1. Regional Response Team IX EPA Southern California Office Signal Hill, CA 8/13/2014 Presented by: Neil Gambow - COO Kelso Technologies Inc.

2.  Ban unmodified pre CPC-1232 tank cars from rails as of May 1, 2017  Remove all AAR tank cars from service as of May 24, 2014  New Cars ordered after January 2014 for use in Canada must meet CPC 1232. (Canada Gazette 7/2/2014)  Propose New TC-140 Tank Car – Comments due by August 17, 2014

3.  October 15, 2011 - CPC-1232 adopted voluntarily by most in industry  April 17, 2012 – 27,000 SCFM Pressure Relief Valve included in CPC- 1232  April 18, 2014 - PHMSA/DOT submitted proposal to Office of Management & Budget (OMB).  July 25, 2014 – PHMSA publishes HM251 Notice of Proposed Rulemaking: Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains (HHFT)  September 25, 2014 – End of PHMSA comment period. Lots of diverse views ▪ RFA (ethanol shippers) want total exemption ▪ Municipalities do not want HHFT trains going through them  Final Rule most likely late 2014 or early 2015.

4. Improve the survivability of a tank car in an accident or derailment

5. Tank Cars DOT 111 in Service272,119 DOT 111 in Flammable Service80,500 CPC 1232 in Flammable Service17,300 DOT 111 in Crude and Ethanol Service56,600 DOT CPC 1232 in Crude and Ethanol Service 14,730

7. DOT 111CPC 1232 AAR/RailroadsBNSF All LegacyNon-JacketedCoiled, Insulated & Jacketed Jacketed Tank Shell Thickness7/16”1/2”7/16”9/16” Head ShieldsNoneHalf Height Full Height Pressure Relief ValvePer AFFTAC27,000 SCFM (After April 2012) Per AFFTAC27,000 SCFM Top Fittings ProtectionNoneYes JacketNone Yes Thermal ProtectionNone Yes BOV HandleYes No ManwayHinged & Bolted Kelso Klincher®

8. Tank CarBOV HandleHead Shield PRVShell Thickness JacketTop Fittings Protection Thermal Protection Braking Option 1RemoveFull Height ½” thick Reclosing (AFFTAC) 9/16” Min 11 gage Min Yes (TIH Design) YesECB Option 2RemoveFull Height ½” thick Reclosing (AFFTAC) 9/16” Min 11 gage Min YES (AAR M1002) YesNo Option 3RemoveFull Height ½” thick Reclosing 27,000 scfm 7/16” Min 11 gage Min YES (AAR M1002) YesNo Legacy DOT 111 Not Removed Optiona lReclosing7/16” Min Optional No Option 1 – PHMSA/FRA Design Option 2 – AAR Design Option 3 – Enhanced CPC 1232Car

9. Tank CarBOV HandleHead Shield PRVShell Thickness JacketTop Fittings Protection Thermal Protection Braking Option 1RemoveFull Height ½” thick Reclosing (AFFTAC) 9/16” Min11 gage Min Yes (TIH Design) YesECB Option 2RemoveFull Height ½” thick Reclosing (AFFTAC) 9/16” Min 11 gage Min YES (AAR M1002) YesNo Option 3RemoveFull Height ½” thick Reclosing 27,000 scfm 7/16” Min11 gage Min YES (AAR M1002) YesNo Legacy DOT 111 Not Removed Optiona lReclosing7/16” Min Optional No Option 1 – PHMSA/FRA Design Option 2 – AAR Design Option 3 – Enhanced CPC 1232Car

10. DOT 111 CPC 1232 Non-JacketedJacketedAll Tank Shell Thickness7/16” 7/16” or 1/2” Head ShieldsFull Height Pressure Relief ValveReclosing Reclosing** Top Fittings Protection No Already in Place Thermal ProtectionYes JacketYesAlready in PlaceYes* BOV HandleRemove

12.  October 1, 2015 – All new tank cars built after this date for use in HHFT meet new criteria  October 1, 2017 – Unmodified DOT 111 cars not authorized for Packing Group 1 in HHFT  October 1, 2018 – Unmodified DOT 111 cars not authorized for Packing Group 2 in HHFT  October 1, 2020 – Unmodified DOT 111 cars not authorized for Packing Group 3 in HHFT High Hazard Flammable Train (HHFT)– train with more than 20 cars carrying flammable commodity

13.  Car Builder Capacity  New Car Annual Builds – 40,000+  Estimate that 55% of new car builds will be for flammable service – 22,000+  Packing Group 1 Demand – 68,600 new cars over three years  Replace Legacy Cars - 33% of fleet will be retired, repurposed – 18,600  Fill needs of shippers – 50,ooo

14.  Retrofit 38,000 Legacy Cars over 38 months – 33% of DOT 111 cars will be scrapped or re-purposed (est.)  Update 14,000+ CPC 1232 cars per year  Suspect serious capacity deficit for retrofit – 1,000 – 1,400 cars a month  Will be a big consideration in defining the timeline of retrofits. May have to give industry longer to comply.

15.  Car Builders will adopt selected option as soon as possible after regulations are finalized – maybe sooner as they know the basics that are likely to be defined (See PHMSA Option 2).  Car owners will:  Immediately start planning for retrofitting, scrapping, re- purposing legacy DOT 111 cars  Secure track space at repair shops very quickly  Place new car orders in the next 6 months to replace legacy DOT 111 cars that will be scrapped or repurposed  Retrofit CPC 1232 cars with new PRV’s where necessary

16. KELSO PRESSURE RELIEF VALVE KELSO KLINCHER® MANWAY SECUREMENT SYSTEM

17. Pressure Relief Valve Valve HousingManway Bottom Outlet Valve

18. Protective Dome All Valves Including PRV Manway Bottom Outlet Valve Half-Height Head Shield

19. Ball Valve Pressure Relief Valve Vacuum Relief Valve Blank Hole Thermowell

20. Helical Spring Valve Kelso Constant Force Spring Valve

24.  PHMSA acknowledges that hinged and bolted manways are a leading cause of leaks(Page 125 of PHMSA Document)  PHMSA has left it up to the industry for now to adopt better technology by the time the new regulations are issued

25. Kelso Klincher® Typical 6-bolt Hinged & Bolted Manway

28.  M1002 – Manual of Standards and Practices, Section C-III, Specifications for Tank Cars (AAR - Association of American Railroads)  M1003 - Manual of Standards and Practices, Section J, Specification for Quality Assurance (AAR - Association of American Railroads)  TP 14877E – Containers for Transport of Dangerous Goods by Rail (Transport Canada)  49 CFR Parts 171-174, 179-180

29.  AAR/TTCI NAR websitehttp://nar.aar.com AAR/TTCI NAR websitehttp://nar.aar.com  BOE/TTCI http://boe.aar.com BOE/TTCI http://boe.aar.com  Federal Rail Administrationwww.fra.dot.gov Federal Rail Administrationwww.fra.dot.gov  DOT Hazmat Safetyhttp://hazmat.dot.gov DOT Hazmat Safetyhttp://hazmat.dot.gov  PHMSA NPRM http://www.regulations.gov/#!documentDetail;D=PHMSA-2012- 0082-0180  Transport Canadawww.tc.cawww.tc.ca  Kelso www.kelsotech.com

30. Thank You!