Annual CWC Report

The Department of Commerce published their annual request for information about the effects of the Chemical Weapons Convention Regulations (15 CFR parts 710-722) on commercial activities involving Schedule 1 chemicals. The DOC’s Bureau of Industry and Security (BIS) needs this input to provide their annual report to Congress on the affects of the CWC implementation on the legitimate commercial activities and interests of chemical, biotechnology, and pharmaceutical firms in the United States.

‘Schedule 1’ chemicals are those chemicals listed in Supplement 1 to 15 CFR 712. They are generally considered to be chemicals that can be used as chemical weapons or their direct precursors. The CWCR restrict commercial production of ‘Schedule 1’ chemicals to research, medical, or pharmaceutical purposes. The Federal Register ‘notice of inquiry’ (74 FR 58004) lists summarizes the specific restrictions placed on facilities that produce or use Schedule 1 chemicals.

The BIS is requesting that comments be submitted by December 10th, 2009. They may be submitted by email (wfisher@bis.doc.gov), or delivered/mailed to:

Willard Fisher
U.S. Department of Commerce
Bureau of Industry and Security
Regulatory Policy Division
14th Street & Pennsylvania Avenue, NW., Room 2705
Washington, DC 20230

HR 2868 Status 11-09-09

Yesterday HR 2868 was formally received in the Senate. According to Thomas.LOC.gov, the bill was assigned just to the Homeland Security and Governmental Affairs Committee. Many observers had also expected it to be assigned to the Commerce, Science and Transportation Committee because of the two titles dealing with security at water facilities. Those facilities and the EPA are normally covered under the Commerce Committee not Homeland Security.

Additional Senate Action

InsideEPA.com reported yesterday [subscription required] that two Senators, Susan Collins (R, ME) and Frank Lautenberg (D, NJ) were preparing to submit their own versions of chemical facility security legislation. At least one major difference between the two of them was expected to be IST provisions. Sen. Collins has been an opponent of government mandated IST while Sen. Lautenberg has been a supporter.

I have no idea why Lautenberg has waited so long to introduce this legislation. With Sen. Collins one would guess that she has been avoiding a repeat of the 2006 intra-committee conflict she had with Sen. Joe Lieberman (I, DE). This has been one of the few bones of contention between these two leaders of the Senate Homeland Security Committee. Having said that, these two will be the pair most likely to craft a truly bipartisan approach to the IST issue.

Counter IED Symposium

Thanks to Stephen Melvin at OurSafeTowns.com for letting me know about a Counter IED Symposium being held on December 1st thru 3rd in Washington, D.C. The Interagency Council for Applied Homeland Security Technology (ICAHST) is sponsoring this event. The symposium will address key issues and critical mission needs in support of IED defeat and prevention in the United States and reflect on the differences between military and civilian response needs.

According to the agenda on the NCSI web site the symposium will focus on the following critical areas:

“Threat Environments: Domestic and Military Response;
“Threat Analysis: Research and Technology;
“Incident Response and Training; and
“Information Sharing.”

This symposium is really targeted at Federal, State and local government agencies that will be charged with responding to IED incidents in the United States. The NCSI web site does note that “industry, academia and laboratories sponsored by the Government” will be attending the event. While I don’t suspect that will include many high-risk chemical facilities, I would hope that some industry organizations like ACC or SOCMA will have representatives in attendance. Registration information is available on-line.

USM v UP Oral Arguments

Earlier this year we saw US Magnesium (USM) win a decision before the Surface Transportation Board (STB) requiring the Union Pacific (UP) railroad to provide chlorine delivery service. In a blog about that decision I noted that: “That order clarified the requirement that UP has an ‘obligation to quote common carrier rates and provide service for the transportation of chlorine for the movements at issue in this case’ (pg 1).” The issue of reasonable rates was not addressed in that decision. Last week the STB announced that they would be hearing oral arguments on November 23rd on a petition by USM to address that subject.

USM Position

USM is asking the STB to require UP to establish ‘reasonable rates’ for the transportation of chlorine gas from the USM production facility in Utah to two customer facilities in Arizona. USM notes that they previously had reasonable contract rates for the carriage of chlorine gas, but that contract expired in March of this year. When contract renewal discussions were started last fall, UP announced that they would raise the rates to levels unacceptable to USM. Since the date that the contract expired USM has been forced to pay a common carrier tariff (UP Tariff 4949) established by UP.

