[Senate Report 107-342]
[From the U.S. Government Publishing Office]
Calendar No. 764
107th Congress Report
SENATE
2d Session 107-342
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CHEMICAL SECURITY ACT OF 2002
_______
November 15, 2002.--Ordered to be printed
_______
Mr. Jeffords, from the Committee on Environment and Public Works,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[to accompany S. 1602]
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was
referred a bill (S. 1602) to help protect the public against
the threat of chemical attacks, having considered the same,
reports favorably thereon with an amendment and recommends that
the bill, as amended, do pass.
General Statement and Background
Congress has long been concerned about releases of
hazardous chemicals from industrial facilities. In 1984, an
accidental release of methyl isocyanate from a Union Carbide
plant in Bhopal, India resulted in more than 2,000 deaths and
hundreds of thousands of injuries. Reacting to this incident
and a number of accidental chemical releases in the United
States, Congress enacted several statutes to help prevent such
releases and to improve preparedness and response capabilities.
The Emergency Planning and Community Right-to-Know Act
(EPCRA), passed in 1986, contains four major requirements
designed to help facilities and communities understand, prepare
for and respond to accidental releases of hazardous chemicals.
\1\ The four requirements are emergency planning, release
notification, hazardous chemical storage reporting, and toxics
release reporting. The emergency planning provisions of EPCRA
established State Emergency Response Commissions (SERCs) and
Local Emergency Planning Commissions (LEPCs). LEPCs are
comprised of emergency responders and other local officials,
and are required to develop emergency response plans and
communicate these plans to the public. The EPCRA notification
and storage reporting requirements establish thresholds and
reporting requirements for releases and storage of certain
extremely hazardous substances held onsite. EPCRA also created
the Toxics Release Inventory, which requires facilities to
report their releases of more than 600 chemicals into the
environment.
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\1\Public Law 99-499.
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The Clean Air Act Amendments of 1990 included requirements
that the Occupational Safety and Health Administration
promulgate Process Safety Management (PSM) regulations that
apply to chemical facilities. \2\ The regulations increase
worker safety by preventing or minimizing the consequences of
catastrophic releases of toxic, reactive, flammable or
explosive chemicals. The Clean Air Act Amendments of 1990 also
include provisions in section 112(r) that are designed to
prevent accidental releases of dangerous chemicals, and
mitigate the consequences of releases that may occur. The
requirements of this section apply to stationary facilities
that process more than a threshold amount of certain dangerous
chemicals. Approximately 15,000 facilities are subject to the
requirements. These facilities must develop risk management
programs that include a hazard assessment of the offsite
consequences of releases under worst-case and alternate
scenarios, a prevention program, and an emergency response
program. Information about the program must be documented in a
Risk Management Plan (RMP) that is submitted to EPA and made
available to States and local planning agencies as well as the
public according to procedures set forth in 40 CFR 68.
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\2\Public Law 101-549.
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RMPs were submitted by covered facilities pursuant to a
statutory deadline on June 21, 1999. RMP data indicate that the
potential for catastrophic chemical releases is widespread in
the United States. According to EPA data, a ``worst-case''
release of toxic chemicals could threaten more than one million
people at more than 123 U.S. facilities spread across 24
States. In addition to these 123 facilties, there are more than
700 facilities located in 39 States at which a ``worst-case''
release of toxic chemicals could threaten more than one hundred
thousand people. \3\
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\3\RMP Info., U.S. Environmental Protection Agency.
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Anticipating the deadline for submission of RMPs, Congress
passed the Chemical Safety Information, Site Security and Fuels
Regulatory Relief Act, Public Law 106-40, on August 2, 1999.
\4\ This Act amended section 112(r) of the Clean Air Act to
limit the availability of RMPs to address concerns regarding
the potential terrorist threat posed by Internet access to
offsite consequence analysis information. The 1999 amendments
also mandated a comprehensive Department of Justice study of
the vulnerability of toxic chemical handling or manufacturing
facilities to criminal and terrorist activity. In May of 2002,
the Department of Justice completed an interim study, nearly 2
years after the statutory deadline of August 5, 2000. The
results of this interim study are classified, and therefore
cannot be discussed in this report. The final study was due to
be completed August 5, 2002, and was not completed by that date
or expected to be completed in the near future.
