Clerical Error – AN Safe

The Royal Canadian Mounted Police (RCMP) announced Wednesday afternoon that the two missing one-tonne (metric ton) bags of ammonium nitrate reported to be missing last December are not really missing. According to an article on BCLocalNews.com, an RCMP spokesman said that their investigation concluded that the “most reasonable explanation for the discrepancy is administrative error”. Kinder Morgan, the distributor handling the material, reported the bags as missing on December 31st. Their own internal investigation pointed to a clerical error and they reported that to the RCMP on January 6th. But, with the Winter Olympics opening later this week, and ammonium nitrate being a well known component for improvised explosive devices, the RCMP was taking no chances. According to the article:

“The investigating team, which included the Integrated National Security Enforcement Team (E-INSET), members of the Vancouver 2010 Joint Intelligence Group, Public Works Canada forensic accountants and Natural Resources Canada, conducted more than 200 interviews of drivers and others involved in transporting the material.”

Loss of Product In their advanced notice of proposed rule making (ANPRM) for the ammonium nitrate security program, DHS indicated that they intended to include in the final regulation a requirement to report the loss, theft or diversion of ammonium nitrate. While theft and diversion are relatively easy to define, the problem of loss is much more complicated as this Canadian incident shows. When inventorying discrete items, most people would expect it to be a relatively simple matter of counting the items. Of course, in the real world things are always more complicated. With a large number of items stored in multiple locations it is relatively easy to have counting errors. This is usually dealt with by having multiple counting teams conducting independent counts. Discrepancies are resolved by recounts until both counting teams come up with the same number. Things get more complicated when there are shipping and receiving operations going on during the count. This is why every organization establishes acceptable levels of inventory discrepancies; inventory inconsistencies below the acceptable level are not investigated. Things are much more difficult with frangible inventory items. Chemicals used in manufacturing, for example, are typically removed from inventory by weight not by container count. Process designers will frequently attempt to size production runs to consume full containers (or multiples of full containers). If, however, there are multiple chemicals going into a product (usually the case) it is practically impossible to size the process to consume full containers of all the chemicals involved. This means that every time the process is run, there will be containers of partially consumed chemicals left in inventory; typically called ‘piece containers’. Organizations with strong inventory control procedures will require that each piece container is re-marked with the current weight of the contents of the container. This is typically determined by taking the initial net weight and subtracting the amount consumed. Unfortunately, all industrial weighments will be close approximations rather than exact amounts. Scale accuracy and operational procedures will affect just how accurately those weighments will be made. An acceptable variation of 1% is not unusual in most of the chemical manufacturing industry. Now a 1% acceptable variation does not seem to be much to worry about. With a drum containing 450 lbs of a chemical that is only 4.5 lbs. Of course, 4.5 lbs of an explosive can be quite devastating; remember the Underwear Bomber only had a few ounces of PETN explosives and intended on bringing down an aircraft with it. For an 80,000 pound rail car load that could be 800 lbs of allowable variation; about half of the amount of ammonium nitrate used in the attack on the Murrah Building in Oklahoma City. Now ammonium nitrate is an industrial chemical, but most of it sold in the United States is sold as fertilizer. Most of it is sold in bulk as a dry powder. At manufacturer’s facilities it is loaded using conveyor belts onto trucks, railcars and barges. I’m not aware of what the fertilizer industry standards are for that type loading, but I would suspect that it would be more than 1%. At all but the largest distributors, the material is transferred into trucks by frontend loaders; 1% weighment variations in those types of operations would be all but impossibly tight. Reportable Loss So, how do you determine what level of ‘loss’ needs to be reported? In the Canadian incident they reported an apparent loss of 0.033%; most companies would consider that an allowable and unremarkable inventory error. And, in fact, that is what the RCMP concluded. Will DHS have the manpower, time and money to conduct a similar investigation for every inventory discrepancy of even 1%? Don’t answer too quick to answer; the 0.033% discrepancy of 6,000 metric tons of ammonium nitrate, if it had been real, it would have made significantly more than 4,800 lbs of improvised explosive device. That would be a very big, a very loud, and a very deadly explosion.

DHS Chemical Security Agenda

As I noted in Monday’s blog, there wasn’t anything in the DHS Fall Regulatory Agenda printed in the Federal Register that dealt with chemical security issues and the OMB list published on Monday only included two items. That list expands significantly if you go to the www.RegInfo.gov web site and visit the Current Regulatory Plan page. There you can look at all ten pages worth of the rules currently under consideration at DHS. Parsing through that list you’ll find six rules that will be of interest to the chemical security community. Those rules are:

Secure Handling of Ammonium Nitrate Program, RIN 1601-AA52; Transportation Worker Identification Credential (TWIC), Card Reader Requirements, RIN 1625-AB21; Freight Railroads--Security Training of Employees, RIN 1652-AA57; Protection of Sensitive Security Information (SSI), RIN 1652-AA08; Freight Railroads--Vulnerability Assessment and Security Plan, RIN 1652-AA58; and Reporting of Security Issues, RIN 1652-AA66.

All of these rules, except the last one, were addressed in the previous Regulatory Agenda; all with projected action dates before 12-01-09. Only the final rule has had any concrete action taken on it since the previous agenda was published in May. Interestingly the railroad vulnerability assessment and security plan rule was previously included in the Administration’s Regulatory Plan; it has now apparently been removed from that plan. Added Review Requirements For those rules that are part of the Regulatory Plan (of these six rules, only the ammonium nitrate and security training rules are included) the Obama Administration has added some administrative requirements for internal documentation supporting the proposed rules. The responsible agencies had to supply the information for the following new fields in the RIN listings for the Current Regulatory Plan:

Overall Description of Deadline; Statement of Need; Summary of the Legal Basis; Anticipated Costs and Benefits; Alternatives; and Risks.

