offer for transportation or transpoi oreign-based entities must comply with all applicable HMR requirements when operatin hazardous materials into or within the United States in the types and quantities listed in § 172.800(b) must develop and implement security plans for those hazardous materials. I hope this information is helpful. Please contact this office if you further questions or need additional information. Sincerely, Susan Gorsky Office of Hazardous Materials Standands Regulations Officer#

Page 3gorsku ULTIMATE CONTRACT SERVICES, INC. 3171 8 8380 FLICK ROAD TIPP CITY, OHIO 45371 Definitions 937-667-7823 937-667-8722 (FAX) 06-0095 April 19,2006 Mr. Edward Mazzullo, Director OFFICE OF HAZMAT STANDARDS U.S. D.O.T. - P.H.M.S.A. 400 7' Street SW Washington, DC 20590-0001 Good Morning! pertain to "Offerers", as a result of the vague interpretations recently provided me by personnel within your I am requesting a formal written clarification of rules regarding Hazmat Regulations 171.1 as they Department. As you are aware, the term "Offeror" has been revised to include Brokers, Freight Forwarders and Agents to register with the P.H.M.S.A. This change became effective October 1, 2005. who offers or arranges with a motor carrier to transport hazardous material is required to register with I recently e-mailed your Department several questions regarding whether a Licensed Property Broker DOT/PHMSA and obtain a Federal Hazardous Material License in order to legally transport such loads. The crux of their response was that it depended on whether the entity performs a "Pre-Transportation Function" (i.e. preparing a shipment, labeling, issue shipping papers etc.) The clarification being sought is; "What is the relationship of a Broker or Third Party Logistics' (a.k.a. 3PL) regarding a Hazmat shipment offered by a Shipper"? While it may be assumed a 3PL will seldom, if ever, be involved with the PHYSICAL handling of a shipment, nevertheless, the 3PL is certainly the catalyst for the selection and qualifying of a motor carrier due to their relationship with the Shipper or Offerer of the Hazmat shipment, whereby a previously unknown carrier responds and initiates the contact with the 3PL. hazardous material. A 3PL may contact a carrier it uses regularly, or offers through an Internet Load Board a parties; wouldn't this exercise qualify as a "Pre-Transportation Function"? When this event occurs and a monetary covenant is finally reached and paperwork exchanged between the The reality of the 3PLs' involvement in such a transaction would certainly require basic knowledge of transported. Without knowledge of the Class, UN number, Quantity, and Weight, a 3PL cannot properly the product to be shipped for transport by being aware of the commodity, class and size of the material to be identify a hazardous shipment nor communicate the hazard to the carrier. Also, the carrier could not pre-plan the routing if it is unaware of the travel restrictions imposed by state and local governments regarding specific part of the 3PL.#

Page 4Administration and Homeland Security have made a priority to require mandatory fingerprinting and The threat of terrorism is another subject of serious concern. The Transportation Security background checks of holders of Commercial Drivers Licenses (CDL) seeking Hazmat endorsements. This was done to insure that access to chemicals and other materials would be restricted to only those who were deemed a non-security risk. Yet, currently, we have 3PL's located outside U.S. borders arranging interstate shipments of hazardous materials between points within the U.S. The only pre-requisite many 3PLs' require of the carrier is that the Driver has a Hazmat endorsement on their CDL. This practice clearly demonstrates their lack of knowledge of the Hazmat regulations. By ordering 3PLs' to register would also require them to review their employees' knowledge of hazardous materials and provide them with proper training. This will ensure that a security review is performed and the security plan is in effect. I find it somewhat irresponsible that this lack of enforcement is being condoned. In the past, when I have requested Brokers who contact me with shipments of hazardous material to provide me with proof of their Registration, I'm told that they are not required to register because they either do not physically handle the material or they do meet the criteria under the definition of shipper or offeror. Some have even stated they have contacted your Department and are being told they are exempt from registering. This I find disturbing from a regulatory as well as a security and safety standpoint. believe that by communicating within our industry and complying with regulations designed to protect both I trust that I made a case for the necessary written clarification of the recently revised regulations. I our safety and security, that together, we can minimize the risk and eliminates those loopholes so often exploited today. I look forward to your response and thank you in advance for your time and interest Respectfully Taken Thomas Radwick President#