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\4\Public Law 106-40.
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Notwithstanding the failure by the Department of Justice to
complete its full vulnerability study, existing evidence
suggests that security is inadequate at many chemical
facilities. In 1999, the Agency for Toxic Substances and
Disease Registry studied security at 30 chemical plants in
three States. \5\ The ATSDR found that ``security at chemical
plants ranged from fair to very poor.'' In a separate study,
the Department of Justice concluded in April, 2000 that ``the
risk of terrorists attempting in the foreseeable future to
cause an industrial chemical release is both real and
credible.'' \6\ In this same report, the Department of Justice
noted that attacking an existing chemical facility, for
example, presents an easier and more attractive alternative for
terrorists than constructing a weapon of mass destruction. In
addition, the Department concluded that many plants that
contain hazardous chemicals would be attractive targets for
terrorists because of the plants' proximity to densely
populated areas.
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\5\Agency for Toxic Substances and Disease Registry, Industrial
Chemicals and Terrorism: Human Health Threat Analysis, Mitigation and
Prevention, 1999.
\6\Department of Justice. Assessment of Increased Risk of
Terrorist or Other Criminal Activity Associated with Posting Off-Site
Consequence Analysis Information on the Internet. April 18, 2000. pp.
23-24.
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Since September 11, there have been a variety of voluntary
industry initiatives to improve security. The American
Chemistry Council (ACC), for example, has adopted a security
code as part of its Responsible Care program, and will require
adherence to that code as a condition of membership in the ACC.
But in spite of the ACC program and related efforts, there have
been security gaps reported at numerous chemical facilities
since September 11, 2001. Governor Tom Ridge echoed the
conclusions of these investigations in his testimony before the
Senate Committee on Environment and Public Works on July 10,
2002, stating that: ``The fact is, we have a very diversified
economy and our enemies look at some of our economic assets as
targets. And clearly, the chemical facilities are one of them.
We know that there have been reports validated about security
deficiencies at dozens and dozens of those.''
In spite of these documented security lapses and widespread
agreement about the vulnerability of the nation's chemical
infrastructure, there are no Federal standards in place to
require plants to assess their vulnerabilities and take steps
to reduce them. As discussed above, there are several programs
in place to plan for and mitigate the threat of accidental
releases of chemicals. But these accidental release programs do
not address the contingencies that a terrorist attack might
entail, and therefore do not provide adequate protection. By
contrast, nuclear plants are already subject to extensive
security requirements designed to prevent armed intruders from
sabotaging the plants. Industry groups, such as the American
Chemistry Council, are in the process of implementing voluntary
programs to reduce hazards and improve security at their
plants. However, the American Chemistry Council represents only
approximately 10 percent of facilities that use large
quantities of dangerous chemicals, and its measures are not
enforceable and do not involve either Federal review of
assessments and response plans or credible third-party review
of such assessments and plans.
Objectives of the Legislation
S. 1602 is intended to ensure that the threat of terrorist
attack on chemical facilities is addressed quickly,
consistently and effectively across the spectrum of U.S.
industrial facilities that have hazardous chemicals. The Act
puts the Environmental Protection Agency (EPA) in the lead role
in implementing the Act, with the Office of Homeland Security
or its successor in a consultative role. This approach is
consistent with the approach outlined in the President's
Homeland Security strategy. \7\ The Act requires the EPA to
consult with the Office of Homeland Security, as well as States
and local governments, to identify ``high-priority'' facilities
within the universe of approximately 15,000 facilities that
have submitted risk management plans (RMPs) to EPA under the
accidental release prevention programs established under
section 112(r) of the Clean Air Act. Population density,
proximity to other critical infrastructure, and additional
criteria, as appropriate, would be used to screen the 15,000
facilities to set the priority list. This would be accomplished
through a rulemaking within one year of enactment. That
rulemaking would also include requirements for each high
priority facility to: conduct a vulnerability and hazard
assessment, and; prepare a prevention, preparedness and
response plan that addresses the hazards and vulnerabilities by
improving security, employing safer technology, and other
means. Copies of the assessments and plans must be submitted to
EPA 12 and 18 months, respectively, after the date of
promulgation of regulations. EPA is required to review the
documents in consultation with the Office of Homeland Security
to determine whether the vulnerability assessments were
conducted in compliance with the regulations and whether the
response plans were prepared and are being implemented in
compliance with the regulations.
