Monday, March 8, 2010

IST Questions – Inventory Management

This is the third blog posting of a series looking at how DHS might construct an Inherently Safer Technology Assessment Tool (ISTAT) for the Chemical Security Assessment Tool if Congress were to include a requirement for conducting an IST assessment as part of their legislation to make the CFATS program permanent. The other postings in the series were:

An IST Tool for CSAT
Reader Email – 03-04-10 IST Rules

In the initial posting in this series we established that there would be three different types of IST methods that would be included in the required assessment. In this posting we will look at the ISTAC questions for Inventory Management Assessment. As I mentioned in the initial blog, DHS would provide the facility with a maximum inventory level that would allow for a one level reduction in Tier ranking (Tier Reduction Maximum Inventory – TRMI) and a maximum inventory that would allow for removal from the list of high-risk chemical facilities that are covered under CFATS (Non-Regulated Maximum Inventory – NRMI). Both inventory levels would be based upon data supplied during the facility’s Top Screen and SVA submissions.

Produced or Received 

The first questions will establish whether or not the Release-Toxic Chemical of Interest (RTCOI) is being received from an off-site location or if it is manufactured on-site. For materials that are being received from off-site there would be a number of questions that establish both the current shipment method (pipeline, railcar, truck, and less-than-truck load shipments) and the available alternatives.

Questions would address the changes in cost/UOM for the different shipment mode. There would also be a question for each mode about the maximum and minimum shipment sizes and their relationship to both the TRMI and NRMI. For materials that are being manufactured on-site the initial questions would identify if it is manufactured in a batch process, semi-batch process, or continuous.

For batch and semi-batch processes the minimum and maximum batch sizes would be established and the cost/UOM for each size batch. If the range between min and max included either (or both) the TRMI or NRMI, the cost/UOM of a batch size just below each level would be identified. For materials manufactured under a continuous process questions would address the current average amount produced between start-up and shut-down of the manufacturing process. The minimum amount that could be produced between start-up and shut-down would also be identified. The cost/UOM for both types of production runs would be identified. If that range between the min and current production runs included either the TRMI or NRMI, the cost/UOM for a production run before those limits would also be identified.

Raw Material or Product 

The next question will address the issue of if the RTCOI is used on-site to manufacture another material or if it is produced/stored on site for sale. This will be determined through asking two separate questions (because it could fall into both categories). For materials that are shipped directly to customers the questions will be used to identify the size of typical shipments to customers as well as the order patterns for those customers. Specific questions will address the need to have inventory on-hand versus the ability to manufacture for orders.

For RTCOI that are used to make other products there will be similar questions about that manufacturing process to those asked about the manufacture of RTCOI; batch vs continuous manufacture and size of production runs. Again, questions will be asked about the cost of modifying the size of the production process to reduce the amount of RTCOI below the TRMI and NRMI.

Dispersed Storage

One way of reducing the risk of a release of an RTCOI is to reduce the amount of material in any singe container and separating the containers to make it unlikely that a successful terrorist attack could successfully breach more than one container or storage tank. Using the area of highest quantity (AHQ) concept developed in the CSAT Top Screen, the questions will look at the costs associated with putting the RTCOI into multiple storage tanks that are smaller than the TRMI or NRMI for that facility while keeping the tanks more than 170 feet apart (this reduces the chance that a single VBIED can take out more than one tank).

These questions will address engineering estimates for the costs of these installations. As with any preliminary estimates they will include known costs (list cost of storage tanks) plus a standard engineering markup to cover installation costs. DHS would have to establish a standard method for determining that markup.

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