[Senate Hearing 106-160]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 106-160


 
               WILL Y2K AND CHEMICALS BE A VOLATILE MIX?

=======================================================================

                             FIELD HEARING

                               before the

                        SPECIAL COMMITTEE ON THE
                      YEAR 2000 TECHNOLOGY PROBLEM
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                                   on

           Y2K PROBLEMS AS THEY IMPACT THE CHEMICAL INDUSTRY

                               __________

                              MAY 10, 1999

                              TRENTON, NJ

                               __________

                  Printed for the use of the Committee

                               

 Available via the World Wide Web: http://www.access.gpo.gov/congress/senate
                                 --------

                      U.S. GOVERNMENT PRINTING OFFICE
 56-950 CC                   WASHINGTON : 1999
_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing Office
                          Washington, DC 20402


                        SPECIAL COMMITTEE ON THE
                      YEAR 2000 TECHNOLOGY PROBLEM

         [Created by S. Res. 208, 105th Cong., 2d Sess. (1998)]

                   ROBERT F. BENNETT, Utah, Chairman

JON KYL, Arizona                     CHRISTOPHER J. DODD, Connecticut,
GORDON SMITH, Oregon                   Vice Chairman
SUSAN M. COLLINS, Maine              JOHN EDWARDS, North Carolina
TED STEVENS, Alaska, Ex Officio      DANIEL PATRICK MOYNIHAN, New York
                                     ROBERT C. BYRD, West Virginia, Ex 
                                     Officio

                    Robert Cresanti, Staff Director
              T.M. (Wilke) Green, Minority Staff Director

                                  (ii)


                            C O N T E N T S

                                 ------                                

                     STATEMENT BY COMMITTEE MEMBERS

Robert F. Bennett, a U.S. Senator from Utah, Chairman, Special 
  Committee on the Year 2000 Technology Problem..................     1

                    CHRONOLOGICAL ORDER OF WITNESSES

Gerald Poje, Board Member, Chemical Safety and Hazard 
  Investigation Board............................................     4
Francis J. Frodyma, Deputy Director, Policy Directorate, 
  Occupational Safety and Health Administration..................     6
Paul Couvillion, Global Director, DuPont Year 2000 Project.......     9
Jamie Schleck, Executive Vice President, Jame Fine Chemical......    11
Charlie B. Martin, Jr., Site Safety Director, Hickson Danchem 
  Corporation....................................................    20
James L. Makris, Director, Chemical Emergency Preparedness and 
  Prevention Office, Office of Solid Waste and Emergency 
  Response, Environmental Protection Agency......................    22
Paula R. Littles, Legislative Director, Paper, Allied-Industrial, 
  Chemical and Energy Workers International Union................    25
Lt. Colonel Michael Fedorko, Acting Superintendent, New Jersey 
  State Police...................................................    27
Jane Nogaki, Board Member, New Jersey Work Environment Council 
  and Pesticide Program Coordinator, New Jersey Environmental 
  Federation.....................................................    28

              ALPHABETICAL LISTING AND MATERIAL SUBMITTED

Bennett, Hon. Robert F.:
    Opening statement............................................     1
    Prepared statement...........................................    35
Couvillion, Paul:
    Statement....................................................     9
    Prepared statement...........................................    36
Fedorko, Lt. Col. Michael A.:
    Statement....................................................    27
    Responses to questions submitted by Chairman Bennett.........    38
Frodyma, Francis J.:
    Statement....................................................     6
    Responses to questions submitted by Chairman Bennett.........    76
Littles, Paula R.:
    Statement....................................................    25
    Prepared statement...........................................    78
    Responses to questions submitted by Chairman Bennett.........    79
Makris, James L.:
    Statement....................................................    22
    Prepared statement...........................................    80
    Responses to questions submitted by Chairman Bennett.........    85
Martin Jr., Charlie B.:
    Statement....................................................    20
    Prepared statement...........................................    88
    Responses to questions submitted by Chairman Bennett.........    90
Nogaki, Jane:
    Statement....................................................    28
    Prepared statement...........................................    92
    Responses to questions submitted by Chairman Bennett.........    94
Poje, Gerald V.:
    Statement....................................................     4
    Prepared statement...........................................    96
    Responses to questions submitted by Chairman Bennett.........   111
Schleck, Jamie:
    Statement....................................................    11
    Prepared statement...........................................   116

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

The American Crop Protection Association.........................   120
Prepared Statement of the Chemical Manufacturers Association.....   127
Prepared Statement of the Chlorine Institute, Inc................   131
Prepared Statement of Audrey R. Gotsch, DrPH.....................   134
Overview of Responsible Care...........................   135
Prepared Statement of Geary W. Sikich............................   138



               WILL Y2K AND CHEMICALS BE A VOLATILE MIX?

                              ----------                              


                          MONDAY, MAY 10, 1999

                               U.S. Senate,
                 Special Committee on the Year 2000
                                        Technology Problem,
                                                       Trenton, NJ.
    The committee met, pursuant to notice, at 12 noon, in 
Committee room 11, Fourth floor, Statehouse Annex, 125 West 
State Street, Trenton, New Jersey, Hon. Robert F. Bennett 
(chairman of the committee), presiding.
    Present: Senator Bennett.

  OPENING STATEMENT OF HON. ROBERT F. BENNETT, A U.S. SENATOR 
    FROM UTAH, CHAIRMAN, SPECIAL COMMITTEE ON THE YEAR 2000 
                       TECHNOLOGY PROBLEM

    Chairman Bennett. Good afternoon. The committee will come 
to order.
    My name is Robert Bennett. I am the chairman of the Special 
Senate Committee on the Year 2000 Technology Problem, and I am 
grateful to the State of New Jersey for making these facilities 
available to us, to allow us to hold this field hearing on Y2K 
problems as they impact the chemical industry.
    I apologize for our late start from our earlier advertised 
time. Even though Y2K has not struck yet, the planes were still 
late coming out of Washington, and delayed the schedule on that 
basis.
    Also, we had invited, and expected, Senator Lautenberg to 
come. He is not a member of the committee, but he had expressed 
an interest in being here, and we are always delighted to have 
him join us. We are told that there is a funeral that he has to 
attend, a death of someone close to him that has changed his 
schedule, and we extend our condolences to him and of course 
excuse him from being here. That means you are going to have to 
put up with me alone for the balance of the afternoon, along 
with of course the witnesses.
    We are pleased to hold the hearing in New Jersey, not only 
because of the importance of the industry to New Jersey but 
because it is nice to get out of Washington every once in a 
while and hear from people who are in the real world instead of 
who are in the somewhat hothouse atmosphere inside the beltway.
    Now I have just come from a tour of Sybron Chemicals in 
Birmingham, and I was impressed with what I found there. They 
have taken the Y2K problem very seriously in terms of effort 
and money. The two of course always go together. And I hope 
that most of the chemical plants in America are as far along as 
they are. They gave me some insights into some of the 
challenges that they had, and that is again one of the reasons 
we hold these hearings outside of Washington when we can, 
because we can always tie them to a visit to actual facilities, 
instead of just having people describe them to us.
    Today we have an excellent group of witnesses who have 
taken time out from their busy schedules to help shed light on 
the Y2K problem. We will have two panels, and I am grateful to 
all of the witnesses.
    Before we begin with the witnesses, let me talk briefly 
about the importance of the chemical industry to America and of 
its place with respect to this problem. Chemicals, almost like 
computers, seem to be everywhere. The crude oil refining 
industry keeps America's transportation running, and it is 
dependent on chemicals. Our health, sometimes our lives, are 
dependent on pharmaceuticals that go back to the chemical 
industry.
    The manufacturer of virtually every consumer product in one 
way or another is dependent on chemical ingredients, and we put 
up this chart in the form of a home that demonstrates that. 
Chemical products are present in the chart from everything from 
shampoo to floor polish and almost everything in between.
    Now, on the economic side, the $392 billion chemical 
industry is the largest industry in the manufacturing sector. 
Manufacturing has been overtaken by the service sector, but 
still in the manufacturing sector of our economy the chemical 
industry is the largest one. It employs over a million workers. 
It is our largest exporter, accounting for $69.5 billion or 10 
percent of the exports in 1997, which easily outdistances the 
second largest industry in exporting, which is agriculture. It 
generates a trade surplus on the average of more than $16 
billion annually over the last 10 years. So it is not only 
everywhere in our lives, it is a very significant part of our 
economic structure as well.
    The chemical industry has set very high standards for 
safety. We take it for granted with respect to this industry. 
They handle highly toxic and dangerous materials every day and 
have turned safety into a routine experience rather than the 
exception. This is an industry that is already accustomed to 
dealing with risks, and that is the good news with respect to 
the Y2K problem because it is a problem that raises the 
possibility of risks.
    But the reason we focus on it is because if there is an 
accident in this industry, it can have potentially devastating 
effects. Even though it happened over 15 years ago, and 
fortunately for us, in another country, most of us remember the 
Bhopal accident that killed several thousand people and injured 
tens of thousands of others.
    We have never seen a chemical release of that size in the 
United States, we hope we never will, but the potential is 
always there. Something like Y2K that could trigger a failure 
in a plant is a logical reason for us to step back and take a 
look at it. An estimated 85 million Americans, which is roughly 
30 percent of the population, live within five miles of one of 
the 66,000 sites that handle hazardous chemicals, so that is 
another reason why we need to look at this very closely.
    In addition to safe onsite operations, chemical processing 
plants must prepare to deal with external services which might 
be Y2K vulnerable. Let me give you an example. On November 24, 
1998, a power outage caused the shutdown of a plant in 
Washington, a refinery in Washington. As the refinery was 
returned to operation after a cool-down period, an accident 
occurred that took the lives of six workers.
    Now, the power outage may not have directly caused the 
accident, but it caused the condition that put the workers into 
a harmful situation. It created the circumstances that put six 
men into danger and ultimately cost them their lives. This, in 
a way, is reminisent of what happened at Chernobyl. People 
always raise the Chernobyl example as one of their fears with 
Y2K.
    It is interesting to note that the release of nuclear 
material into the atmosphere at Chernobyl was not caused 
directly by the shutdown or failure of the plant. It was human 
error that occurred as they were trying to deal with the 
failure of the plant. And that is, again, a paradigm of what 
might happen here. If we have a shutdown because of Y2K, the 
difficulty of bringing the plant back might then trigger an 
accident which the shutdown itself did not.
    I am told, I didn't know this before, that the two most 
dangerous times and accident prone-times in a chemical plant 
are when it is shutting down and starting up; sort of like an 
airplane, the two most dangerous times are when it is taking 
off and landing.
    So the industry must prepare itself for some unexpected Y2K 
shutdowns and be very careful about the safety connected, also, 
with starting up. An industry with many harmful and toxic 
substances gives us one where there is very little room for 
error.
    Now, as we do in these hearings, because the committee has 
no ability to pass a law stating that there will be no 
problems, or pass a law stating that the arrival of the Year 
2000 will be delayed for 6 months while we get ready for it, 
one of the things we have done historically in the committee is 
to focus on the regulators who have access in the industry and 
have some degree of influence.
    I knew that we were getting somewhere when my son-in-law, 
who works for a bank, came to me and said, ``I don't know what 
has happened, but the bank examiners from the Federal Reserve 
Board now have only one thing on their minds, and that is Y2K. 
They have turned it into the top priority in the bank.'' And 
since we had had the Federal Reserve Board before our committee 
and talked to them about Y2K, I quietly took a little credit 
for that and said maybe, for one of the few times in 
government, something that we are doing is having an impact.
    And that is one of the things we will be doing here today, 
also, not only finding out about where the industry is but 
talking to the regulators, and both stimulating them to help 
solve the problem and giving them an opportunity to inform the 
public as to what they have been doing and where we are. That 
kind of information is very important.
    You can get on the Internet and find web sites that will 
tell you Y2K is going to lead to TEOTWAWKI. ``TEOTWAWKI'' for 
those who have not been on the Internet, is maybe the world's 
longest acronym, and it stands for ``the end of the world as we 
know it.'' I don't think it will be TEOTWAWKI, but it is still 
something we need to focus on, and we can prevent panic by 
getting out accurate information. This hearing will give us the 
opportunity to do that.
    So with those preliminary remarks, we will now introduce 
the members of our first panel, some of whom have already 
testified before the committee and are familiar with what we 
do. We will hear from the Honorable Dr. Jerry Poje, who is a 
member of the U.S. Chemical Safety and Hazards Investigation 
Board. He is principal author of the March 1999 report on this 
subject, which first got this committee stimulated to pay 
attention to chemicals.
    He will be followed by Mr. Francis Frodyma, the acting 
director of Policy at the Occupational Safety and Health 
Administration. Then we will hear from Mr. Paul Couvillon, who 
is global director for DuPont's Year 2000 Project, and Mr. 
Jamie Schleck, executive vice president of Jame Fine Chemicals, 
a specialty chemical manufacturer here in New Jersey. I see one 
more at the table, and I am not sure exactly who you are, sir.
    Mr. Cohn. My name is Don Cohn. I am legal counsel for 
DuPont.
    Chairman Bennett. OK, so you are here to make sure that Mr. 
Couvillon doesn't say something that will cause him to go to 
jail, or DuPont to be sued.
    Mr. Cohn. Yes.
    Chairman Bennett. To go back to another hearing, you are 
not a potted plant. Very good.
    Dr. Poje, again, we thank you for your leadership in this 
area, and appreciate your help and appreciate your testimony. 
Let me give you one word on logistics here.
    We have asked each of the witnesses to limit his testimony 
to 5 minutes. We have received much more extensive statements 
from them in writing, which will be part of the record of the 
hearing.
    And we have this device to tell us when the 5 minutes are 
up. Unlike the one we use in the Senate, that has an amber 
light that can tell you when 4 minutes are up, this one is 
either red or green. No nonsense here in New Jersey, you are 
either up or you are down. But what we will do, we will turn 
the red light on after 4 minutes, as if it were the amber 
light, so you do get some kind of a warning and you don't have 
to cutoff in mid-sentence.
    We don't usually do that in the Senate. That is left up to 
the Supreme Court, where a lawyer once asked the Chief Justice, 
``May I finish my sentence?'' and he said, ``If it's a short 
one.'' We won't be quite that dramatic, but we would appreciate 
your paying attention to the time limits so that will give us 
time for more interaction within the panel and more questions 
and other comments.
    So with those ground rules, Dr. Poje, again we are grateful 
for your being here and look forward to your testimony.

  STATEMENT OF GERALD POJE, BOARD MEMBER, CHEMICAL SAFETY AND 
                   HAZARD INVESTIGATION BOARD

    Mr. Poje. Good afternoon, Mr. Chairman. I am Gerald V. 
Poje, member of the U.S. Chemical Safety and Hazard 
Investigation Board, a position nominated by the President and 
confirmed by the Senate.
    I oversee the Board's efforts on reducing risk of accidents 
associated with the Year 2000 computer problems. The Board and 
its members thank you for inviting us to testify regarding this 
critical issue.
    The Chemical Safety Board is an independent Federal agency 
with the mission of ensuring the safety of workers and the 
public by preventing or minimizing the effects of industrial 
and commercial chemical incidents. The CSB is a scientific 
investigatory organization responsible for finding ways to 
prevent or minimize the effects of chemical accidents at 
commercial or industrial facilities. The Board is not an 
enforcement or regulatory agency.
    Our Board views the Y2K issue within the larger 
evolutionary trend of expanding automation and information 
technologies in the chemical handling sectors. New technology 
will continue to pentrate the work place, affecting management, 
workers, equipment, and interrelationships with suppliers, 
customers, regulators, and the surrounding community.
    Chairman Bennett. His mike is on, so OK, go ahead.
    Mr. Poje. How our Nation and businesses manage the Y2K 
problem will provide important lessons for other new technology 
issues. If Y2K failures become sufficiently apparent in 1999 to 
2000, policymakers will likely need to consider three major 
issues:
    First, the absence of adequate data reqarding Y2K 
compliance, despite widespread recognition of the problems, 
deadlines for compliance, and consequences; second, inadequate 
application of established principles for managing process 
safety in facilities, particularly as it relates to automation 
and information technologies; and, third, gaps in process 
safety training, technical assistance, and research, 
particularly as it applies to small and mid-size facilities and 
those in low-income and minority communities.
    The problem before this committee is urgent and 
significant. As you already pointed out, there are some 
projections of risk to the U.S. population. Even this 
projection from EPA may underestimate the full risk to the U.S. 
population.
    Late last year your committee asked the Chemical Safety 
Board to investigate the issues of chemical safety and the Year 
2000 computer technology problem, requesting that we evaluate 
the extent of the Y2K problem as it pertains to automation 
systems and embedded systems; the awareness of large, medium 
and small companies within the industry; their progress to date 
in addressing the Year 2000 problem; the impact of the Year 
2000 problem on EPA's risk management plans; and Federal agency 
roles in preventing disasters due to the Year 2000 problem.
    In December 1998 our Board convened an expert workshop on 
Y2K and chemical safety, involving leaders from industries, 
equipment vendors, insurance companies, regulatory agencies, 
research agencies, universities, labor organizations, 
environmental organizations, trade associations, professional 
engineering associations, and health and safety organizations. 
As a result, the Board considers the Y2K problem to be a 
significant problem in the chemical manufacturing and handling 
sector.
    Enterprises with sufficient awareness, leadership, 
planning, lead time, financial and human resources, are 
unlikely to experience catastrophic failures and business 
continuity problems unless their current progress is 
interrupted or there are massive failures of utilities. Many 
larger corporate entities fit this profile. The overall 
situation with small and mid-size enterprises is less 
determinate, but efforts on the Y2K problem appear to be less 
than appropriate, based upon inputs from many experts.
    While the impact of RMP should be positive, there are no 
special emphases or specific mention of Y2K technology hazards 
in either EPA or OSHA regulations. Compliance activities 
reported to the Safety Board to date have not found a single 
failure which, by itself, could cause catastrophic chemical 
accidents. However, it is unclear what the outcome might be 
from multiple failures, multiple control system failures, 
multiple utility failures, or a combination of both.
    Surveillance of the industrial sector that handles 
hazardous chemicals is insufficient to draw detailed 
conclusions regarding the totality of the sector's Y2K 
compliance efforts.
    Special workshop attendees reached consensus on the 
importance of four issues related to Y2K problems: First, small 
and medium-size enterprises' risks and needs are greater than 
those of larger corporate entities; second, existing risk 
management programs provide the most substantial framework for 
addressing this issue; third, the discontinuity of utilities 
threatens all chemical handling entities; and, fourth, 
management of Y2K problems will require responsive 
communication among the stakeholders.
    Limited research indicates that large multinational 
companies are, in general, following well thought out and well 
managed paths toward Y2K compliance. These have, in addition to 
their Y2K compliance efforts, made extensive contingency plans, 
including in some cases plans to shut down batch operations for 
limited periods at the turn of the century.
    The CSB conclusions vis-a-vis large and multinational 
companies should not be construed to mean that there is no 
potential for Y2K-related catastrophic events at these 
facilities. Some Y2K impacted components may not achieve 100 
percent completion. Multiple failures may not have been 
considered and may result in accidents, and in addition, the 
erosion of commodity pricing, merger and acquisition 
activities, loss of critical Y2K staff for 1999, may create 
unique threats to the successful completion of the Y2K project.
    In summary, I would like to say that given the time 
constraints, altering this situation requires a massive effort. 
Much work has been done to date. The Board has concluded that 
these efforts should focus on, one, providing easy-to-use 
tools; two, promoting accessible resources; and, three, 
providing attractive incentives for Y2K compliance.
    I would be happy to answer your questions at an appropriate 
time.
    [The prepared statement of Mr. Poje can be found in the 
appendix.]
    Chairman Bennett. Thank you very much.
    Mr. Frodyma.

   STATEMENT OF FRANCIS J. FRODYMA, DEPUTY DIRECTOR, POLICY 
   DIRECTORATE, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION

    Mr. Frodyma. Thank you, Mr. Chairman, and thank you for 
this opportunity to appear today to describe the Occupational 
Safety and Health Administration's efforts to protect workers 
in the chemical industry. Before I discuss what we are doing 
with the Y2K issue, though, I would like to just spend a minute 
to talk about OSHA and who we are.
    OSHA's core mission is to provide a safe and healthy 
workplace for every working man and woman in Nation. The 
language in our statute is very broad. It requires the agency 
to set standards and conduct inspections at over 6 million 
workplaces employing more than 100 million Americans.
    This statutory responsibility covers all industrial 
sectors, including manufacturing; construction; longshoring; 
yes, chemicals; health care; retail trade; and many service 
sectors. The Act also allows States to operate their own OSHA-
approved safety and health programs, and 25 States and 
Territories have elected to do so.
    With regard to OSHA and the chemical industry, OSHA has 
been particularly concerned about the chemical industry since 
the mid-'80's, since the Bhopal, India catastrophe. And yet 
despite this impression created by a catastrophic accident and 
releases and other high publicity events, that this is a 
dangerous industry, from an occupational safety and health 
perspective, the overall injury/illness rate for the chemical 
production sector is substantially below the national average. 
Therefore, the chemical industry has not been to date targeted 
for OSHA programmed inspections.
    However, OSHA does recognize that there is a continuing 
need to address the risk of catastrophic accidents in this 
industry, including those that might be caused by unsafe 
operation and/or equipment failure due to the Y2K problem. And, 
indeed, OSHA enforces numerous safety and health standards 
applicable to the chemical processing industry. The most 
important one to the Y2K issue is our Process Safety Management 
standard, or as we call it, PSM.
    PSM requires employers who possess a threshold quantity of 
any substances on a list of highly hazardous chemicals to 
assess the risks posed to workers and to develop a plan for 
mitigating those risks. The employer must, as part of a hazard 
analysis, assure process safety by conducting an evaluation and 
controllling the associated hazards created by the technology 
(e.g., Y2K) of the process itself. Therefore, under this rule, 
employers now have a responsibility to assure that the effects 
of the Y2K problem on any such equipment or controls are 
appropriately managed.
    However, for OSHA to rely solely on enforcement of 
regulations through PSM inspections to assure Y2K readiness is 
not practical, in part for the following reasons:
    First, coverage. Whether a facility is covered by a PSM 
standard depends on the quantities and types of highly 
hazardous chemicals on their site. Coverage is not always 
determined by an industry or an SIC code. Thus, there are many 
facilities outside the chemical industry which are covered by 
process safety management, and some facilities within the 
chemical industry that are not covered. So many chemical 
facilities potentially facing Y2K compliance issues are, 
strictly speaking, not covered by the rule; and many covered 
facilities that do not engage in the type of processing 
activities considered at most risk of Y2K complications are 
covered.
    The second reason is that for OSHA, process safety 
management inspections are complex and time-consuming. A 
quality process safety management inspection by OSHA takes over 
4 weeks. In addition, OSHA just has a few inspectors with the 
necessary training and experience to conduct PSM inspections.
    Therefore, OSHA must target--moreover, OSHA's inspection 
force of 2,000 compliance officers is responsible for, as I 
said, the 6 million establishments. Therefore, our agency must 
target its resources at the most dangerous workplaces, as 
indicated partly by the higher than average injury and illness 
rates. As I mentioned earlier, the chemical industry has a 
substantially lower than average injury/illness rate, and OSHA 
could not conduct a program of Y2K inspections at PSM-covered 
workplaces without diverting limited enforcement resources from 
industries where workers face a much higher probability of 
death or injury.
    Therefore, OSHA has concluded that the existing regulatory 
framework will not effectively deal with the Y2K problem. 
Instead, we feel that it can be most effective in addressing 
this problem through a compliance assistance approach that 
involves outreach and dissemination of education materials. 
This is the approach that was also suggested by the Chemical 
Safety Board in its March 1999 report to your Committee.
    As part of our efforts, I would like to mention quickly a 
few of the steps we have taken. In September, 1998 we published 
a fact sheet entitled ``How the Millennium Bug Can Affect 
Worker Safety and Health.'' The sheet lists possible failure 
conditions and identifies specific hardware and electronic 
devices that should be evaluated for possible errors, and that 
fact sheet has been available through OSHA's web site since 
December 1998.
    We have also begun dissemination of information to high 
hazard employers, and last month OSHA mailed letters to 12,500 
employers with the highest injury/illness rates in the Nation, 
alerting them they need to take action to improve their safety 
record. We included the Y2K fact sheet in that mailing, which 
was also sent to 1,200 companies who use chemicals in high 
volume, such as those in the chemical, printing, rubber and 
paper industries.
    We also conduct about 32,000 inspections annually, and in 
each of those inspections our compliance officers now 
distribute Y2K fact sheets to all employers after every 
inspection, regardless of the industry inspected. Also, those 
fact sheets have been made available to State inspectors, who 
conduct an additional 60,000 inspections.
    And then, finally, our OSHA consultation programs, which 
operate in all 50 States, have also been distributing the Y2K 
fact sheet, and these consultants visit more than 20,000 
workplaces annually.
    Mr. Chairman, in conclusion I would like to say that OSHA 
thinks that we can most effectively address the Y2K problem 
through aggressive outreach and education efforts, and we will 
continue to distribute information and additionally seek new 
ways to spread the word about the need for every employer to 
seriously and thoroughly consider how Y2K affects the health 
and safety of their employees.
    Mr. Chairman, I would be happy to answer any questions, at 
your convenience.
    Chairman Bennett. Thank you.
    Mr. Couvillion.

STATEMENT OF PAUL COUVILLION, GLOBAL DIRECTOR, DuPONT YEAR 2000 
                            PROJECT

    Mr. Couvillion. Good afternoon, Senator Bennett. My name is 
Paul Couvillion, the Global Director----
    Chairman Bennett. Couvillion, I apologize. I apologize for 
mispronouncing your name.
    Mr. Couvillion. That is quite all right, sir.
    I am the global director for DuPont's Year 2000 Project. 
Thanks for inviting me this afternoon to discuss this very 
important issue.
    DuPont has made some formal disclosures through the SEC, 
and today's statement will not be covering those again. The 
data that I have, contained in the statement that was sent to 
you, are up-to-date data as of the end of May, and I want to 
ask that you use this statement in conjunction with those 
earlier disclosures.
    I have worked for DuPont for 35 years and was appointed to 
lead this global effort almost 2 years ago. I was selected to 
lead this work because of my experiences in leading people and 
in managing manufacturing processes in a number of DuPont's 
businesses.
    The remediation of Year 2000 issues in our plant process 
control systems, computer hardware, applications software, 
embedded chip equipment, and in our suppliers' and customers' 
systems, is very important to DuPont. Based on our current 
plan, we should have more than 98 percent of our critical and 
significant computer systems Year 2000 capable by the end of 
June, with the remainder completed by year-end.
    DuPont has been in business for almost 200 years. We are a 
world leader in science and technology with a range of 
disciplines and products, including high performance materials, 
specialty chemicals, pharmaceuticals, and biotechnology. 
DuPont's 93,000 employees are dedicated to bringing science to 
the marketplace in ways that benefit people and generate value 
for our stockholders.
    This project is one of the top corporate initiatives 
identified by DuPont's president and CEO, Chad Holliday. We 
have proactively addressed Year 2000 issues since 1995. We have 
established two key goals for the project. The first, 
consistent with our commitment to continuously improve our 
safety performance, is to prevent safety, health or 
environmental incidents that could occur as a result of the 
Year 2000 problem. Second, we want to maintain the continuity 
of our businesses and service to our customers, employees, 
stockholders and communities.
    This task has required mobilizing employees around the 
globe. The DuPont Year 2000 project consists of more than 40 
teams and about 2,000 people from businesses, regions and 
functions that comprise the company worldwide. These teams work 
together with our information technology partners, Computer 
Sciences Corporation and Anderson Consulting, who operate the 
majority of DuPont's global information and technology systems 
infrastructure.
    The Company's approach to the Year 2000 challenge, as shown 
in the written statement, involves the use of a multiphase 
process being used by many companies worldwide. This process is 
being applied through a large and diverse range and number of 
systems that are connected in complex and extensive networks 
across businesses and regions.
    Our Year 2000 project is managed centrally with a small, 
diverse team of experienced people. The work is executed 
locally within each business unit, function and region. 
Corporate direction is provided by our Operating Group, who 
receive updated biweekly. My team reports to an Executive 
Steering Committee every month, and the role of my team has 
been to develop and provide common technology and processes for 
the project, to monitor business unit progress against those 
goals, collect metrics, hold periodic reviews, and provide 
support to unit projects.
    We estimate total expenditures to become internally capable 
to be in the range of $350 to $400 million, and through March 
1999 we have expended $225 million or about two-thirds of our 
4-year estimated expenditures.
    DuPont has more than 80,000 suppliers and 20,000 customers, 
with 150 joint ventures around the globe. A business partner 
work stream was established to develop an informed view of the 
readiness of more than 5,000 critical suppliers, 2,000 key 
customers, and all of our joint ventures.
    About three-fourths of the suppliers that we surveyed 
responded. Of those assessed, 15 percent have potentially--will 
potentially create interruptions to the continuity of supplies 
or services to our value chain. Key reasons for our concerns 
are ``no response,'' ``no program in place,'' ``late 
completion,'' or ``no supplier assessment in place.'' We have 
initiated and have almost completed four special emphasis 
surveys aimed at key infrastructure operations, shown in the 
written statement. The initial conclusions indicate that we are 
likely to experience a low probability of failure among these 
groups of infrastructure providers. However, we found in some 
specific areas around the globe where we could have services 
interruptions and contingency plans may be required.
    About half our customers surveyed responded. Of those 
responding, we have assessed 33 percent as potentially creating 
interruptions to our business processes.
    In regard to the assessment of critical suppliers and 
customers, we rely heavily on and trust what we are told about 
their Year 2000 readiness. As a result, we cannot guarantee the 
readiness of any of our companyies external to DuPont's 
operations. At best, we have been able to create informed 
judgments.
    In summary, this project is critical to DuPont's success. 
We have committed the necessary resources to get this work done 
on time. From this work we have learned and gained much from 
this large global project. We intend to meet our goal of safe, 
continuous operation through the millennium.
    At midnight on December 31, 1999, the world--companies, 
governments, and institutions--will be given a test. I don't 
know about you or others in this Year 2000 class, but each time 
I take the test, I get a little nervous and anxious. We have 
done our homework, have taken reasonable approaches, and I 
believe we have prepared ourselves well for this final exam. 
There are no guarantees that we will succeed, but because of 
the extensive work we have committed and done for Year 2000, we 
expect to get an A for both our effort and our results.
    Thanks for the opportunity to appear this afternoon.
    [The prepared statement of Mr. Couvillion can be found in 
the appendix.]
    Chairman Bennett. Thank you very much.
    Mr. Schleck.