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\7\The White House. National Strategies for Homeland Security,
July 2002, pp. 29-35.
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Section-by-Section Analysis
Section 1. Short Title
The Chemical Security Act of 2002.
Sec. 2. Findings
Section 2 contains four findings, which can be summarized
as follows: 1) the chemical industry is a crucial part of the
United States' critical infrastructure; 2) the possibility of
attacks on chemical facilities poses a serious threat to public
health, safety and welfare as well as critical infrastructure
and national security; 3) the possibility of chemical theft
from a chemical facility also poses such threats, and; 4) there
are significant opportunities to prevent attacks and threats,
and reduce harm that would result by using safer technologies
and improving site security.
Sec. 3. Definitions
SUMMARY
Section 3 defines ten terms for the purposes of the Act.
Definitions include:
``Chemical Source'' is a stationary source (as
defined in section 112(r) of the Clean Air Act) that contains a
substance of concern.
``Employee'' means a duly recognized collective
bargaining representative at a chemical source; or, in the
absence of such a representative, other appropriate personnel.
``Head of the Office'' means the head of the
Office of Homeland Security or a successor agency.
``Safer Design and Maintenance'' includes, to the
extent practicable: use of inherently safer technology, use of
secondary containment equipment, implementation of security
measures, and use of buffer zones.
``Security Measure'' means an action to increase
the security of a chemical source, including employee training
and background checks, perimeter and access controls, and
cybersecurity.
``Substance of Concern'' is any regulated
substance under 112(r) of the Clean Air Act, and any substance
added by the Administrator through rulemaking.
``Unauthorized Release'' is the removal or
release from a chemical source of a covered substance of
concern that is unauthorized or is caused, in whole or in part,
by a criminal act.
``Use of Inherently Safer Technology'' means use
of a technology (or product, practice, etc.) that as compared
with current practices, reduces or eliminates the possibility
of a release of a substance of concern or threat to public
health resulting from such a release.
DISCUSSION
The definitions of ``chemical source'' and ``substance of
concern'' set the parameters for the universe of substances and
entities potentially covered by the Act, as described in the
discussion of Section 4. The definition of ``employee'' is used
in Section 4 to require that workers be consulted in the
development of vulnerability assessments and response plans.
The definition and its use in this Act in no way affects
employer obligations under section 8(a)(2) of the National
Labor Relations Act. The definition of ``head of the Office''
reflects the fact that Congress is considering the
establishment of a Department of Homeland Security, which would
replace the existing Office of Homeland Security. The term
``practicable,'' as used in the definition of ``safer design
and maintenance,'' is intended to incorporate consideration of
both technical feasibility and cost.
Sec. 4. Designation and Regulation of High Priority categories
SUMMARY
Subsection 4(a).--Designation and Regulation of High
Priority Categories by the Administrator
Subsection 4(a)(1).--Within one year of enactment, requires
the Administrator, in consultation with the Office of Homeland
Security or its successor, and State and local emergency
response agencies, to designate ``high priority'' combinations
of chemical sources and substances of concern based on the
threat of a release and criteria in subsection (a)(2).
Subsection (a)(5) authorizes the Administrator, in consultation
with the Office of Homeland Security, to add substances of
concern as part of the rulemaking under subsection (a)(1).
Subsection 4(a)(2).--Sets safety and security criteria for
the Administrator, in consultation with the Office of Homeland
Security, to consider in designating ``high priority''
categories, including severity of harm that could be caused by
a release, proximity to population centers, threats to national
security or critical infrastructure, threshold quantities of
substances of concern that pose a serious threat, and such
other safety or security factors that the Administrator
considers appropriate.
Subsection 4(a)(3).--Requires the Administrator, in
consultation with the Office of Homeland Security, the Chemical
Safety Board, and State and local agencies, to establish
regulations for ``high priority'' chemical sources within one
year of designating such categories under subsection (a)(1).