Two of these fields, description of deadline and legal basis, are really just restatements of already existing fields in the RIN file. But they were added by the Obama Administration as part of their effort to make regulatory jargon understandable to the general public. For example the legal authority for the security training rule (49 USC 114; PL 110-53, sec 1517) becomes “49 U.S.C. 114; section 1517 of Public Law 110-53, Implementing Recommendations of the 9/11 Commission Act of 2007 (Aug. 3, 2007; 121 Stat. 266)”. The remaining four fields are an attempt to document the needs that are being addressed, the cost benefit analysis supporting the regulatory scheme, the alternative methodologies that were examined during the development process and the risks that were addressed or avoided in the regulatory process. One would like to thing that these areas were being addressed all along, but now there will be some documentation supporting that assumption. There is an interesting disparity in the thoroughness with which these two agencies (NPPD and TSA) within DHS are addressing this documentation requirement. While neither agency has yet apparently completed an economic analysis, the two agencies take completely different tacks when addressing the ‘Anticipated Costs and Benefits’ documentation. TSA simply notes that an ‘economic analysis is under development’. NPPD, on the other hand, defines what classes of people will likely bear the costs, what categories of costs might be expected to be incurred and even note that the benefits will be hard to quantify because it will be “difficult to identify the particular risk reduction associated with the implementation of this rule”. More Regulatory Delays With the exception of the reporting security issues rule, all of these rules have been delayed since the publication of the May agenda. The new expected action dates for the rules are:

Secure Handling of Ammonium Nitrate Program, NPRM, 04/2010; Transportation Worker Identification Credential (TWIC), Card Reader Requirements, NPRM, TBD; Freight Railroads--Security Training of Employees, NPRM, 04/2010; Protection of Sensitive Security Information (SSI), next action TBD; Freight Railroads--Vulnerability Assessment and Security Plan, NPRM, TBD; and Reporting of Security Issues, to be determined.

Neither the DHS Fall Regulatory Agenda nor the OMB Fall Regulatory Agenda provides any explanation of the newly extended action dates; so much for regulatory transparency. Industry does pay attention to the progress of these rules because they will have an impact on the operations of covered industries. Failure to keep industry appraised of the reasons for delays in the regulatory process makes it harder for potentially affected industries to plan their future operations. On the ammonium nitrate regulation I understand that DHS originally intended to have the final rule in place by next year’s fertilizer application season. That is obviously not going to happen. I hope that the Department has been proactive in communicating this delay to the agricultural sector. Some fertilizer distributors have been concerned about ordering ammonium nitrate for next season without knowing what regulations might be put into place. They fear that the regulations described in the ANPRM will adversely affect their ammonium nitrate sales and don’t want to be stuck with un-sellable inventory. With the exception of the TSA security reporting rule, these potential regulations have been hanging over the heads of a wide range of industries for a number of years. Congressionally mandated deadlines have been routinely ignored. This can no longer be blamed on a Republican administration dragging its heels putting into place rules mandated by a Democratic Congress. One final comment on delays, I find it hard to explain why TSA is unable to set a date for the publication of the final rule for reporting security issues. The NPRM was fairly simple, requiring very little action on the part of industry. The comment period did just close on October 26th, but there were only two fairly brief comments posted to the www.Regulations.gov web site. I can see little justification for not having a final rule in place before May.

Ammonium Nitrate Regulations

A recent article on the ABCNews.go.com web site reported on an unusual bipartisan security concern being voiced by the House Homeland Security Committee. Both Chairman Thompson and Ranking Member King were complaining about the lack of progress being made on establishing regulations to control the sale and transfer of ammonium nitrate, a prime raw material for historically significant improvised explosive devices. Congress added special provisions to the DHS FY 2008 appropriations bill authorizing the Secretary to develop regulations controlling the sale and transfer of this very common IED precursor chemical. As I noted almost two years ago §563 required DHS to publish a final rule on ammonium nitrate by 12-26-08, but DHS was only able get the comment period of their Advanced Notice of Proposed Rule Making (ANPRM) done by that date. In another blog late last year I laid out a wide variety of other requirements that had gotten in the way of the ability of DHS to take timely action on the preparation of that ANPRM. Since that time, the ISCD has had to continue working on the ammonium nitrate regulations while they were expending a great deal of time producing the final version of the Risk Based Performance Standards Guidance document, two SVA manuals and the SVA CSAT tool. All the while they were also executing a number of public outreach programs to explain the CFATS regulations and the Site Security Plan implementation schedule while dealing with numerous requests for compliance assistance visits. I did a series of blogs late last year (11-07-08, 12-05-08, 12-12-08, 12-19-08, 12-26-08, 01-09-09, and 01-30-09) on the comments received about the ANPRM. The comments expressed the expected concerns about regulation stifling the legitimate use of ammonium nitrate, but they also raised a number of important issues that would need to be addressed in the eventual regulations. As I pointed out on a number of occasions, DHS would have its work cut out for it dealing with the issues that Congress never envisioned when they required the regulations to be developed. DHS has been working closely with the potentially regulated community to insure that while the regulations restrict the access of potential terrorists to this potent IED precursor, it does not unduly restrict the legitimate end users of ammonium nitrate fertilizers, commercial explosives and other minor uses. Since DHS hopes to have the final regulations in place before the next fertilizer application season next spring, it is important to get the bugs worked out in advance. According to the ABC web article, DHS has essentially completed the draft of the Notice of Proposed Rule Making (NPRM), the next stage in the regulatory development process. As soon as the internal review is completed by the Obama Administration, the NPRM will be published in the Federal Register. Obviously, I will report on that as soon as I see it.