USM claims that the common carrier tariff rates are “dramatically higher than the contract rates previously paid by USM in 2008 for this transportation and are unreasonably high in violation of 49 U.S.C. §§10701 and 10704” (pg 5). USM notes that the rates “produce revenues substantially in excess of 180% of UP’s variable costs of providing the transportation” (pg 8). USM contends that the rates are 568% and 422% for the respective customer locations

USM claims that they have no alternative transportation for their chlorine gas to these customers so they have been forced to pay the rates set by UP because of UP’s ‘market dominance’ in the area. UP owns the rail lines at both ends of the transportation routes and there are no reasonable alternative forms of transportation.

USM is asking the STB to “order UP to establish reasonable rates for transportation of chlorine” on the indicated routes and “order that reparations be paid, plus interest, for any unlawful charges assessed by UP from and after March 3, 2009” (pg 9).

UP Position

UP agrees that the rates established by the Tariff Rate 4949 are substantially higher than those set under the previous contract. UP maintains that those higher rates are a reflection in recent and proposed regulatory changes for the shipment of toxic inhalation hazard (TIH) chemicals like chlorine and anhydrous ammonia. UP claims that the new tariff reflects a reasonable increase in the rate to support those new requirements.

UP notes that the method that USM is asking the Board to use in its evaluation of the UP tariff (the Three-Benchmark Method) would not adequately reflect the changes in the market and regulation that make the new rate reasonable. The reason is that the method relies heavily on the rates and costs of the previous three year period (2004 through 2007 in this case) and does not reflect recent changes. UP questions the Board’s ability to adequately address the problem of ‘regulatory lag’ in this case using this method and proposes changes to the Three-Benchmark method to address that issue.

UP maintains that they have incurred and continue to incur increased costs because of these new safety and security regulations reflected in new procedures and training requirements. UP notes that the most costly of these new regulatory requirements is the new requirement to install positive train control (PTC) on mainlines used to transport TIH chemicals like chlorine gas. In their Opening Evidence document, UP maintains that “These costs associated with TIH movements should be borne by TIH shippers, rather than UP’s other shippers, to avoid cross-subsidization of TIH shipments.” (pg 19)

HAZMAT Shipping Implications

There are a number of reasons that this decision may not be a ‘landmark’ case in controlling future rate setting cases for TIH chemicals. First, UP notes that all of their other chlorine shippers have been accepting routine increases in their shipping costs reflecting the changes in regulatory requirements. Next, USM is not a regular chlorine producer; they produce chlorine as a byproduct of their magnesium production process. This means that their chlorine shipments are irregular in frequency and destination, resulting in potentially higher costs.

Having said that, UP has raised the issue of having TIH shippers essentially pay for the installation of PTC on lines where it is being required solely because of the shipment of TIH chemicals. There is certainly at least some justification for this, but it will raise some significant cost issues where there is only a single TIH shipper on a given line. This case certainly provides the STB the chance to establish a potentially landmark decision on the allocation of PTC costs.

DHS CSAT FAQ Page Update – 11-06-09

Last week DHS added responses to five new questions on their extensive CSAT Frequently Asked Questions page. Those questions were:

1268 Am I exempt from registering since I fall under Part 105 of the Maritime Transportation Security Act?
1558 May I continue to work on my SVA while I replace, or after I replace, an existing Top-Screen?
1613 What is the anticipated timeframe for receiving a response to an extension request?
1614 My circumstances have changed from my original Top-Screen submission. What do I base my SVA on – my original submission or the material modifications I have made?
1615 I have resubmitted my Top Screen because of material modifications at my facility. This resulted in a change to my tiering. In this case, what happens to my current SVA?

As always, I recommend that site security managers read all new responses as they are posted. There is no telling which might affect the CFATS implementation at a facility without reading the individual answers.

New Top Screens

With the economic situation being so bad for the chemical industry in general, many facilities are closing, reducing operations, or eliminating product lines; all things that can result in the reduction or elimination COI. This means that DHS has been receiving large numbers of Top Screen resubmitals that might result in lowering of risk level ratings or removal from the list of high-risk chemical facilities. What affect this has on facility SVAs is the basis for four of this week’s new questions.

First, DHS makes clear that once an SVA notification letter is sent to a facility the facility is required to complete the SVA for the underlying Top Screen unless or until DHS removes the requirement. If a facility feels that their subsequent Top Screen will result in removal from the high-risk list (if they no longer have COI on-site for example) they should request an extension of the time to file their SVA under the old Top Screen siting the lack of COI and the new Top Screen submission as justification.