Such regulations shall require chemical sources, in
consultation with local law enforcement/emergency responders
and employees, to:
conduct a vulnerability assessment;
identify hazards that could result from a
release;
prepare a plan that includes actions, and
procedures, including safer design and maintenance, to
eliminate or significantly reduce the potential consequences of
a release.
Subsection 4(a)(4).--Requires the Administrator, in
consultation with the Office of Homeland Security, to revise
the regulations under subsections (a)(1) and (a)(3) within 5
years.
DISCUSSION
Subsection 4(a) requires a two-part regulatory process that
establishes the major requirements of the Act. First, the EPA
must consult with the Office of Homeland Security, as well as
the State and local agencies listed, to identify ``high
priority'' categories. These high priority categories are
combinations of chemical sources and substances of concern. It
is the committee's expectation that the facilities currently
subject to EPA's Risk Management Program requirements,
established under Section 112(r) of the Clean Air Act, would be
EPA's starting point for determining the high priority
categories. There are approximately 15,000 of these facilities,
each of which has onsite more than a threshold quantity of at
least one of 140 listed toxic or flammable chemicals. The high
priority list would be developed by screening the RMP list of
15,000 facilities using the criteria listed in subsection
4(a)(2). These criteria include the severity of harm that could
be caused by a release of a substance of concern, proximity to
population centers, threats to critical infrastructure or
national security and threshold quantities. The size of the
universe of high-priority facilities would therefore likely be
smaller than the 15,000 that are subject to EPA's RMP
requirements.
While the decision of how to develop and apply the criteria
listed in subsection 4(a)(2) is left to the EPA, the committee
does not expect that facilities located in remote areas, such
as many agricultural retailers, would be included in the high
priority categories. In addition, the committee notes that some
facilities subject to the RMP requirements may exceed the RMP
threshold quantities for brief periods during the year, making
them less attractive targets for attack than RMP facilities
that consistently exceed the threshold quantities. EPA should
consider the frequency and duration that the threshold
quantities of substance of concern are onsite at a particular
facility in designating high priority categories.
Subsection 4(a)(3) establishes the requirements applicable
to high priority category chemical sources. These requirements
must be developed through rulemaking no later than one year
after enactment of the Act. The committee is aware that there
are voluntary security programs currently being implemented at
some of the facilities that may be subject to the requirements
of this Act. For example, the American Chemistry Council has
developed and adopted a security code as part of its
Responsible Care program, and has made adherence to the
security code a condition of membership in the American
Chemistry Council. In addition, energy producers have conducted
vulnerability assessments at a portion of their facilities in
conjunction with the Department of Energy under Presidential
Decision Directive 63. Finally, some community water suppliers
are required to conduct vulnerability assessments with respect
to attacks that could cause a disruption in water supplies
under the bioterrorism bill that was signed into law earlier
this year. The committee recognizes that these efforts may
overlap with the assessment and planning requirements in
subsection 4(a)(3). The committee does not intend unnecessary
duplication of efforts, however, the committee has left to the
Administrator and the Office of Homeland Security the
determination of whether assessments required by other laws are
duplicative of the purposes and requirements of this Act. With
respect to voluntary programs such as the American Chemistry
Council Responsible Care program, EPA may consider the
requirements of such programs as it develops its regulations,
but may not relieve any facility of the responsibility to
comply with the provisions of this Act on the basis of
participation in any such program.
Subsection 4(b).--Compliance Certification
Subsection 4(b)(1).--Requires each owner and operator of
each high-priority chemical source to certify compliance with
the vulnerability/hazard assessment regulations within one year
of promulgation of applicable regulations.
Subsection 4(b)(2).--Requires each owner and operator of
each high-priority chemical source to certify compliance with
the prevention, preparedness and response plan regulations
within 18 months of promulgation of applicable regulations.
Subsection 4(b)(3).--Requires review of assessments and
plans and re-certification by chemical sources every 3 years.
Subsection 4(b)(4).--Exempts from disclosure under the
Freedom of Information Act all information provided to the
Administrator under this section, with the exception of the
compliance certifications described in subsections 4(b) and
5(a). The subsection also requires the Administrator, in
consultation with the Office of Homeland Security, to develop
protocols necessary to prevent unauthorized disclosure of
assessments and plans.