STATEMENT OF JAMIE SCHLECK, EXECUTIVE VICE PRESIDENT, JAME FINE 
                           CHEMICALS

    Mr. Schleck. Chairman Bennett and members of the committee, 
I would like to thank you for this opportunity to come and 
speak before you about this very important topic. My name is 
Jamie Schleck. I am executive vice president of Jame Fine 
Chemicals, a specialty chemical manufacturer, family owned. We 
have approximately 44 employees. We manufacture products for 
the pharmaceutical, cosmetic, dietary supplement, 
chemiluminescent, and disinfectant industries.
    I myself am a software engineer, and I have spent 6 years 
in general management of this company. As such, I feel I have a 
unique perspective on this issue, as well as the industry 
dynamics of companies in the same roles that Jame Fine 
Chemicals is in.
    I would like to talk to you first about these industry 
dynamics. I will then talk to you about the specific Y2K 
compliance efforts that Jame Fine Chemicals has undertaken. I 
will then talk to you about the exposure that I have identified 
within my company, which I think may be indicative of other 
companies also in the same roles as Jame Fine Chemicals. And 
finally, I will talk about industry initiatives which we have--
which have been brought to bear on companies such as my own, 
and the impact that they have had in terms of Y2K compliance.
    First, the industry dynamics: What I have found in reading 
some of the reports involved in--concerning the chemical 
industry, there seems to be a lack of understanding of batch 
processing versus continuous process. Batch processing involves 
the intermittent use of raw materials in the production of 
chemicals, as opposed to continuous processing which has a 
continuous input and a continuous output of manufacturing of 
chemicals.
    As you stated earlier, one of the major dangers that could 
be identified from Y2K is the startup and shutdown of 
processes. At Jame Fine Chemicals we startup and shut down 
processes every day as a matter of normal business. Batch 
processing provides for flexibility and low-cost manufacturing 
of these products.
    If I could draw an analogy between the types of specialty 
chemicals that my company manufactures and commodity chemicals, 
specialty chemicals could be considered like diamonds, whereas 
commodity chemicals would be compared to coal. As such, 
automation usually is not cost-effective for companies such as 
my own.
    The reduction of labor costs and cycle times clearly has a 
second order effect when compared to yield management and the 
importance of maintaining tender loving control over the 
process. We have highly skilled operators, many of whom are 
paid more than $30 an hour to operate our processes.
    I would next like to talk about Jame Fine Chemicals' 
specific Y2K compliance initiatives. We began examining the Y2K 
compliance problem in 1997. Our process involved assessment, 
prioritizing those processes which could be affected by Y2K, 
remediation, and finally, implementation of our compliance 
initiatives.
    What we did was, we identified every process that could be 
remotely affected by embedded chips, by software-related 
intrusions into the process, as well as anything that would be 
affected by any kinds of Y2K compliance issues. We then began 
prioritizing those specific problems that we saw, and then we 
began implementing a program to eliminate Y2K compliance 
problems.
    We expect that by June 30th of this year we will have 
completely ruled out any problems of Y2K compliance. As of 
today, we have two issues which are not Y2K compliant. One is a 
process controller on a freeze drying operation. The second is 
our phone system.
    Next I would like to talk to you about some of the exposure 
that we have identified throughout our Y2K compliance issues. 
As many chemical companies have already identified, we are of 
course very dependent upon utilities--electricity, gas and 
water. It will be important for us, at the coming of December 
31st, 1999, to ensure that we are not engaged in any processes 
which are dependent upon these utilities.
    Additionally, we feel that there could be some exposure in 
terms of raw material availability. Again, on December 31st we 
will not be manufacturing any processes for which we do not 
already have raw materials in store.
    Again, I mentioned that our phone system was something 
which was not Y2K compliant, but we do not consider this to be 
a critical business function, as we could just go back to using 
a normal phone system or roll our clocks back so that voice 
mail will again be usable.
    There have been several industry initiatives that also have 
brought this important topic to light for companies such as my 
own. ``Responsible Care'' by SOCMA; software validation, which 
is brought forth through cGMP compliance, and also insurance 
compliance. It was important for us this year, when we did our 
annual insurance review, that the Y2K statements were up-to-
date and were identifying all possible risk to our insurance 
company.
    In conclusion, I would like to say that I feel that 
companies in the industry that I am in and in the role that I 
am in have limited exposure to Y2K problems because of the 
dynamics of the industry.
    I will be happy to take your questions. Thank you.
    [The prepared statement of Mr. Schleck can be found in the 
appendix.]
    Chairman Bennett. Thank you all very much. I at some point 
would like to get Mr. Schleck and Mr. Couvillion into a 
conversation about the large and the small and some of the 
contrasts and complementary activities that you get involved in 
chemical manufacturing.
    Let me start with you, Dr. Poje. Throughout your statement 
you focused again and again on the small and medium-sized 
enterprises as the area where you either have the least 
information or where the most remediation needs to be done, and 
this of course is a concern that the committee has.
    In general terms, we find on the committee that the people 
who are willing to come testify to us, regardless of what the 
situation is, are the people who are in good shape, and very 
often then there is a tendency to extrapolate into the unknown 
area the good results that you have out of the known area. I 
think you have appropriately said we can't do that.
    We can't at the same time extrapolate bad assumptions into 
the unknown area, but I think we would be terribly naive if we 
assumed that everybody who didn't report was in the same shape 
as those who did report.
    So do you have any thoughts--or any of the rest of you, 
chime in on this, even though I am focusing it with Dr. Poje--
as to what we could do to increase our information for the 
small and medium-sized enterprises that have not reported, 
either through their trade association or their regulator or to 
your inquiries, as to where they are?
    Mr. Poje. Senator, thank you for that question. We are very 
concerned about the small, mid-size enterprises because we want 
them to succeed in this area as we do in other areas. The Board 
has to confront, unfortunately, terrible tragedies that have 
occurred in the last year or so involving such entities.
    In March of this year we had to begin an investigation into 
a small company in Allentown, Pennsylvania that was 
manufacturing a material called hydroxylamine. In preparing a 
more purified solution of this chemical, something went awry in 
the process. The situation resulted in a catastrophic 
explosion. Four workers were killed inside the plant. One 
worker was killed in a business nearby. Eleven buildings were 
damaged in the area, and the explosion was felt 15 miles away, 
throughout Allentown.
    It is unlikely that such a small, mom-and-pop operation 
would be part of an association. So, yes, we have worked with 
associations, we will continue to try to work with associations 
to build models of performance that could be useful for all 
such entities. I think the characterization by Mr. Schleck of 
the difference in scales are very important issues that need to 
be addressed by all such entities.
    We would welcome other associations, in addition to the 
Chemical Manufacturers Association, to provide such examples of 
how to deal with specific Y2K related problems that are likely 
to be had in common across such small entities. Smaller 
businesses lack the large corporate communication structure 
which allows for learning to be disseminated from one facility 
to another, such as might happen in a very coordinated program 
described by Mr. Couvillion.
    The Board would like to see is an acceleration of 
surveillance efforts so that we would have a better picture on 
the membership and how they are complying. However, we also 
would like to see additional models developed within each of 
those associations that could be used as examples to others 
within or outside the association, identifying how facilities 
can address contingency planning and compliance efforts that 
are effective throughout the rest of this year.
    Chairman Bennett. Mr. Schleck, you are the closest thing on 
the panel to a mom-and-pop operation, only you have grown to 
sisters and cousins and aunts, and far beyond just mom-and-pop, 
but do you have any comment at all as to how we might reach 
some of these small operations that Dr. Poje is talking about?
    Mr. Schleck. Well, I would first of all characterize us 
possibly as a mom-and-pop operation, certainly a pop-and-son. 
My father is still active with the business.
    Chairman Bennett. Well, OK. Is it named after you?
    Mr. Schleck. You know, people always ask me that, and his 
name is James, and it was started at the time that I was a 
young child, so possibly. It is commonly confused, though. I 
think that----
    Chairman Bennett. Be like the politicians. Take credit for 
it anyway.
    Mr. Schleck. I shall. One thing that I think is critical 
for anyone involved in industry such as the chemical industry 
is to have adequate operating procedures which would rule out 
any kind of catastrophic events as we saw in Allentown. One 
thing that we have is a hazard operations procedure which runs 
down all the selected ``what if'' scenarios, which include the 
failure of utilities, the interruption of gas or water supply.
    As I recall from reading about that incident, that was a 
company that had really just started, and they probably did not 
have the types of operating procedures that were--that are 
necessary to operate in this business. That being said, I think 
that it is important for industry trade associations to 
identify, through initiatives like ``Responsible Care'' and 
cGMP, which is actually an agency compliance issue with the 
Food and Drug Administration, to ensure that companies such as 
the one in Allentown, such as Jame Fine Chemicals or other 
companies, are in fact implementing and following those 
important operating procedures.
    Chairman Bennett. Mr. Frodyma?
    Mr. Frodyma. Yes, Mr. Chairman.
    Chairman Bennett. You spoke about the dissemination and 
distribution of your fact sheet. I have a fact sheet, single 
page. Is this what we're talking about?
    Mr. Frodyma. Yes, Mr. Chairman.
    Chairman Bennett. Well, I don't mean to make your afternoon 
uncomfortable, but this is woefully inadequate. There is 
nothing here that you couldn't pick up from the Sunday 
supplement in terms of information.
    EPA has a four-pager which incidentally has in one small 
box what you take half a page to cover, and they just tuck it 
up there, with more information, web sites, addresses, a lot of 
alerts and so on.
    Mr. Frodyma. Well, we have also distributed other web site 
material to our--the groups that I mentioned in my testimony. 
The President's Y2K web site, which discusses the chemical 
industry, we have mentioned. We have also distributed to the 
small and medium-size--we are targeting the small and medium-
size establishments. The SBA's web page, which has a lot more 
information on it which is more detailed.
    But in addition to just the fact sheet, we have also had 
discussions with our managers about not just the information on 
the fact sheet but what they can talk to the employers about 
when they do visits. So we haven't--although the fact sheet, 
the document, we have also had discussions with the managers 
about how to use the fact sheet.
    Chairman Bennett. Well, again, there are very few facts on 
the fact sheet. If I might, if it doesn't offend your 
sensibilities to use another agency's information, here is the 
EPA ``Prevent Year 2000 Chemical Emergencies.'' It describes 
the problem in greater detail than yours does, then goes on to: 
your software, your process control equipment, your service 
providers, hazard awareness and reductions. There is a box on 
some dates to watch. A lot of people don't realize that the 
first of January is not the only date that is affected, and 
there are a series of dates here, leap year and so on. Steps to 
address the problem, remedy, test, develop, so on.
    Then here is the box with the items that are on your fax 
sheet included, and then a full page of information resources, 
Y2K freeware and shareware, national bulletin board for Year 
2000, National Fire Data Center. I am just reading a few of 
them. Here is the President's Council on Year 2000 conversion 
product, compliance information, Chemical Manufacturers 
Association survey, and so on.
    Again, I realize that Federal agencies (and I have worked 
in one before I came to the Senate, I served in the executive 
branch) get very jealous about turf, but I would suggest that 
simply reprinting this from EPA and putting it in your 
distribution channel would be very, very helpful.
    I have seen the material put out by the Small Business 
Administration. It is not tailored to the chemical industry, 
and simply would help somebody deal with his billing or payroll 
kinds of problems. But I think something more than what we have 
seen under the banner of OSHA should be distributed through the 
OSHA network, because you have the largest network of anybody 
at the table.
    Mr. Frodyma. Well, we certainly can use the EPA's fact 
sheet. In fact, we have--our people have worked with EPA on 
development of their fact sheet and we can easily see that the 
EPA's material is also made available through all of our 
sources. It is a very good suggestion.
    Chairman Bennett. Thank you. I will look forward to see 
what goes on.
    OSHA has perhaps the highest visibility in manufacturing of 
any Federal agency. I remember walking into a company that had 
a little sign on the window that said, ``If you think OSHA is a 
small town in Wisconsin, you are in real trouble.'' So 
everybody is aware of you, and you can be of great help in 
getting more detailed information. And not to beat up on you 
personally, but the single page fact sheet that we have a copy 
of is, in our opinion, inadequate.
    Dr. Poje, you want to get in?
    Mr. Poje. Senator, if I could just chime in here, one of 
the recommendations from our Board's report was to have a high 
level Federal meeting coordinated through the President's 
Council on Y2K. I think this would be a way in which such 
information could be shared very expeditiously between 
agencies, and could maximize the impact of such common 
information. OSHA's reach is quite impressive. EPA has a 
similar reach but maybe in a different angle. There are other 
research entities, such as the National Institute for 
Occupational Safety and Health, which are working on Y2K.
    That recommendation, which has yet to be acted upon, that 
the President's Council coordinate such a meeting. We could 
invite the associations, who also have a very important 
perspective on how to reach their members, and work 
expeditiously, in coordinated fashion, to make the message 
heard.
    The Health and Safety Executive in the United Kingdom has 
produced a number of informational resources specific to 
health, safety and environmental protection. I think that these 
provide strong models for us to examine and adapt for an 
approach that is useful here in the United States.
    Chairman Bennett. Thank you. John Koskinen, who chairs that 
effort on behalf of the President, he and I talk every week, 
and I will mention that to him this week. I always tell him 
what comes out of these hearings, and he tells me what he is 
doing, and this is one that I can pass on to him as a very 
specific suggestion.
    Yes, sir, Mr. Couvillion?
    Mr. Couvillion. Thank you, Senator. I had four thoughts, 
the first one of which, even though my name is French, I did 
not invent the company, though I do believe I made a 
contribution to it over my years of time. So just a little bit 
of an aside here.
    I guess the four thoughts I had were, No. 1 is that we have 
135 plant locations or site locations around the world. Among 
those sites, we have some 320 operations, a significant number 
of operations. We found that the only way to manage such a 
large operation is to leverage it on a global basis and to 
communicate daily, if not weekly, on the successes, the 
learnings, and the findings.
    And so the idea would be, for example, a small plant might 
have 40 people in it, a large plant of ours might have 3,000 
people. So the idea of leveraging among multiple site locations 
within a given industry, be it a small company industry, would 
have a high value I believe for those companies sharing 
information about their findings, their learnings, and their 
application to Year 2000, all the way into the contingency 
planning processes. So if you can model what we do at our plant 
sites around the globe, it would be a very, very critical piece 
of success.
    The second area deals with process safety management. I 
think clearly process safety management forces you to think 
about Year 2000 not as a device that might fail, but within 
what system does it fit, and are we doing the necessary testing 
and integration work that is necessary to create success? And a 
sound process safety management process, built upon for Year 
2000, is another way of assuring success in the business. So I 
think to me a recommendation would be to have very strong views 
of process safety management, as Dr. Poje has already spoken 
about, I think are really key to that whole process.
    I think the third area of value for us has been a learning 
that with the Chemical Industry Technology Alliance, a group 
consisting of about 60 large Fortune 500 companies, we 
participate on a quarterly basis in reviews. We will get groups 
of suppliers to come in and share what they are doing to the 
whole industry. We will get the power providers to come in and 
share what they are doing as a key learning. So if there is 
some way to create an alliance of small businesses to get 
together to listen to large providers, telecommunications, 
power industry providers and so forth, would be another key 
value. I don't know if such an industry, small industry forum, 
exists today.
    I think the last one would be to create an open sharing of 
information, so the fear of litigation, the fear of legal 
barriers doesn't stand in people's way to get this work done. 
Maybe an extension to the current disclosure act might be a 
valued thing, and the CMA work we have done in creating a 
supply chain pledge, where people sign a mutual pledge in this 
process, to commit the effort and energy to get this work done, 
might be a way to sort of cap it off and put the icing on the 
cake.
    So those are four suggestions at least that I think about 
in the learnings we have had in this project.
    Chairman Bennett. We appreciate that. We have tried to 
facilitate the exchange of information with the legislation 
that Senator Dodd and I passed, or convinced the Congress to 
pass, last year. Unfortunately, we have not seen as much 
exchange of information as we had hoped. Not to slam your 
companion there, but the legal departments of many companies 
have said, ``Well, the law notwithstanding, don't tell anybody 
anything. That's the safest way to go.''
    Mr. Couvillion. I join you in that.
    Chairman Bennett. Yes. Let me ask you a tough question, but 
you mentioned it in your opening statement and I think you 
might want to elaborate it a little more. You say you are over 
90 percent there?
    Mr. Couvillion. Ninety-eight percent.
    Chairman Bennett. Ninety-eight percent there, but you have 
spent only two-thirds of the money.
    Mr. Couvillion. We are finding----
    Chairman Bennett. Does that mean that you have left the 
really tough part still to do, or that you got it done much, 
much cheaper than you anticipated? If it is the latter, then 
you are the only company that I know of in that situation.
    Mr. Couvillion. We are finding that we are in the labor-
intensive part of this work today. Our spend rate is pretty 
high right now through the summer months. And I think, second, 
that we are in fact seeing ourselves spending less money than 
we originally estimated in this project.
    Now, those are the two fundamental reasons for this. We are 
going to spend it out. I had $225 million. We have come a long 
way and done a lot of work. Particularly we found ourselves 
spending less capital than we originally anticipated to get 
work done.
    Chairman Bennett. That is surprising. Just about everybody 
else that appears before the committee ends up spending 
substantially more than they originally had thought, very much 
including the Federal Government. The initial estimates for the 
Federal Government were that we would spend $2.5 billion. We 
are probably going to go over $10 billion, and there are still 
parts of the government that are saying, ``Gee, we could use a 
little more.'' Of course, they say that all the time.
    Let me ask you one other question, Mr. Couvillion. Dr. Ed 
Yardeni, whom everyone who is connected with Y2K knows very 
well, looked at your disclosure, I don't mean to pick on you, 
but you're the only one available--and he said that 65 percent 
of your key suppliers were at a high risk of not being Y2K 
ready. You are saying now that 15 percent of your suppliers are 
at high risk. Do you want to reconcile those two numbers, for 
anybody who may be watching?
    Mr. Couvillion. Sure. The data--we are constantly reviewing 
and looking at our status in this information--the data shown 
in the statement reflects current information, last week's 
state of the business in terms of our supplier relations 
process. The earlier data probably comes from the third or the 
fourth quarter report, I don't know which offhand.
    What we have done is----
    Chairman Bennett. Is there any difference between critical 
suppliers and key suppliers?
    Mr. Couvillion. No, they are the same, one and the same.
    Chairman Bennett. OK.
    Mr. Couvillion. We have found that calling supplier forums, 
we have called entire groups, supplier groups together, to come 
to DuPont, to share with them what they are doing, and we have 
found a significantly greater openness in the last three to 4 
months.
    We have initiated face-to-face contacts with everyone in 
the infrastructure processes--transportation, shipping, 
telecommunications, the power industry, and the natural gas 
industry. We have called on each one of those on a face-to-face 
basis, and frankly we have found that that has paid off 
tremendous dividends just to go talk to people face-to-face, 
rather than depending on the earlier processes where we used a 
significant amount of written survey data and asked people to 
fill the blanks in and send data back to us.
    So starting with telecommunications, open forums for both 
customers and suppliers, as well as getting these face-to-face 
discussions, has made a tremendous difference in the process 
for us.
    Chairman Bennett. Well, I think that is a significant 
contribution, because when we are dependent on surveys by trade 
associations, we miss a whole lot of folks. Mr. Schleck, do you 
have any thoughts as to where such a forum could be put 
together, that we could do the kinds of things that Mr. 
Couvillion is talking about.
    Mr. Schleck. Well, I would like to just supplement his 
comments in saying that, as is the case, we supply as a 
specialty chemical manufacturer many large pharmaceutical 
companies such as DuPont, specialty chemical companies such as 
DuPont or Cytec or----
    Chairman Bennett. Are you going to ask him for an order, as 
long as you are here?
    Mr. Schleck. No, but my point is that actually it is, as a 
business priority it is important for us to be Y2K compliant 
and show that to our customers, because this is obviously a 
competitive advantage and an important business function that 
we can play for our customers. So as DuPont has called in their 
key suppliers, we have also been questioned by some of our 
major customers about our Y2K compliance strategy and what our 
plans were.
    Chairman Bennett. One last question. As we look at this 
overall from the Senate point of view, we think the United 
States is probably going to be in fairly good shape. I don't 
have the same confidence at all overseas.
    And both you, Mr. Schleck, and Mr. Couvillion, do you have 
foreign suppliers, raw materials or finished goods, that you 
are concerned about, that you have looked at as part of this? 
And do you share our concern that there is greater risk 
overseas, or do you think this is going to be all right? Mr. 
Schleck, we will start with you.
    Mr. Schleck. As I mentioned before, we found that it is 
important for us to have an increase of our raw materials 
supplies come year-end. We are fairly dependent upon raw 
materials from other countries. We have audited those 
suppliers. We visit them usually on a yearly basis. This past 
year it has been somewhat more frequently.
    And what I have found from many of these suppliers, again, 
there is a different industry dynamic from what is commonly 
associated with the chemical industry. There is much less 
automation, higher value products, so therefore certainly 
justifying the need for specialized labor and less automation.
    The exposure that I see is in regard to shipping, customs 
clearance, those types of issues, and those may really have a 
nuisance value to us which can be mitigated by having the 
adequate raw materials supply at the end of the year.
    Chairman Bennett. So you are stockpiling?
    Mr. Schleck. Yes. We are probably going to be increasing 
our base inventory by approximately 20 percent, which is about 
1 month's supply.
    Chairman Bennett. OK. Mr. Couvillion?
    Mr. Couvillion. Yes. As I indicated earlier, we have about 
5,000 critical suppliers, or key suppliers, if you want to call 
it that, of the roughly 80,000 we deal with. Now, that accounts 
for probably 90-plus percent of our purchases. Half of those 
suppliers are outside of the United States.
    And so we have a process that is very similar to what we 
are doing here. We are going out, we are calling on people, we 
are talking to people in a very similar fashion. We have had 
very good success in our Asia Pacific region, very good success 
in our European region, and very good success in Mexico, for 
example, in getting data back from suppliers.
    I think the aggressiveness and the energy which you put 
into it will determine the outcome of the process, and our view 
is that we have put a significant amount of energy because we 
view this as an absolutely critical part of our success.
    We do have, as I indicated in the statement, some 15 
percent who we are not comfortable with. We are going to go out 
and, in fact, have contingency plans. Our intent is not to 
build inventory. The belief on our part is that it is critical 
from a quality point of view to get the work done, not to put 
inventory in place. Although we don't discount it, we see some 
view of being able to get at that.
    Now, we are looking at direct suppliers only in this 
particular case, not those further back in the stream. At least 
it gives us very strong comfort about where we are.
    Chairman Bennett. You are not stockpiling. Are you going to 
change any suppliers if you decide they are not going to be 
ready? Are you going to cut them off for future?
    Mr. Couvillion. We have that as one of our contingencies, 
and we have a group of suppliers we call mission critical, 
limited alternatives, that we look at. And in those cases we 
are going to find a way, if we can't get business, we will find 
alternatives to do that. We have not pulled the trigger on 
doing that yet, though.
    Chairman Bennett. OK, fine. Let me thank you all. This has 
been a very informative panel, and I have enjoyed the 
discussion as well as your opening statements.
    We will now go to the second panel. We have Mr. James 
Makris, who is the director of the Chemical Emergency 
Preparedness and Prevention Office at EPA; Mr. Charlie Martin, 
he is the safety coordinator for Hickson DanChem Corporation in 
Danville, Virginia. We appreciate Mr. Martin's coming up here 
to emphasize that this is a problem we must be concerned about 
across the Nation.
    We have Ms. Paula Littles, who is the citizenship and 
legislative director of the PACE International Union; Lt. Col. 
Michael Fedorko, the state director of the New Jersey Office of 
Emergency Management; and Ms. Jane Nogaki, who represents the 
New Jersey Work Environment Council and the New Jersey 
Environmental Federation.
    So we appreciate all of your being here. Let's see. I 
introduced Mr. Makris first, but Mr. Martin, you seem to be on 
the far end, so let's go down in the physical order in which 
you are seated and start with you, Mr. Martin.

  STATEMENT OF CHARLIE B. MARTIN, JR., SITE SAFETY DIRECTOR, 
                  HICKSON DANCHEM CORPORATION

    Mr. Martin. Yes, sir. Good afternoon, Chairman Bennett. My 
name is Charlie Martin, and I am the site safety coordinator at 
Hickson DanChem Corporation. I would like to take this 
opportunity, if I may, to introduce Mr. Jonathan Miels, to my 
left, who is our information systems manager at Hickson 
DanChem, and he has also been our prime leader in our Y2K 
compliance efforts.
    I thank you for inviting me today to appear before you and 
this distinguished panel. Although our company is not 
physically located in New Jersey, the issue we are discussing 
here today does not vary across State lines. I am here today to 
present my industry's perspective on Y2K contingency planning 
from both inside and outside the company fence.
    Hickson DanChem is engaged in custom manufacturing of 
organic and inorganic specialties for major chemical companies. 
It also produces a comprehensive line of textile chemical 
auxiliaries and specialty surfactants. In layman's terms, we 
make the chemicals that are used for fabric conditioning, paint 
additives, and personal care products. The company employs 132 
persons at our plant in Danville, Virginia and uses batch 
manufacturing processes, which is inherently different from the 
continuous operations.
    As the site safety coordinator, I serve on the Y2K 
compliance team. Since the last panel addressed Y2K initiatives 
generally, I will focus my comments on the last step of Y2K 
preparation, which is contingency planning. It should be noted 
that our company will be Y2K compliant on June 30, 1999.
    In developing the final draft of our emergency contingency 
plan, Hickson DanChem tried to foresee every possible 
situation, however remote. Our plan covers safe process 
operations, emergency response planning, and community dialog.
    As Hickson DanChem conducted its Y2K assessment, employees 
played a critical role. In fact, employee involvement is not 
unique to Y2K safety activities. Recognizing that their 
contribution is paramount to a successful employee health and 
safety program, we have always included our employees in 
developing safety plans and procedures.
    This involvement enhances our compliance with Federal 
regulations such as the Occupational Safety and Health 
Administrations Process Safety Management or PSM rule and the 
``Responsible Care'' code guidelines. Coupled with regulatory 
requirements, these guidelines address many of the potential 
results of Y2K technology problems.
    Some specific activities at Hickson DanChem that our 
employees play a dynamic role in are our formal Site Safety and 
Health Committee, which is comprised of eight task groups. 
These groups participate in various areas of our safety 
program. They also perform hazard assessment audits. We hold 
monthly shift training sessions on related OSHA and regulatory 
topics; departmental safety meetings, which are also held 
monthly; and 5-minute supervisor safety talks that are 
performed daily.
    Hazard/Operability or HAZOP studies are performed on new 
and existing processes, and include recommendations for 
corrective actions that will preclude potential failures. HAZOP 
action items result in decisions such as installing emergency 
shutdown devices in conjunction with process control systems.
    Regarding specific impacts of Y2K, our onsite Y2K 
assessment team performed evaluations on business information 
systems, process control systems fire and security systems, 
field control units, and QC lab equipment. During the roll over 
period of December 31, 1999 through January 1, 2000, provisions 
were considered for a phased startup of utilities, system 
checkouts, and status verifications with the emergency response 
agencies before manufacturing processes are resumed.
    Another important aspect of an effective safety program is 
involvement with local emergency response teams and 
participation with local emergency planning committees, better 
known as LEPC's. Hickson DanChem participates in the 
Pittsylvania County LEPC by providing technical expertise in 
the planning process, assisting with training of local 
responders, and hosting regular plant tours and emergency 
response drills for local responders.
    In fact, we had a major emergency response drill on March 
11, 1998, in which Y2K related issues were addressed. The drill 
was noted as being the first of its magnitude in our area. 
Since that time, lessons learned have enabled us to identify 
potential challenges and make continuous improvements in our 
system.
    Because of strong involvement in the county LEPC, we were 
chosen to serve on the city of Danville Emergency Planning 
Committee, as well.
    As you can tell, handling chemicals has led the industry to 
develop extensive plans to address potential incidents covering 
both onsite and offsite consequences. However, Y2K presents a 
unique set of potential consequences, such as potential 
multiple system failures. As such, our emergency response plans 
designate actions to be accomplished should these type 
situations arise.
    Communicating Y2K compliance with your local community 
establishes public confidence and provides opportunities for 
open dialog between the community and the plant. Several of our 
customers, suppliers and business support agencies have 
requested and been provided information on our Y2K progress.
    Our information systems manager participated in a Y2K drill 
with our regional medical center. The drill proved beneficial 
for both Danville Regional Medical Center and Hickson DanChem. 
Participation in the Pittsylvania County Safety Roundtable 
provides vital information to small industries on topics such 
as risk management plan or RMP preparations. A seminar hosted 
by the Danville LEPC was held on April 29, 1999, to further 
explain RMP requirements. Hickson DanChem also sponsors 
programs such as Educators in the Workplace, which provides 
awareness information to local teachers and guidance 
counselors.
    In conclusion, Hickson DanChem is committed to having an 
effective emergency response plan that avoids the potential Y2K 
technology concerns. Many of the contingency planning 
activities for Y2K readiness in the chemical industry are 
already being addressed through procedures and practices. 
However, Hickson DanChem has added additional measures to 
ensure the safety of our employees, neighbors, environment and 
equipment come December 31, 1999 and January 1, 2000. The 
involvement of our employees and local emergency responders has 
led us to develop an effective and open community dialog and on 
and offsite contingency plans.
    Mr. Chairman, we appreciate the opportunity to appear 
before you today. The Y2K issue warrants the collaborative 
efforts of all stakeholders before you today. We welcome your 
leadership and look forward to a transition to a safe and 
prosperous new millennium. Thank you very much.
    [The prepared statement of Mr. Martin can be found in the 
appendix.]
    Chairman Bennett. Thank you.
    Mr. Makris.

  STATEMENT OF JAMES L. MAKRIS, DIRECTOR, CHEMICAL EMERGENCY 
 PREPAREDNESS AND PREVENTION OFFICE, OFFICE OF SOLID WASTE AND 
    EMERGENCY RESPONSE, U.S. ENVIRONMENTAL PROTECTION AGENCY

    Mr. Makris. Thank you, Mr. Chairman. My name is Jim Makris, 
and I am at the Environmental Protection Agency. It is really a 
pleasure, a terrific opportunity, to be here, share some of 
these views with you.
    I also would like to make a comment to Paul Hunter, who has 
been a terrific aide to I think all of the Federal agencies as 
we have worked through some of these processes. He has just 
been a terrific ally and a supporter.
    Within EPA----
    Chairman Bennett. On his behalf, I will thank you.
    Mr. Makris. Pardon me?
    Chairman Bennett. On his behalf, I will thank you for your 
kind comments.
    Mr. Makris. Well, I know he wouldn't say that himself, but 
within the agency my responsibilities are to be the emergency 
coordinator of EPA, which covers a wide variety of difficult 
and technical tasks. I am also responsible for managing the 
Chemical Emergency Preparedness Program and right-to-know 
programs as they relate to chemical accidents. I am accompanied 
by Oscar Morales, the associate director of the Information 
Management Division in TSCA, who has the Toxic Release 
Inventory responsibilities, and Don Flattery, who is EPA's 
sector outreach coordinator for 2000.
    Within our agency, as in most agencies, we have three basic 
tasks. One is to be sure that the agency's business will go on 
uninterrupted. It is a fundamental issue. The President said, 
``Do it.'' You wanted it done. So what we are doing is making 
sure that EPA's systems are in good order, and I think we have 
gotten an A from some of the committees that have rated us and 
from OMB. We didn't start there, but we are there now.
    The second responsibility that we have is to deal with 
sectors that have been assigned to us, one of which is the 
chemical industry sector which we are talking about today.
    And then of course the third obligation we have as an 
agency is, if things go wrong, if there are accidents involving 
chemical releases or other releases, is EPA ready to meet its 
emergency response responsibilities which, in conjunction with 
the Coast Guard and the other Federal agencies, we have carried 
out for so many years dealing with hazardous materials and oil 
spills.
    But we are the agency with the responsibility for ensuring 
that the environment and the public are protected from the 
unreasonable risk of toxic chemicals. We identify hazards in 
the environment, regulate their use, assess the risks of 
release to public health, and indeed deal with prevention 
programs.
    Following the world's largest chemical accident in Bhopal, 
India, which has been mentioned by several people including the 
Chairman, Congress passed a law which required EPA to work 
closely with industries to participate in emergency planning, 
to notify their communities of the existence of releases, and 
to allow local communities to enhance emergency preparedness 
and accident prevention.
    I think it is very important to note that that law moved 
things in a different way than a lot of previous regulation 
around industry that EPA was managing. It changed the paradigm 
from complete command and control to a recognition that 
communications was critical.
    Senator Lautenberg, I wish he had been here today. He was a 
key part of passing this original Community Right-to-Know Act 
in 1986. But it is fundamentally against Thomas Jefferson's 
statement, where he said people are inherently capable of 
making proper judgments when they are properly informed. And I 
think that, you know, that is in all EPA's little brochures, 
but I think fundamentally it says that if you get information 
to the public and you create an environment and a forum in 
which they can communicate, the risk-taker with the risk-maker, 
progress will be made.
    And I think that the Act created the Act of 1986 created a 
whole lot of dialog between the public and private sector, 
leading to reductions in risk on a voluntary basis by the 
chemical industry accompanied by exposure and disclosure and 
discussions at the local level. We also have, obviously, the 
Superfund law, and most all EPA environmental laws provide some 
emergency provisions to be able to move forward.
    Based on our legislative authorities, EPA was asked by the 
Council to take responsibility for the chemical sector, and we 
felt that it could be well achieved within the legislative 
framework that the agency already had, and we stepped forward 
in that manner. We have taken a broad array of outreach 
activities in consultation with the chemical industry trade 
associations. The Administrator has asked that all EPA speakers 
talk about Y2K in any kind of issues with which they deal.
    I thank you very much for the compliment on the fact sheet 
that we put out. It was an innovation to try in plain English 
to reach out and get as many words as we could to the private 
sector over what might go wrong. I also have to say that OSHA 
helped us to that, as did CMA and some others, so that we were 
clear, to put out a message that was understandable and that 
was in plain English.
    I think EPA has--we have put a lot of tools in our toolbox 
that are useful to small and medium-size enterprise, and 
specifically with the case of the fact sheet, have distributed 
it broadly to LEPC's throughout the country, to State emergency 
response commissions. We submitted it to SBA, who are 
redistributing it to some of their constituents. And so we feel 
that that brochure, together with some of the other information 
that we have created, will be very useful indeed.
    We work with CMA on the ``Responsible Care'' program--I am 
going to turn pages rapidly now. I think that in the matter of 
surveys, we are working hard to try to get the best input we 
can from the field. We keep being told by industry they are 
being surveyed to death, so we think that it is important to do 
some pointed surveys rather than any more of the broad surveys. 
We are getting to the--we are getting to a point now where we 
need specific information, not broad ``How are you doing it?'' 
But at the moment, the surveys seem to be showing that most 
people are doing a really terrific job.
    Going to the end, I think that we are ready to deal with an 
emergency if it happens. We were part of the FEMA visit to 10 
regional offices; EPA was on that podium. I personally was in 
both Philadelphia and Newark, New York, and also Atlanta. I 
understand that just today there was a meeting of 300 people 
here in New Jersey dealing with the Y2K issue, specifically 
around emergency management, but leading to the chemical 
industry.
    I was reminded this morning of the importance, and Mr. 
Martin mentioned it again, of using the local emergency 
planning committees that were created by the Congress in 19808 
and 1986 as an outreach mechanism directly to the community and 
directly to the industry, and to provide the LEPC's with 
questions that they can pose to the industry in their local 
communities about Y2K, just as we ask them to do that regarding 
chemical safety generally.
    I guess in conclusion I would like to make it real clear 
that I am also the chairman of the National Response Team. We 
have a monthly meeting. The meeting always includes a Y2K 
discussion. We had full briefings by agencies. We have had DOE 
and HHS. We will have the other agencies presenting to us where 
they are in the emergency planning process during subsequent 
National Response Team meetings.
    We, as you may or may not know, Senator Bennett, some 
companies were concerned with testing, that in order to test 
they might have a release. EPA found a way to allow a testing--
``amnesty'' is a peculiar word, but at least a testing 
flexibility, to allow moderate releases under certain 
preestablished conditions that would allow a company to take 
the risks of testing without having a Federal sanction.
    And the last thing I would like to comment on is, the risk 
management planning process that we have under Section 112(R) 
of the Clean Air Act requires that companies meet their general 
responsibilities and general duties. The essence of our 
publication is to say, ``Industry, you have a general duty to 
operate safely, and that includes Y2K.'' Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Makris can be found in the 
appendix.]
    Chairman Bennett. Thank you.
    Ms. Littles.

