Adding Costs, Complications and Lawsuits to a Critical Industry

The House Energy and Commerce Committee today reported out H.R. 2868, the Chemical Facility Anti-Terrorism Act by a 29-18 vote. (For the mark-up and amendments, go here.) While the goal of protecting chemical facilities from terrorist attacks is obviously desirable, the legislation complicates recent Homeland Security rules and adds significant new costs and burdens that make it more difficult to operate chemical plants. In the process, risks that chemical companies now manage well could be transferred to other venues less able to deal with the threats.

The National Association of Manufacturers joined 20 other trade associations in sending a letter to the committee expressing the groups’ opposition to the legislation. The major point of objection is the bill’s imposition of Inherently Safer Technology requirements. Sounds benign, but …

Specifically, we strongly object to the Inherently Safer Technology (IST) provisions of this legislation that would allow the Department of Homeland Security (DHS) to mandate that businesses employ specific product substitutions and processes. These provisions would be significantly detrimental to the progress of existing chemical facility security regulations (the “CFATS” program) and should not be included in this legislation. DHS should not be making engineering or business decisions for chemical facilities around the country when it should be focused instead on making our country more secure and protecting it from terrorist threats. Decisions on chemical substitutions or changes in processes should be made by qualified professionals whose job it is to ensure safety at our facilities.

Furthermore, forced chemical substitutions could simply transfer risk to other points along the supply chain, failing to reduce risk at all. Because chemical facilities are custom-designed and constructed, such mandates would also impose significant financial hardship on facilities struggling during the current economic recession. Some of these forced changes are estimated to cost hundreds of millions of dollars per facility. Ultimately, many facilities would not be able to bear this expense.

More risks plus more costs equal fewer jobs. High energy costs over the past decade have already driven new chemical facilities overseas, and H.R. 2868 will just continue the trend.

In addition, the bill contains language to encourage “citizen suits” against facilities, letting environmental groups and others use the courts to attempt to manage (or more likely, prevent operation of) chemical facilities.

The committee defeated several amendments that would have improved the bill, including a sensible proposal to allow three years for the Department of Homeland Security to complete implementation of Chemical Facility Anti-Terrorism Standards. Instead of predictability and reasonable phase-ins, what’s left is a jobs-killing piece of legislation that conceivably worsens the security of chemical facilities.

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