DISCUSSION
Subsection 4(b)(4) exempts the assessments and plans from
disclosure under FOIA. It also directs EPA to develop protocols
to prevent disclosure to unauthorized persons of the
assessments and plans. During committee markup of the Act, an
amendment was offered by Senator Bond, and accepted by voice
vote, that requires specific protocols prohibiting disclosure
to unauthorized persons to be developed. Notwithstanding the
FOIA exemptions and protocols mentioned above, this subsection
provides that certifications of compliance will be publicly
available, so that the public will know whether a local
facility has complied with the law. In addition, the
certifications will provide a checklist to indicate whether the
chemical source has implemented each of the four elements of
safer design and maintenance. It is not the committee's intent
that such certification be utilized as demonstration of full
compliance with the requirements of the Act. Rather, the EPA
may utilize the authorities contained in current law to request
access to and inspection of documents, facilities and other
information to ascertain compliance with the Act.
Sec. 5. Enforcement
(a) Review of Assessments and Plans
Subsection 5(a)(1).--Requires the Administrator, in
consultation with the Office of Homeland Security, to review
vulnerability assessments and response plans to determine their
compliance with applicable regulations.
Subsection 5(a)(2).--Requires the Administrator to certify
each compliance determination in writing, including a checklist
indicating consideration of safer design and maintenance.
Subsection 5(a)(2)(C).--Establishes an ``early compliance''
authority. The Administrator, in consultation with the Office
of Homeland Security, shall review assessments and plans
submitted prior to publication of proposed regulations to
determine compliance with the Act. No further revisions to the
assessments or plans will be required if such a determination
is made. This provision has been included to enable facilities
that already have assessments and plans underway--such as
American Chemistry Council members--to continue their work and
submit the assessments and plans for early approval by the
Administrator if the Administrator determines that they
assessments and plans meet the requirements of the Act.
Subsection 5(a)(2)(D).--Requires the Administrator to
establish a schedule for reviewing assessments and plans, not
to exceed 3 years beyond the deadline for submission of such
assessments and plans.
5(b) Compliance Assistance.--Requires the Administrator to
provide notice and compliance assistance to a chemical source
if the Administrator, after consultation with the Office of
Homeland Security, determines that a chemical source has not
complied with the assessment or planning regulations; or that a
threat exists that is beyond the scope of a plan or
implementation of a plan.
5(c) Compliance Orders.--Thirty days after the later of the
date that the Administrator first provides compliance
assistance or a chemical source receives notice under (b), the
Administrator may issue an order directing compliance after
notice and opportunity for hearing.
5(d) Abatement Orders.--Requires the Office of Homeland
Security to provide notification to a chemical source if the
Office of Homeland Security, in consultation with local law
enforcement and first responders, determines that a terrorist
threat exists that is beyond the scope or implementation of a
response plan submitted by a chemical source. Requires the
Office of Homeland Security to notify the Administrator and the
Attorney General if the Office of Homeland Security determines
that actions taken by a chemical source in response to the
notification are insufficient. Once these preliminary steps
have been taking, the Administrator and the Attorney General
are then authorized to secure relief through court orders to
protect the public health or welfare.
DISCUSSION
Section 5 establishes requirements for review of
assessments and plans submitted to EPA, and authorities and
procedures for EPA to address deficiencies in these documents.
Section 5(c) establishes an ``early compliance'' provision.
As noted in the discussion of Section 4, industry groups such
as the American Chemistry Council are in the process of
implementing voluntary security measures. The aim of the Act is
to encourage such voluntary efforts to continue, while ensuring
that they meet the standards set out in the Act. To accomplish
this goal, the Act includes an ``early compliance'' provision.
Under this provision, chemical sources can submit assessments
and response plans for review at any time after enactment of
the Act. Assessments and plans received prior to publication of
draft regulations must be reviewed by the Administrator and
must meet the standards in the Act. Assessments or plans
received after that date must meet the requirements of the
final regulations.
Sec. 6. Recordkeeping and Entry
Section 6 establishes record retention requirements for
covered chemical sources. The section also establishes
authority for the Administrator, in carrying out the Act, to
enter or request information from a chemical source.
Sec. 7. Penalties
Section 7 establishes civil penalties for violations of the
Act and criminal penalties for knowing violations of the Act.