In the event that the resubmitted Top Screen does not result in a change of tier level the new top screen will almost certainly not result in a change in date for the submission of the SVA previously required. This is the reason that DHS wants facilities to continue working on their current SVAs or SSPs while their new Top Screen is being evaluated.
If a new Top Screen does result in a change of preliminary tier rankings, DHS still might not change the due date of a previously ordered SVA. If there were no changes in the list of covered chemicals held at the facility, there will likely be no need to change the SVA submission, so DHS would keep the same date. Similarly, if there was an elimination of a minor (by inventory standards) COI while large scale storage of other COI remain, DHS might not change the SVA date. The later situation might not even change the completion date of an ordered Site Security Plan.

Reader Comment 11-08-09 Recommit

Anonymous wrote in yesterday morning to take me to task for my description of Mr. Dent’s (R, PA) motion to recommit in my blog about the final day of the debate on HR 2868 in the House. Anonymous wrote, in part:

“That was not the motion to recommit. The motion to recommit barred DHS from requiring IST implementation unless it found that doing so would cause no net NATIONAL reduction in jobs, and would apply anytime unemployment was over 4%. In the past 478 months, unemployment has been under 4% SIX times, the last time
being just before George W Bush took office.”

Dent’s Similar Amendment

I must admit that it was rather late when I finished up my posting and I rushed through my description of the Dent motion to get the blog posted. Further I made the mistake of applying less than adequate analysis to words of a politician in a debate. Here is what Dent said

“When I offered a similar amendment [emphasis added] at the full committee, my friend, Ms. JACKSONLEE, and my friend, Mr. CUELLAR, both spoke in strong support stating, [‘]We want to make sure that it does not adversely affect the
workforce, which is something we all support.[’] That provision passed unanimously. That’s why I was angered when it was stripped out by the Rules Committee.” (CR, Nov 6, pg H12533)

‘Similar’ is a slippery word, particularly when used in a political debate. The amendment that Mr. Dent was referencing modified §2111(b)(1)(D) to read: “(D) would not significantly or demonstrably reduce the operations of the covered chemical facility or result in a reduction of the workforce of the covered chemical facility”.

The amendment was not ‘stripped out by the Rules Committee’; this implies that targeted action was taken against the amendment. This amendment was found in the Homeland Security Committee version of the bill. As I reported earlier the version of the bill reported out by the Rules Committee used the Energy and Commerce Committee version of the bill for the §2111 language. Chairmen Thompson and Waxman did not include the Dent language in modifications subsequently made to that section.

The Actual Motion to Recommit

The Dent amendment included in the motion to recommit actually read:

“(iv) would not significantly or demonstrably reduce the operations of the covered chemical facility or result in any net reduction in private sector employment when national unemployment is above 4 percent.”

This language appears to be very restrictive. As Anonymous pointed out there has not been less than 4% unemployment since the beginning of the previous administration. Add to that the language about resulting in “any net reduction in private sector employment” and you put the Secretary in a position of determining if a particular IST implementation would result in a large enough job reduction to result in a net reduction.

Anonymous feels that this “language would have gutted the IST provision”. I think that that may be a bit of political hyperbole. A ‘pro-business’ Secretary could arguably decide, as a matter of personal discretion, that any IST implementation would result in a net reduction to avoid imposing any IST implementation. An ‘environmentalist’ Secretary could just as arguably decide that there was no number of layoffs at a particular facility that would have a negative affect on the net level of private sector employment to justify requiring a wide swath of IST implementations.

Leaving such a wide level of discretion, based on a vague standard that has nothing to do with the underlying regulation, makes for very poor law. After this closer examination I have to admit that I agree with Chairman Thompson’s evaluation of this amendment that he voiced in the floor debate; I am opposed to this provision in “its present form”.

If his amendment had been a straight duplication of the one added in the Homeland Security Committee markup, I think that Dent’s motion to recommit would have been readily accepted by the Democratic Leadership, if for no other reason that it would have shown that the debate was being handled in a ‘bipartisan’ manner.

Thanks to Anonymous for making me look at this matter in more detail.

HR 2868 Passed in House on Friday

Most readers of this blog are certainly aware of the fact that HR 2868 passed in the House on Friday afternoon. There have been a number of news articles and blogs written about the fact of passage. Some have cheered about the results and others have jeered. The bill will be officially delivered to the Senate on Monday and everyone interested in the bill will turn their attention to that body in the coming weeks and months ahead.