  STATEMENT OF PAULA R. LITTLES, LEGISLATIVE DIRECTOR, PAPER, 
 ALLIED-INDUSTRIAL, CHEMICAL, AND ENERGY WORKERS INTERNATIONAL 
                             UNION

    Ms. Littles. Thank you, Mr. Chairman. Good afternoon. My 
name is Paula Littles, and I am the legislative director of 
PACE International Union. Our union represents workers employed 
nationwide in paper, allied-industrial, chemical or refining, 
and nuclear industries. Workers at these facilities are 
responsible for critical plant operations. They implement the 
contingency measures used during emergencies, from inclement 
weather to system failures to fires and/or explosions.
    The Chemical Safety Board report released in March 1999 
explained that ``The Year 2000 technology problem is 
significant in the chemical manufacturing and handling sector, 
posing unique risks in business continuity and worker and 
public health and safety.'' We firmly believe that chemical 
workers, emergency responders, and local government agencies 
that focus on environmental and emergency response should be 
provided with training and tools to adequately address Y2K 
issues. Currently workers are provided training on contingency 
plans for single device failures, for example, loss of a boiler 
or loss of electricity or some other similar utility.
    However, multiple device failure possibilities are not 
normally considered in the current process hazard analysis. It 
is unclear what the outcome might be due to such failures--
possible multiple control system failures, multiple utility 
failures, or a combination of both.
    Contingency planning for Y2K-related emergencies has to be 
designed and implemented with worker involvement--workers 
provide the day-to-day operations of these facilities, and they 
have the day-to-day operating knowledge--and should also be 
designed to include safe operations, safe shutdown, and 
emergency response. Any such planning must also take into 
account human factors such as appropriate staffing, hours of 
continuous work, rest intervals, and worker stress levels.
    We have discussed this issue with the companies that employ 
our members at their facilities, and it is felt in our 
organization that a number of the larger companies are taking 
the Y2K problem seriously and are expending large amounts of 
resources to correct the problem. A number of these facilities 
have shared their concern regarding the reliability of their 
utility suppliers.
    Petrochemical facilities have a great dependency on 
purchased utilities for their day-to-day operations. We 
strongly urge and encourage greater communications between 
utility providers and the facilities they serve, to ensure that 
each entity is doing their part in addressing this issue.
    We are also very concerned with the small and mid-size 
facilities where we represent workers, and also where we don't 
represent workers. Unfortunately, we do not believe these 
facilities have the capability to expend the necessary 
resources to test the design and Y2K contingency measures for 
all of their systems and provide the necessary training for 
their employees.
    We would encourage the companies that are ahead of the 
curve on their Y2K efforts to provide assistance to those that 
are not proportionately comparable. In the short period of time 
remaining before Y2K, we feel that this is one viable option to 
assist these employers that have been unable to adequately 
address this issue.
    No matter what size the company, the Y2K issue could 
threaten worker and public health and safety. We would 
encourage companies to follow the proposed emergency response 
planning as specified in the Chemical Safety Board report 
through Y2K contingency planning on three levels.
    Level one should address continued safe operations that 
include preplanning of actions that will allow the facility to 
continue to run in a safe and environmentally sound manner. 
Level two should address safe shutdown. This level of planning 
assures the availability of personnel, equipment, utility 
services, and other resources needed to ensure a safe shutdown 
of a facility. Level three is activated when contingency level 
one fails to ensure continued safe operations; and contingency 
level two fails to ensure safe shutdown. This will likely 
initiate a process safety incident.
    PACE strongly believes that both employers and government 
agencies should designate worker representatives and include 
them in discussions regarding Y2K contingency planning, because 
ultimately workers will be the ones responsible for 
implementing these plans.
    In conclusion, I would like to say that because of the lack 
of adequate planning for reaching Y2K compliance, contingency 
planning and worker training should be initiated immediately to 
build an emergency response infrastructure to respond to 
environmental disruptions, chemical releases, and worker public 
health and safety. Thank you, Mr. Chairman, for allowing me to 
speak to you today.
    [The prepared statement of Ms. Littles can be found in the 
appendix.]
    Chairman Bennett. Thank you for being with us.
    Colonel Fedorko.

       STATEMENT OF LT. COLONEL MICHAEL FEDORKO, ACTING 
            SUPERINTENDENT, NEW JERSEY STATE POLICE

    Mr. Fedorko. Good afternoon, Senator. I am Lt. Colonel Mike 
Fedorko. I serve as the acting superintendent of the New Jersey 
State Police, and as State director of the New Jersey State 
Police Office of Emergency Management. Thank you for the 
opportunity to testify before the Senate Subcommittee on the 
Year 2000 Technology Problem.
    In New Jersey, Y2K readiness is coordinated by Governor 
Christine Todd Whitman's office, resulting in a comprehensive, 
coordinated effort by all State agencies. The role of the State 
Police Office of Emergency Management in this process is to 
oversee and guide the activity of local emergency planning 
committees. LEPC members interface directly with 
representatives of chemical facilities in their communities on 
issues related to hazardous materials, emergency planning and 
emergency response.
    Our State is home to nearly 1,000 chemical facilities that 
are regulated under the Superfund Amendments Reauthorization 
Act or the U.S. Environmental Protection Agency risk management 
rule. New Jersey's unique emergency management legislation 
mandates the establishment of a local emergency planning 
committee and the development of a State-approved emergency 
operations plan in every one of our 21 counties and 566 
municipalities.
    Our Y2K recommendations to the county and local emergency 
management personnel are that they assess potential risks, 
determine how those risks will impact on the local emergency 
operations plan. We are urging local emergency management 
personnel to examine, assess and build on the disaster 
readiness capabilities they already have.
    This office is supporting those recommendations through 
training sessions and outreach programs aimed at the emergency 
response community. In cooperation with the Office of the 
Governor, the Department of Law and Public Safety, the 
Department of Community Affairs, we have developed an outreach 
program concerning Y2K issues to address our elected officials 
and the emergency response community.
    We have scheduled three regional conferences and invited 
the elected officials, business administrators, emergency 
response personnel, and emergency management personnel from all 
of our 21 counties and 566 municipalities. The timing of this 
hearing is notable, as we held one of our Y2K training sessions 
in Morris County this morning. To date, we have reached 14 
counties and over 235 municipalities.
    Plan appropriately, prepare responsibly: This is New 
Jersey's Y2K message to local governments and community 
members. Local governments have an opportunity to set an 
example and to set the tone for citizens by addressing Y2K 
issues in a proactive, deliberate, and consistent manner.
    ``Proactive'' means start addressing Y2K immediately. 
``Deliberate'' means that we should integrate Y2K planning into 
the existing framework for disaster preparedness, training and 
response. ``Consistent'' means that we should test all 
emergency response systems, verify and test again.
    To the members of the chemical industry who are represented 
here today, we recommend that you continue working with the 
local emergency planning committees, as you are already 
required to do under existing Federal laws such as Superfund 
Amendments and Reauthorization Act and the U.S. Environmental 
Protection Agency risk management rule. The Y2K readiness 
status of your company should be on the agenda during regularly 
scheduled planning meetings held with the emergency response 
community.
    In conclusion, our position--plan appropriately, prepare 
responsibly--is consistent with our planning strategy for all 
emergency disasters. We look forward to the continued 
cooperation and support from the Federal Emergency Management 
Agency and other Federal agencies. We are committed to working 
in conjunction with all State agencies and private sector 
organizations to enhance Y2K readiness for all New Jersey 
citizens.
    Thank you for your time and attention, sir.
    Chairman Bennett. Thank you very much.
    Let's end with Ms. Jane Nogaki.

    STATEMENT OF JANE NOGAKI, BOARD MEMBER, NEW JERSEY WORK 
  ENVIRONMENT COUNCIL, AND PESTICIDE PROGRAM COORDINATOR, NEW 
                JERSEY ENVIRONMENTAL FEDERATION

    Ms. Nogaki. Chairman Bennett, thank you for having this 
hearing today in New Jersey, and thank you for extending to the 
New Jersey Work Environment Council and the New Jersey 
Environmental Federation the opportunity to testify today on 
concerns that the citizens and workers of this State have 
regarding potential Y2K problems in facilities using hazardous 
chemicals.
    My name is Jane Nogaki, and I have been involved in 
community and environmental right-to-know issues for 20 years. 
I am a board member of the New Jersey Work Environment Council, 
a State-wide alliance of labor and environmental activists, and 
I am the pesticide program coordinator for the New Jersey 
Environmental Federation, a nonprofit coalition composed of 80 
organizations and 90,000 members. I am also a resident of 
Marlton, New Jersey and a public member of the Burlington 
County Local Emergency Planning Committee, the county where you 
were this morning when you were looking at Sybron Chemical.
    The New Jersey Work Environment Council and the New Jersey 
Environmental Federation are concerned about potential public 
and occupational health risk posed by chemical releases 
resulting from the Year 2000 computer problems. It is our 
contention that, despite corporate and government efforts to 
identify and remedy Y2K problems, the situation in New Jersey 
remains perilous for workers and residents alike.
    At the same time, if policies are properly designed and 
implemented to address this potential health risk, New Jersey's 
workers and residents may be able to seize opportunities to 
increase awareness about toxics in our neighborhoods and 
workplaces.
    We can be proud of the effectiveness of New Jersey's Toxic 
Catastrophe Prevention Act [TCPA], which covers 91 facilities 
using extremely hazardous substances. We also look forward to 
expansion of the program under the U.S. Environmental 
Protection Agency's Clean Air Act Section 112(R), which will 
extend to approximately 70 additional facilities. Together, 
these laws authorize the State DEP to collect voluminous risk 
information data about roughly 160 facilities using high-risk 
toxics, and they are considered model laws for chemical 
accident prevention.
    Yet, State government efforts to address potential Y2K 
problems in the chemical and related industries appear 
inadequate. Last fall, for example, the DEP conducted an 
informal survey of 20 New Jersey chemical facilities and 
concluded that these manufacturers had few date-dependent 
processing units. DEP simply accepted management's verbal 
assertions and did not request independent verification and 
validation data.
    Thus, it appears that the New Jersey DEP, the agency 
charged with preventing toxic disasters, has put its head in 
the sand when faced with challenges posed by the millennium 
bug. Moreover, it is also apparent that no other agency in New 
Jersey is independently verifying even the most basic 
assertions from chemical facilities.
    Therefore, we have some proposals to remedy this situation. 
To safeguard against preventable Y2K-related chemical releases, 
and to assure New Jersey citizens that both the DEP and 
facilities in the State that use hazardous substances are 
taking adequate precautions, we propose the following:
    That the New Jersey Department of Environmental Protection 
should distribute a Y2K preparedness survey to the roughly 160 
facilities covered by the Toxic Catastrophe Prevention Act and 
the EPA Clean Air Act, Section 112. This survey should request 
information about Y2K efforts, including their preparedness and 
planning, to help the DEP determine whether each company is 
Y2K-compliant. The survey should also include questions about 
equipment suppliers and other contractors.
    A reasonable deadline should be set to allow companies to 
complete the survey, and copies of the survey and a list of the 
companies receiving it and an introductory letter about the 
importance of Y2K preparedness should be sent to the 
appropriate mayors and local emergency planning committees in 
municipalities throughout the State.
    Second, for those companies that do not respond to the 
survey by the deadline, the DEP should conduct follow-up 
enforcement activities. They should conduct independent 
validation and verification audits of a limited number of 
facilities, and then they should generate a report detailing 
the results of their findings, and make this information 
available to the public.
    And then we believe that the DEP should initiate a series 
of local hearings on Y2K preparedness, in which a survey of 
questions that people could ask in their own community, such 
as, are chemicals being stockpiled onsite in anticipation of 
the Year 2000? Have independent verifications taken place? Have 
risk management programs been shared with the community? This 
kind of survey and public outreach could go a long way toward 
making sure that the outcome of this preparedness is to prevent 
accidents.
    We see this as a tremendous opportunity, but only if there 
are some more teeth in a program, a State survey and prevention 
program that heightens the awareness about this potential 
problem. We don't think that there should be panic about the 
situation, but I think we concur with your feelings and the 
feelings of the Chemical Safety Board that the prevention 
awareness has to be heightened at this point and not left to 
chance.
    So thank you very much for the chance to testify here.
    [The prepared statement of Ms. Nogaki can be found in the 
appendix.]
    Chairman Bennett. Thank you.
    Who wants to respond to Ms. Nogaki? Let me ask you. You run 
an operation. How would you respond to a questionnaire of that 
kind? You have the advantage of not being from New Jersey, so 
that you can give us maybe, Mr. Martin, a reaction. How would 
you respond if the State were to do the kinds of things she has 
just described?
    Mr. Martin. I think the forums, the forums as I understand 
she is speaking of, would be quite great, and I am trying to 
relate that to what we are already doing, and I think it has 
made us a lot of money, and increased our understanding and 
increased our awareness level within the community and within 
our plant site.
    Whereas to the specifics of all the things she is 
requesting, maybe not knowing the logistics of everything that 
goes on as far as New Jersey is concerned, it would be hard to 
maybe address them specifically. Like I said, for our 
particular area, we have had a great relationship with our 
LEPC's, we have had a great relationship with the communities. 
I don't know. We dispel, I guess, any type of outlandish fears, 
if you will, of anything that could happen, because of that 
relationship and that we work so closely together.
    Chairman Bennett. Thank you.
    Mr. Makris, you have a sort of a national view of these 
kinds of things. Could you give us a reaction?
    Mr. Makris. Several. First, I am glad that Jane is saying 
they are going to do it in New Jersey, rather than saying it is 
something that EPA Washington should do, because I think it is 
consistent with the general view of the program as best run 
closer to the people.
    So my view would be that we would provide, I would provide, 
my office would provide any support that we could to this kind 
of an effort with DEP, and I suspect that it would be like 
something that would catch on throughout the country and other 
States might follow some of these models.
    Along those lines, you know, several people mentioned the 
importance, especially you, Senator Bennett, the importance of 
trying to penetrate what is really going on out there. You 
know, our folks in the Toxic Release Inventory Program have put 
out a major letter to their constituents talking about 
enforcement and reminding them of their obligations.
    Similarly, we are planning an enforcement test in EPA 
Region Six, which I guess we will regard as a pilot. And last, 
I would like to mention that Dana Minerva, our deputy assistant 
administrator for water, testified before you in Anaheim, and 
one of the things that she has done is, she is initiating a 
National Test Day for water systems.
    So, you know, I think we are going to have several examples 
and really do some testing and observe some specific instances. 
So I think anything that gets that profile raised and that 
provides an opportunity with a rifle instead of a shotgun to 
see what goes on is helpful, and we will provide whatever help 
Jane needs. Probably can't send money.
    Chairman Bennett. OK. Mr. Fedorko, I have gone to two other 
places first to give you a chance to collect your thoughts. Do 
you have a response to----
    Mr. Fedorko. Senator, we work with the local emergency 
planning committees, and it is their responsibility to go out 
and talk to the chemical industry, and we actually rely on them 
to do that.
    Chairman Bennett. The issue raised by several of you is the 
issue of self-reporting, and that gives us some concern at the 
Federal level. The only information we have is self-reported.
    Ms. Nogaki, what agency would you think should go out and 
do the audit? As far as Mr. Makris is concerned, he gets 
audited by the General Accounting Office. When he says that all 
of EPA's computers are going to work, we say, ``Thank you very 
much,'' and then we turn to the General Accounting Office to 
have them tell us whether he is right on or not, and sometimes 
the GAO disagrees with some of the folks who self-report.
    Colonel Fedorko or Ms. Nogaki, who should do some of the 
independent auditing of people who self-report in New Jersey?
    Ms. Nogaki. Well, we are suggesting--and understand, you 
know, I do not represent the Department of Environmental 
Protection, I represent----
    Chairman Bennett. I understand. Sure.
    Ms. Nogaki [continuing]. I believe that the Department of 
Environmental Protection should be an enforcing and verifying 
agency, that we shouldn't leave this to self-reporting.
    And so who should do that auditing? I think the DEP is 
probably able in a limited number of cases to verify and audit, 
and I think that companies are sometimes hiring their own 
auditors, third person auditors and verifiers, to do that 
audit. And I think either one would be a method, but I think 
that it is government's responsibility here to provide some 
verification that this effort is going on.
    The self-reporting, in the case of many companies, you 
know, it is in their own interest to do this right, and many of 
them will do it right, but I think that there is a public need 
and a worker need for some kind of verifiable audit going on. 
Even if it is in a limited number of facilities, I think it 
should happen, and I think that the State branch of the 
Environmental Protection Agency, which is in most places called 
DEP or DNR, should be that agency.
    Local emergency planning and local emergency responders, 
they are the people that are left to pick up the pieces when 
things go wrong. You know, God bless them, they are always 
willing and ready to be there, and they have a communication 
status, but they don't have any enforcement powers and they are 
not enforcers of environmental laws, they are responders.
    It is the Department of Environmental Protection's job to 
enforce this law, and they are clearly--they have statutory 
authority under the TCPA and the Clean Air Act, to inspect 
facilities to ensure that they are operating safely.
    Chairman Bennett. Yes, sir?
    Mr. Makris. Senator, we did not include in the original 
requirements for the risk management planning, Y2K. We put that 
rule out in 1996, and it was before some of this flurry took 
place and some of this great concern.
    But what we have done is reminded, through that alert, that 
it is their general duty, which is a very important part of the 
112(R) program, risk management planning program. And in 
addition, when people file electronically, one of the first 
reminders is, ``Don't forget to include Y2K and include it in 
your executive summary of your operation.'' Now, that is not 
mandated by law but it is an encouragement that we have done to 
the 69,000 facilities we expect to submit risk management 
planning.
    Chairman Bennett. Yes. I am interested, Ms. Nogaki, that 
you are very complimentary of New Jersey's initiative, just 
talking about the State government as a whole here, New 
Jersey's initiative in the Toxic Catastrophe Prevention Act. I 
don't know of any other State where they have done that with 
State legislation. Do you, Mr. Makris, know of any?
    Mr. Makris. Clearly New Jersey led the way.
    Chairman Bennett. Yes.
    Mr. Makris. New Jersey led the way. Louisiana, California, 
several other States have very active programs. Georgia is 
developing an active program. But I think it was the State of 
New Jersey and Senator Lautenberg's powerful influence, and at 
that time Congressman Florio's influence, that helped to drive 
some of the programs in the first place. And the first thing we 
do at EPA is ask New Jersey to come on in and give us some 
advice.
    Chairman Bennett. Well, coming from outside the State, 
then, I come in for this hearing and I hear high praise for the 
State's initiative in one area, and criticism for the State's 
initiative in another area or the State's enforcement in 
another area. I find a little bit of a disconnect, that a State 
can lead out in the one regard and then is derelict in another 
regard. Can any of you help me?
    Ms. Nogaki. I would just like to respond. I don't 
understand myself the dereliction of duty here. As I said, DEP 
didn't even attend a national briefing on this issue, but we 
think that by our raising this issue and bringing it to the 
department or to the Governor of the State, to ask if some 
enforcement mechanism can be instituted, that perhaps that can 
be corrected.
    Now I am going to say that while New Jersey was first in 
writing a toxic catastrophe prevention law, it was Bhopal, the 
disaster at Bhopal that triggered it. I mean, we do have the 
third highest chemical production in the country. We have a 
high volume of chemicals transported in the State and 
manufactured here, and a very dense population. So our 
awareness of toxic chemicals is probably higher than any other 
State in the country.
    And despite the institution of that law and the pollution 
prevention that has occurred as a result of it, we still have 
had more than 8,000 releases since 1986 that have been 
responded to by emergency responders--transportation spills, 
chemical accidents, very serious accidents.
    Four years ago at NAPP Chemical, four workers were killed. 
It is a batch operation plant. Just last year in Patterson, New 
Jersey, Heterene Chemical released a chemical called creosol, 
and two blocks away an elementary school had to be evacuated 
and many people were sickened by it.
    We continue to have accidents, and we will continue to have 
them, but to the extent that we can prevent them, we need to do 
that. And we think that enforcement, particularly in this kind 
of scenario, should be stepped up.
    Chairman Bennett. The witness from OSHA who appeared on the 
first panel indicated that one of the reasons OSHA has not 
spent more time than it has on Y2K is that the overall record 
of the chemical industry has been very good, and that OSHA 
spends its time with people who have records that are bad. Are 
you challenging that comment on his part?
    Ms. Nogaki. I can't really explain that. I think that in 
New Jersey, that we have a high risk of chemical accidents 
because of the joint nature of our high population density and 
the proximity to----
    Chairman Bennett. That is one of the reasons I am holding 
the hearing in New Jersey, is because you have that 
juxtaposition here that you don't have in a lot of other 
States.
    Ms. Nogaki. Right, so that the consequences of chemical 
releases and accidents are felt immediately, because they often 
happen right in the neighborhood. The plant that you visited 
today, Sybron, is in a relatively rural area, but most----
    Chairman Bennett. Yes. Not relatively. It is rural.
    Ms. Nogaki. Well, yes, it is in a rural area, but many of 
the manufacturing and chemical facilities in New Jersey are in 
neighborhoods, you know, like a block away from here. They are 
in residential neighborhoods, they are in light industrial 
areas facing highways where there is heavy exposure, and we 
have the New Jersey Turnpike, the route between Philadelphia 
and New York where there is a high volume of transport going 
on. So we are at higher risk than other places.
    Chairman Bennett. Ms. Littles, we haven't heard from you 
since your opening statement. Do you have a comment on some of 
the issues we are discussing here?
    Ms. Littles. Well, actually I think that Jane's suggestion 
is a very good one, and I believe it could be beneficial in 
more than just New Jersey, in other States also. There has got 
to be some mechanism in place, I think, for the government to 
be able to track what companies are or are not doing around 
this issue, to enable to ensure that they can come up to a 
level that would be acceptable for the end of this year.
    Chairman Bennett. I agree with Mr. Makris, I am delighted 
to have the suggestion made at a State level rather than a 
Federal level, because we couldn't get the space rented and the 
pencils bought for an agency in time to do this at any kind of 
a Federal level.
    Ms. Littles. Oh, I am certain, but there are other States 
that are, as New Jersey is, that actually could also benefit 
from having some system such as the one she suggested in place.
    Chairman Bennett. Mr. Martin, just to go back to you for a 
minute, where is Virginia on this? Just to get another view, do 
you have the kind of State monitoring that is being asked for 
here in New Jersey?
    Mr. Martin. Well, as far as the different reports that need 
to go to State agencies, those reports are quite naturally 
submitted on time and by their request. Again, you know, 
through the regular regulatory reporting systems, I think all 
of our information is sent and everything is checked out and 
verified. No other normal reporting that I think--that I know 
of in Virginia that is required would have any kind of bearing 
or any kind of impact, other than the ones we are already 
submitting, the 112, the other reports, et cetera, that are 
mandated by EPA.
    Chairman Bennett. Thank you. Well, Governor Whitman's 
office has been very cooperative with us in helping us set up 
the hearing. We have a sense of very good communication, and we 
will communicate to the Governor's office the suggestions and 
comments that have been made here.
    Anyone have any final comment you wish to make?
    Mr. Fedorko. Senator, we can make that recommendation to 
Commission Shenn with DEP, through the Office of Emergency 
Management.
    Chairman Bennett. I think that would help short-circuit the 
communications loop, and I thank you for your willingness to do 
that.
    We thank you all. We thank the members of the first panel 
and those who have attended. The hearing is adjourned.
    [Whereupon, at 2 p.m., the hearing was adjourned.]
                            A P P E N D I X

              ALPHABETICAL LISTING AND MATERIAL SUBMITTED

                                 ______
                                 

            Prepared Statement of Chairman Robert F. Bennett

    Good Morning and welcome to our hearing on the impact of the Year 
2000 technology problem on the chemical industry. I am pleased to be 
holding this hearing here in New Jersey, not only because of the 
importance of this industry to your state, but also because it is nice 
to go outside of Washington DC to meet the people on the front lines of 
the battle against the Y2K computer problem.

    I have just come from a tour of Sybron Chemicals in Birmingham and 
was impressed with the level of automation in this plant, which I 
understand is typical of other plants in the industry. While this 
automation enables safe and efficient operation of the plant, it also 
increased susceptibility to Y2K anomalies. I can only hope that the 
other tens of thousands of chemical producers and users in America are 
doing as well as Sybron in addressing this insidious problem.

    We have an excellent group of witnesses here today who have taken 
time out of their busy schedules to help us shed light on the Y2K 
problem in the chemical industry. Before we begin let me talk about the 
importance of the chemical industry.

    The crude oil refining industry keeps American transportation 
running. Our health--and sometimes our lives--are dependent on 
pharmaceuticals produced by the chemical industries. And, the 
manufacture of virtually every consumer product is in some way 
dependent on vital chemical ingredients. As you can see on this chart, 
(shaped like a house) chemical products are present in everything from 
shampoo to floor polish.

    On the economic side, the $392 billion chemical industry is the 
largest in the manufacturing sector and employs over one million 
workers. It is also our largest exporter accounting for $69.5 billion 
or 10% of the total exports in 1997, easily out distancing the second 
leading industry--agriculture--and generating a trade surplus on 
average of more than $16 billion annually over the last ten years.

    The chemical industry has set high standards for safety, and has a 
very proactive program to preserve this record and to continuously 
improve on health, safety, and environmental performance. This industry 
is one that is already accustomed to dealing with risks, and I am 
hopeful that we won't see any Y2K-related problems. Nevertheless, the 
chemical industry warrants our attention because accidents can have 
such devastating effects. Even though it happened over 15 years ago in 
another country, most of us remember the Bhopal accident that killed 
several thousand people and injured tens of thousands of others. We 
have never seen a chemical release of that size in the United States, 
but the potential for harm is great. An estimated 85 million 
Americans--more than 30 percent of the U.S. population--live within 5 
miles of one of the 66,000 sites that handle hazardous chemicals. 
That's why any potential Y2K problems at chemical facilities cannot be 
taken lightly.

    In addition to safe ``on-site'' operations, chemical processing 
plants must prepare to deal with external services which may be Y2K 
vulnerable. Let me give you an example. On November 24, 1998, a power 
outage caused the shutdown of an Anacortes, Washington refinery. As the 
refinery was returning to operation after a cool-down period, an 
accident occurred that took the lives of six workers. The power outage 
may not have directly caused the accident, but it brought about the 
circumstances that put six men in danger, and ultimately cost them 
their lives. Accidents are more likely to occur at a chemical plant 
during startups and shutdown--just as airlines face an increased risk 
of accidents during takeoff and landing. This industry must be ready 
for any sudden Y2K-induced shutdowns.

    In this industry, with the many harmful and toxic substances that 
are involved in chemical processes, there is very often little room for 
error, and the potential for a Y2K impact must be determined and 
planned for. Our Committee has been very concerned about the Y2K impact 
on numerous government agencies and private sector organizations. 
However, in few other areas have we have perceived a similar possible 
public health risk associated with Y2K. That's why we're here today to 
address the question, ``Will Y2K and chemicals be a volatile mix?''

    * * * * *

    Panel 1 Introduction: The witnesses for our first panel today are:

    - The Honorable Dr. Jerry Poje (POE-GEE), member of the US Chemical 
Safety and Hazards Investigation Board and principal author of the 
March 1999 report on this topic.

    - Mr. Francis Frodyma (FROE-DEE-MA), the Acting Director of Policy 
at the Occupation Safety and Health Administration,

    - Mr. Paul Couvillion (COE-VEE-ON), Global Director for DuPont's 
Year 2000 Project, and

    - Mr. Jamie Schleck, Executive Vice President of Jame Fine 
Chemicals, a specialty chemical manufacturer here in New Jersey.

    Panel 2 Introduction: We'll now start our second panel. Our 
witnesses are:

    - Mr. James Makris, director of the Chemical Emergency Preparedness 
and Prevention Office at the EPA,

    - Mr. Charlie Martin, Site Safety Coordinator for Hickson Danchem 
Corporation in Danville, VA. We appreciate Mr. Martin's being here to 
emphasize that this is a problem we must be concerned about across the 
nation,

    - Ms. Paula Littles, Citizenship & Legislative Director of the PACE 
International Union,

    - Lt. Col. Michael Fedorko, the State Director of the New Jersey 
Office of Emergency Management, and

    - Mrs. Jane Nagoki (NAH-GAWK-EE), representing the New Jersey Work 
Environment Council and New Jersey Environmental Federation.

    We appreciate the efforts of all of our witnesses today, and we 
extend our gratitude for their preparation and contributions. As I said 
when we began, this industry is very important to our standard of 
living, our health, and our economy. We must all work together to 
prevent the Y2K-problem from damaging any of these areas.
                               __________

                 Prepared Statement of Paul Couvillion

    Introduction

    Good afternoon, Mr. Chairman and members of the Senate special 
committee. My name is Paul Couvillion, Global Director for DuPont's 
Year 2000 Project. Thank you for inviting me to appear before you today 
to discuss this very important issue.

    DuPont has made formal disclosure statements to the U.S. Securities 
and Exchange Commission regarding our Year 2000 Project. I'm not here 
to restate those disclosures and disclaimers, but to give you a brief 
update on our project and to answer any questions you may have when I 
complete my statement.

    I have worked for DuPont for 35 years and was appointed to lead 
this global effort almost two years ago. I was selected to lead this 
work because of my experiences in leading people and in managing 
manufacturing processes in a number of DuPont businesses.

    The remediation of Year 2000 issues in our plant process control 
systems, computer hardware, applications software, embedded chip 
equipment and our suppliers and customers are very important to DuPont. 
Our goal is to achieve safe, continuous business operation through the 
Millennium. Based on our current plan, we should have more than 98% of 
our critical and significant computer systems Year 2000-capable by the 
end of June 1999, with the remainder completed by year-end.

    I am excited about what our teams have accomplished and am 
confident we will be internally ready for the Year 2000. We are 
developing contingency plans where we have assessed potential 
interruptions in supplies or product flow to customers.

    Who Are We?

