Last week Secretary Chertoff gave a speech at the Brookings Institute. He talked about the nation’s infrastructure and the Department’s accomplishments in protecting that infrastructure. He used the CFATS regulations as an example of how a modern, cooperative regulatory approach could use corporate self-interest to achieve a societal goal of minimizing the threat of terrorist attack.
Chemical Facilities as Terrorist Targets
After the 9/11 terrorist attacks it did not take a great mind to see that there were a large number of chemical facilities in the United States that could be attractive targets for a terrorist attack. A successful attack on any of these facilities would be the moral and physical equivalent of releasing an enormous chemical weapon in a heavily populated area. The question was what to do about the problem.
The Secretary noted that:
- “We knew we needed a sensible solution, but we also knew that the option of simply sending boots on the ground to guard every single chemical plant or imposing billions of dollars of costs based on what bureaucrats in Washington believe is the best way to guard each individual plant ‑‑ we realized that that approach would be prohibitively expensive. It would probably seriously damage the very industry we're trying to protect. And it probably wouldn't do a very good job of reducing vulnerabilities.”
Industry – Government Partnership
The chemical industry has a rational self-interest in protecting their facilities from terrorist attack, but that is not sufficient. The chemical industry does not have adequate intelligence capabilities to determine and track the scope of the threat. Individual chemical facilities do not have the data to necessary to quantify their risk relative to other facilities. Finally chemical facilities are prohibited by law from cooperatively establishing security standards that would ensure that the added costs of security would not upset the balance of competitive forces in the market place.
The government, at all levels, has a responsibility to protect its citizens from foreign attack. In this case the nature of the enemy and the dispersed locations and disparate nature of the potential target facilities make a traditional military style defense impossible. Furthermore, there is no way that any reasonably sized government agency would have the variety of engineering and chemical knowledge necessary to understand the technical details of each type facility necessary to mount an adequate defense.
Neither the government nor industry had all of the skills necessary to protect high-risk chemical facilities and their surrounding communities from a successful terrorist attack. What was needed was a working partnership between the government and industry. This is how Secretary Chertoff described the CFATS partnership:
- “This allowed them to decide the right way and the most cost-effective way to achieve the result. But it allowed us to set the standards that's (sic) required and the result that must in fact be reached. And that's what I mean by a partnership. We set the standards. We set the performance outcomes. But the actual implementation is carried out by the companies that know best.”
Classic Carrot and Stick Partnership
While most facilities understand their ‘rational self-interest’ in protecting their facility from terrorist attack, there will always be companies that are just too short sighted or are just plain crooked enough to not want to join into a partnership that will require them to expend money, time and effort that does not show an immediate, positive return to their profits. As the Secretary pointed out:
- “I'm not naive about the fact that there are always a few companies that somehow either don't appreciate their rational self-interest in meeting these standards, or companies that may feel that if everybody else does the right thing they can kind of hide in the tall grass and may get away on the cheap without doing what they need to do to protect their own assets and to protect the surrounding community. So we did put a little bit of a stick into these regulations.”
The CFATS regulations provide for inspections and audits to ensure that facilities are meeting the risk-based performance-standards required for their tier in the rankings of high-risk chemical facilities. Repeated failure to perform to the standards can result in fines of up to $25,000 per day. The Secretary has even been authorized to order facilities closed if other measures to ensure compliance fail.
CFATS as a Program Exemplar
The Secretary used the CFATS program as an example of how a modern, 21st Century public-private partnership can be used to promote security. Unfortunately the program could also be used as a less favorable example of many of the problems that beset other DHS programs.
Congressional support for DHS programs like CFATS is uneven at best. Nearly everyone agrees that regulations like CFATS are required, but too many special interests do not want those regulations applied to their facilities. DHS had to acquiesce to Congressional/agricultural pressure and both increase the STQ for propane and then ‘temporarily’ exempt farmers from CFATS coverage. Then politicians like Sen. Schumer (D, NY) complain that DHS has not regulated high-risk facilities like water treatment facilities; facilities exempted from regulation by the authorizing legislation.
There are some people in Congress that can be counted on to provide constructive if sometimes controversial support for DHS programs like CFATS. The House Homeland Security Committee has not only pushed for expansion of the CFATS program, but has worked hard to develop and pass legislation to support that expansion. Then the House leadership allows that same legislation to die of inattention in a committee less concerned about progress than in congressional jurisdictional conflicts; legislative jurisdictional conflicts that plague most homeland security programs.
Congress gave the Secretary six months to develop regulations to ensure adequate security at high-risk chemical facilities; just a few paragraphs tacked onto a spending bill to provide very limited Congressional guidance to solve a very complex problem. Then it limited that authority to only three years. DHS completed the regulations within that limit, but at the cost of having to develop the necessary supporting programs along the way. The political infighting that should have been completed in the legislative process has slowed the progress of implementing the regulations. And it is seeming increasingly more likely that the lack of Congressional commitment will allow the program to die before it can be completely implemented.
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