Market Intelligence: Protect - don't destroy the US chemical industry

29 June 2009 00:00  [Source: ICB]

THE OBJECTIVE, said then-Secretary Michael Chertoff, is to raise security at US chemical facilities in a way that doesn't destroy the businesses we're trying to protect.

"Because the consequence of that is we stifle our economy, we throw workers out of work, we make it difficult to sustain our way of life," Chertoff said, speaking back in March 2006 as head of the Department of Homeland Security (DHS).

If industry is smothered with security requirements, he added, "then we will actually have succeeded in doing what the enemy has not, which is causing our own loss of prosperity and our own loss of freedom."

New legislation introduced to toughen federal antiterrorism security mandates for high-risk US chemical facilities might well realize Chertoff's worst fears.

The bill, HR-2868, titled The Chemical Facility Antiterrorism Act of 2009, would give the DHS much broader authority - without a meaningful appeal process - to dictate what feedstocks and processes producers can use and even products they make. This is the inherently safer technology (IST) mandate.

In addition, it would allow and seemingly encourage states and even county or municipal governments to impose their own antiterrorism security measures - but only if those state or local mandates are tougher than the federal law.

And, icing on the cake, the legislation would allow any citizen of the US to file suit in federal court against any chemical facility that the citizen suspects is in violation of the federal antiterrorism security law.

That citizen suit provision, known as private right of action, also would allow lawsuits against the department secretary if plaintiff John Doe thinks the department is not being tough enough in enforcing the security law.

Under current law, which passed in 2006 and underlies the existing Chemical Facility Anti-Terrorism Standards (CFATS), federal authority over security at high-risk chemical sites takes precedence over or preempts any existing or future state requirements that "conflict with or frustrate" the federal law.

Without that limited federal preemption, "we are concerned that the legislation will encourage the creation of a patchwork of conflicting rules that stretch across federal, state and local lines," said Martin Jeppeson, an executive at CALAMCO, a California-based nonprofit farmer cooperative that distributes nitrogen fertilizer.

In testifying before the House Homeland Security Committee on the new bill, Jeppeson also had harsh words the bill's IST provision, warning that it "could have a devastating impact on American agriculture."

"Such a mandate could jeopardize the availability of lower-cost sources of plant nutrient products" because under pressure from federal, state and local officials and even private party litigation, fertilizer distributors likely would abandon anhydrous ammonia in favor of less hazardous but more costly urea.

That could raise the cost of fertilizing a 1,000-acre (405 hectare) corn farm by as much as $15,000 (€10,800), he said.

The American Chemistry Council (ACC) also took issue with the bill's IST mandate, noting that in many cases there simply is no safer chemical alternative.

"There are no chlorine-free processes that produce silicon of the purity required for products such as integrated circuits," said Marty Durbin, ACC vice president for federal affairs. "Nor is there an economically viable chlorine-free route to the production of titanium. In these instances, you cannot simply eliminate potential security risks - you must work to manage or mitigate them."

The bill's defenders note that the department could impose IST measures on a given plant site only if it is "technically and economically feasible" and would not "significantly and demonstrably" impair production.

Significantly, even the DHS is effectively opposed to the IST mandate. Philip Reitinger, DHS deputy undersecretary for national protection programs, told the committee that the current approach to IST works just fine.

"CFATS currently provides facilities with flexibility to assess and determine what measures to include," he noted "This includes adoption of safer technologies, where appropriate. We support such voluntary measures when they reduce risk."

Reitinger said the DHS also has "significant concerns" on the citizen suit provision.

"The department is concerned about the potential for disclosure of sensitive or classified information in such proceedings," he added.

Jeppeson, too, was very worried by the private right of action provision. "The broad discovery rights enjoyed by a plaintiff in a judicial action increases the likelihood of disclosure to the public of sensitive information, which could be used in terrorist activities," he said.

In other words, court-ordered disclosure of information about a plant site's vulnerabilities and defenses - which CFATS requires facilities to document in detail to DHS - would hand prospective terrorists a custom-made attack blueprint.

As Chertoff admonished, let's hope we don't destroy the business we seek to protect.

By: Joe Kamalick
+1 713 525 2653

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