    DuPont has been in business for almost 200 years. We are a world 
leader in science and technology with a range of disciplines and 
products including high performance materials, specialty chemicals, 
pharmaceuticals and biotechnology. Our portfolio of 2,000 trademarks 
and brands includes Lycra(R) elastane, Teflon(R) fluoroproducts, 
Stainmaster(R) residential carpeting, Kevlar(R) aramid fiber and 
Corian(R) solid surface materials. We operate in 65 countries worldwide 
and have a long-established presence in North America and Europe and 
strong and growing market positions in South America and Asia Pacific. 
DuPont's 93,000 employees are dedicated to bringing science to the 
marketplace in ways that benefit people and generate value for our 
stockholders.

    DuPont and Y2K

    The goal of our global Year 2000 team is to be certain that 
critical and significant information technology is capable. This 
project is one of the top corporate initiatives identified by DuPont 
President and Chief Executive Officer Chad Holliday.

    DuPont has proactively addressed the Year 2000 issue on a global 
basis since 1995. We established two key goals for the project. The 
first, consistent with our commitment to continuously improve our 
safety performance, is to prevent safety, health or environmental 
incidents that could occur as a result of the Year 2000 Problem. 
Secondly, we want to maintain the continuity of our businesses in 
service to customers, employees, stockholders and communities.

    This task has required mobilizing employees around the globe. The 
DuPont Year 2000 Project consists of more than 40 teams and about 2,000 
people from businesses, regions and functions that comprise the company 
worldwide. These teams work together with our Information Technology 
(IT) Alliance Partners--Computer Sciences Corporation (CSC) and 
Anderson Consulting--who operate the majority of DuPont's global 
information systems and technology infrastructure.

    The company's approach to the Year 2000 challenge involves the use 
of a multi-phase process being used by many companies worldwide:

      Assign qualified people to the project,
      Find and Inventory systems, hardware, and software 
(objects),
      Assess object capability (Capable, not capable, unknown),
      Define safety or business criticality of objects (Mission 
critical, significant, negligible),
      Strategies to remediate/test non-capable objects 
(remediate, replace, retire, validate),
      Create plans to define the work, the schedule and 
resources needed,
    Prepare and Remediate objects,
    Test objects/systems individually or as an integrated system,
    Redeploy into production, and
      Contingency planning and Event management.

    This process is applied to a diverse range and number of systems 
connected in complex and extensive networks across businesses and 
regions.

      6 regions--US, Mexico, Canada, Asia Pacific, Europe 
(includes Middle East, Africa), South America,
    3 global data centers in 2 countries,
      2,000 medium range computer platforms, each with--100 
software applications,
      12,000 telecommunications, wide area and local area 
network devices, switches or servers,
    60,000 personal computers and applications,
    500 globally shared, centrally managed, applications used to manage 
our global businesses,
    8,500 business specific applications among 17 global business units 
and 10 functions,
    200,000 objects or embedded chips at 320 production units at 135 
sites around the globe, and
    2,000 non-manufacturing sites, warehouses, sales offices, with bar 
code readers, faxes, etc.

    Our Year 2000 Project is managed centrally with a small, diverse 
team of experienced people. The work is executed locally within each 
business unit, function and region. Corporate direction is provided by 
our Operating Group who receive project updates biweekly. My team 
reports to an Executive Steering Committee every month. This steering 
group is made up of senior corporate officers, including the CIO, CFO, 
and the V.P.'s of Sourcing, Engineering and two global businesses. The 
role of my team has been to develop and provide common technology and 
processes for the Year 2000 project, monitor business unit progress 
versus plans, collect metrics, hold periodic reviews and provide 
support to unit projects.

    Costs

    We estimate total expenditures to become internally Year 2000 
capable to be in the range of $350 to $400 million. Through March 1999, 
we have expended $225 million or about two-thirds of our 4-year 
estimated expenditures.

    Readiness of Parties Upstream and Downstream from DuPont

    DuPont has more than 80,000 suppliers, 20,000 customers and 150 
joint ventures around the globe. A Business Partner workstream was 
established to develop an informed view of the readiness of more than 
5,000 critical suppliers, 2,000 key customers and the joint ventures.

    About three-fourths of the suppliers surveyed responded; of those 
we have assessed 15% as potentially creating interruptions to the 
continuity of supplies or services. Key reasons for our concerns are 
``no response,'' ``no program in place,'' ``late completion,'' or ``non 
supplier assessment in place.'' We initiated and have almost completed 
four special emphasis surveys among these key supplier groups to become 
better informed about potential disruptions to our operations:

      Global telecommunications,
    Logistics suppliers (air, truck, rail, ocean and freight 
forwarders),
    Electrical utilities generation and distribution, and
    Natural gas providers.

    Initial conclusions indicate we will likely experience a ``low'' 
probability of failure among these groups of infrastructure suppliers. 
However, we have found some specific regional or area exceptions where 
these services could be interrupted and where contingency plans will be 
required.

    About half of the customers we surveyed responded; of those 
responding we have assessed 33% as potentially creating interruptions 
to our business processes. Key concerns include the late remediation of 
order placement systems, receipt of product by customers and accounts 
payable systems.

    Contingency Plans, Crisis Management and Event Management

    Each of the company's business units has formulated contingency 
plans to address potential disruptions to their business operations 
from both internal and external sources. DuPont is reviewing a number 
of options including sourcing raw materials from alternate vendors or 
arranging for back-up or alternate transportation carriers. We have 
completed summary plans and expect to complete detailed contingency 
plans by June 1999. We will continue to update these plans during the 
remainder of the year. They will be executed in time to assure 
continued operations.

    Information about DuPont's Year 2000 project including a completed 
CMA survey and our most recent SEC disclosure statement are available 
on our internet home page at www.dupont.com.

    Summary

    This project is critical to DuPont's success and we have committed 
the necessary resources to get the work done on time. From this work we 
have learned and gained much about how to do a large global project 
including:

      Using teams and networks globally,
    Leveraging knowledge and solutions globally across businesses and 
regions,
    Partnering with our IT Alliance for maximum business benefit,
    Better insights and understanding about how our IT systems work,
    Helping us to create a new, future IT strategy, and
    Closer working relationship and understanding of our value chain.

    We intend to meet our goal of safe, continuous operation through 
the Millennium.

    At midnight on December 31, 1999, the world--companies, 
governments, institutions--will be given a test. I don't know about 
you, but each time I take a test I get a little anxious and nervous. We 
have done our homework and I believe we have prepared ourselves well 
for this final exam and expect to get an ``A'' for both effort and 
results.

    Thank you for the opportunity to appear before the committee this 
afternoon. I will be happy to answer any questions you may have.
                               __________

 Responses of Lt. Colonel Michael A. Fedorko to Questions Submitted by

                            Chairman Bennett

    Question 1. Do you have specific concerns regarding the Y2K-
vulnerability of the chemical industry, and has the Office of Emergency 
Management responded to those concerns?
    Answer. From the perspective of an organization concerned primarily 
with consequence management, let me assure you that we take this issue 
seriously. While regulatory authority for this segment of industry 
resides with the NJDEP, the NJSPOEM is responsible for coordinating 
emergency management by assuring that States agencies, counties and 
municipalities maintain current and viable all-hazard emergency 
operations plans to deal with a full range of emergency situations. 
With the onset of the Y2K issue, we recognized the unique challenges 
inherent with Y2K and felt it prudent to hold three regional public 
officials conferences to provide local planners and responders with 
information and advice on addressing Y2K concerns in their 
jurisdictions. These workshops were extremely well received. In 
conjunction with the State's Chief Information Officer and the 18 
respective State Department Y2K coordinators, we continue to monitor 
progress toward achieving Y2K readiness.
    The NJDEP does not have specific concerns because of the 
significant outreach effort by the USEPA and the various chemical 
industry trade association. Assessments indicate that the larger 
facilities are aware of the problem, have allocated appropriate 
resources and should be ready. Additional effort is being made by the 
USEPA and these trade associations to target the small and medium sized 
enterprises to facilitate their rate of progress to that of the larger 
facilities. The NJDEP's general concerns (i.e., how do we handle 
problems that occur in spite of the foregoing) are being addressed by 
the Local Emergency Planning Committee activities described in response 
to question 3.
    Question 2. What is being done to plan for response to multiple 
system failures within a single plant, or simultaneous failures in 
neighboring facilities?
    Answer. Community Emergency Managers have been trained using the 
Guide for State and Local Emergency Managers. This Contingency and 
Consequence Management Planning for Year 2000 Conversion manual 
developed by FEMA is being used to prepare plans that address these 
worst case scenarios. Consequence management plans will then be 
developed, coordinated and tested. These actions will occur in the time 
line shown in the response to question 3, below.
    In addition, risk management plans, as required under both TCPA and 
Section 112(r) of the Clean Air Act do require worse case scenario 
development and the corresponding emergency procedures. Training 
programs conducted by the NJSPOEM, NJDEP and USEPA have always included 
consequence management and multiple system failures as part of their 
classroom and hands-on curricula. This is a standard practice under 
hazard and risk assessment for emergency response teams.
    Question 3. Can you describe specific initiatives undertaken by the 
Local Emergency Planning Committees (LEPCs), and what impact have they 
had on Y2K readiness in the chemical industry?
    Answer. LEPCs have been advised to convene a special session to 
occur not later than September 30, 1999 to address potential impact of 
Y2K. Please refer to the enclosed letter, which was sent on May 27, 
1999 to all 566 municipal and 21 county emergency management 
coordinators. They are to insure active participation of local 
government officials, private industry, businesses and community 
organizations in the analysis and problem-solving process of 
confronting potential Y2K challenges. Municipal emergency management 
coordinators are to schedule the meetings no later than June 30, 1999. 
NJSPOEM regional staff will work closely with the county coordinators 
to assist in the planning and conduct of these meetings, placing 
emphasis on municipalities hosting TCPA and/or SARA chemical handling 
facilities.
    An annex by annex review of their respective emergency operations 
plans and worst case analyses will be the basis for coordinated plan 
development, testing and implementation. These activities are designed 
to minimize the adverse impact to human health and the environment if 
releases occur in spite of the best Y2K readiness preparations by the 
chemical facilities.
    Question 4. Would you describe the training and outreach programs 
your office has developed to support the Local Emergency Planning 
Committees?
    Answer. The NJSPOEM's Training and Program Support Bureau offers a 
variety of interrelated courses designed specifically to improve the 
professional, managerial and technical skills of LEPCs. The curriculum 
includes over 50 offerings which cover emergency management, planning, 
community disaster education, leadership, hazardous materials planning 
and emergency response, incident command and other emergency management 
programs designed for targeted audiences, such as school administrators 
and persons with disabilities.
    During the past year, the NJSPOEM has also been able to focus on 
specific projects related to the implementation of the USEPA Risk 
Management (RMP) Rule. Activities include the development and delivery 
of the NJSPOEM Risk Management and Communication Course, over 15 RMP 
outreach presentations, development and distribution of RMP print 
materials aimed at LEPCs, and three pass-through grants which were 
awarded to county LEPCs for demonstration projects related to the USEPA 
Rule. During this time, The New Jersey Chapters of the American 
Institute of Chemical Engineers and the Academy of Certified Hazardous 
Materials Managers also approached the NJSPOEM regarding the 
development of an RMP volunteer match program, where trained volunteer 
chemical engineers from either association would be matched with county 
and municipal LEPCs to assist them in interpreting industry RMPs, and 
integrating RMP data into their community's emergency operations plan. 
To date, three county LEPC matches have been made.
    Finally, the New Jersey Department of Community Affairs, Division 
of Local Government Services distributes a quarterly publication 
entitled ``Y2K? OK!'' to all municipalities and counties in the State. 
This publication was targeted specifically at local government 
officials by providing them with current technology and advice on 
addressing Y2K concerns in their communities, and encouraging public 
education and awareness. A copy of Volume 2 of this publication is 
enclosed for your review. In addition, the State Y2K Coordinator and 
his staff have been conducting a vigorous outreach campaign to the 
public and private sectors to deliver the Y2K compliance message and 
reinforce the need for emergency planning.
    Question 5. What are the Department's [NJSPOEM] plans to provide an 
increased response capability (to address problems which might occur in 
the time period immediately before and after the date change)? Will 
there be any increase in emergency response capability to deal 
specifically with chemical plant incidents?
    Answer. Emergency response capability probably will not be altered 
significantly from normal procedures. Y2K preparation has enhanced the 
quality of contingency plans by encouraging local planners and 
responders to consider direct and secondary impacts of this hazard. It 
is hoped that each of New Jersey's 566 municipalities will have 
developed a Y2K appendix to their EOP before the end of this year.
    Question 6. What has been the level of involvement of your 
Department [NJSPOEM] with the New Jersey Department of Environmental 
Protection in addressing the allegation that the NJDEP is not 
sufficiently aware of status of Y2K readiness in the chemical industry?
    Answer. These criticisms were communicated in a letter from the 
witness (co-signed by others) to Governor Whitman on May 7, 1999. The 
response by Robert C. Shinn, NJDEP Commissioner, dated May 26, 1999, 
(also enclosed) outlined actions that the NJDEP considers necessary and 
sufficient for effective accomplishment of its mission. The NJSPOEM has 
no direct role in these issues, however, as discussed earlier in this 
letter, we do have significant interaction in coordination, development 
and implementation of emergency response planning. At the three public 
officials conferences, LEPCs were encouraged to place special emphasis 
in encouraging participation from their chemical industry in addressing 
Y2K issues in their community and reporting their progress to the 
public through local media and community group meetings. In addition, 
the State's Y2K Coordinator holds monthly Y2K coordinating meetings 
with all 18 State Department Information Officers to share information 
and monitor progress towards Y2K compliance.
    Again, thank you for the opportunity to respond to your concerns. 
The NJSPOEM and NJDEP are making every effort to take a pro-active 
stance on the Y2K issue. We believe that we have the mechanisms in 
place to expediently address the known and potential challenges of Y2K. 
Should your office or members of the Special Committee on the Year 2000 
Problem have additional concerns, please do not hesitate to contact 
this office.








































































                               __________

       Responses of Francis J. Frodyma to Questions Submitted by

                            Chairman Bennett

    Question 1. You mentioned in your statement that the Standard on 
Process Safety Management of Highly Hazardous Chemicals (PSM) does not 
cover many facilities considered to be at risk due to Y2K. Can you 
elaborate on this, and explain what has been done to reach those 
facilities not covered by PSM?
    Answer. OSHA's PSM standard only applies to establishments that 
have more than a threshold quantity of certain highly hazardous 
substances on site. This list of highly hazardous substances, which was 
promulgated separately through a notice-and-comment rulemaking, is 
limited to approximately 135 hazardous substances and does not include 
all flammable, toxic and reactive substances that could potentially 
create a Y2K-related safety hazard. Therefore, many facilities that one 
might assume are covered by PSM, such as chemical plants processing 
substances not covered by PSM, or gas stations, are not covered. A 
facility's coverage status can vary as hazardous substances are moved 
on to or off of the worksite. OSHA is aware that there are many 
facilities that store large quantities of flammable and reactive 
substances and are at potential risk from Y2K-related problems, but 
there is no requirement for such facilities to identify themselves to 
OSHA. There is no ``master list'' of PSM-covered facilities for OSHA to 
target. Therefore OSHA has initiated a general outreach program to all 
industries, including the development of a concise Y2K fact sheet to 
alert employers to the potential for Y2K-related problems at their 
worksites. This fact sheet has been posted on OSHA's Internet web site, 
is handed out to employers during OSHA inspections and consultation 
visits, and was recently sent out to 12,500 employers in a mass 
mailing.
    Question 2. It is clear from your statement that OSHA believes that 
PSM inspections are not an effective tool to be utilized in assuring 
Y2K compliance due to resource limitations and the existing focus of 
the PSM program. What has OSHA done, as an alternative to using PSM 
inspections, to assure that Y2K safety related hazards have been 
properly addressed?
    Answer. There is no way for OSHA to ``assure'' that Y2K-related 
safety hazards have been properly addressed by every employer in every 
industry. Even if OSHA devoted all of its resources entirely to the Y2K 
issue, and had airtight legal authority to cite employers for failure 
to properly address Y2K-related safety hazards, the agency could not 
inspect all of the workplaces that are at risk. Therefore, OSHA has 
chosen to address Y2K through outreach and education, by disseminating 
information to as many employers as possible.
    Question 3. You mention in your statement that OSHA concentrates 
its efforts on those industries having the worst safety records and 
higher-than-average injury and illness rates, and that the chemical 
industry actually has one of the best records in this regard. However, 
experts in the chemical industry, including the Chemical Safety Board, 
recognize the great vulnerability of the chemical industry to Y2K 
related safety problems. Do you mean to state through your remarks that 
OSHA has intentionally ignored an area in which there is great 
potential for health and safety risks, simply because statistics on 
past incidents don't support it? Shouldn't OSHA be as concerned about 
the potential risk areas, as they are with demonstrated risks?
    Answer. OSHA has not ignored the potential for Y2K-related safety 
problems in the chemical industry. On the contrary, we have developed a 
Y2K fact sheet, publicized its availability, posted it on our Internet 
web site, instructed our inspectors to hand it out at each inspection, 
asked the Consultation Programs to distribute it during their visits, 
and included it in a mass mailing to 12,500 businesses. We worked with 
the Environmental Protection Agency on the development of their Y2K 
fact sheet, and have included a link to EPA's fact sheet on our web 
site. We also participated in the Y2K workshop organized by the 
Chemical Safety Board in December, 1998.
    As for concern about potential risks versus demonstrated risks, 
OSHA believes we have found an appropriate balance between the two. In 
the case of Y2K, we have chosen to address this potential risk through 
outreach and education.
    Question 4. Would you explain in more detail what a ``Special 
Emphasis Program'' is and why that would not help greatly raising 
awareness on Y2K? It sounds like that is just the sort of program OSHA 
needs. Just the creation of a program and the associated publicity 
would generate a lot of positive activity in the short time remaining.
    Answer. Special Emphasis Programs (SEPs) give OSHA a mechanism to 
conduct programmed compliance inspections in high potential injury or 
illness rate situations which are not covered by normal inspection 
scheduling systems. SEPs can be targeted based on a number of different 
factors, including specific industry, substance or other hazard, type 
of workplace operation, type or kind of equipment, etc.
    As I stated in my written testimony, OSHA does not have a standard, 
other than the Process Safety Management Standard (PSM), under which 
employers could be cited for failure to assess their Y2K readiness and 
address any areas of vulnerability that are discovered. Only about 
25,000 establishments, out of the more than 6 million workplaces in the 
nation, are covered by the PSM standard. Assuming that OSHA enforcement 
could compel Y2K safety, it must be noted that stringent legal tests 
must be satisfied for OSHA to successfully cite an employer under the 
General Duty Clause. Therefore, the General Duty Clause is not an 
appropriate foundation for a Special Emphasis Program. Further, SEPs in 
the chemical industries have proven to be resource-intensive, and an 
SEP on Y2K would divert resources from other, equally important agency 
functions.
    Question 5. You cite several problems which seem to have 
handicapped OSHA in its ability to play a more direct role in 
mitigating potential Y2K related hazards in the chemical industry, such 
as the applicability of the General Duty Clause. What has OSHA done to 
overcome these impediments? Both Congress and the White House have been 
asking the agencies for quite some time now about what additional 
legislation or authority they needed in regard to Y2K. Why weren't 
these issues raised earlier?
    Answer. Even if the legal impediments to OSHA citation were 
removed, OSHA does not believe that a massive program of inspection and 
citation is the appropriate method for dealing with Y2K. There is no 
``one-size-fits-all'' solution when it comes to Y2K, as each workplace 
is different. We believe that education and outreach is the better 
approach. It is in employers' own self-interest to find and fix Y2K-
related safety hazards. We think that if employers are made aware of 
and given information about the Y2K problem, they will take the 
initiative to address it.
                               __________

                 Prepared Statement of Paula R. Littles

    Good morning, Mr. Chairman, Members of the Committee, my name is 
Paula Littles. I am the Citizenship-Legislative Director for the Paper, 
Allied-Industrial, Chemical and Energy Workers International Union, 
AFL-CIO (PACE). Our union represents 320,000 workers employed 
nationwide in the paper, allied-industrial, chemical, oil refining, and 
nuclear industries. It is my pleasure to appear before this Committee 
today to address the issue of Y2K and the chemical sector. According to 
the U.S. Environmental Protection Agency (EPA), 85 million Americans 
live, work, and play within a five-mile radius of 66,000 facilities 
handling regulated amounts of highly hazardous chemicals. Workers at 
these facilities are responsible for critical plant operations. They 
implement the contingency measures used during emergencies, from 
inclement weather to system failures to fires and/or explosions.
    The Chemical Safety Board (CSB) Report released in March 1999 
explained that ``The Year 2000 technology problem is significant in the 
chemical manufacturing and handling sector, posing unique risks in 
business continuity, and worker and public health and safety.'' Small 
and medium-sized businesses are ``of major concern'' the report states 
because ``efforts on the Y2K problem appear to be less than 
appropriate.''
    Y2K problems may be found in computer systems and machinery 
containing embedded chips. These chips are far too numerous and 
dispersed throughout our primary industrial sectors to be adequately 
assessed, remediated and tested before the Y2K rollover. Because of the 
lack of adequate planning for reaching Y2K compliance, contingency 
planning and worker training should be initiated immediately to build 
an emergency response infrastructure to respond to environmental 
disruptions, chemical releases, and worker and public health and 
safety.
    Chemical workers, emergency responders, and local government 
agencies that focus on environmental and emergency response should be 
provided with training and tools to adequately address Y2K issues.
    Workers are currently provided training on contingency plans for 
single device failures, however multiple device failure possibilities 
are not normally considered in the current process hazard analyses. It 
is unclear what the outcome might be due to such failures--possibly 
multiple control system failures, multiple utility failures, or a 
combination of both.
    Contingency planning for Y2K-related emergencies has to be designed 
and implemented with worker involvement and should also be designed to 
include safe operations, safe shutdown, and emergency response. Any 
such planning must also take into account human factors such as 
appropriate staffing, hours of continuous work/rest intervals, and 
worker stress levels.
    We have discussed this issue with the companies that employ our 
members at their facilities, and it is believed that the larger 
companies are taking the Y2K problem seriously and are expending large 
amounts of resources to correct the problem. A number of these 
facilities have shared their concern regarding the reliability of their 
utility suppliers. Petrochemical facilities have a great dependency on 
purchased utilities for their day-to-day operations. We strongly urge 
greater communication between the utility providers and the facilities 
they serve, to ensure that each entity is doing their part in 
addressing this issue.
    We are concerned about the small and mid-sized facilities that we 
represent. Unfortunately, we do not believe these facilities have the 
capability to expend the necessary resources to test the design and Y2K 
contingency measures for all their systems, and provide the necessary 
training for their employees.
    As a labor organization, we have been encouraging the companies 
that operate the facilities that we represent and are ahead of the 
curve on their Y2K efforts to provide assistance to those that are not 
proportionately comparable. In the short period of time remaining 
before Y2K, we feel this is one viable option to assist these employers 
that have been unable to adequately address this issue. No matter what 
size the company, the Y2K issue could threaten worker and public health 
and safety. We would urge companies to follow the proposed emergency 
response planning as specified in the Chemical Safety Board Report 
through Y2K contingency planning on three levels:
      Level 1 should address continued safe operations that 
include pre-planning of actions that will allow the facility to 
continue to run in a safe and environmentally sound manner;
      Level 2 should address safe shutdown. This level of 
planning ensures the availability of personnel, equipment, utilities, 
services and other resources needed to ensure safe shutdown; and
      Level 3 is activated when Contingency Level 1 fails to 
ensure continued safe operations and Level 2 fails to ensure safe 
shutdown. This will likely initiate a process safety incident (See 
Attachment I).
    PACE believes that both employers and government agencies should 
designate worker representatives and include them in discussions 
regarding Y2K contingency planning, because ultimately workers will be 
the ones responsible for implementing these plans.
    Thank you for allowing me the opportunity to speak on behalf of 
PACE today to present our position on this important issue.
                               __________

        Responses of Paula R. Littles to Questions Submitted by

                            Chairman Bennett

    Question 1. In your statement, you point out that lack of resources 
is a problem for small and medium size companies. We hear this often, 
yet we have never been provided with any hard data. Can you quantify 
this for us in any way? Also, what do you think could be done to 
financially aid such companies in the short time remaining?
    Answer. In March of 1999 the PACE International Union requested 
their local union officers to request that their represented companies 
address the following areas:
    a) Identification of any Y2K problem;
    b) Inventory of what chips are affected and the location of the 
chips;
    c) Testing to see if the chips work and correcting them if they do 
not;
    d) Testing of corrected systems and certification that all systems 
are viable; and
    e) Contingency plans and training to work around problems that the 
facilities can not correct in a timely manner, or problems at utility 
sites or other industrial facilities (upstream or downstream).
    Based on the responses received, we concluded that there was a 
greater problem with the small to medium-sized companies that we 
represent. In the short time remaining, training funds should be 
provided to assist in the training of workers in these facilities to 
better equip them to handle Y2K-related incidents.
    Question 2. You mentioned that PACE is encouraging its better-
prepared members to lend assistance to those members who are less 
prepared. Has a formal program been established in PACE, or any 
chemical industry association to provide such assistance?
    Answer. No, we plan to offer training to our members to better 
prepare them for what to expect. Unfortunately a formal program would 
have to be developed, with the collaboration of management or an 
industry association to really have value to these companies that are 
less prepared.
    Question 3. You represent a large number of workers in a number of 
industries that may be vulnerable to Y2K problems in manufacturing 
process automation. What is the general level of concern about worker 
safety among your membership regarding the Y2K issue?
    Answer. We currently have three general levels of concern regarding 
worker safety and Y2K:
    1) Are the workers and the workplace being accurately prepared for 
Y2K? For example, if a company decides to staff-up for manual 
operations/shutdown, would everyone know what their roles would be? 
Will everyone have sufficient training in their assigned roles to 
perform necessary tasks in a timely, safe, and proficient manner?
    2) In the event of a Y2K-related action, has a discussion and plan 
been developed for worker interaction with community responders from 
surrounding communities and tested for its effectiveness?
    3) Have companies and their utility suppliers had sufficient 
interaction to work together towards limiting the problems that could 
surface due to Y2K? Overall, the concern among our membership, like the 
general public varies from extreme concern to those who feel the 
problem will not be that great.
    Question 4. You raised many important issues in your discussion of 
the three levels of contingency planning in your statement. What formal 
activities has PACE engaged in to spread this information across the 
industry?
    Answer. Unfortunately PACE has limited influence in disseminating 
information across the industry. In order to facilitate this, there 
would have to be better collaboration with management. Regrettably all 
of our represented companies are not willing to work with the union in 
some areas. What we have done is to provide all of the union's 
International Representatives with a copy of the Chemical Safety Board 
Report that gives an in-depth overview of the three levels of 
contingency planning. Our Representatives were asked to share this 
information with local union officers and representative companies.
    Question 5. PACE represents a diverse cross section of the chemical 
processing industry. Is there any one sector in which your concerns are 
greater than they are in others?
    Answer. No. With the diverse cross section of the chemical 
processing industry, if a facility manufactures chemicals or just uses 
chemicals in its process, their work-site could still be subject to 
Y2K-related failure. Depending on related circumstances, the facility 
that you would least expect to experience major problems could be the 
worst case for the type of process they use.
    Question 6. Are there any issues regarding union membership rights, 
contract restrictions, or other worker protection issues that might 
somehow complicate planned Y2K responses and contingency plans in the 
industry? (Overtime restrictions, holiday pay considerations, and 
hourly work restrictions).
    Answer. The majority of our contracts are not restrictive as it 
relates to business emergencies. We expect our representative companies 
to provide a safe work environment, and we would be willing to work 
with them on their planned Y2K responses and their contingency planning 
and training. We are concerned about rate retention in the event of a 
Y2K problem. The employer has a responsibility to keep all workers 
whole, meaning no loss of pay and benefits. Discussions between 
represented companies and the union should start sooner rather than 
later on this subject.
    Question 7. Would you say more about the worker training and tools 
you believe are needed? Is there time to develop such tools and 
training programs?
    Answer. The development of training and educational materials for 
front-line workers in chemical dependent industries, local community 
residents, and the emergency response community should be developed to 
specifically focus resources on the unique hazmat response challenges 
of Y2K-related chemical and hazardous materials, related incidents and 
scenarios. These scenarios should include:
      an individual worker's or responder's role in a process 
shutdown;
      how an emergency plan should change if there is no 
outside response;
      the possibility of creating a dangerously confined space 
if doors don't automatically open; and
      what to do if there is lack of power or air to re-supply 
breathing apparatus.
    The NIEHS Worker Education and Training Program (WETP) has included 
Year 2000 conversion and chemical safety awareness and response in all 
of their planned safety and health activities. We feel that with the 
time remaining for training, we should utilize training programs that 
are well established and proven such as the NIEHS's WETP.
                               __________