Sec. 8. No Effect on Requirements Under Other Law
Section 8 states that nothing under this Act affects any
duty or other requirement imposed under any other Federal or
State law.
Sec. 9. Authorization of Appropriations
Section 9 authorizes such sums as are necessary to carry
out this Act.
Legislative History
S. 1602 was introduced on October 31, 2001 by Senator
Corzine, with Senators Jeffords, Boxer and Clinton as
cosponsors, and was referred to the Committee on Environment
and Public Works. A hearing was held by the Subcommittee on
Superfund, Toxics, Risk and Waste Management on November 14,
2001 to consider S. 1602; and a full committee oversight
hearing was held on July 10, 2002 to receive testimony the
creation of a Department of Homeland Security. The full
Committee on Environment and Public Works met on July 25, 2002
to consider S. 1602, and ordered it reported to the Senate with
an amendment in the nature of a substitute.
Hearings
On Wednesday, November 14, 2001, the Subcommittee on
Superfund, Toxics, Risk and Waste Management of the Committee
on Environment and Public Works held a legislative hearing to
receive testimony on S. 1602, the Chemical Security Act. There
were no prior congressional hearings on this legislation.
Witnesses at the hearing appeared in the following order:
Robert C. Shinn, Jr., Commissioner, New Jersey Department of
Environmental Protection; Mr. Fred Webber, President and Chief
Executive Officer, American Chemistry Council; Mr. Paul Orum,
Director, Working Group on Community Right-to-Know; Mr. Bill
Stanley, Synthetic Organic Chemical Manufacturers Association;
and Ms. Rena Steinzor, Academic Fellow, National Resources
Defense Council.
Rollcall Votes
On July 25, 2002, the Committee on Environment and Public
Works met to consider S. 1602. The committee agreed, by voice
vote, to an amendment in the nature of a substitute offered by
Senator Corzine. Also, agreed to by voice vote was an amendment
by Senator Bond that directs the Administrator to develop
protocols to protect sensitive information received by EPA in
the form of chemical facility vulnerability assessments and
response plans. Finally, agreed to by voice vote was a
technical amendment by Senator Corzine to the definition of
``unauthorized release'' on page 6, line 18. A recorded vote on
S. 1602 was requested by Senator Corzine and seconded by
Senator Clinton. A recorded vote occurred on the bill, as
amended. S. 1602 was unanimously ordered reported by 19 ayes.
Regulatory Impact Statement
In compliance with section 11(b) of rule XXVI of the
Standing Rules of the Senate, the committee makes evaluation of
the regulatory impact of the reported bill. The bill does not
create any additional regulatory burdens, nor will it cause any
adverse impact on the personal privacy of individuals.
Mandates Assessment
In compliance with the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), the committee finds that S. 1079 would not
impose any Federal intergovernmental unfunded mandates on
State, local, or tribal governments.
Cost of Legislation
Section 403 of the Congressional Budget and Impoundment
Control Act requires that a statement of the cost of the
reported bill, prepared by the Congressional Budget Office, be
included in the report. That statement follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 1, 2002.
Hon. James M. Jeffords, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1602, the Chemical
Security Act of 2002.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Susanne S.
Mehlman (for Federal costs), who can be reached at 226-2860,
Greg Waring (for the State and local impact), who can be
reached at 225-3220, and Lauren Marks (for the private-sector
impact), who can be reached at 226-2940.
Sincerely,
Dan L. Crippen.
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S. 1602, the Chemical Security Act of 2002, as ordered reported by the
Senate Committee on Environment and Public Works on July 25,
2002
Summary
S. 1602 would require the Environmental Protection Agency
(EPA) to develop regulations to identify sources of industrial
chemicals or facilities vulnerable to unauthorized releases of
hazardous chemicals. The regulations would require owners and
operators of those facilities to perform vulnerability
assessments of chemical sources and to establish safety and
security plans. EPA also would be responsible for developing
methods to guard against inappropriate disclosure of the
vulnerability assessment plans prepared by the owners of
chemical sources that may pose a security threat, and for
certifying their compliance with these plans.