Before I start my coverage of the Senate’s efforts on this bill, I want to take one last look at some of the political oddities that occurred on the floor of the House Friday afternoon as the Committee of the Whole House dealt with the 10 amendments that the Rules Committee included in the rule for the debate.

In an earlier blog I mentioned that I noted that a “shoe-in for passage on the floor is the amendment submitted by Chairman Thompson. This will make ‘a number of technical corrections and fixes typos and verbiage issues’. These almost always pass.” I almost mentioned that they typically pass on voice votes.

Manager’s Amendment

At the start of this debate I was having problems with my CSPAN link so I was following the summary of the debate on the House Clerk’s website. When I saw that a voice vote was requested on this amendment I assume that it was a delaying tactic, which presaged a long afternoon. It wasn’t until this morning when I read a copy of the debate in the Congressional Record that I understood what was going on.

Now the first thing that you need to understand is that the ‘Manager’s Amendment’, which this was, is almost always an amendment that corrects grammatical errors, technical mistakes, and the like. It is done to make a piece of legislation more professional and to remove errors that might make interpretation difficult at a later date. Substantive changes are not normally made to avoid problems in passing the legitimate changes to the bill.

It is because of this that I did not closely read the Thompson Amendment, I wish I had. On page 4 (for Title 1), page 7 (for Title 2), and page 10 (for Title 3), the amendment makes a major change to the rules for protecting information about the security plans for plants. Making a policy change in the manager’s amendment is offensive enough, but the wording of these changes makes it appear that the disclosure of security information by a third party is excluded from the information protection rules of the legislation.

Here is what Mr. Barton (R, TX) said when he made the unusual move to rise in objection to the Manager’s Amendment:

“So what we are doing here, Mr. Chairman, is saying, as the distinguished chairman said, we don’t want to try to give the Department of Homeland Security the ability to prevent information that has already been publicly disclosed by somebody we regulate as part of the site security plan. But then they are creating this new loophole, that if a group that is not controlled by Homeland Security somehow gets information, they can publish it. They can put it on their Web site, and they’re not liable.” (Congressional Record, pg H12517).

It is no wonder that the vote on this amendment followed straight party lines, Democrats supporting their leadership and Republicans in opposition. It was the only vote in the process that split perfectly along party lines.

The Republican Amendments

As I noted in my earlier blog about the amendments I noted that four of the Republican amendments had no chance of passing, any more than they had in both the Homeland Security Committee and the Energy and Commerce Committee markup hearings. In committee the vote was a strict party line vote. The votes here were slightly less one sided.

The Barton Amendment, changing the pre-emption language in the legislation, fell the furthest from the party line. Eighteen Democrats voted ‘Aye’ in support and twenty-two Republicans voted against the amendment. The two Dent amendments, one providing for a straight extension of the §550 CFATS authority and the other striking the IST provision, garnered 17 and 22 Democratic votes respectively while loosing no Republican votes. The McCaul Amendment striking the citizen enforcement provisions garnered the support of 28 Democrats while loosing the support of one Republican.

Bipartisan Amendments

As I predicted, the Flake Amendment was the single Republican Amendment that passed. But even I was surprised that it passed without opposition. No one spoke against the amendment and Mr. Pascrell (D, NJ) even spoke in favor of the amendment. It was one in a series of amendments that passed on voice votes without spoken opposition.

I had predicted that the remaining four Democratic amendments would pass, but I was surprised that the Republicans did not even object to the amendments in their allocated 5 minutes of debate. Instead they used their support of the amendments as a platform for discussing what they felt were the shortcomings of the over-riding bills. In any case, the discussion and vote gave the appearance that there was genuine bi-partisan support for the amendments. That alone was worthwhile in this contentious legislative year.

Recommit with Instructions to Amend

After the final vote on the bill there was one parliamentary hurdle left; the motion to recommit to committee. In this case Mr. Dent (R, PA) took what appeared to be an easy pass at that requirement. His motion to recommit was within instructions to return the legislation to the Homeland Security Committee with instructions to return the bill ‘forthwith’ with a minor amendment. In this case, the amendment was one that was unanimously approved in the Energy and Commerce Committee. It required the Secretary to take into account job loss in determining whether to require implementation of an IST method.

The motion to recommit failed with 19 Democrats joining the Republicans in support of the motion; one Republican joined the majority in opposing the motion. The final vote was 189 to 236. HR 2868, the Chemical and Water Facility Security Act of 2009 passed in the House. Next week it will be delivered to the Senate.