                 Prepared Statement of James L. Makris

    Mr. Chairman and Members of the Committee:
    I am Jim Makris, Director of the Environmental Protection Agency's 
Chemical Emergency Preparedness and Prevention Office. I am accompanied 
today by Oscar Morales, Associate Director of the Information 
Management Division, Office of Prevention, Pesticides, and Toxic 
Substances, and Don Flattery, EPA's Year 2000 Sector Outreach 
Coordinator. It is a pleasure to be here today to discuss the 
implications of the Year 2000 (Y2K) technology problem for chemical 
safety. We appreciate the Committee's efforts in both educating and 
alerting government, industry, and the public at large to our potential 
vulnerability to the Y2K problem. We welcome the Committee's invitation 
to appear here today to discuss the chemical safety aspects of Y2K 
which we all agree is an important topic for this hearing.
    Just to bring the Committee up to date since our appearance at your 
field hearing in Anaheim in December, EPA has continued to make 
substantial progress in putting our own house in order by ensuring that 
our internal systems are Y2K compliant. I am pleased to report that we 
have evaluated all of our mission-critical systems for vulnerability 
and have completed the appropriate conversion steps. This success was 
recognized by the Subcommittee on Government Management, Information, 
and Technology of the House Committee on Government Reform, and we 
remain in OMB's top tier ranking of Federal agencies making very 
satisfactory progress. My ensuring the readiness of these systems, we 
expect to be prepared to continue to protect public health and the 
environment on January 1, 2000, and beyond.
    Now let me turn specifically to the subject of the impact of Y2K 
disruptions on chemical safety. As you know, EPA is the Federal agency 
with primary responsibility for ensuring that the environment and the 
public are protected from the unreasonable risks of toxic chemicals and 
other dangerous substances. We identify chemical hazards in the 
environment, regulate the use of pesticides, protect the public from 
existing and proposed new toxic chemicals in the marketplace, prevent 
and respond to the accidental release of hazardous chemicals, and 
assess the risks of such releases to public health and the environment. 
In doing all this, EPA operates under four major legislative mandates: 
the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the 
Toxic Substances Control Act (TSCA), the Emergency Planning and 
Community Right-To-Know Act (EPCRA), and Section 112(r) of the Clean 
Air Act Amendments of 1990.
    EPA's Relationship With the Chemical Industry
    Under TSCA and FIFRA, the Agency evaluates pesticide and chemical 
products entering commerce to safeguard against public health hazards 
and environmental harm. Under FIFRA, this is accomplished by 
registering and reregistering new and older pesticide active 
ingredients and by establishing maximum levels for pesticide residues 
in food. EPA also promotes the use of safer chemicals and manufacturing 
processes and technologies. Through our pollution prevention programs 
under TSCA, we encourage the chemical industry to test chemicals in 
advance of introducing them into the marketplace, to design them at the 
molecular level to be less toxic to humans and the environment, and to 
re-engineer chemical processes to make them safer and less wasteful so 
as to minimize their environmental impact at the time of manufacture.
    Following the world's largest chemical accident in Bhopal, India, 
Congress enacted the Emergency Planning and Community Right-To-Know Act 
in October 1986, as Title III of the Superfund Amendments and 
Reauthorization Act. EPCRA helps communities prepare for chemical 
emergencies and grants citizens and government officials access to 
information about potential chemical hazards. The law requires 
industries to participate in emergency planning and to notify their 
communities of the existence and/or releases of hazardous chemicals. 
EPCRA's goal is to help citizens, officials, and community leaders to 
be better informed and understand the risks associated with toxic and 
hazardous materials in their communities through emergency planning, 
hazardous chemical inventory reporting, public access to chemical 
information, hazardous substance release reporting, and the Toxic 
Release Inventory (TRI) database.
    By its enactment of Section 112(r) of the Clean Air Act Amendments 
of 1990, the Congress recognized the need for facilities to develop or 
improve their planning and accident prevention programs to reduce the 
risk of chemical accidents and to allow local communities to enhance 
emergency preparedness and accident prevention. The law also affirms 
the rights of citizens to have access to information about the hazards 
these facilities present. Under the chemical accident provisions of 
section 112(r), facilities must conduct hazard assessments, establish 
accident prevention programs, and bolster emergency response planning. 
EPA implements these requirements through the Agency's Risk Management 
Program (RMP) regulations which are aimed at reducing the likelihood 
and severity of chemical releases.
    The Risk Management Plan regulations require facility hazard 
assessments from over 69,000 facilities nationwide which use or store 
any of 140 specified chemicals. These assessments address off-site 
disaster risks caused by chemical releases, fires, explosions, or other 
natural events. Covered facilities must submit to EPA a Risk Management 
Plan in 1999, have an accident prevention program in place, and have 
developed an emergency response plan.
    EPA also addresses chemical safety through the Emergency Response 
Program, a coordinated effort among five EPA headquarters offices and 
our ten Regional Offices using legislative authority derived from 
EPCRA, the Comprehensive, Environmental Response, Compensation and 
Liability Act (CERCLA)--also known as Superfund--the Clean Water Act 
(CWA), and the Oil Pollution Act. Under this program, EPA coordinates 
and implements a wide range of activities to ensure that adequate and 
timely response measures are taken in communities affected by chemical 
releases. The program's primary objectives are to take reasonable steps 
to prevent such emergencies; to prepare emergency response personnel at 
the Federal, State, and local levels for such emergencies; and, to 
respond quickly and decisively to such emergencies wherever and 
whenever they occur within our national borders. EPA and a network of 
Federal, State, and local responders stand ready twenty-four hours a 
day to contain and clean up released chemicals.
    Y2K Chemical Sector Outreach
    Based on our legislative authorities in this area and our long-
standing relationship with the chemical industry, EPA was asked by the 
President's Council on Year 2000 Conversion to take responsibility for 
outreach to three of the more than twenty-five sectors of economic 
activity identified as high priority. They are water, waste, and 
chemicals. As the chemical sector lead, we have been working with 
chemical industry trade associations to help them address Y2K chemical 
safety concerns, implement plans to assess and repair potential 
problems, make contingency plans, and keep the public and Federal, 
State, and local governments informed of progress.
    EPA's goal in our outreach to the chemical industry is to encourage 
and complement industry efforts to the best of our ability. We believe 
that we can most effectively address potential Y2K-related chemical 
risks and accidents by building upon our relationships with the 
industry through our existing statutory and voluntary programs.
    In this regard, we have undertaken a broad array of outreach 
activities with the chemical industry. EPA speakers have addressed 
numerous fora. We have distributed specific ``tool kit'' materials 
including brochures, handouts, articles, and guidance documents. We 
have coordinated extensively with chemical industry trade associations. 
One of the larger trade associations, the Chemical Manufacturers 
Association (CMA), representing over 190 chemical companies, has 
initiated programs to share solutions and information with its member 
companies through the development of a comprehensive Internet website, 
Y2K contingency planning workshops, and a Y2K workgroup with an 
extensive industry-wide membership.
    The chemical industry and its trade associations are our primary 
and best source of information related to plant operations, process 
management, and equipment and systems. In our chemical sector outreach, 
we will continue to provide additional helpful information regarding 
Y2K impacts on chemical company operations. We recognize, however, that 
chemical plant managers possess the knowledge, experience, and 
expertise on which we must rely. To this end, we have strongly 
encouraged the trade associations to develop additional information-
sharing opportunities as they continue Y2K planning activities in the 
balance of 1999. CMA has positively responded to this challenge by 
agreeing to use its Responsible Care program to share Y2K information 
among members. In addition, the Chemicals Information Technology 
Association (CITA), a sub-group of CMA member companies participating 
in the CMA Y2K Workgroup, has developed a Y2K contingency planning 
guide for use by Association members.
    Raising Y2K Awareness
    EPA has chosen a coordinated approach of direct outreach to 
relevant stakeholders, data submitters, and pesticide registrants to 
ensure that no environmental programs are compromised and that every 
effort is taken to minimize the potential deleterious effects of 
computer problems on the regulated community. EPA's Office of 
Prevention, Pesticides, and Toxic Substances has directly contacted its 
primary group of data respondents--including Toxic Release Inventory 
(TRI) facilities--and pesticide registrants to remind them of their 
obligation to ensure the integrity of data reported to the Agency. 
Companies were also encouraged to work closely with testing 
laboratories and field sites to ensure that the data, which the Agency 
must act upon, is valid and reliable.
    To further increase Y2K awareness among chemical companies, EPA's 
Chemical Emergency Preparedness and Prevention Office (CEPPO) developed 
a Year 2000 Chemical Safety Alert for the chemical industry. The Alert, 
a copy of which I am submitting with my statement, summarizes the steps 
that facilities need to take to address Y2K problems and lists the 
technical resources available on the Internet to help them, such as 
guidelines, planning documents, testing tools, solutions, services, and 
product status databases. The Alert urges facilities to prioritize 
critical systems for Y2K remediation and testing and emphasizes Y2K 
contingency planning in coordination with emergency planning and 
response partners.
    Assessment of Chemical Industry Readiness
    As is the case in other sectors, assessments of readiness are 
largely based on Y2K industry surveys. A number of these surveys have 
been conducted throughout the chemical industry. The most complete 
survey work has been done by CMA. As of March 1999, nearly 40% of CMA's 
respondents--those who provided dates--expect to be Y2K ready by the 
end of March 1999; 90% say they will be ready by the end of September 
1999; and, all respondents indicate they will be Y2K ready by December 
1999. The survey results also indicate that as of February 1999, all of 
the respondents have action plans in place to address their potential 
Y2K problems. Of the respondents, 99% have plan elements that include 
prioritization of the company's hardware, software, and embedded 
systems according to their mission-critical functions; 96% of the plans 
include elements to assess supporting infrastructure systems such as 
communications, power, and other building systems; 98% have addressed 
the readiness of key suppliers, customers, and organizations that make 
up the supply chain; and 97% address safety, environmental, and health 
systems. Testing of mission-critical systems is a plan element for 98% 
of the respondents; 89% have plans to communicate Y2K readiness 
internally; 81% plan to communicate externally; and, 92% of the 
respondents have contingency planning elements for all business 
systems.
    In addition to the CMA survey, which serves as an indicator of 
sector readiness, many CMA members are members of other trade 
organizations currently working with the President's Council on Y2K 
issues. The most notable trade association with strong ties to and 
shared membership with CMA is the American Petroleum Institute (API). 
API surveys have reported high states of readiness among member 
companies.
    Based on these surveys and others conducted by the Chlorine 
Institute and the Pharmaceutical Research and Manufacturers of America, 
we fell confident that large companies with sufficient awareness, 
leadership, planning, and resources are unlikely to experience Y2K 
failures. We are not as confident, however, about the readiness of 
small and medium-sized plants. Our participation in the U.S. Chemical 
Safety and Hazard Investigation Board's December 18, 1998 workshop, 
convened to discuss Y2K and chemical safety issues, bears out this 
finding. As highlighted in the Board's report, we simply do not have 
adequate information about the readiness of smaller companies.
    Small and Medium-Sized Company Preparedness
    To address the issue of preparedness among small and medium-sized 
companies, EPA's Office of Chemical Emergency Preparedness and 
Prevention (CEPPO) and our Office of Prevention, Pesticides, and Toxic 
Substances (OPPTS) have initiated a number of recent activities. In 
cooperation with CMA and the U.S. Chemical Safety and Hazard 
Investigation Board, EPA organized a trade group meeting of smaller or 
specialty chemical companies with a membership of approximately 7,000-
10,000 chemical manufacturers, formulators, retailers, and 
distributors. This group has undertaken an additional survey to 
determine the extent of the Y2K problem among smaller companies and of 
the Y2K remediation efforts which may still be needed. We expect the 
results of this survey in late spring. Using these results, we hope to 
formulate more targeted plans for those companies identified as 
vulnerable.
    EPA implemented an outreach campaign aimed at distributing the Y2K 
Safety Alert to small and medium-sized companies during the Spring of 
1999. CEPPO also sent an electronic copy of the Alert to a group of 
small business trade associations and State Small Business Assistance 
Centers with which we maintain regular contact. EPA also made the Alert 
available to the 69 district offices that participated in the recent 
Small Business Administrator's ``National Small Business Y2K Action 
Week.''
    In addition, we are encouraging the development of a new guidance 
document based on expertise drawn from this group for use by small and 
medium-sized chemical companies. This document will be jointly 
developed and distributed by EPA, the Board, CMA, the Center for 
Chemical Process Safety (CCPS), and the consortium of smaller and 
specialty chemical associations. In order to help us determine the most 
useful Y2K information needed by the smaller companies, the trade 
associations will be soliciting recommendations from their membership.
    Preparedness to Respond to Potential Chemical Industry Y2K Failures
    EPA's approach is to build upon--not create anew--the existing 
Federal emergency planning network to address Y2K risks in a number of 
ways. EPA's Office of Chemical Emergency Preparedness and Prevention 
(CEPPO) and Office of Emergency and Remedial Response (OERR) actively 
manage EPA's national level program for preparedness, planning and 
coordinating response to chemical releases. EPA is involved in a 
network of contingency plans, representing different levels of 
geographical scope, which forms the backbone of our country's efforts 
to prepare for and coordinate responses to emergency incidents, 
including those resulting from Y2K malfunctions. This network is called 
the National Response System.
    The National Contingency Plan is the Federal government's primary 
plan to prepare for chemical emergencies and to coordinate with other 
emergency responders. The Federal government also prepares Regional and 
Area Contingency Plans that coordinate effective responses within each 
of the ten standard Federal Regions and other designated Areas covering 
Alaska, the Caribbean, and several islands in the Pacific. At the local 
level, Local Contingency Plans are developed to prepare and organize 
local resources in the event of the accidental release of hazardous 
substances.
    Under the Emergency Planning and Community Right-to-Know Act of 
1986 (EPCRA), State governors establish State Emergency Response 
Commissions (SERCs), which, in, turn establish Local Emergency Planning 
Committees (LEPCs) for districts within each State. These emergency 
planning organizations are responsible for developing local contingency 
plans using chemical inventory information collected as part of the 
law's community right-to-know provisions. EPA has urged the SERCs and 
the LEPCs to encourage their local industrial facilities to address Y2K 
problems and to coordinate Y2K emergency response plans with the LEPCs.
    We are working directly with the Federal Emergency Management 
Agency (FEMA) and the National Response Team (NRT) to carry out a full 
range of Y2K contingency planning activities across all Federal 
agencies. Recently, EPA served as a key participant in FEMA-organized 
Y2K contingency planning workshops. These workshops were designed to 
allow Federal planners to exchange readiness and planning information 
with emergency responders at the State and local level. Approximately 
2,000 emergency management specialists, with representatives from every 
State, attended these workshops. EPA has been vigorously participating 
in many planning efforts as a Federal Response Plan lead agency with a 
particular emphasis on carrying out our responsibilities as the Chair 
for the Emergency Support Functions for Hazardous Materials. As a 
result of the Emergency Planning and Community Right-to-Know Act, Local 
Emergency Planning Committees (with participation from State and local 
planners and other community officials and representatives) already 
have contingency plans in place for emergency response. These 
contingency plans are designed for many types of hazardous materials 
emergencies, including those caused by potential Y2K disruptions.
    Y2K Planning Linked to the Risk Management Program
    Mindful of the potential for process shutdowns and accidental 
releases, EPA has encouraged facility managers to think about their Y2K 
readiness as they prepare their Risk Management Plans (RMPs). EPA's 
previously described Y2K Chemical Safety Alert reminds managers that 
addressing Y2K risks is part of their responsibility to prevent 
accidents under the General Duty Clause of Section 112(r) of the 1990 
Clean Air Act Amendments and Risk Management Program requirements. We 
also have placed Y2K reminders in the RMP reporting instructions and on 
our Website. RMP plans submitted to EPA must describe how facilities 
prevent or minimize chemical accidents and how they will promptly 
respond to accidents that do occur. EPA is encouraging facilities to 
address their Y2K readiness in an RMP executive summary. Linking sound 
Y2K planning to the Risk Management Program is consistent with our 
approach of utilizing existing regulatory and voluntary programs to 
address Y2K readiness.
    Y2K Enforcement and Compliance Assurance Program
    EPA expects the chemical sector, like every other sector, to be in 
compliance with environmental regulations before, during, and after the 
Year 2000. Regulated entities will not be allowed to use computer-based 
failure as a shield for not discharging their environmental compliance 
obligations. At the same time, EPA's Office of Enforcement and 
Compliance Assurance is actively working in several ways to promote the 
timely assessment and correction of Y2K problems.
    EPA issued its Y2K enforcement policy on November 30, 1998. The 
policy is designed to encourage prompt testing among all sectors of 
computer-related equipment to ensure that environmental compliance is 
not impaired by the Y2K computer bug. Under the policy (published on 
the Internet at www.epa.gov/year2000 and in the March 10, 1999 Federal 
Register), EPA states its intention to waive 100% of the civil 
penalties that might otherwise apply, and to recommend against criminal 
prosecution for environmental violations caused during specific tests 
that are designed to identify and eliminate Y2K-related malfunctions. 
The civil penalty waiver and recommendation against criminal 
prosecution are limited to testing-related violations disclosed to EPA 
by February 1, 2000, and are subject to certain conditions, such as the 
need to design and conduct the tests well in advance of the dates in 
questions, the need to conduct the tests for the shortest possible 
period of time necessary, the need to correct any testing-related 
violations immediately, and other conditions to ensure that protection 
of human health and the environment are not compromised.
    EPA's recent publication of the policy in the Federal Register 
incorporated numerous clarifications suggested by commenters, some of 
which are directly relevant to chemical industry safety. For example, 
the policy now clarifies that Y2K testing protocols should be designed 
to prevent or limit violations that may result from such testing (e.g., 
through adoption or revision of appropriate contingency plans). This 
will help to ensure that all prudent steps are taken to ensure that 
such testing is as safe as possible. For violations occurring after 
January 1, 2000, EPA's long-standing enforcement response and penalty 
policies will continue to recognize a chemical facility's good faith 
efforts to test and remediate Y2K problems and other potentially 
mitigating factors in determining an appropriate enforcement response.
    The enforcement and compliance assurance program is also reaching 
out to educate the chemical industry about Y2K problems. ChemAlliance, 
the Internet-based compliance assistance center for the chemical 
industry, posts a Y2K notice on its front page. (ChemAlliance is the 
product of a partnership between the chemical industry through various 
industry organizations, EPA's Office of Enforcement and Compliance 
Assurance, academia, and others.) The website (www.chemalliance.org) 
highlights the six-step action plan, described in EPA's Y2K Fact Sheet, 
``The Millennium Bug,'' and provides real life examples of equipment 
failure at chemical plants caused by confusion over leap year and Y2K 
testing, and offers links to EPA, other Federal, and trade and industry 
resources for Y2K. We believe these actions will help to motivate 
chemical companies to proactively meet their Y2K responsibilities.
    Summary
    In closing, we believe the chemical industry is making good 
progress in its efforts to identify and fix potential Y2K problems. EPA 
intends to continue working with chemical industry associations, 
private groups, and the U.S. Chemical Safety and Hazard Investigation 
Board to assess readiness, to promote effective planning, and to 
encourage the sharing of preparedness information with chemical 
customers, the general public, and local, State, and Federal officials. 
In doing so, we will utilize the many existing mechanisms available 
which are designed to allow us to perform our statutory 
responsibilities in this area as well as to effectively address 
potential Y2K problems in the chemical sector. We intend to continue to 
make this effort a priority with the help of this Committee.
    Again, thank you for the opportunity to appear here today. I would 
be pleased to answer any questions you may have.
                               __________

         Responses of James L. Makris to Questions Submitted by

                            Chairman Bennett

    Question 1. The recent GAO study on the Y2K activities of state 
regulatory agencies in the water and wastewater industry revealed a 
lack of engagement on the Y2K issue on the part of many state 
regulatory agencies. One of our other witnesses here today has 
criticized the New Jersey Department of Environmental Protection's for 
being inactive on Y2K. What is EPA's assessment of the activity level 
of state environmental protection agencies across the country on the 
Y2K issue in the area of chemical safety? What effort has EPA made to 
engage the state environmental protection agencies on the Y2K issue?
    Answer. To date, Year 2000 issues at the State level have typically 
been centrally managed by State Chief Information Officers. The 
President's Council has been coordinating very closely with the State 
CIO community directly and through the National Association of State 
Information Resource Executives (NASIRE) which represents State CIOs to 
address readiness internally and externally within each of the States. 
Surveys conducted by NASIRE have included questions on State outreach 
to key industries. Information from the NASIRE surveys do not provide 
enough information to reach reliable conclusions for environmentally-
related sectors.
    In an additional attempt to obtain Y2K sector readiness information 
at the State level, EPA encouraged the Environmental Council of States 
(ECOS), an organization representing State environmental officals to 
conduct a survey of their members which addressed internal and external 
readiness. While this survey, completed in April, indicated substantial 
progress in addressing state environmentally-related systems, the 
amount of data on sector progress collected by the State environmental 
agencies confirmed that the State CIO organizations remain the primary 
responsible organization for determining State readiness.
    Despite an apparent lack of State sector information available 
through formal surveys, EPA believes progress in being made based upon 
on-going staff to staff discussions. We believe that the State 
environmental agencies are engaging businesses and municipalities on 
Y2K issues. EPA has been widely sharing fact sheets, guidance documents 
and reference materials which we have been encouraging the States to 
use and disseminate. One of the more widely distributed of these 
documents, ``Prevent Year 2000 Chemical Emergencies'', has been 
distributed to State emergency planners and enviornmental program 
administrators. In some instances, we have assisted the States in 
preparing mailings of such material.
    In March, EPA's Deputy Administrator asked our Regional offices to 
engage directly State environmental administrators to discuss readiness 
in sectors which have a potential affect on the environment and public 
health. This request was followed up with a letter from EPA's Assistant 
Administrator for Water to the EPA Regional offices asking that Y2K 
readiness of drinking water and wastewater treatment facilities be 
included in regularly scheduled annual State program reviews. In the 
coming months, we expect Y2K issues and readiness at the State level to 
be an important topic in meetings and discussions.
    Finally, EPA is currently involved in the implementation of the 
Risk Management Program established as a result of Section 112(r) clean 
Air Act Amendments. The Risk Management Program requires chemical 
facilities to submit plans which describe how facilities prevent or 
minimize chemical accidents. EPA has issued a specific reminder that 
each facility has a general duty to address Y2K vulnerabilities in 
their plans. State environmental agencies are active participants in 
the RMP process.
    Question 2. The EPA has taken a very positive step in its amendment 
of its enforcement policy in regard to violations occurring during Y2K 
testing. Has EPA been able to analyze the effectiveness of the policy 
change yet? Do we have any firm evidence that it has in fact encouraged 
more testing? Has EPA received any reports of testing related problems 
or violations?
    Answer. EPA has not conducted analyses concerning the effectiveness 
of the policy or obtained empirical evidence demonstrating that its Y2K 
Enforcement Policy has encouraged more testing. Anecdotal reports, 
however, suggests that the policy is contributing to the momentum 
towards early testing. The public comments on EPA's policy have been 
very positive, and comments at conferences and in other contexts since 
then also have been very favorable. In addition, other Federal agencies 
and several States recently have adopted identical or very similar 
policies to encourage testing, and EPA has heard that other States are 
in the process of following suit. Given the dual State/federal nature 
of environmental regulation, we believe that regulated entities will 
feel even more comfortable doing Y2K testing as more and more States 
follow EPA's lead in adopting this type of enforcement policy.
    On June 17, 1999, the Associated Press (AP) reported that a water 
reclamation plant malfunctioned during a test of the facility's 
contingency plan and spilled four million gallons of sewage into a San 
Fernando Valley park near Los Angeles, California. The AP report stated 
that the sewage welled up out of a manhole near the plant in Van Nuys, 
California, on the night of June 16th and flowed about 100 yards into 
the park, according to Linda Aparicio, a spokeswoman for the city 
Public Works Department. Crews reportedly worked to vacuum up the 
spill, but health officials recommended that a portion of the park 
remain closed for two days as a precaution. The AP report further 
stated that Y2K test simulated a scenario in which the power failed. 
The emergency generator reportedly kicked in as expected, but a gate 
failed to reopen, Ms. Aparicio said. ``Our computers did not tell us 
that gate was closed,'' she said. ``No one knew that sewage was backing 
up.'' She said it was unclear weather the problem was related to the 
test or was coincidental. The AP reported that the sewage system was 
back in operation by Thursday morning, June 17. On June 18, 1999, the 
Los Angeles Times carried an expanded report on the spill. EPA is doing 
some further investigation of this incident.
    Question 3. Does EPA have any evidence to suggest that funding has 
been an impediment for small or medium size companies? If so, what has 
been done to alleviate this impediment?
    Answer. EPA regularly engages the small business community in a 
variety of fora to discuss regulatory and administrative issues. We 
have addressed Y2K readiness with small business representatives on a 
number of occasions. We have not heard from participants in these 
discussions that lack of financial resources will impair Y2K readiness 
nor do we have any evidence to suggest that funding has been an 
impediment for small and medium sized companies.
    Recognizing that technical and financial resources may be an issue 
with some businesses, EPA has developed a ``Tool Kit'' for small 
business distributed by the Agency's Small Business Ombudsman. This 
tool kit contains fact sheets, guidance documents, check lists and 
other reference materials to conduct an in-house assessment and 
remediation effort. In addition, information about SBA loan and 
technical assistance efforts has also been shared with the small 
business representatives with whom the Agency meets regularly.
    In the Chemical sector, EPA has been working closely with a cluster 
of small and specialty chemical trade associations to develop a survey 
of readiness among the smaller chemical companies. This survey, 
completed in May, indicates high levels of readiness by the end of the 
calendar year. In addition, we are assisting this group of trade 
associations with a guidance documents, ``Addressing Year 2000 Issues 
in Chemical Facilities: Guidance for Small and Medium Sized 
Companies''. This document will be available this summer.
    Question 4. How will EPA fit into the overall federal government 
strategy of monitoring events occurring around the date change? Will 
there be any mechanisms established to provide real time monitoring of 
Y2K related incidents in the chemical industry?
    Answer. EPA is working within the existing framework established by 
the Catastrophic Disaster Working Group (CDRG), which is composed of 
Federal agencies and departments to collect information on significant 
Y2K incidents. The CDRG will be following a Federal Response Plan 
Operation Supplement for Y2K Consequence Management, which will be 
finalized next month. Reporting for Y2K incidents will follow a local-
to-state-to-region-to-FEMA headquarters scheme. The information 
collected will allow the CDRG to identify and respond to those 
incidents of a magnitude that would require notification of and 
assistance from other Federal Agencies. In addition, EPA will have its 
own Emergency Operations Center activated to collect information on 
chemical accidents for which EPA Regions normally receive notification 
from the National Response Center. EPA and the CDRG are currently 
working with the newly established Y2K Information Coordination Center 
(ICC), which will be collecting information about system operations 
during the date rollover period and providing this information to 
decision-makers and the public. The ICC will collect information from 
all of the existing government emergency operation centers as well as 
from industry information centers.
    Question 5. What are EPA's greatest concerns regarding the 
potential for hazardous material releases due to Y2K problems?
    Answer. Our greatest concerns are those accidents which could 
seriously threaten the safety or health of workers, the local community 
and the environment. However, it is unlikely that a single Y2K failure 
could by itself cause a catastrophic chemical accident. It is difficult 
to predict what the outcome might be from multiple failures or 
combination of control and utility failures. We are optimistic that 
industrial facilities that manufacture or use chemicals are making 
reasonable efforts to address potential Y2K problems as well as 
preparing contingency plans. However, the ability to respond to a 
chemical accident could be hampered by Y2K disruptions in electricity, 
water supply, and communications. Therefore, it is necessary that 
response agencies have contingency plans in place to work around these 
problems as well as fix their internal Y2K problems. Response agencies 
should also be prepared to handle a larger number of incidents over the 
transition period if Y2K problems cause industrial accidents.
    Question 6. How has EPA engaged State Emergency Response Committees 
or Local Emergency Response Committees in preparing for Y2K incidents 
in the chemical industries?
    Answer. SERCs establish LEPCs, which in turn are responsible for 
developing local contingency plans using chemical inventory information 
collected as part of community right-to-know regulations. Thus, these 
organizations should be prepared to handle chemical incidents 
regardless of whether they are caused by Y2K or some other problem. 
Approximately 2,000 emergency management specialists attended ten FEMA-
organized Y2K contingency planning workshop where EPA was a key 
participant. EPA's Y2K Chemical Emergency Alert (posted on our Web 
site) encourages facilities to communicate and coordinate Y2K 
contingency plans with their LEPCs. EPA has distributed the Alert to 
LEPCs and SERCs. In addition, EPA has urged SERCs and LEPCs to 
encourage state and local emergency service providers to conduct 
internal Y2K audits to ensure that they are able to carry out their 
emergency response functions. The SERCs and LEPCs were also asked to 
encourage their industry contacts to conduct Y2K audits of systems that 
protect against releases of hazardous chemicals to the environment. 
LEPCs may also conduct their own follow up of Y2K readiness of 
facilities that use chemicals. For example, the City of Ann Arbor and 
Washtenaw County LEPCs are requiring a Y2K compliance plan for all 
facilities in their county that use, produce or store more than 55 
gallons of chemicals.
    Finally, FEMA has provided a guide for State and Local Emergency 
Managers, Contingency and Consequence Management Planning for Year 2000 
Conversion, to help them protect public safety and health if Y2K 
incidents (not limited to chemical incidents) occur. EPA has developed 
and made available on its Web site, a paper with Y2K planning ideas 
that can be used by emergency response organizations.
    Question 7. Hazardous chemicals must be treated with a ``cradle to 
grave'' approach in today's world. The proper treatment of the waste is 
just as important as the care of the raw material and manufactured 
products. Does EPA have concerns about the machines that produce date 
information that goes with labels or manifests for chemical waste 
products?
    Answer. First a brief word about manifests. Hazardous waste 
manifests only accompany hazardous waste shipped off-site by a 
generator. Usually, a hazardous waste manifest is a multipart form, 
which is created for each specific, individual shipment of waste. 
Currently, the federal Uniform Hazardous Waste Manifest (EPA Form 8700-
22) includes the name of the designated receiving facility, the 
shipper's EPA identification number, and a description of the waste 
based on Department of Transportation (DOT) requirements. DOT's 
requirements usually include information about the proper shipping name 
and hazard class.
    The only dates of concern regarding a hazardous waste manifests 
are: (1) the date the transporter accepts the waste, and (2) the date 
it's delivered to a treatment, storage, or disposal facility. All of 
this information is specific to each waste shipment, and is manually 
written on the manifest.
    Question 8. Would you explain how the responsibilities for chemical 
incidents involving waterways are divided between EPA and the Coast 
Guard? Has EPA coordinated its emergency response plan with the Coast 
Guard for chemical incidents on waterways that may occur with the 
millennium rollover?
    Answer. EPA and the USCG share responsibility for providing On 
Scene Coordinators (OSCs) to respond to chemical or oil emergencies. 
USCG has primary responsibility on land or water in the coastal zone. 
EPA has primary responsibility on land or water in the inland zone. 
Each EPA Region has a Memorandum of Understanding with USCG which 
specifically delineates the line between inland and coastal zones; for 
example, EPA Region III and the USCG (MSO Baltimore) might delineate 
the break point along the Potomac River at the Key Bridge. In some 
cases responsibility may be shared, or assumed by the first responder 
able to arrive at the site.
    EPA and USCG cooperate in standing Regional Response Teams and the 
Area Committees to ensure coordinated and efficient emergency response 
plans, including potential incidents that may occur with the millennium 
rollover.
                               __________

              Prepared Statement of Charlie B. Martin, Jr.