CBO estimates that implementing this bill would cost $80
million over the 2003-2007 period, assuming appropriation of
the necessary funds. Enacting S. 1602 could affect direct
spending and receipts because this bill would provide for civil
and criminal penalties against owners of chemical sources who
fail to comply with the bill's requirements. However, CBO
estimates that any such increase in civil and criminal
penalties would be not be significant.
S. 1602 would require the owners and operators of certain
facilities to undertake measures to protect against the
unauthorized release of chemical substances. Because the owners
and operators of those facilities include both public and
private-sector entities, the requirements would be both
intergovernmental and private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA). Based on information from
EPA and industry sources, CBO estimates that the cost to comply
with the mandates would not exceed the annual thresholds
established by UMRA ($58 million for intergovernmental mandates
and $115 million for private-sector mandates in 2002, adjusted
annually for inflation).
Estimated Cost to the Federal Government
The estimated budgetary impact of S. 1602 is shown in the
following table. The costs of this legislation fall within
budget function 300 (natural resources and environment).
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2003 2004 2005 2006 2007
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SPENDING SUBJECT TO APPROPRIATION
Development of Regulations:
Estimated Authorization Level.................................. 1 1 * * *
Estimated Outlays.............................................. 1 1 * * *
Coordination with Office of Homeland Security and Technical
Support:
Estimated Authorization Level.................................. 2 2 2 1 1
Estimated Outlays.............................................. 2 2 2 1 1
Review of Vulnerability Assessments, Certification of Compliance,
and Enforcement:
Estimated Authorization Level.................................. 1 10 31 21 9
Estimated Outlays.............................................. 1 9 27 22 11
2Total Proposed Changes:
Estimated Authorization Level.................................. 4 13 33 22 10
Estimated Outlays 4 12 29 23 12
----------------------------------------------------------------------------------------------------------------
NOTE : * = Less than $500,000.
Basis of Estimate
For this estimate, CBO assumes that S. 1602 will be enacted
near the beginning of 2003. According to EPA, 12,000 to 15,000
chemical plants and storage sites handle hazardous chemicals
that could be vulnerable to unauthorized releases of hazardous
material caused by terrorist attacks. Under this legislation,
EPA would work with owners and operators of these facilities to
develop vulnerability assessment guidelines, identify and
correct problems related to the production and storage of
hazardous chemicals, and obtain verification that problems have
been remedied. CBO estimates that implementing these provisions
would cost $80 million over the 2003-2007 period, assuming
appropriation of the necessary amounts. Such spending would
fund additional personnel, travel expenses, and contract
support services necessary to implement EPA's three main
responsibilities under this bill--to develop regulations,
coordinate with the Office of Homeland Security (OHS) and
provide technical support, and enforce the bill's new
requirements.
Over the next 5 years, CBO estimates that efforts to
support the development of regulations under S. 1602 would
require about 12 staff-years at a cost of about $1 million, as
well as $1 million in contract services to support economic
analyses and research required to establish the regulations.
S. 1602 would require EPA to coordinate its oversight and
enforcement activities with OHS and to establish and maintain
computer systems for tracking information about possible
threats and other recordkeeping associated with hazardous
chemical sites. CBO estimates that coordinating with OHS and
developing and maintaining information technology would require
about 20 staff-years at a cost of about $2 million, as well as
$6 million in contract services over the 2003-2007 period.
Enforcing the bill's requirements would demand the most
resources from EPA. The bill would require the agency to review
vulnerability assessments submitted by the owners and operators
of chemical sources, certify whether sites are in compliance,
and pursue enforcement actions when necessary. CBO estimates
that over the 2003-2007 period such activities would require
about 200 staff-years at a cost of about $20 million, plus $22
million in travel expenses and $28 million in contractor
support services.
Based on information from EPA, CBO assumes that following
the submission and review of vulnerability assessments, EPA and
contractor staff would travel to most of the 12,000-15,000
chemical sites or facilities. A site visit would include up to
a three-person team performing inspection duties over a three-
to 5-day period. Furthermore, because EPA expects that about 85
percent of the owners and operators of the sites would submit
their assessments sometime in 2004, CBO estimates that the
majority of the site inspections would occur over the 2004-2006
period. Thus, most of the personnel and related travel expenses
would occur during that time period.