    Introductory Comments
    Chairman Bennett and members of the Committee, my name is Charlie 
B. Martin and I am the Site Safety Coordinator at Hickson DanChem 
Corporation. Thank you for inviting me to appear before you today on 
this distinguished panel. Although our company is not physically 
located in New Jersey, the issue we are addressing here today does not 
vary across state lines. I am here today to present my industry's 
perspective on Y2K contingency planning for both inside and outside the 
company fence.
    Hickson DanChem is engaged in the custom manufacturing of organic 
and inorganic specialities for major chemical companies. It also 
produces a comprehensive line of textile chemical auxiliaries and 
specialty surfactants. In layman's terms, we make the chemicals that 
are used for fabric conditioning, paint additive, and personal care 
products. The company employs 132 persons at our plant in Danville, VA 
and uses batch manufacturing processes.
    My company is a member of the Synthetic Organic Chemical 
Manufacturers Association (SOCMA). SOCMA is the leading trade 
association representing the batch and custom chemical industry. This 
industry produces over 90 percent of the 50,000 chemicals produced in 
the U.S. while making a $60 billion annual contribution to the economy. 
SOCMA's 300+ member companies are representative of the industry and 
are typically small businesses with fewer than 75 employees and less 
than $40 million in annual sales.
    As the site safety coordinator, I serve on our Y2K compliance team. 
Since the last panel addressed Y2K activities generally, I will focus 
my comments on the last step of Y2K preparation--contingency planning. 
It should be noted that our company will be Y2K compliant on June 30, 
1999. In developing the final draft of our emergency contingency plan, 
Hickson DanChem tried to foresee every possible situation, however 
remote. Our plan covers safe process operations, emergency response 
planning and community dialogue.
    We are pleased to see that today's panel reflects those 
stakeholders that should be involved with industry's community 
awareness and emergency preparedness efforts. An effective and 
successful plan must involve the collaborative participation of the 
company, its workers, government, emergency responders and the 
community. My testimony today will address Hickson DanChem's continued 
dialogue with these groups and describe how many of the activities 
related to Y2K contingency planning are a normal part of business for 
the chemical industry as a result of voluntary initiatives such as 
Responsible Care and federal and state regulations.
    Employee Participation
    As Hickson DanChem conducted its Y2K assessment, employees played a 
critical role. In fact, employee involvement is not unique to Y2K 
safety activities. Recognizing that the involvement of our employees is 
paramount to a successful employee health and safety program, we have 
always included our employees in developing safety plans and 
procedures. This involvement complements our implementation of federal 
regulations such as the Occupational Safety and Health Administration's 
Process Safety Management Rule (PSM), company safety policies, and the 
chemical industry's health, safety and environmental initiative, 
Responsible Care. Specifically, SOCMA's guidance for the 
Responsible Care Employee Health and Safety and Process 
Safety Codes provides guidelines for company practices that complement 
federal occupational safety regulations. Coupled with regulatory 
requirements, these guidelines address many of the potential results of 
Y2K technology problems.
    Specific activities in place at Hickson DanChem include a formal 
Site Safety and Health Committee comprised of eight task groups that 
participate in various areas of our safety program. They also perform 
housekeeping and hazard assessment audits throughout the site. We hold 
monthly shift training sessions on related OSHA and home safety topics 
as well as conduct training on regulatory topics using the computer. 
Departmental safety meetings are also held monthly and five minute 
supervisory safety talks are performed daily. Hazard/Operability 
(HAZOP) studies are performed on new and existing processes and include 
countermeasures for suspected failures. HAZOP action items result in 
decisions such as installing emergency shut-down devices in conjunction 
with process control systems for specific processes.
    Regarding impacts specific to Y2K, our on-site Y2K assessment team 
performed formal evaluations for Business Information Systems, Process 
Control Systems, Fire and Security Systems, Field Control Units, and QC 
Lab Equipment. During the roll over period of December 31, 1999-January 
1, 2000, provisions were considered for a phased start-up of utilities, 
system checkouts, and status verifications with Emergency Response 
agencies before manufacturing processes are resumed.
    With their assistance, we have integrated Y2K related activities 
into our existing safety program.
    Emergency Response
    Another important aspect of an effective company safety program is 
involvement with local emergency response teams. Hickson DanChem has an 
Emergency Response Plan and has incorporated Y2K related activities 
into it.
    Under Title III of the Superfund Amendments and Reauthorization Act 
(SARA), States are required to establish Local Emergency Planning 
Committees, better known as LEPCs. Each LEPC is responsible for working 
with industry to develop emergency response plans for its community 
that take potential risks from a chemical related accident into 
account; collecting and storing information provided by facilities; and 
making it available to the public. Representatives to the LEPC include 
individuals from the fire department, emergency management agencies, 
local health agencies and hospitals, local officials, community groups, 
media, and local businesses. Hickson DanChem participates in the 
Pittsylvania County LEPC by providing technical expertise in the 
planning process, assisting with the training of local responders in 
handling hazardous chemicals, providing information about chemicals and 
transportation routes, offering in-kind assistance in the planning 
process and hosting regular plant tours and emergency response drills 
for local responders. In fact, we held a major emergency response drill 
on March 11, 1998, in which many Y2K related activities were addressed 
such as internal and external alarm system notifications to both County 
and City emergency response agencies. The drill was noted as being the 
first of its magnitude in our area. Since that time, lessons learned 
have enabled us to identify potential challenges and make continuous 
improvements in our system.
    Responsible Care also plays a significant role in Hickson 
DanChem's interaction with local emergency responders. The Community 
Awareness and Emergency Response Code, or CAER Code, encourages 
facilities to take a leadership role in the LEPC and initiate 
activities that go beyond the requirements of SARA. For example, The 
CAER Code provides guidelines on participation in the community 
emergency response planning process to develop and periodically test 
the comprehensive community emergency response plan developed by the 
LEPC. Because of our involvement with our County LEPC, I am proud to 
say that I have just been named to serve on the City of Danville 
Emergency Planning Committee.
    As you can tell, handling chemicals has led the industry to develop 
extensive plans to address potential incidents covering both on-site 
and off-site consequences. However, Y2K presents a unique set of 
potential consequences, such as potential multiple system failures. As 
such, our emergency response plans designate actions to be accomplished 
should these type situations arise.
    Dialogue with Community
    Communicating Y2K compliance with your local community establishes 
public confidence and provides opportunities for open dialogue between 
the community and the plant. Several of our customers, suppliers, and 
business support agencies have requested and been provided information 
on our Y2K progress. Our information systems manager participated in a 
Y2K drill with our regional medical center. The drill proved beneficial 
for both Danville Regional Medical Center and Hickson DanChem. 
Participation in seminars as a member of the Pittsylvania County Safety 
Roundtable provided information to local small industries on Risk 
Management Plan (RMP) preparations. A symposium hosted by the Danville 
LEPC was held on April 29, 1999 to further enhance their understanding. 
Hickson DanChem has also sponsored programs, such as Educators in the 
Workplace to provide awareness information to local area teachers and 
counselors.
    Conclusion
    Hickson DanChem is committed to having an effective emergency 
response plan that avoids the potential Y2K technology concerns. Many 
of the contingency planning activities for Y2K readiness in the 
chemical industry are being addressed through procedures and practices 
that are already in place. However, Hickson DanChem has added 
additional measures to ensure the safety of our employees, neighbors, 
environment and equipment come December 31, 1999 and January 1, 2000. 
The involvement of our employees and local emergency responders has led 
us to develop an effective and open community dialogue and on and off 
site contingency plan.
    Though Y2K presents cause of concern, we have addressed these 
issues in the same manner as we address all emergency response issues-- 
by assessing the potential problems carefully and thoroughly, 
implementing preventative measures, and testing to ensure that 
potential problems have been adequately addressed. Contingency planning 
is an important part of doing business for our company. Hickson DanChem 
can say with confidence that we are prepared for the safe transition to 
the year 2000.
    Mr. Chairman, we appreciate the opportunity to appear before you 
today. The Y2K issue warrants the collaborative efforts of all of the 
stakeholders before you today. We welcome your leadership and look 
forward to a transition to a safe and prosperous new millennium.
                               __________

     Responses of Charlie B. Martin, Jr. to Questions Submitted by

                            Chairman Bennett

    Question 1. You indicated that your company has tried to anticipate 
a wide range of contingency planning scenarios. Do you think the 
industry has placed sufficient emphasis on the need for contingency 
planning?
    Answer. Risk management plays an important role in the daily 
operations of chemical manufacturing facilities. My initial statement 
for the committee referred to the Responsible Care program as 
an example of risk management activities that take place at many 
chemical facilities. The industry's commitment to this program shows 
that contingency planning is, and has been, in place for many years. 
Many Y2K-related activities and emergency planning are inherent, 
although not expressly designed for Y2K, within the Responsible 
Care program. Although Responsible Care is not 
practiced at every chemical manufacturing facility in the United 
States, participation in the program is a requirement of active 
membership in the Synthetic Organic Chemical Manufacturers Association 
(SOCMA). The Chemical Manufacturers Association and other chemical 
industry trade associations.
    In addition to programs such as Responsible Care members 
of our industry are also subject to a number of federal regulatory 
requirements that indirectly address the types of risks and necessary 
planning that are implicated by Y2K issues. For example, most chemical 
manufacturing facilities must submit facility-specific risk management 
plans to the U.S. Environmental Protection Agency (EPA) by June 21, 
1999, to comply with the Risk Management Planning Rule (RMP) under the 
Clean Air Act Sec. 112(r). 40 CFR Sec. 68. Under the RMP, chemical 
facilities must submit their facilities' plans to address potential 
risks and hazards at the facility level. In the preparation of their 
RMPs, most companies will be evaluating potential Y2K-related events 
such as loss of power and chemical releases.
    Similarly, Title III of the Superfund Amendments and 
Reauthorization Act (SARA), requires states to establish Local 
Emergency Planning Committees (LEPCs). Each LEPC is responsible for 
working with industry to develop emergency response plans for its 
community that take potential risks from a chemical-related accident 
into account; collecting and storing information provided by 
facilities; and making it available to the public. As I stated in my 
testimony, our company has been very actively working with our LEPC on 
Y2K-related issues. Although I believe this is true for other companies 
in the industry, I do not have specific information in this regard.
    Question 2. The Chemical Manufacturer's Association and its 
associated Chemical Information Technology Association have developed 
contingency planning guidance. Do you have a feeling for how widely 
distributed and used these materials have been?
    Answer. Hickson DanChem is not a member of the Chemical 
Manufacturers Association and therefore, I cannot comment about the 
distribution of the document. Members of the Chemical Manufacturers 
Association or the association's staff would be better equipped to 
respond to this question.
    Question 3. You mentioned that it is very important that chemical 
plants have a dialogue with their local communities. In your opinion, 
is the majority of the chemical industry engaging its local community 
(hospitals, emergency services and the general public) in a Y2K 
dialogue?
    Answer. My knowledge and experience of this issue involves specific 
activities that have taken, or will take place at Hickson DanChem. As I 
stated in my testimony, on March 11, 1998, Hickson DanChem participated 
in one of the first Y2K-related emergency response drills in our area. 
I am not in a position to answer this question on behalf of the 
industry as a whole.
    Question 4. You mentioned that the Pittsylvania County Safety 
Roundtable provided many small industries with valuable Risk Management 
Plan information. In your opinion, is an adequate job being done in 
reaching out to the industry and the public to raise awareness on the 
Y2K issue?
    Answer. The chemical industry has been made aware of the Y2K 
situation through various media including insurers and computer 
providers. The chemical industry trade associations also have provided 
information to their members about the Y2K situation. For example, 
SOCMA has been actively involved with the Y2K issue for quite some 
time. Specifically, the association has written numerous articles in 
its magazine, has had technology experts give presentations at meetings 
and has dedicated a page on its Internet Web site to address the issue 
and link to numerous sources of information and guidance materials. 
Additionally, SOCMA currently is working with EPA and other chemical 
industry trade associations to develop a document intended to assist 
small and medium-sized companies with their Y2K assessments and 
contingency plans. All parties contributing to this effort are 
committed to distributing the document beyond their respective 
memberships and constituencies.
    Generally speaking, I am not in a position to determine whether Y2K 
awareness activities in general, or to the public at-large are 
adequate.
    Question 5. The Chemical Safety Board recommends that all chemical 
processors continuing operations through the year 2000 transition 
should have plans and trained staff who could manually assume control 
of the plant. What do you think of these recommendations? In your 
opinion, is the industry incorporating these suggestions into their 
contingency and continuity plans?
    Answer. The CSB's recommended procedures are part of our daily 
operating schedule. As a batch processor, our company's manufacturing 
processes require intermittent introduction of frequently changing raw 
materials, and have varying process conditions. Therefore, equipment 
often is idle while waiting for raw materials, waiting for quality 
control checks, undergoing cleaning, etc. Due to the nature of batch 
manufacturing, it rarely pays to automate a system. Additionally, batch 
chemical processes start and shut down daily, if not multiple times 
during any given day. Consequently, at our company, as at the most 
batch operations, we depend upon by highly skilled operators who 
manually control operations.
    Although I would expect that most batch processors similarly would 
in the normal course depend upon manual operation of their plants, I do 
not have specific information in that regard.
                               __________

                   Prepared Statement of Jane Nogaki

    Mr. Chairman and Members of the Committee:
    Thank you for extending to the New Jersey Work Environment Council 
and the New Jersey Environmental Federation the opportunity to testify 
here today about concerns that citizens and workers of this state have 
regarding potential Y2K problems in facilities using hazardous 
chemicals. My name is Jane Nogaki and I have been involved in community 
and environmental Right to Know issues for 20 years. I am a Board 
Member of the New Jersey Work Environment Council, a statewide alliance 
of labor and environmental activists, and I am the Pesticide Program 
Coordinator for the New Jersey Environmental Federation, a nonprofit 
coalition composed of 80 organizations and 90,000 members. I am also a 
resident of Marlton and a public member of the Burlington County Local 
Emergency Planning Committee.
    The New Jersey Work Environment Council and the New Jersey 
Environmental Federation are concerned about the potential public and 
occupational health risk posed by chemical releases resulting from Year 
2000 (``Y2K'') computer problems. It is our contention that, despite 
corporate and government efforts to identify and remedy Y2K problems, 
the situation in New Jersey remains perilous for workers and residents 
alike. At the same time, if policies are properly designed and 
implemented to address this potential health risk, New Jersey's workers 
and residents--working in cooperation with facilities using hazardous 
chemicals and the state's Department of Environmental Protection--may 
be able to seize opportunities to increase awareness about toxics in 
our neighborhoods and workplaces.
    THE CURRENT Y2K PROBLEM
    As you know, Y2K refers to computer programs and chips embedded in 
millions of control devices worldwide that--unless fixed--may 
incorrectly read the year 2000 as an entirely different date come the 
start of next year. Despite assurances, no one knows how many glitches 
may occur when the clock strikes midnight. The results could include 
catastrophic chemical releases putting thousands of workers and 
citizens at risk and damaging the environment.
    On April 2, President Clinton said, ``We have made tremendous 
progress in our efforts to address the Year 2000 (Y2K) computer 
problem. In spite of this progress, however, too many businesses, 
especially small and medium-sized firms, will not be ready unless they 
act immediately.''
    This is indeed true here in New Jersey. We are the most densely 
populated state and, at the same time, we are a major chemical 
producer. Not surprisingly, we have the highest concentration of toxic 
air and water releases of any state in the nation. We have enacted our 
own laws, such as the Toxic Catastrophe Prevention Act (TCPA), to 
safeguard workers and the public. Yet there have been 8,247 reported 
releases of extremely hazardous substances reported to the Department 
of Environmental Protection (DEP) since 1986, when that law was 
enacted.
    Y2K presents a daunting challenge for the chemical, petroleum and 
related industries. These sectors of our state's economy are 
particularly vulnerable, because of their reliance on embedded chips 
for process control and monitoring. Embedded chips are in alarm 
systems, computer motherboards, utility and lighting controls, process 
controllers, refrigeration devices, and pumps and valves. System 
failures could include emissions sampling and related laboratory 
analyses, pollution treatment systems, leak detection systems, safety 
alarms, safety relief devices, security systems (which could lock out 
critical personnel), and power and water surge detection systems. 
Nonetheless, some chemical plants, according to one chemical 
engineering consultant, ``.  .  .  have not provided a manual means of 
shutdown independent of the programmable logic controller.'' And 
although many systems are designed to ``fail safe'' in response to 
single incidents, experts agree that Y2K glitches may set in motion 
multiple mechanical failures.
    Complicating matters, most chemical facilities depend on thousands 
of outside suppliers--and these vendors may not fix their own problems. 
Outside vendors can affect plant operations through failure to deliver 
essential data or chemical feedstocks, or utilities such as power and 
water. Vendors may spread corrupted data which can infect the plants' 
own repaired computer systems. Some larger companies are auditing the 
facilities of their important suppliers to determine if they can count 
on supplier efforts to remedy Y2K vulnerabilities.
    To underscore the problem in the chemical industry, the U.S. 
Environmental Protection Agency has issued a memo calling attention to 
the possibility of chemical plant problems stemming from the Y2K issue. 
The agency has urged state and local emergency planners to prepare and 
to carry out the emergency response functions.
    NEW JERSEY'S EFFORTS
    We can be proud of the effectiveness of New Jersey's TCPA program, 
which covers 911 facilities using extremely hazardous substances. We 
also look forward to expansion of the program, under the U.S. 
Environmental Protection Agency's Clean Air Act Section 112(R), to 
approximately 70 additional facilities. Together, these laws authorize 
the state DEP to collect voluminous risk information data about roughly 
160 facilities using high-risk toxics, and they are considered a model 
for chemical accident prevention.
    Yet state government efforts to address potential Y2K problems in 
the chemical and related industries appear inadequate. Last fall, for 
example, the DEP conducted an informal survey of 20 New Jersey chemical 
facilities, concluding that these manufacturers had few date-dependent 
processing units. DEP simply accepted management's verbal assertions 
and did not request independent verification and validation data. In 
addition, DEP ignored invitations and chose not to send a 
representative to the federal Chemical Safety and Hazard Investigation 
Board's December, 1998 Y2K conference.
    Thus it appears that the DEP, the agency charged with preventing 
toxic disasters, has put its head in the sand when faced with 
challenges posed by the ``millennium bug.'' Moreover, it is also 
apparent that no other agency in New Jersey is independently verifying 
even the most basic assertions from chemical facilities.
    It is clear that Y2K safety issues will continue to be the subject 
of considerable public discussion and media interests. It is worth 
noting, therefore, that under Section 112(R) of the Clean Air Act 
amendments of 1990, June 21 is the deadline for many chemical 
manufacturers and other employers in New Jersey to make public detailed 
Risk Management Plans RMPs). These plans include information about 
``worst case scenarios'' such as fires, explosions and toxic gas 
clouds. Needless to say, this looming deadline for legally-mandated 
disclosure of information about potential chemical accidents makes all 
the more important a strong government response to rising citizen 
concerns about potential Y2K problems.
    PROPOSALS
    To safeguard against preventable Y2K-related chemical releases, and 
to assure New Jersey's citizens that both the DEP and facilities in the 
state that use hazardous substances are taking adequate precautions, we 
propose the following:
    1. The New Jersey Department of Environmental Protection (DEP) 
should distribute a Y2K-Preparedness Survey to roughly 160 facilities 
covered by the Toxic Catastrophe Prevention Act and the EPA Clean Air 
Act Section 112(R). This survey should request information about Y2K 
efforts, including preparedness and planning, to help the DEP determine 
whether each company is Y2K-compliant. The survey should also include 
questions about equipment suppliers and other contractors. In addition, 
respondents should be asked to produce all Y2K-related documents, such 
as 10(Q) forms filed with the Securities and Exchange Commission. A 
reasonable deadline should be set to allow companies to complete the 
survey. Copies of the survey, a list of the companies receiving it and 
an introductory letter about the importance of Y2K-preparedness should 
be sent to the appropriate mayors, and Local Emergency Planning 
Committee members in municipalities throughout the state. The DEP 
letter should briefly describe the potential human, environmental and 
economic costs of non-compliance.
    2. For those companies that do not respond to the survey by the 
deadline, the DEP should conduct follow-up enforcement activities. 
These activities should begin with a phone call to companies. If, after 
telephone contact, companies still do not submit the survey, the DEP 
should conduct a site visit of the facility or facilities. Note that, 
according to the TCPA Section 8(a), the DEP has ``the right to enter 
any facility at any time in order to verify compliance with the 
provisions of this act.''
    3. The DEP should conduct Independent Validation and Verification 
(IVV) audits of a limited number of facilities. This auditing process 
would involve spot checks of certain facilities--including review of 
relevant documents and a possible site visit--to corroborate 
disclosures made about Y2K preparedness. It would aim to provide some 
assurance to citizens that assertions made by facilities are valid.
    4. The DEP should generate a brief report detailing the results of 
the survey and the IVV audits, and make this information available to 
the public. This report should document the response--or lack of 
response--by specific facilities. A summary should then be published in 
newspapers throughout the state; and the full report should be posted 
on the agency's Home Page on the World Wide Web and sent to Local 
Emergency Planning Committees. Moreover, if DEP does not currently have 
the staff or financial resources to conduct an audit and produce a 
report, such resources should be made available immediately.
    5. The DEP should initiate a series of local hearings on Y2K 
preparedness in chemical facilities. These hearings would provide a 
forum for citizens, workers and emergency responders to interact with 
plant managers about Y2K preparedness.
    QUESTIONS RESIDENTS AND WORKERS SHOULD BE ASKING CHEMICAL 
FACILITIES
    Among the questions we should be asking chemical facilities at such 
public hearings are:
    1. Have you completed Y2K-related remediation and testing of your 
safety-related systems?
    2. Have you consulted with employees, neighbors and emergency 
responders in all phases of your Y2K remediation, testing, drills and 
planning for high-risk periods?
    3. Have you conducted or planned any facility-wide Y2K testing, 
either independently or in coordination with outside utilities or 
suppliers, that has or will shut down your facility?
    4. From what sources has your facility's Y2K effort been 
independently audited (sometimes called ``independent verification and 
validation'' or ``IVV'')? Corporate headquarters? Major customers? 
Local government?
    5. Have you conducted IVV on your major suppliers?
    6. Do you intend to employ a ``Safety Holiday'' strategy (i.e., 
temporarily shut down your facility during high-risk periods for Y2K 
problems)? If yes, are you committed to maintaining pay and benefits 
for employees during this period?
    7. Have you stockpiled--or do you plan to stockpile--essential 
chemical supplies for anticipated Y2K outages? If yes, do any of these 
stockpiled chemicals add to the accident risk at your facility?
    8. How much (approximate or range in dollars) is your total budget 
for Y2K work?
    9. Have you developed Y2K Risk Management Programs (RMPs) as part 
of your ongoing work under OSHA's Process Safety Management and EPA's 
Risk Management Planning regulations?\1\
---------------------------------------------------------------------------
    \1\ Under the U.S. Environmental Protection Agency's Risk 
Management Program and U.S. Occupational Safety and Health Act's 
Process Safety Management program, certain facilities are required to 
develop and implement risk management programs (RMPs) by June 1999. 
Under the RMP initiative, regulated facilities are required to conduct 
a hazard assessment, develop and implement a prevention program, and 
implement an emergency response program. The hazard assessment includes 
development of worst-case and alternative release scenarios for a 
number of highly toxic chemicals as well as compilation of 5-year 
accident history.
---------------------------------------------------------------------------
    10. Under these laws, you must calculate toxics ``worst case 
scenario'' releases.
          How far is your calculated downwind distance?
          How long (in minutes) would it take a facility to realize it 
        had such a release?
          How long would it take for the facility to decide not to try 
        to handle it on its own?
          How long would it take to notify the fire department?
          How long would it take for the public to be notified?
    11. Have you arranged to make RMP documents available in a public 
library or other location with ready public access?
    CONCLUSION
    The NJ Work Environment Council and the NJ Environmental Federation 
have worked for many years to strengthen right-to-know laws providing 
citizens and workers access to information about hazardous chemicals 
used at work and in the community. We have built a statewide coalition 
of workers, citizens, scientists, and lawyers to monitor these 
problems. We believe it is in the interest of everyone in New Jersey to 
ensure that the facilities within the state that use extraordinarily 
hazardous chemicals--especially those covered by the TCPA and the Clean 
Air Act--are prepared for potential Y2K computer problems and make 
every effort to provide information to the public. Given the complex 
and costly nature of this preventive work, the DEP must also play a 
more prominent role than it has to date. Y2K poses a daunting 
challenge, but it also offers an important opportunity for government 
and business to work in cooperation with citizens, workers and 
emergency responders to avert potentially dangerous chemical releases 
that can damage human health and our environment.
    Thank you for the opportunity to testify.
                               __________

           Responses of Jane Nogaki to Questions Submitted by

                            Chairman Bennett

    Question 1. In your statement, you criticize the New Jersey 
Department of Environmental Protection (DEP) for its failure to address 
critical Y2K issues in the chemical industry. What factors do you 
believe contributed to the DEP's lack of engagement on this issue? In 
your opinion, what should be done to get the DEP more proactive in this 
area?
    Answer. Since the Committee's May 10 field hearing in Trenton, the 
DEP itself has responded to our criticisms. It is clear from the 
agency's response that it has defined its role in an extremely limited 
manner. Specifically, DEP appears to see itself as an enforcement 
agency that will inspect and cite employers after an incident occurs, 
but with no responsibility for a preventive Y2K strategy beyond the 
deterrent value of its inspection program. Our testimony maintained 
that the DEP appears to have its ``head in the sand'' regarding Y2K 
issues. It now appears the agency's heels are also dug in. Clearly, 
Governor Whitman should step in and direct the agency to undertake a 
more aggressive Y2K effort that would include:
      a survey of Y2K compliance efforts of facilities using 
extraordinarily hazardous chemicals;
      inspections and penalties for facilities failing to 
respond to such a survey;
      independent audits of the Y2K compliance efforts of a 
limited number of facilities;
      production of a report on the results of the survey and 
audits; and
      a series of local hearings--involving workers, citizens 
and facility managers--on the Y2K issue.
    As we made clear in our statement, resources should be allocated 
for this effort, including additional DEP staff, if necessary.
    It should be noted that since issuing our proposals to the Governor 
and testifying before the Special Committee, WEC has conducted its own 
34-question survey of 160 facilities using extraordinarily hazardous 
chemicals. Responses are currently being analyzed.
    Question 2. What specific concerns have your members voiced, from 
the workers' perspective, regarding the safety hazards Y2K presents to 
them as they carry out their duties each day?
    Answer. Unfortunately, it appears that not enough workers on the 
shop floor are aware of the increased accident risks related to Y2K 
computer mishaps. The reasons for this are many, but include:
      a lack of urgency on the part of our state government to 
disseminate information regarding possible threats to workplace, 
environmental and public safety or to initiate any preventive programs 
beyond the deterrent impact of existing enforcement strategies;
      a perception, promoted by many large chemical 
corporations and bolstered by a variety of local, state and federal 
government officials, that they are adequately and responsibly 
addressing problems when, in fact, preparation by even the largest 
companies (e.g. Occidental Chemical) appears to have a long way to go;
      the grim reality that workers toiling in toxic jobs have 
to endure an ongoing, everyday threat to their health and safety and 
thus may be inured to any additional hazards posed by Y2K computer 
problems.
    That said, those workers aware of Y2K problems have raised a number 
of concerns. For example, many are worried about re-starting operations 
that have shut down safely and about multiple and simultaneous process 
failures. Workers know that companies have ``fail safe'' systems in 
place that will safely shut down a process if, for example, there is a 
power interruption. But a real danger may emerge if a series of 
failures occur simultaneously or when systems that have ``failed safe'' 
are starting up again. The Y2K issue; these workers say, raises the 
following ``systems of safety'' questions:
      Have companies conducted Process Hazard Analysis (PHA) as 
required by OSHA's Process Safety Management Standard?
      Have facilities conducted a specific Y2K PHA on all their 
processes?
      Do facilities have adequate staffing to not only run the 
process but to handle emergency shutdowns?
    Many safety committee members in chemical facilities are also aware 
that PHA's are too often ignored, conducted inadequately, or conducted 
but not utilized. Since downsizing is widespread in the chemical 
industry, many facilities are also woefully understaffed. Informed 
workers contend that these factors combine to create a prescription for 
Y2K problems. Indeed, a recent example of a Y2K-like scenario is the 
explosion that killed six workers in Anacortes Washington on November 
25. A power failure caused the plant to shut down, which occurred 
without incident. But management rushed to start up once the power came 
on, did not fully safeguard systems, and six workers died. The Seattle 
Times reported that the explosion occurred when a pocket of hot liquid 
fuel was exposed to air after workers unsealed the bottom of a large 
steel ``coker'' drum. ``Though workers followed safety precautions,'' 
the newspaper reported, ``the hot fuel was not detected by temperature 
indicators because it had been insulated by a cool crust of residue 
that formed after a power failure the day before.''
    Question 3. You mention in your statement that New Jersey's Toxic 
Catastrophe Prevention Act (TCPA) has been very effective, but at the 
same time you are highly critical of the DEP regarding its Y2K efforts. 
How do you rectify these seemingly contradictory viewpoints? To what 
extent, if any, has the TCPA contributed to an effective response to 
Y2K in the chemical industry?
    Answer. TCPA has indeed been an effective enforcement program. But 
the DEP has not extended the TCPA's reach to encompass broader 
preventive efforts--such as public or worker education--regarding Y2K 
or, for that matter, chemical safety in general. Thus, TCPA's ability 
to push a facility to address specific problems related to Y2K--e.g. 
disruptions among vendors--is negligible.
    Question 4. How would you gauge the effectiveness of Environmental 
Protection Agency and OSHA efforts on Y2K in the chemical industry?
    Answer. OSHA's effort, as noted by Senator Bennett at the May 10 
hearing in Trenton, has been meager at best. The EPA has provided more 
information, but, according to our members, has yet to have any real 
impact either with workers inside facilities or with neighbors outside.
    Question 5. In the list of questions for chemical facilities that 
you provided in your statement, you alluded to the fact that Risk 
Management Plans should be readily available to the general public. The 
EPA initially wanted to make these available on the Internet, but 
decided not to do so because of security concerns expressed by the FBI 
in regard to the increased vulnerability to terrorism such widespread 
dissemination of this information might cause. What is your opinion 
about this?
    Answer. Worst case scenarios included in the Risk Management Plans 
were intended for use by the public to help communities prepare for and 
prevent chemical accidents. We feel that denying or limiting access to 
this information based on purported threats of terrorism would be ill-
conceived. The public's right to know would be reduced by these 
measures, but chemical facilities would not be required to take steps 
to improve site security, to establish buffer zones, or to make 
chemical plants safer. We see no reason to pit community right to know 
against chemical industry complacency in reducing risks to New Jersey 
communities. Moreover, we see a great value in establishing a national, 
public RMP data system that would enable citizens to access and analyze 
RMP information.
                               __________

                  Prepared Statement of Gerald V. Poje

    Good afternoon, Mr. Chairman and Senator Lautenberg. I am Gerald V. 
Poje, Ph.D., one of four members nominated by the President and 
confirmed by the U.S. Senate to the U.S. Chemical Safety and Hazard 
Investigation Board (CSB). Our chairman, Dr. Paul L. Hill, the other 
board members and I thank you for inviting the CSB to testify 
regarding:
          1. The critical findings and recommendations from the CSB's 
        Year 2000 (Y2K) Technology report,
          2. Significant activities that have occurred within the 
        chemical industry to address areas with the greatest Y2K risk,
          3. Assessment of the chemical industry's ability to continue 
        uninterrupted operations in spite of Y2K, and
          4. Actions that Congress and others should take to reduce the 
        risks of Y2K failures.

    The Chemical Safety Board is an independent federal agency with the 
mission of ensuring the safety of workers and the public by preventing 
or minimizing the effects of industrial and commercial chemical 
incidents. Congress modeled it after the National Transportation Safety 
Board (NTSB), which investigates aircraft and other transportation 
accidents for the purpose of improving safety. Like the NTSB, the CSB 
is a scientific investigatory organization. The CSB is responsible for 
finding ways to prevent or minimize the effects of chemical accidents 
at commercial and industrial facilities and in transport. The CSB is 
not an enforcement or regulatory body. Additionally, the CSB conducts 
research, advise Congress, industry and labor on actions they should 
take to improve safety, and makes regulatory recommendations to the 
U.S. Environmental Protection Agency and the U.S. Department of Labor.

    I am trained in toxicology and specialize in policies dealing with 
chemical hazards. I oversee the board's efforts on reducing risks of 
accidents associated with Year 2000 computer problems. Let me state 
clearly, that the CSB views the Y2K issue within the larger 
evolutionary trend of expanding automation and information technologies 
in the chemical handling sectors. New technology will continue to 
penetrate the workplace, affecting management, workers, equipment and 
interrelationships with suppliers, customers, regulators and the 
surrounding community. How our nation and businesses manage the Y2K 
problem will provide important lessons for other new technology issues.

    Currently, I work with the Intergovernmental Forum on Chemical 
Safety and the Organization for Economic Cooperation and Development to 
promote global remediation and contingency planning around Y2K 
problems.

    In February 1999 I also testified before the Senate Environment and 
Public Works Committee's Subcommittee on Clean Air, Wetlands, Private 
Property and Nuclear Safety on the Year 2000 Computer Technology 
Problem And Chemical Safety Issues.

    BACKGROUND

    The U.S. Chemical Safety and Hazard Investigation Board, at the 
request of Senators Bennett and Dodd of the U.S. Senate Special 
Committee on the Year 2000 Technology Problem, has investigaged the 
issues of chemical safety and the year 2000 computer technology 
problem. In December 1998, the board convened an expert workshop on Y2K 
and Chemical Safety involving leaders from industries, equipment 
vendors, insurance companies, regulatory agencies, research agencies, 
universities, labor organizations, environmental organizations, trade 
associations, professional engineering associations, and health and 
safety organizations. The process of our safety board's efforts could 
prove to be a useful model for other critical issues associated with 
the year 2000 technology problem and for further elaboration of the 
chemical safety issues at hearings and workshops organized at the 
national, state and local levels.

    The board members have reviewed and approved the report which is 
available via Adobe Acrobat at the Chemical Safety Board's website: 
http://www.csb.gov/y2k/y2k01.pdf.

    In developing the report, the Chemical Safety Board was guided by 
the request of the Senate Special Committee to evaluate:
      the extent of the Year 2000 Problem as it pertains to the 
automation systems and embedded systems that monitor or control the 
manufacture of toxic and hazardous chemicals, or safety systems that 
protect processes,
      the awareness of large, medium, and small companies 
within the industry of the Year 2000 threat,
      their progress to date in addressing the Year 2000 
problem,
      the impact of the Risk Management Plans required in June 
1999, and
      the role federal agencies are playing in preventing 
disasters due to the Year 2000 problem.

    In synoposis, the Year 2000 Problem is a significant problem in the 
chemical manufacturing and handling sector. All enterprises with 
sufficient awareness, leadership, planning, lead time, financial and 
human resources are unlikely to experience catastrophic failures and 
business continuity problems unless their current progress is 
interrupted or there are massive failures of utilities. Many larger 
corporate entities fit this profile. The overall situation with small 
and mid-sized enterprises is indeterminate, but efforts on the Y2K 
problem appears to be less than appropriate based upon inputs from many 
experts. While the impact of the Risk Management Plans should be 
positive, there are no special emphases or even specific mention of 
Year 2000 technology hazards in either U.S. Environmental Protection 
Agency (EPA) or Occupational Safety and Health Administration (OSHA) 
regulations regarding process safety. Federal agencies are aware of and 
involved in Year 2000 technology and chemical safety issues. However, 
significant gaps exist, and there do not appear to be specific plans to 
address these gaps.

    Scope of Issues

    The Expert Workshop, as well as the research conducted for our 
report, concluded that the Year 2000 problem is one of major 
proportions and has the potential for causing disruption of normal 
operations and maintenance at the nation's chemical and petroleum 
facilities. Compliance activities reported to the Chemical Safety Board 
to date have not found a single failure (embedded microchips or 
software) which by itself could cause a catastrophic chemical accident. 
However, it is unclear what the outcome might be from multiple 
failures, e.g., multiple control system failures, multiple utility 
failures, or a combination of multiple utility and control system 
failures. Surveillance of the industrial sector that handles high 
hazard chemicals is insufficient to draw detailed conclusions 
applicable to all localities.

    One theme upon which experts agree is that failures from Y2K non-
compliance at small and mid-sized enterprises is more likely. The 
reason is a lack of awareness regarding process safety in general and 
the Y2K impact in particular, lack of resources, and technical know-how 
for fixing the problems. Given the time constraints, altering this 
situation would require a massive effort. The Board has concluded that 
this effort should focus on: 1. providing easy-to-use tools, 2. 
promoting accessible resources, and 3. providing attractive incentives 
for Y2K compliance efforts. Additioinal efforts should be the focus of 
an urgent meeting of agencies convened by the Administration.

    Facility Issues
    The potential for catastrophic events, at US chemical process 
plants, stemming from Year 2000 non-compliance, can be divided into 
three categories: failures in software or embedded microchips within 
the process plants, external Y2K-related problems (e.g., power 
outages), and multiple Y2K-related incidents that may strain emergency 
response organizations. A check list of devices to be assessed for Year 
2000 compliance at a chemical plant is identified in Appendix A.

    The limited scope of the Y2K Expert Workshop and the research 
conducted for this study concluded that large multinational companies 
are, in general, following a well-thought out and well-managed path 
towards Y2K compliance. These multinational enterprises have, in 
addition to their Y2K compliance efforts, made contingency plans, 
including, in some cases, plans to shutdown batch operations for 
limited periods at the turn of the century.

    Particularly in the contingency planning area, the CSB's efforts 
benefited from the specific presentations by the Occidental Chemical 
Corporation and the Rohm and Haas Company. The efforts of the Chemical 
Information Technology Association have culminated in contingency 
planning guidelines, available at the Chemical Manufacturers 
Association website http://www.cmahq.com/cmawebsite.nsf/pages/
newsinfo). I have appended the PowerPoint presentations regarding 
approaches to managing this issue from two major chemical 
manufacturers: Appendix B from the OxyChem corporation and Appendix C 
from the Rohm and Haas company.

    While existing disaster recovery plans focus on loss of data 
centers, facilities, or communications circuits, Year 2000 contingency 
planning must focus on loss of external services and multiple 
simultaneous occurrences. With Y2K issues, problems will be more 
complex and they will happen simultaneously. Unpredictable human 
behavior will make them worse. The same problem may occur in multiple 
places, and some problems will ripple into other areas threatening 
health and safety, individual business continuity and supply chain 
failures.

    The CSB conclusions vis-a-vis large and multinational companies 
should not be construed to mean that there is no potential for Y2K-
related catastrophic events at these facilities. It is possible that 
some Y2K-impacted components may not have been identified, compliance 
programs may not achieve 100% completion before critical dates, or 
multiple failures that may not have been considered may result in 
accidents.

    In addition, the erosion of commodity pricing, merger and 
acquisition activity and loss of critical Y2K staff through 1999 may 
create unique threats to successful completion of Y2K projects.

    The major control and instrumentation vendors canvassed in our 
study are involved in an extensive program to provide Y2K compliance 
for their products. There is, however, reason to believe that some 
independent control systems integrators may have developed and 
implemented control systems for which there is little or no 
documentation of Y2K-related vulnerabilities. In addition, some vendors 
are no longer in business or not as cooperative as the major control 
and instrumentation vendors.

    Regulations
    EPA's Risk Management Program and OSHA's Process Safety Management 
program mandated by the Clean Air Act Amendments of 1990 may provide 
significant benefit in terms of improving overall safety programs, 
reliability of chemical process plants, emergency response plans, and 
other programs at regulated and compliant facilities. As a result, the 
overall capability and readiness of the chemical process industry to 
deal with and effectively overcome the Y2K threat is likely to be very 
high. However, it must be pointed out that none of these regulatory 
programs or activities have any direct relationship with Y2K 
compliance.

    Instituting new regulations to standardize testing or certification 
is not a reasonable approach for three reasons. First, in the remaining 
time, it is not possible to develop the mechanism and logistics needed 
for rulemaking, standard development, and establishment of reporting 
procedures. Second, implementation of any standardized method or 
regulation may create penalties and unnecessary complications for many 
companies that do not fit the selected standard but have already 
expended an extensive amount of effort on Y2K compliance. Third, it is 
critical to minimize overall administrative efforts in order to focus 
available resources on the remedial efforts within this limited time 
frame.

    Other Issues
    The existing chemical sector and its system of safety will be 
tested by Y2K problems. Some aspects are worth noting.

    1. The chemical sector and its surveillance systems are quite 
heterogeneous. For example, the Chemical Manufacturers Association 
(CMA) has approximately 190 members who represent nearly 90% of the 
chemical producing capacity in the United States.

    CMA developed and implemented a Y2K survey beginning in July 1998 
(see, the CMA website (http://www.cmahq.com/cmawebsite.nfs/pages/
newsinfo). Several associations within the larger Council of Chemical 
Associations have recently adopted and applied the CMA surveillance 
tool to their members. Other associations may lack resources to survey 
their members and/or power to assure their compliance. Many more 
facilities handling significant amounts of high hazard chemicals may 
not belong to industrial associations.

    The two major regulatory agencies, EPA and OSHA, have not 
undertaken a surveillance of the Y2K compliance efforts of their 
regulated community, nor have they funded other entities to do such. 
Therefore the chemical sector has much less of a coordinated approach 
than other sectors (see, for example, the North American Electric 
Reliability Council 3rd report to the Department of Energy, ftp://
ftp.nerc.com/pub/sys/all updl/docs/y2k/4-30-y2k-report-to-doe.pdf).

    2. Independent validation and verification also is heterogeneous in 
the chemical sector. Many larger corporate chemical companies employ 
rigorous independent auditing of their facilities for a variety of 
performance measures, including risk management and Y2K compliance 
efforts. Many companies are auditing suppliers and customers for Y2K 
compliance and allowing themselves to become subject to similar audits. 
Such practices have proven highly valuable in improving quality, 
promoting confidence in management and business continuity and building 
trust among the key stakeholders. However, the percentage of facilities 
handlling significant amounts of high hazard chemicals that employ this 
approach is not known.

    Other sectors managing hazardous materials are employing public 
oversight. The Nuclear Regulatory Commission recently has developed an 
inspection manual and checklist guidelines for power plant inspectors 
(see Final NRC Inspection for Review of Year 2000 (Y2K) Readiness of 
Computer Systems at Nuclear Power Plants http://www.nrc.gov/NRC/Y2K/
Audit/TI2515-141.pdf and a Y2K Review Checklist http://www.nrc.gov/NRC/
Y2K/Audit/TI2515-141A.pdf). Similarly, the Connecticut Department of 
Public Utility Control is employing a independent auditing firm to 
oversee Y2K compliance at public utilities (see http://
www.dpuc.state.ct.us/DPUCinfo.nsf/6388afa2e804605f852565f7 004e9e87/
a66dc559a4ee99b385256705006be862?Oopen Document).

    The role for federal, state, local agencies and private third party 
auditing of Y2K compliance, through either comprehensive or special 
emphasis programs, is not specified within the chemical sector.

    3. Policymakers likely will become involved if the existing system 
of surveillance, auditing and technical assistance is proven 
insufficient to prevent extraordinarily manifest Y2K failures. After 
the Bhopal, India disaster in December 1984, Congress enacted Title III 
of the Superfund Amendments and Reauthorization Act (SARA) in 1986. 
SARA Title III required states to establish state and local emergency 
planning committees (LEPCs), mandated that facilities must make 
information on harzardous chemicals available to the public, created 
basic research programs at universities, and established training 
programs for workers and emergency responders. Additional catastrophic 
failures in the United States during 1988 and 1989 prompted the 1990 
Clean Air Act Amendments which established: a general duty obligation 
in regard to process safety, OSHA Process Safety Management (PSM) rule, 
the EPA Risk Management Program (RMP) Rule, and the formation of the 
Chemical Safety and Hazard Investigation Board.

    If Y2K failures become sufficiently apparent in 1999-2000, policy 
makers likely will need to consider three major issues: 1. The absence 
of adequate data regarding Y2K compliance, despite widespread 
recognition of the problem, deadlines for compliance and consequences, 
2. Inadequate application of established principles for managing 
process safety in facilities, particularly as it relates to automation 
and information technologies, and 3. Gaps in process safety training, 
technical assistance, and research, particularly as it applies to small 
to medium sized facilities and those in low income and minority 
communities.

    Priority Issues and Findings

    Special Expert Workshop attendees reached consensus on the 
importance of four issue areas related to Y2K problems and chemical 
safety. First, small and medium-size enterprises (SMEs) risks and needs 
are greater than those of larger corporate entities. Second, existing 
risk management programs provide a more substantial framework for 
addressing Y2K related problems. Third, the discontinuity of utilities 
threatens all chemical handling entities. And fourth, managing Y2K 
problems will require responsive communication among the stakeholders.

    Recommendations
    The following recommendations were developed based on input from 
the workshop attendees and research conducted during the CSB Y2K study.

    Executive Administrative Agencies
      The Administration should promote the development of an 
informatioin clearing-house. Information such as checklists and lists 
of devices or equipment susceptible to Y2K failures should be provided 
specific to industry sectors. A Federal government agency should be a 
focal point for the clearing-house in coordination with other public 
and private entities, and thereby shielding organizations that provide 
Y2K-related information from the threat of lawsuits.
      The President's Council on the Year 2000 should 
coordinate a contingency planning phase to build public awareness and 
promote the ability of emergency response infrastructure at the 
federal, state, and local levels. The U.S. Environmental Protection 
Agency (EPA) should promote the development of contingency plans to 
assure capable emergency response and promote communications among 
facilities, local governmental agencies and the nearby communities 
should problems arise. Federal initiatives should include the 
organization of regional conferences focusing on ways to assess risks 
appropriately and how to prioritize which systems and facilities pose 
greater risks.
      EPA and the Occupational Safety and Health Administration 
(OSHA) and other safety organizations should increase Y2K awareness in 
small and mid-sized enterprises (SMEs).

    Facilities
      All processors that will run through the transition 
should have plans and sufficient and trained staff on hand to manually 
take control of the process. Facility managers should be prepared to 
shut down the process quickly and safely should control problems occur. 
Manual operations, especially over extended periods of time, may 
require significant changes in staffing and comprehensive training of 
managers, operators and other workers.
      Batch processors should consider delaying batches 
involving hazardous materials that will be in the process as the clocks 
turn to 2000, and at other sensitive dates, for processes where testing 
was not done or testing results were inconclusive.
      Chemical workers, emergency responders and local 
governmental agencies that focus on environmental health and emergency 
response should be provided with training and tools (e.g., guidelines, 
checklists, and software) to address Y2K issues.
      Facility managers should phase-in and coordinate shut 
downs, resulting either intentionally as a safeguard against Y2K-
related failures or as a direct result of Y2K failures, and startups 
with local utilities and agencies, including emergency response 
agencies and Local Emergency Planning Committees.

    Other Sectors
      Power outages and other utility failures could constitute 
as much of a threat, or even more so, than internal process plant Y2K-
related failures. Thus, utilities and oversight agencies should expend 
every effort to preserve the integrity of the national power grid 
system, local power supplies and other appropriate utilities. Chemical 
facilities individually and aggregately can exacerbate unusual loading 
patterns and minimum generation condition on the electrical grid. 
Therefore, contingency plans for utilities and chemical facilities 
should incorporate specific elements for cross sector communication.

    All Stakeholders
      Communication tools should be developed to improve the 
status of SMEs and to aid worker and public understanding. While it is 
critical to develop and implement Y2K compliance programs, it is 
equally important to inform workers and the public about the extensive 
work being done, in order to allay fears, avoid panic and promote 
community contingency planning. This communication can be made through 
federal agencies, such as EPA, OSHA, and the Chemical Safety and Hazard 
Investigation Board (CSB), state and local agencies. Other important 
venues for outreach include: unions, trade and professional 
organizations, such as the American Institute of Chemical Engineers 
(AIChE), American Petroleum Institute (API), American Society of Safety 
Engineers (ASSE), Chemical Manufacturers Association (CMA), Chlorine 
Institute, and International Society for Measurement and Control (ISA), 
and research organizations such as the Mary Kay O'Connor Process Safety 
Center at Texas A&M University.

    Summary
    In summary, the Year 2000 technology problem is a significant 
problem in the chemical manufacturing and handling sector, posing 
unique risks to business continuity and worker and public health and 
safety. All enterprises with sufficient awareness, leadership, 
planning, financial and human resources are unlikely to experience 
catastrophic failures and business continuity problems unless their 
current progress is interrupted or there are massive failures of 
utilities. Many larger corporate entities fit this profile. The overall 
situation with small and mid-sized enterprises is indeterminate, but 
efforts on the Y2K problem appears to be less than appropriate based 
upon inputs from many experts. Federal agencies are aware of and 
involved in Year 2000 technology and chemical safety issues. However, 
significant gaps exist, and there do not appear to be specific plans to 
address these gaps.
























                               __________

         Responses of Gerald V. Poje to Questions Submitted by

                            Chairman Bennett

    Question 1. Your testimony and the CSB report of March has called 
for the urgent meeting of Federal agencies convened by the 
Administration on this topic. Would you tell us what you believe the 
goals and desired outcomes of this meeting should be? Which Federal 
agencies should be present at a meeting such as this?
    Answer. When the CSB convened the expert meeting in December, 1998, 
the majority of expert participants valued the involvement of a broad 
diversity of stakeholders, including six Federal agencies representing 
regulatory, research, training, toxicology, emergency response and 
investigatory functions. The Federal government commands an important 
role in providing leadership coordination, and direction on the Y2K 
issue. Government needs to get pertinent and candid information out to 
the public, demonstrate that organizations are managing against the 
problem, establish that normal emergency response mechanisms have been 
reviewed and updated, and share technical information with those that 
need it.
    No individual agency represents the total mandate of the Federal 
government, nor engages all relevant stakeholders. While the 
President's Council has assigned responsibility for the chemical sector 
to the Environmental Protection Agency, to the best of my knowledge 
with less than 200 days remaining there is no plan to convene a Federal 
agency summit meeting on chemical safety.
    A Federal Summit on Y2K and chemical safety would:
    a. delineate the extent and depth of surveillance efforts of the 
chemical handling industry in the private and public sectors;
    b. identify best practice and application of independent validation 
and verification procedures for assuring compliance efforts;
    c. compile individual agency resources and actions devoted towards 
assessing and improving Y2K compliance for the chemical handling 
industry;
    d. identify needs and opportunities for cross-sectoral 
coordination, training and investigation;
    e. identify best practice for emergency planning and response, 
including ways of identifying facilities with Y2K failure potential 
prior to sensitive dates;
    f. discuss the feasibility of the executive branch of the federal 
government requesting Y2K compliance from high hazard chemical handling 
facilities;
    g. delineate coordination needs and opportunities with state and 
local agencies on chemical safety.
    The outcome of a Federal Summit would be a more coordinated Federal 
plan of action and communication on chemical safety.
    The Federal agencies should include
    1. the major regulatory agencies--EPA (OIRM, OSWER, OPPTS, OECA) 
and OSHA (Office of Compliance, Office of Policy),
    2. research, training, and public health agencies--NIOSH, NIEHS, 
ATSDR,
    3. Emergency management--FEMA,
    4. agencies with facility management functions that include the 
management of chemical hazards--DOE, DOD, and
    5. independent investigatory and safety agencies--CSB, NTSB.
    Question 2. Your testimony is guardedly optimistic about the larger 
firms in this industry. However, the Chemical Manufacturer's 
Association has been running a Y2K-survey on their almost 200 member 
firms since December last year and as of the end of April, has only 
gotten a 63% response rate. Searching the web for information, CMA has 
gotten data on another 7% or so. Should we not be concerned about the 
30% (almost 70 companies) that have not participated in their own 
association's survey on this important matter? Could you recommend 
incentives that parties in the government or elsewhere could take to 
improve the response rate?
    Answer. Recognizing the need for greater transparency on safety and 
environmental programs, more than a decade ago, the Chemical 
Manufacturers Association told the public, ``Don't trust us, track 
us!'' and implemented the Responsible Care \1\ code of practices to 
guide its members. Every participating company's chief officer signs 
the Responsible Care Guiding Principles--the foundation of 
Responsible Care--as a symbol of his or her commitment to continuous 
health, safety and environmental performance improvement. Responsible 
Care is an obligation of membership in CMA. In the Y2K 
technology problem arena, I urge all to be guided by former President 
Ronald Reagan who is famous for his international safety aphorism: 
``Trust but verify.''
---------------------------------------------------------------------------
    \1\ http://www.cmahq.com/cmawebsite.nsf/pages/responsiblecare
---------------------------------------------------------------------------
    Yes, we should be concerned about the status of non-reporting 
companies. Recent surveillance efforts by seven associations of smaller 
and mid-sized enterprises (SMEs) gathered responses from 300 entities 
from a total population of more than 3000. Obviously, stated 
commitments among these companies that they will be 100% Y2K ready by 
the end of the year is important, and their public disclosure efforts 
are laudatory although individually anonymous even to their trade 
association. However, the 10% responders from this SME community does 
not constitute a random sample of the larger population. Therefore, it 
is unacceptable to project similar commitments of Y2K compliance before 
the end of the year for the 90% who did not respond. Furthermore, many 
other chemical handling entities belong to other associations which 
have not initiated any surveillance program, and other facilities do 
not belong to a trade association.
    In addition, it is also important to recognize the time sensitivity 
of information in surveys. At a recent meeting organized by the CMA, 
one Y2K leader critiqued the accuracy of the CMA aggregate data since 
his company's current status (which was more complete than originally 
projected) would not be accurately reflected in their data submitted 
several months ago. While another company representative anticipating 
imminent completion of a major merger could not project that the 
current status would reflect the ultimate status of the company 6 
months from now. CMA leaders recently expressed uncertainty that the 
association would be able to commit resources or garner membership 
support towards a survey update of their members as has been 
accomplished in other sectors.
    Trade associations which have organized surveillance efforts are to 
be commended for their voluntary efforts which have increased public 
awareness and prepared their members for communicating their Y2K 
compliance status. Hopefully such actions enhance the Y2K compliance of 
their member. None-the-less, it is important to recognize these 
associations have limited leverage with their due-paying members to 
extract Y2K data and maintain its currency. When the survey protocol 
relies upon voluntary submissions it cannot be expected that all will 
comply, nor can the compliance results from the responders be projected 
to the non-responders, such as the 30% of the CMA members and the 90% 
of the associations of SME chemical specialty producers and 
distributors.
    Legitimate interests of concerned media, investors, workforce and 
communities will continue to seek information regarding the compliance 
status and future direction of every company and their specific 
facilities. The capacity to effectively participate in contingency 
planning requires that all participants have timely access to relevant 
information, sufficient technical understanding and expertise, and the 
resources to participate.
    With approximately 6 months remaining before the end of the year 
there are limited opportunities to provide incentives. The Federal 
regulatory agencies should issue a joint communication regarding the 
applicability of the general duty clauses to Y2K failures affecting 
health, safety and environmental protection. The CSB has urged 
organizations with greater technical and financial resources to partner 
with less resourced entities to improve their compliance status and 
strengthen their contingency planning efforts. In the private sector 
this includes large corporations working with smaller suppliers and 
their customers, such as through an enhanced total product stewardship 
program. In the public sector this includes federal agencies with 
facility management competencies, such as DOD and DOE, working with 
smaller municipalities and businesses in their nearby vicinity. These 
efforts could increase public awareness of the need for expanding Y2K 
compliance efforts, contingency planning, and communication of 
progress, vulnerabilities, uncertainty and management strategies.
    The CSB has already stated that instituting new regulations to 
standardize testing or certification is not a reasonable approach. In 
the remaining time, it is not possible to develop the mechanism and 
logistics needed for rulemaking, standard development, establishment of 
reporting procedures and assuring uniform awareness and compliance. 
Conversely, there is also little benefit in promoting incentives 
towards compliance by providing relief from existing regulations 
because of the same logistical constraints.
    Question 3. You site lack of knowledge and resources as a potential 
cause of failures among small and medium sized enterprises, and you say 
that it would take a ``massive'' effort to alter this situation. Given 
the limited amount of time that's left and the dangerous scenario 
surrounding the fact that literally thousands of these smaller 
companies are located in the middle of residential communities, what 
recommendation does the CSB make given this volatile combination? Is 
there time for a ``massive'' effort?
    Answer. No single entity could be assigned the sole responsibility 
for assuring SME compliance. Local, state and federal agencies, 
managers, workers, trade associations, professional associations, 
community organizations, and others have important roles in promoting 
health, safety and environmental protection. For example, the Washtenaw 
County and Ann Arbor, MI Local Emergency Planning Committees (LEPCs) 
have initiated a laudatory effort to increase awareness and 
accountability for Y2K compliance among more than 800 businesses 
handling even small amounts of chemicals in their jurisdiction, and 
will be organizing community conversations regarding chemical safety 
concerns. The National Institute of Environmental Health Sciences has 
increased the Y2K awareness of training experts in the HAZWOPER program 
and will be providing grant supplements to prepare many more workers 
and emergency responders (see question 2). The EPA, trade associations 
representing some chemical SMEs and the CSB have worked together to 
prepare guidance for SMEs. Industrial unions have sent letters to their 
locals and employers requesting attention to and information regarding 
Y2K compliance and contingency planning. Each of these examples should 
serve as models for others to emulate and thereby reduce the risks.
    Question 4. My understanding of the chemical manufacturing process 
is that start-up and shut-down are two very critical and sometimes 
hazardous points of operation. You indicate in your testimony that 
power outages and other utility failures could be as threatening as 
internal system failures. Could you describe for us the risks 
associated with power outage where normal operations are disrupted, and 
give us your estimate of the existence of alternative power sources or 
other contingencies that may be in place within the chemical industry 
in the event of an electrical or power outage?
    Answer. No effort was made in the CSB study to assess the potential 
of power outages from Y2K-related failures. However, potential Y2K-
related power outages represent another set of problems for chemical 
and petroleum facilities. While many chemical and petroleum 
manufacturing facilities have backup power generators, Y2K failures may 
include concurrent loss of power, cooling water and other system 
malfunctions. High demand processes, such as chloralkali or smelting 
operations would not be able to operate processes on back-up power 
generators. Plants without auxiliary power backup systems face a threat 
to parts of their processes that may not shutdown in a fail-safe mode. 
Batch chemical processes are especially susceptible because the safety 
of the process is quite often dependent on time-dependent factors such 
as precisely timed mixing, heating or cooling requirements.
    A potential scenario is that widespread power outages may cause 
shutdowns of many plants, which in turn will require simultaneous 
startups. Startups of continuously producing chemical plants are 
infrequent and their durations are short compared with the life cycle 
of a plant. Marsh and McLennan in their evaluation of large property 
damages in the petrochemical industry found that process safety 
incidents occur five times as often during startup as they do during 
normal operations. Thus, a large number of simultaneous startups may 
increase the potential of incidents in one or more process plants. In 
addition, the simultaneous restarts of large power-consuming facilities 
will impose large demands on the electrical grid.
    While occasional power outages are dangerous and difficult to 
manage, they are not unusual problems for facility managers and workers 
to confront. With Y2K power outages, problems will be more complex and 
they will happen simultaneously such as loss of crucial data, facility 
subsystems, or communications circuits, as well as loss of other 
external services and multiple simultaneous occurrences. Unpredictable 
human behavior will make them worse. The same problem may occur in 
multiple places, and some problems will ripple into other areas 
threatening health and safety, individual business continuity and 
supply chain failures.
    Consequently the CSB report recognized that many members of the 
chemical process industry are concerned about the reliability of power 
supply and are seeking ways to assess the vulnerability of their 
specific utility. Individual companies and local associations are 
encouraged to engage in dialogue with their individual power suppliers 
to find out what they are doing regarding Y2K. Accurate and pertinent 
information about utility status is essential for contingency planning 
purposes.
    For some managers of facilities that draw high power loads prudent 
safety practice may determine that the plant be shut down during 
critical time periods and restarted at a later date. However, such 
decisions should not be made without communicating these planned 
actions with their utilities in order to prevent problems on the power 
grid. As a further complication, cumulatively, small power consumers 
can impact on power distribution through the nearly simultaneous shut 
down of many facilities without coordinating with their utility. 
Utilities can bring up or shutdown generators as demands vary, but they 
have trouble responding to unexpected changes in load or demand.
    Insufficient electrical demand coupled with increased numbers of 
generators supplying the electric grid could overload the power 
distribution system, threaten the integrity of equipment, and/or trip 
breakers. If that happened, then there could be power outages for all 
the customers on the affected distribution line. The January 11, 1999 
report, ``Preparing the Electric Power Systems of North America for 
Transition to the Year 2000--A Status Report and Work Plan--Fourth 
Quarter 1998'', issued a specific recommendation that would affect any 
advice given for facilities considering shutting down during rollover 
to Year 2000.\2\
---------------------------------------------------------------------------
    \2\ See with access though Adobe Acrobat Reader, ftp://
ftp.nerc.com/pub/sys/all--updl/docs/y2k/secondfinalreporttodoe.pdf
---------------------------------------------------------------------------
          ``Unusual Loading Patterns and Minimum Generation Conditions. 
        Another priority concern that is emerging from the contingency 
        planning process stems from the need to have additional 
        generating units on line as a precaution against Y2K events. 
        With additional generators on line and the possibility of 
        customer demand being low through the extended holiday period, 
        utilities must consider what is called a *minimum generation* 
        condition. When there is too much generation on line in 
        relation to demand, system voltages and frequency can rise. 
        Planning for the rollover into the Year 2000 must trade off the 
        need to have additional reserves to respond to possible 
        generator contingencies with the potential for excessive 
        voltages. Customers should be encouraged during the period not 
        to take unusual steps such as shutting down facilities that 
        would normally operate through the holiday weekend. Extremely 
        low demand or unusual pattern demand can present additional 
        challenges for operation of the electric system.''
    The response to the utility problem has to be two-pronged, 
governmental leadership and corporate accountability. The federal 
government should ensure the integrity of the nation's electrical grid. 
In addition, state and local governments should make every effort to 
ensure the integrity of other utilities within their purview. The 
chemical process facilities should on the other hand design their Y2K 
compliance activities, particularly the contingency planning activities 
with the assumption that most utilities will fail, or at the best be 
under maximum strain.
    The CSB recommends that utilities, individually and through their 
associations, should take the lead in regards to 1. Informing their 
customers of possible power supply problems, and 2. Ascertaining 
whether their customers plan to alter their power demands such that 
utilities might be unable to maintain power distribution. Where 
utilities find significant planned shutdowns, they should take the 
initiative to coordinate shutdowns and subsequent start ups.
    Question 5. Besides your Board, OSHA, and EPA, are there other 
Federal agencies in your opinion that should be active in reaching out 
to the chemical industries on the Y2K problem? If so can you tell us 
what their activities have been?
    Answer. The CSB has not undertaken a comprehensive surveillance of 
all Federal agency efforts, and recommends that this activity occur 
through a Federal summit on chemical safety and Y2K. On a more informal 
basis, many agencies have shared information with the CSB and have 
engaged in outreach efforts. For example, the National Institute of 
Occupational Safety and Health (NIOSH) has developed a website devoted 
to Y2K. I have reviewed technical papers and informational brochures 
that NIOSH has prepared to educate occupational health professionals, 
and the academic centers supported in part through NIOSH have provided 
a forum for me to address the Y2K issue.
    In particular I would like to mention and commend the National 
Institute of Environmental Health Sciences (NIEHS). NIEHS was given 
major responsibility for initiating a training grants program under the 
Superfund Amendments and Reauthorization Act of 1986 (SARA). The 
primary objective of this program is to fund non-profit organizations 
with a demonstrated track record of providing occupational safety and 
health education in developing and delivering high quality training to 
workers who are involved in handling hazardous waste or in responding 
to emergency releases of hazardous materials. Since the initiation of 
the Hazardous Waste Worker Training Program in 1987, the NIEHS has 
developed a strong network of non-profit organizations that are 
committed to protecting workers and their communities by delivering 
high-quality, peer-reviewed safety and health curriculum to target 
populations of hazardous waste workers and emergency responders.
    Since last October NIEHS has organized several major discussions of 
the Y2K risks in hazardous material management and emergency response. 
Last month they announced the availability of $100K competitive, 
supplemental training grants to their existing grantee community. 
Applications are due in July and awards will be announced in August. 
Their clearinghouse, which supports informational exchanges among the 
grantees and others, will be providing key support for curriculum 
development in order to accelerate the delivery of training programs. 
This effort is funded through existing resources, and has not benefited 
from federal Y2K supplemental funding.
    Question 6. I understand that the purpose of the Chemical Safety 
Board is generally to improve the safe production, storage and use of 
chemicals. I also understand that the CSB is neither a regulatory or 
compliance organization. I applaud the CSB for proactively taking on 
the Y2K issue before there are Y2K caused accidents to investigate. Are 
there any specific actions the CSB can take to assist state and local 
government organizations obtain information about the Y2K readiness of 
chemical facilities in their jurisdiction for the purpose of assessing 
the risk to their communities? Are there realistic actions the 
Executive Branch or Congress can take to facilitate this happening?
    Answer. The CSB views the Y2K issue within the larger evolutionary 
trend of expanding automation and information technologies in the 
chemical handling sectors. New technology will continue to penetrate 
the workplace, affecting staffing, management, workers, equipment and 
interrelationships with suppliers, customers, regulators and the 
surrounding community. How our nation and businesses manage the Y2K 
problem will provide important lessons for other new technology issues.
    The Year 2000 technology problem threatens to increase the risks of 
chemical accidents. The potential for catastrophic events, at US 
chemical process plants, stemming from Year 2000 non-compliance, can be 
divided into three categories: failures in software or embedded 
microchips within the process plants, external Y2K-related problems 
(e.g., power outages), and multiple Y2K-related incidents that may 
strain emergency response organizations. Therefore, CSB has been 
motivated to promote a preventative approach by our research, 
recommendations and outreach efforts.
    The CSB currently is staffed with fewer than 30 people, including 
administrative and support personnel, and funded for FY 1999 at $6.5M, 
much of which has been committed to investigating tragic incidents 
involving chemicals. None-the-less, the CSB will be mailing copies of 
our Y2K report to governors, heads of territories, protectorates and 
the District of Columbia and other leaders with suggestions for 
distributing to relevant agencies and localities. In addition we will 
continue to work with EPA and trade associations to develop, promote 
and distribute guidance document for SMEs. The board will continue to 
address major audiences, communicate with the press, and work with 
state and local agencies, trade associations, technical organizations, 
foundations, organized labor and environmental organizations to promote 
the highest level of vigilance on safety and the year 2000 technology 
problem.
    The CSB reiterates our request that the executive branch should 
organize high level summit of executive branch agencies and other 
agencies (See response to question 1.). Additional activities could 
include training OSHA and EPA compliance officers to understand, assess 
and communicate the importance of Y2K compliance, and assure a common 
investigative protocol for assessing Y2K technology problems in the 
etiology of health, safety and environmental failures.
    Congress continues to have an important role through its oversight 
functions which can promote the mobilization and coordination of 
appropriate Federal agencies. Congress can enhance occupational and 
environmental health by assuring that liability avoidance for Y2K 
failures do not include avoidance of responsibility for health, safety 
and environmental protection.
    As stated in the field hearing testimony, if Y2K failures become 
sufficiently apparent in 1999-2000, policy makers likely will need to 
consider three major issues: 1. The absence of adequate data regarding 
Y2K compliance, despite widespread recognition of the problem, 
deadlines for compliance and consequences, 2. Inadequate application of 
established principles for managing process safety in facilities, 
particularly as it relates to automation and information technologies, 
and 3. Gaps in process safety training, technical assistance, and 
research, particularly as it applies to small to medium sized 
facilities and those in low income and minority communities.
                               __________