Because those prosecuted and convicted for violation of the
provisions of S. 1602 could be subject to criminal fines, the
Federal Government might collect additional fines if the
legislation is enacted. Collections of such fines are recorded
in the budget as governmental receipts (revenues), which are
deposited in the Crime Victims Fund and later spent. Civil
penalties for violations could also be imposed under the bill,
and such collections are recorded in the budget as governmental
receipts. In recent years EPA has imposed fines on firms
handling hazardous chemicals for violations of the clear air
act totaling $1 million to $2 million a year. CBO expects that
the amount of additional fines collected under this bill would
be insignificant.
Intergovernmental and Private-Sector Impact
The bill would require EPA to develop regulations
designating certain facilities as ``high priority,'' based upon
the severity of the threat posed by an unauthorized release of
chemicals from those facilities. Owners and operators of
facilities designated as high priority would be required to
undertake specific measures to protect against terrorist
attacks, criminal acts, or other types of chemical releases.
Because the high-priority facilities would be selected from
about 15,000 public and private entities (including public
water utilities and firms in the chemical industry), the bill
would impose both intergovernmental and private-sector
mandates, as defined in UMRA.
Specifically, S. 1602 would require that owners and
operators of affected facilities conduct an assessment of the
vulnerability of their facility, identify the hazards that may
result from a substance's release, and develop and implement a
plan to prepare, prevent, and respond to a release. According
to EPA, owners and operators would be granted some flexibility
in developing and implementing the response plans and could
choose to upgrade security, redesign the manufacturing,
refinement, or treatment processes that occur at the facility,
or substitute for the materials used in their chemical
processes. S. 1602 would further require that owners and
operators certify completion of both the assessment and plan,
submit copies to EPA, maintain records at the facility, and
complete a periodic review of the assessment and plan.
According to government and industry representatives, a
substantial number of the facilities potentially affected by
the bill's provisions are actively engaged in activities
similar to those that would be required under S. 1602. Such
facilities are acting either in response to the terrorist
attacks of September 11, 2001, as a condition of membership in
chemical industry associations, or to comply with the Public
Health Security and Bioterrorism Preparedness and Response Act
of 2002. EPA has indicated that the efforts of such facilities
would likely satisfy the requirements of the bill. Therefore,
CBO expects that enactment would impose few additional costs on
those facilities. Further, EPA does not expect to use its
authority under the bill to require that owners and operators
incorporate the more costly measures of process redesign or
material substitution in order to mitigate the threat of a
chemical release.
Assuming that EPA does not use such authority, and based on
information from government and industry sources on the costs
of measures that would protect against a release, CBO estimates
that the total cost of the mandates contained in the bill would
not exceed the annual thresholds established by UMRA ($58
million for intergovernmental mandates and $115 million for
private-sector mandates in 2002, adjusted annually for
inflation).
2Estimate Prepared By: Federal Costs: Susanne S. Mehlman (226-
2860); Impact on State, Local, and Tribal Governments: Greg
Waring (225-3220); Impact on the Private Sector: Lauren Marks
(226-2940).
2Estimate Approved By: Robert A. Sunshine Assistant Director
for Budget Analysis.
Additional Views of Senator Inhofe
On July 25, 2002, I supported the reporting of this bill
from the Environment and Public Works Committee with every
expectation that major improvements to the bill would occur.
The legislation as reported out of committee does not address
all of the concerns that were raised in the committee,
including the role of the Department of Homeland Security,
human resource needs, distribution of sensitive site
vulnerability information, and incentives for early action on
the part of companies. Additionally, the committee must address
concerns regarding agricultural operations, fire emergency
prevention and mitigation, consolidation of national security
responsibility, energy assurance, overlapping government
authorities, and others that have arisen from scores of
stakeholders upon thoughtful consideration of this legislation.
I wholeheartedly support the goal of ensuring the security
of our nation's chemical infrastructure. However, Congress
should not let our chance to address such a critical issue miss
the mark and possibly hurt our nation in the process. At a time
when Congress has such major issues before it, I believe that
Congress must work together to craft an effective solution to
improving the security of our nation's chemical infrastructure.
Changes in Existing Law
Section 12 of rule XXVI of the Standing Rules of the
Senate, provides that reports to the Senate should show changes
in existing law made by the bill as reported. Passage of this
bill will make no changes to existing law.