                  Prepared Statement of Jamie Schleck

    Introductory Comments
    Chairman Bennett and members of the Committee, my name is Jaime 
Schleck and I am the Executive Vice President of Jame Fine Chemicals 
Inc. Thank you for inviting me to appear before you today to discuss an 
issue important to both industry and the public at large. My role here 
today is to present the impact of the Y2K computer problem on small 
business chemical manufacturers, and how these companies can prepare 
for the millennium change. In my testimony I will explain the unique 
nature of small chemical companies and how this affects Y2K 
preparations and contingency planning. I will also describe how Jame 
Fine Chemicals is preparing for the millennium change and identify 
existing initiatives that assisted us in our Y2K assessment. Finally, I 
will address what my trade association, the Synthetic Organic Chemical 
Manufacturers Association, or ``SOCMA,'' is doing to assist its members 
with Y2K preparation.
    Jame Fine Chemicals is a family owned company comprised of 44 
employees. The company manufactures various specialty chemicals for use 
in five distinct industries: pharmaceuticals, cosmetics, dietary 
supplements, chemiluminescent products and disinfectants.
    Jame Fine Chemicals utilizes batch manufacturing techniques. This 
manufacturing technique is not exclusive to Jame Fine Chemical, as most 
small chemical manufacturers use batch techniques.
    Batch Manufacturing
    Batch manufacturing provides an efficient, and frequently the only, 
method to make small quantities of chemicals to meet specific needs and 
consumer demands for specialized products. Batch processes are distinct 
from continuous operations in that a continuous operation has a 
constant raw material feed to each unit operation and continual product 
withdrawal from each unit operation. A batch process has an 
intermittent introduction of frequently changing raw materials into the 
process, varying process conditions imposed on the process within the 
same vessel and, consequently, an intermittent release of air 
emissions. Vessels are often idle while waiting for raw materials, 
waiting for quality control checks, undergoing cleaning, etc.
    Due to the unique characteristics of batch manufacturing, the Y2K 
issue presents a different rubric of automation assessment and 
contingency planning. The steps and procedures exercised at Jame Fine 
Chemicals for Y2K compliance are demonstrative of what I believe most 
small chemical companies have done or are currently doing.
    As a general rule, specialty chemicals are much more expensive than 
traditional commodity chemicals. One can easily make the analogy that 
specialty chemicals are to commodity chemicals what diamonds are to 
coal. On a per kilogram basis, the average specialty chemical 
manufactured by Jame Fine Chemical could be as much as several hundred 
times more expensive than the most costly commodity chemical. These 
economics are common throughout the industry. Consequently, the 
industry is made up of many smaller companies that focus on specific 
niche products.
    Because of the aforementioned economic factors, it rarely pays to 
automate a process. In terms of profit optimization, the reduction of 
labor cost and cycle time through automation has a clearly second order 
effect when compared to yield management and flexibility. Consequently, 
the cost structure justifies the need for highly skilled labor and a 
de-centralized manufacturing process (batch processing). These economic 
factors also provide a strong incentive for companies such as ours to 
take the necessary measures to ensure that the Y2K issues do not 
disrupt production.
    Jame Fine Chemicals' Y2K Activities
    My company began its Y2K activity in 1997. Our goal was to be 
completely aware of any Y2K compliance issues by the beginning of 1999, 
thus providing us a year to make any necessary changes or refinements. 
Our plan consisted of several steps including assessment, remediation, 
validation and contingency planning.
    Assessment
    Assessment for Jame Fine Chemicals involved the identification of 
all potentially affected software, hardware, embedded systems, 
environmental control systems, and other essential systems. 
Manufacturing controls at most batch plants are quite different than at 
continuous flow plants. Unlike continuous systems, most batch 
operations do not rely on computers for manufacturing. Virtually all of 
the critical inputs and product flows of batch systems are controlled 
by a trained process operator--a person--not a computer. Process 
operators are highly skilled laborers who have responsibility for 
turning valves, making blends, beginning processes, adding and handling 
of product and--should the situation arise--activating emergency power 
shut off switches. As a result, there is no risk of chemical overflow 
due to automation failures.
    Computer automation at Jame Fine Chemicals is used for reaction 
monitoring systems and quality assurance. These systems ensure that the 
instruments are functioning properly. It is important to distinguish 
between production automation and monitoring. At Jame Fine Chemicals, 
there are no process steps that are taken without the input from a 
human being. We do use several automated monitoring devices to gather 
data about a particular process, but we do not have batches that run on 
autopilot.
    The process systems at Jame are typical of most batch 
manufacturers. There are, however, some companies that may have a 
higher degree of automation in their manufacturing processes. As a 
general rule, these companies tend to be more sophisticated and have 
installed their systems within the last several years. Because the 
batch control systems that have been programmed and subsequently 
installed within the last five years are amenable to the millennium 
change, these systems should not pose Y2K related problems. Of course I 
can not speak to specific programs and companies other than my own.
    One area that firms, such as Jame Fine Chemical, must carefully 
examine is the delivery of raw materials and in utilities, particularly 
on dates that have been identified as potentially problematic for 
computer systems that may have Y2K problems (1/1/00; 2/29/00; 10/10/00; 
9/9/99). We have identified those processes that could be adversely 
effected and have taken steps to ensure that they are not active during 
critical dates.
    Implementation
    Once we identified all of our potential Y2K affected systems, we 
began contacting our vendors and partners for clarification on their 
Y2K status. We also began physically testing those systems where 
possible. In cases where data is gathered by automated machinery, we 
tried changing the dates to see how the systems would react.
    Additionally, as part of our Hazard Operation Procedures (HAZOP), 
we routinely reviewed all of the possible ``what if'' scenarios for a 
given process. Whenever a process is introduced or modified, we have a 
HAZOP meeting to discuss all of the possible scenarios, and we lay out 
the plan for addressing each circumstance. This process has identified 
several Y2K scenarios that are now guarded against.
    Contingency Planning
    The last step in Jame Fine Chemicals' review of potential Y2K issue 
was contingency planning. Our contingency plan includes Y2K specific 
initiatives as well as emergency preparedness plans drawn from other 
programs and statutes.
    Our Y2K specific efforts include the purchase of extra materials 
from our suppliers. We feel that it will be important for us to 
increase our raw material ``safety stock'' by at least 20 percent for 
the end of the year. This will give us approximately one month of 
protection for all possible delays. Our purchase orders for most of 
these materials have already been placed.
    The second part of our Y2K specific contingency plan is to have 
staff on site and on call for December 31, 1999 and January 1, 2000. 
Rather than shut down, as we normally do, we are committing the 
resources to ensure that all of our planning and implementation was 
done appropriately, and to further prevent or respond to any incidents 
resulting from on or off site Y2K problems.
    The third part of our Y2K specific contingency plan is to ensure 
that no ``utility dependent'' or ``raw material'' dependent processes 
are effected. For example, no utility dependent processes will be 
running during any of the critical dates (1/1/00; 9/9/99; 2/29/00; 10/
10/00). Additionally, no ``raw material'' dependent processes will be 
started unless we are sure that we have the proper materials on hand to 
prevent the process from being interrupted at a critical phase.
    The remaining portions of our contingency plan pertain to emergency 
preparation and community outreach. Since many of the potential, or 
feared, impacts of Y2K related problems are potentially catastrophic in 
nature, efforts to prevent, and planning to enable fast response to 
remediate such events, are already in place. For example, our company 
has prepared a Risk Management Plan to comply with the Clean Air Act's 
soon to be implemented RMP regulation. 40 CFR Sec. 68. In this plan, we 
cover such events as loss of power from our utility provider.
    Community Outreach Efforts
    Community outreach efforts are also in place through other programs 
not specific to Y2K. For example, we have always had a good working 
relationship with our local fire department, Local Emergency Planning 
Committee (LEPC) and our community. In fact, on April 20, 1999, we 
conducted an exercise with our on site emergency response team and 
local fire department. The borough of Bound Brook, NJ has implemented 
an information system that provides emergency workers with site 
diagrams and hazard information for local businesses.
    In addition, every manufacturing company that belongs to SOCMA 
participates in Responsible Care, and one of the obligations 
of that program is for companies to have an extensive dialogue with 
their local communities and rescue personnel. Our company has had open 
houses and regular meetings with our community where safety issues have 
been addressed. Our Y2K efforts will be addressed at our next community 
outreach meeting. Because of Y2K, Jame Fine Chemicals is taking extra 
steps to ensure the safety of our workers and communities as well as 
the integrity of our systems and products. Through voluntary 
initiatives like Responsible Care, and federal regulations 
like RMP, the chemical industry is prepared to prevent and/or respond 
to both on and off site chemical related incidents.
    Awareness
    Of course, the first step in implementing a Y2K compatibility plan 
is awareness. As I stated earlier, Jame Fine Chemicals has been aware 
of the Y2K issue for several years. Like many other small companies, we 
received material on the Y2K issue and its potential impact on 
manufacturing systems from our insurers. The insurance industry has 
done a great job in spreading the word about potential Y2K challenges 
to their client companies.
    Assistance from Voluntary Programs
    As a chemical manufacturer of pharmaceutical intermediates, we are 
subject to a wide array of federal and state regulations to ensure 
safety and environmental protection. In addition to regulation, the 
chemical industry is also committed to volunteer initiatives that go 
above and beyond what is required by the government. At Jame Fine 
Chemical, we found two such initiatives to be quite beneficial to our 
Y2K efforts. The first is our commitment to the aforementioned 
Responsible Care program, Responsible Care is the 
industry's self regulating code of management practices that ensure 
employee health and safety, process safety, community dialogue and 
other activities. We found that there was a synergy between the 
operating procedures we regularly perform for Responsible 
Care and the systems assessment and community outreach for 
Y2K compliance. I have included a summary of the Responsible 
Care program with my written statement.
    In addition to Responsible Care, Jame Fine Chemical is 
also cGMP compliant, or more specifically, uses the Food and Drug 
Administration's (FDA) recommended current Good Manufacturing 
practices. 21 CFR Sec. 210. The purpose of cGMP is to ensure purity and 
quality of the product manufactured. cGMP calls for controls in every 
step of the manufacturing process and includes stringent standards of 
system quality assurance and validation of such systems. If a company 
is not cGMP compliant, it can not sell chemicals in the U.S. As we 
progressed in our Y2K activities, we found that our cGMP status was 
beneficial.
    Assistance from Trade Associations
    A great resource for many small companies in the chemical industry 
is trade association membership. Jame Fine Chemicals is a member of the 
Synthetic Organic Chemical Manufacturers Association (SOCMA). SOCMA is 
the leading trade association representing the batch and custom 
chemical industry. This industry produces over 90 percent of the 50,000 
chemicals produced in the U.S. while making a $60 billion annual 
contribution to the economy. SOCMA's 300+ member companies are 
representative of the industry and are typically small businesses with 
fewer than 75 employees and less than $40 million in annual sales.
    SOCMA has been actively involved with the Y2K issue for quite some 
time. Over the last couple of years, SOCMA has conducted extensive 
outreach to apprise its members of the potential ramifications of Y2K 
computer issues. Specifically, the association has written numerous 
articles in its magazine, has had technology experts give presentations 
at meetings and has dedicated a page on its Internet web site to 
address the issue and link to numerous sources of information and 
guidance materials. Most recently, SOCMA has volunteered to work with 
the Environmental Protection Agency (EPA) to develop a document 
intended to assist small and medium sized companies with their Y2K 
assessments and contingency plans.
    SOCMA has also participated in a Y2K Readiness Survey in 
collaboration with six other industry trade groups. The results of the 
survey show a general awareness and dedication to ensuring Y2K 
compliance. Eighty-one percent of SOCMA member companies that responded 
to the survey have Y2K testing initiatives that address health, safety 
and environmental systems, mission critical functions, and include 
contingency plans. Of smaller-size companies responding, 84 percent 
confirmed that they have been working to ensure that their supply 
chains, which include suppliers, transporters and customers, are Y2K 
ready. While we cannot say that this is representative of all small 
companies, we believe that these results demonstrate that many small 
companies are aware of the Y2K issues and are taking them very 
seriously.
    Conclusion
    Jame Fine Chemicals has dedicated time and resources to ensuring 
Y2K compliance, thus ensuring the safety of its employees and community 
neighbors. Our contingency plan involves on site and off site 
activities and protects our customers from potential shortcomings in 
the supply chain.
    Due to the unique nature of batch manufacturing, the Y2K technology 
problem does not pose as great a risk in small companies as has been 
feared. Most batch operations are manually controlled by trained 
process operators and, as such, do not rely exclusively on automation 
for manufacturing. Those that are fully automated tend to be newer 
systems that are already Y2K compliant. In addition, ensuring safety 
and environmental protection is inherent in the chemical industry 
through both regulatory and voluntary initiatives. In fact, many of the 
Y2K related emergency plans have already been implemented as a result 
of OSHA's Process Safety Management, EPA's upcoming implementation of 
the Risk Management Planning Rule, and Responsible Care. Our 
trade association, SOCMA, has done a great job in making companies 
aware of Y2K and assisting them in their assessments and contingency 
plans.
    In concluding my statement, I would like to make one recommendation 
to the Committee. We all need to work together and communicate what the 
Y2K technology problem is and how to address it. In our industry, SOCMA 
and other chemical trade associations have done a great job in getting 
the word out to their members and providing assistance. In addition, 
word has spread to many companies through their insurers, trade press, 
the general press and from their customers and suppliers. We agree that 
Y2K issues deserve serious attention and we believe that if we all work 
together to identify and address potential issues, we will all benefit.
    This concludes my statement.
    Mr. Chairman, thank you for your invitation to appear before you 
today. I appreciate yours and the Committee's dedication to this 
important issue.
    I would be glad to entertain questions at this time.
                               __________

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

                                ------                                


                  American Crop Protection Association

             Chemical Producers & Distributors Association

             Chemical Specialties Manufacturers Association

               International Sanitary Supply Association

             National Association of Chemical Distributors

          RISE (Responsible Industry for a Sound Environment)

          SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION

                   Y2K READINESS DISCLOSURE SURVEY OF

                 SMALL AND MID-SIZED CHEMICAL COMPANIES

                 FOR INCLUSION IN THE COMMITTEE RECORD

         SPECIAL COMMITTEE ON THE YEAR 2000 TECHNOLOGY PROBLEM

                          UNITED STATES SENATE

                              JUNE 9, 1999

    The American Crop Protection Association (ACPA), Chemical Producers 
& Distributors Association (CPDA), Chemical Specialties Manufacturers 
Association (CSMA), International Sanitary Supply Association (ISSA), 
National Association of Chemical Distributors (NACD), RISE (Responsible 
Industry for a Sound Environment), and Synthetic Organic Chemical 
Manufacturers Association (SOCMA) commissioned an independent survey of 
small and medium-sized entities in the chemical industry to determine 
their readiness for the Y2K phenomenon. The survey was conducted by 
Fetzer-Kraus, Inc. of Washington, D.C., to obtain a ``snapshot'' of 
where this specialized segment of the chemical industry stands in 
preparation for Y2K. The survey also was launched to assist the 
committee, Congress, the administration, and the U.S. Chemical Safety 
and Hazard Investigation Board (CSB) with obtaining timely and accurate 
information about the preparedness of this specific segment of chemical 
manufacturers, formulators, and distributors for the turn of the 
century and the new millennium. The results of the survey, included in 
this statement, are based on U.S. companies with individual gross sales 
of $75 million or less. In all, more than 300 companies that are mostly 
small batch chemical manufacturers, formulators, distributors, 
retailers, or combinations of the above, responded. The survey was 
conducted from March through May of 1999. The results of this survey of 
small to medium-sized chemical companies illustrates that they have 
given and continue to give serious regard for the potential problems of 
the Y2K issue. These companies have investigated the potential for 
problems, identified and implemented corrective measures, communicated 
with communities, and coordinated contingency plans with local 
emergency response authorities to manage the possibility of single and 
multiple safeguard failures. The companies were asked to disclose 
whether or not they had Year 2000 action plans with specific elements. 
The planning elements and responses are as follows:






    In addition to co-sponsoring this survey, the associations have 
continued outreach to member companies and provided requested 
assistance to solve Y2K problems. Many of the associations' Internet 
sites provide significant amounts of information about compliance and 
contingency planning for memberships. Additionally, the trade 
associations currently are working with the U.S. Environmental 
Protection Agency (EPA) to develop a document to assist small and 
medium-sized companies with Y2K assessments and contingency plans.

    In March of this year, the committee received a report from the 
U.S. Chemical Safety and Hazard Investigation Board (CSB). The survey 
indicated that the CSB report lacked appropriate information from any 
small and mid-sized enterprises (SMEs). While CSB's report might have 
proved useful two years ago, its conclusions regarding the readiness of 
SMEs last March now appear to be based on supposition and not fact. The 
data from the survey clearly indicates that the small and medium 
chemical producers have placed considerable emphasis on preparing for 
Y2K concerns for some time. Additionally, the management of small to 
medium=sized chemical companies is serious and well-organized with Y2K 
mitigation and contingency plans.

    We believe the Y2K issue should not be given short shrift. It is a 
concern to our members and we have been responding with due diligence 
along with them during the past several months. It is our hope and 
desire that no circumstance will exist that places any member company, 
community, or persons at a significant risk due to a Y2K-related 
phenomenon. That is precisely why we have taken prudent and timely 
steps to avert any possibility of such risks to safety, health, and the 
environment.

    We commend the committee for its work and oversight during the 
approach of the new millennium. Furthermore, we pledge our support of 
efforts to maintain productive and accurate communications among 
government and industry entities to ensure a safe and smooth transition 
from 1999 to the year 2000.

    Organized in 1933, the American Crop Protection Association (ACPA) 
is the not-for-profit trade organization representing the major 
manufacturers, formulators and distributors of crop protection and pest 
control products, including bio-engineered products with crop 
production and protection characteristics. ACPA member companies 
produce, sell and distribute virtually all the active compounds used in 
crop protection chemicals registered for use in the United States.

    The Chemical Producers and Distributors Association (CPDA) is a 
voluntary, non-profit national trade association consisting of nearly 
100 member companies engaged in the manufacture, formulation and 
distribution of agricultural, lawn and garden pesticides as well as 
their adjuvant and inert ingredients. CPDA's membership accounts for 
more than $6 billion worth of chemical-related sales each year.

    The Chemical Specialties Manufacturers Association (CSMA) 
represents several hundred companies--about one-third of which are 
small businesses--primarily engaged in the formulation and packaging of 
chemical specialty products. These products include: automotive care 
products; cleaners and detergents; disinfectants and sanitizers; 
nonagricultural pesticides; and polishes and floor maintenance 
products.

    With more than 4,400 distributor, wholesaler, manufacturer, 
manufacturer representative, publisher, and associate member companies, 
the International Sanitary Supply Association (ISSA) is the leading 
international trade association for the cleaning and maintenance 
industry.

    The National Association of Chemical Distributors (NACD) is an 
international association of chemical distributor companies that exists 
to enhance and communicate the professionalism of the chemical 
distribution industry. NACD's more than 300 members purchase and take 
title to chemical products from manufacturers. Member companies 
process, formulate, blend, repackage, warehouse, transport, and market 
these chemical products exclusively for an industrial customer base of 
approximately 750,000. All member companies are committed to product 
stewardship and responsible distribution in every phase of chemical 
storage, handling, transportation, and disposal through implementation 
of the Responsible Distribution Process (RDP), a condition of 
membership since 1991.

          RISE (Responsible Industry for a Sound Economy) is the 
        national association representing the manufacturers, 
        formulators, distributors and other industry leaders involved 
        with pesticide products used in turf, ornamental, pest control, 
        aquatic and terrestrial vegetation management and other non-
        food/fiber applications.

          Synthetic Organic Chemical Manufacturers Association (SOCMA) 
        is the leading trade association representing the batch and 
        custom chemical industry. SOCMA's more than 300 member 
        companies make the products and refine the raw materials that 
        make our standard of living possible. From pharmaceuticals to 
        cosmetics, soaps to plastics and all types of industrial and 
        construction products, SOCMA members make materials that save 
        lives, make our food supply safe and abundant, and enable the 
        manufacture of literally thousands of other products.
        
        
        
        
        
        
                               __________

      Prepared Statement of the Chemical Manufacturers Association

    The Chemical Manufacturers Association (CMA) is pleased to update 
you on our efforts to assist members of the association and allied 
trade associations in preparing for a wide range of Y2K challenges. CMA 
is a nonprofit trade association whose member companies represent more 
than 90% of the productive capacity of basic industrial chemicals in 
the United States.
    CMA has undertaken an aggressive plan to assist our members. This 
plan includes:
    Development of a customer survey instrument that our members are 
using to gauge the readiness of their customers and suppliers.
    Sponsor workshops and meetings of members and allied trade groups 
to discuss readiness, contingency plans and community assistance. At 
our May, 1999 Responsible Care conference we discussed the 
need for plants to work with their local communities to share 
contingency plans and assist the communities in developing local Y2K 
contingency plans. An additional workshop on Y2K readiness is scheduled 
for June 10, 1999. This workshop is open to members of allied trade 
associations.
    We sponsor a list server and web site location on Y2K where members 
and the public can share information and benchmark against other 
member's practices.
    We have conducted a readiness survey of our members to determine 
their readiness for Y2K. We have provided summaries of the results as 
information is collected. The latest summary, dated May 12, 1999 is 
included in these comments for the record.
    The readiness survey looks at four areas:
            Business Information Technology Systems
            Manufacturing, Inventory & Distribution IT Systems
            Embedded Systems
            Supply Chain Issues
    According to the survey of CMA members, nearly 72% of the 
respondents who provided dates will be ready by the end of June 1999 
and an additional 20% by the end of September 1999. All respondents 
indicated they would be Y2K ready before the end of the year.
    The survey results also indicated the readiness of member companies 
based on size. The results are similar for the four different size 
categories in the survey. Based on this information we conclude that 
the small to medium sized firms in our membership are no less Y2K ready 
than the large firms.








                               __________

           Prepared Statement of the Chlorine Institute, Inc.

    The Chlorine Institute, Inc. is pleased to provide these comments 
for the record of the Committee's hearing on the Y2K readiness of the 
chemical industry in Trenton, New Jersey on May 10, 1999.
    The Chlorine Institute, Inc., founded in 1924, is a 235-member, 
not-for-profit trade association of chlor-alkali producers worldwide, 
as well as packages, distributors, users, and suppliers. The 
Institute's mission is the promotion of safety and the protection of 
human health and the environment in the manufacture, distribution and 
use of chlorine, sodium hydroxide, potassium hydroxide and sodium 
hypochlorite, plus the distribution and use of hydrogen chloride. The 
Institute's North American Producer members account for more than 98 
percent of the total chlorine production capacity of the U.S., Canada, 
and Mexico.
    The Institute has been conducting a readiness survey of its members 
that produce, repackage and distribute, and use chlorine. (Repackaging 
chlorine most often involves the transfer of liquified chlorine gas 
from a 90-ton rail car or pipeline to either 100 lb. or 150 lb. 
cylinders or one-ton containers.) The survey form is attached to these 
comments. Earlier results were presented verbally to the staff of the 
committee. The following data and assessments are based on the survey 
results to date. The information received is very encouraging as to the 
Y2K readiness of the members of the Institute.
    North American Chlor-Alkali Producers
    The Institute's membership includes 24 North American companies 
that produce chlorine and its co-products sodium hydroxide or potassium 
hydroxide (alkalis). Information has been received from 23 companies. 
Of those, twenty companies responded directly to the Institute and 
three to the CMA survey. All companies responding indicated they were 
fully engaged in addressing the Y2K concerns and would be Y2K ready by 
the end of the year. The results indicate the majority will be Y2K 
ready in the third-quarter of 1999.
    Chlor-alkali production at the vast majority of plants is dependent 
on electricity supplied by local utilities. Plants have contingency 
plans to deal with an interruption of power without the loss of 
containment of the product.
    U.S. and Canadian Repackagers of Chlorine
    The Institute's membership includes 21 repackagers of chlorine (19 
U.S. and 2 Canadian). Nineteen companies responded to the Institute's 
survey. All of these members would be considered small (the majority) 
to medium size companies.
    All of the companies responding indicated they would be Y2K ready 
by year-end. The majority indicated they would be Y2K ready by October 
1999.
    These companies are the source of chlorine for the vast majority of 
water and waste water treating facilities using liquified chlorine gas 
as a disinfectant. Some water utilities receive their chlorine by rail 
tank cars or tank trucks. The repackaging of liquified chlorine gas 
does not depend on computer driven or dependent systems. Therefore, 
there would not be accidental releases of chlorine due to a Y2K 
problem. Also, as long as the repackaging companies have a source of 
liquified chlorine gas and electrical power, they will be able to keep 
the water utilities supplied. Several members have volunteered that 
they have back up generators to maintain operations should there be an 
electrical failure. Others are planning to keep their inventories 
higher than usual so they can supply customer requests for increased 
quantities of chlorine prior to year-end 1999. Inventory buildup is 
limited by the number of containers available to fill. The Institute 
believes that many local or state authorities require utilities to have 
sufficient chlorine in inventory in case of a disruption of supply.
    Chlorine Users
    The Institute has chlorine user members in four categories (by 
use): general chemical processes, bleach makers, swimming pool 
applicators, and water utilities. The following are the survey results 
from general chemical processes and bleach makers.
    General Chemical Processes
    Of the 15 Chlorine Institute members in the general chemical 
processes category, responses were received from nine companies, six 
directly to the Chlorine Institute and three to CMA. All responders 
indicated they would be Y2K ready by year end. All the direct 
responders to the Chlorine Institute indicated they would be Y2K ready 
by September 1999. The nine responders represent a mix of large 
(mostly), medium and small companies.
    Bleach (Sodium Hypochlorite) Makers
    There are nine Chlorine Institute members in the category of bleach 
makers. Five companies responded to the survey and all will be Y2K 
ready by July 1, 1999. These companies receive chlorine and sodium 
hydroxide and combine the two in a process that results in a water 
solution of sodium hypochlorite, i.e., bleach. Bleach has many 
applications, most of which fall into disinfection processes, including 
water and waste water treatment. With one exception, these members are 
small (mostly) or medium size companies. Some of the repackaging 
companies also produce bleach.
    As an additional input to the questions of readiness of U.S. bleach 
makers, a major manufacturer of sodium hypochlorite continuous 
processing systems was contacted (a member of the Institute) to 
determine the readiness of their equipment in the field. The company 
has informed its customers that their equipment is Y2K compliant.
    Bleach manufacturers not using continuous processing equipment 
produce their product in a batch process which involves little or no 
dependence on computer based process control.
    As with the other members mentioned thus far, bleach makers are 
dependent on an electrical supply for operating their processes. It is 
anticipated that an interruption of the electrical supply will not 
result in chlorine or sodium hypochlorite releases. The process of 
making bleach essentially is one of the methods used to deal with 
chlorine during a disruption in the chlorine production process.
    The Institute does not have sufficient information to generalize on 
what steps are being taken by bleach makers to ensure a supply of 
sodium hypochlorite to water utilities, beyond the inventory 
capabilities of both production sites and user sites. Some producers 
have indicated that they have stand-by electrical generating 
capabilities.


                               __________

              Prepared Statement of Audrey R. Gotsch, DrPH

    The New Jersey/New York Hazardous Materials Worker Training Center 
has been conducting training for personnel responding to hazardous 
materials incidents since 1987. The Center based at the Environmental 
and Occupational Health Sciences Institute, UMDNJ/Rutgers University, 
has trained over 165,000 people, including over 135,000 directly 
responsible for reacting to chemical emergencies. This training has 
enabled emergency personnel to respond appropriately and effectively 
when faced with a hazardous materials incident. Preparation, both in 
the classroom and during simulated emergency situations, is how 
emergency responders learn to protect the people that live in our 
communities. They are the essential personnel needed to abate the 
hazards when faced with catastrophic incidents. As Y2K approaches, 
communities should be concerned about how much and what types of 
training are suitable for emergency response personnel.
    The significance of Y2K comes as a result of computer chips being 
designed with only two digits rather than four to specify the year. 
Time sensitive processing may result in systems shutting down or 
incorrect calculations being generated in year 2000. Nationally, 
numerous areas may be affected. Utilities, banks, public hospitals, 
municipal transit systems and communications systems that link police, 
fire, and other emergency and security operations are just some of the 
areas that could be affected. Many of them are evaluating their 
contingency plans taking into consideration safety, utility continuity, 
supply reliability and customer needs. However, in the event of 
emergency situations that may arise from power outages and utility 
failures, emergency response personnel will be needed to quickly 
respond.
    Y2K issues may effect emergency responders in several ways. They 
may be limited by power outages, reduced ability to communicate due to 
failures in telephone, radio, computer systems, and multiple incidents. 
Failures in public utilities or communications systems will reduce or 
eliminate ways to call for emergency assistance. However, maybe more 
importantly, multiple incidents will put enormous pressure on emergency 
responders, and their resources. Emergency responders will be over 
extended, mutual aid may not be available, and response to an incident 
will not occur in a timely manner.
    Planning for the potential catastrophic incidents related to the 
issue of Y2K requires emergency planning and responsive 
intercommunication. These skills are enhanced through training and 
education efforts developed to address the challenges of Y2K related 
issues. Knowledge is key for the emergency response community in order 
to deal with any casualties that may come. Public agencies and the 
private sector already support training and education for chemical 
workers and Hazardous Materials (HAZMAT) emergency responders through 
programs which can tailor training modules to specific targeted groups 
of responders at the operations, awareness, technician and specialist 
levels.
    In the chemical and manufacturing industries, the potential exists 
for a number of disastrous events to stem from Y2K Non-Compliance. 
First, failures in software or embedded microchips within the process 
plants may cause process excursions or control problems resulting in 
accidents. Second, external Y2K-related problems, such as power outages 
may lead to a variety of problems. For example, rapid shutdowns may 
result in the triggering of fire suppression systems, causing loss of 
water pressure for actual fires, and disarming such systems. Third, 
multiple Y2K-related incidents may exceed the capacity of emergency 
response organizations to respond.
    A fact sheet distributed by the Superfund Labor Health and Safety 
Task Force, reported that during the five year period between January 
1993 through December 1997, OSHA inspected 2,852 facilities with 1,580 
citations written for no emergency response plan being available. There 
were 1,305 citations written for plans not containing all necessary 
elements and 1,229 citations written for training not addressing 
emergency planning and coordination. There were 70 inspections at 
Treatment Storage and Disposal facilities in the last five years 
resulting in 122 citations being written, 80% involved emergency 
response training and planning. Consequently, proper training and 
strategies to implement various guidelines, checklists and software 
must be provided for emergency responders, local governmental agencies, 
chemical and manufacturing industries that focus on environmental 
health and emergency response.
    Training issues must be addressed, not just as a one-time effort. 
We must insure that our emergency response and operations personnel are 
fully oriented and qualified to implement alternative strategies and 
operational activities. Only with preparation through comprehensive 
training will all emergency personnel obtain the critical skills 
necessary to take appropriate action and prevent an incident before it 
occurs.
    Thank you for the opportunity to share our concern with you.
                               __________

                 Overview of Responsible Care

    Responsible Care is the chemical industry's initiative 
for continuously improving health, safety, and environmental quality. 
Conceived in 1984 by the Canadian Chemical Producers' Association, the 
initiative was brought to the United States by the Chemical 
Manufacturers Association (CMA) in 1988 and by SOCMA in 1990. With more 
than twenty U.S. Responsible Care Partner Associations and 
the spread of Responsible Care to over 40 countries, it has 
truly become an industry-wide global initiative.
    The following provides an overview of SOCMA's Responsible 
Care initiative.
    The Responsible Care Initiative
    Responsible Care is a continuous improvement initiative 
built around a set of ten Guiding Principles (see page 2.5) and six 
Codes of Management Practices (see page 2.6) that put the Guiding 
Principles into action. The six codes, in order of their implementation 
are: 1) Community Awareness and Emergency Response (CAER), 2) Process 
Safety, 3) Employee Health and Safety, 4) Pollution Prevention, 5) 
Distribution, and 6) Product Stewardship.
    Other elements of Responsible Care include: 1) a self-
evaluation process that determines how well companies are applying the 
Codes which helps evaluate industry performance, 2) mutual assistance, 
and 3) performance improvement measurements.
    Responsible Care establishes the following value-added 
goals: 1) improved chemical processes, 2) improved customer relations 
and service, 3) waste reduction, 4) minimization of accident and 
incidents, 5) safety handling, transportation, and storage, and 6) 
increased internal communications and heightened public awareness.
    Benefits of Implementing Responsible Care
    Enhanced environmental, health, and safety performance is the most 
obvious benefit of implementing Responsible Care. However, 
there are other outcomes to the process. Enhanced operating performance 
is another very beneficial result of implementing the program: it is a 
value-added investment program.
    There is a real input of time, effort, and funds into the start of 
the process--however, there are measurable financial, as well as 
operating benefits that can be gained by fully implementing the 
program. The following are just some of the potential value-added 
benefits:
      building ties with the local community, government 
agencies, and other manufacturers,
      reducing the frequency and consequences of worker 
incidents,
      increasing customer service and satisfaction,
      minimizing disruptions and shutdowns from accidents and 
worker incidents,
      reducing in worker compensation costs,
      increasing emergency response preparedness, both on and 
off-site,
      reducing emissions and waste disposal costs, and
      efficient use of labor and equipment resources due to an 
integrated approach to process design, construction, operation and 
maintenance.
    SOCMA's Participation
    Helping its members to achieve enhanced performance is one of 
SOCMA's primary goals. The Association has adopted the chemical 
industry's Responsible Care initiative as its primary 
performance improvement program. Using this approach, SOCMA's members 
have been able to formalize their ongoing, continuous performance 
improvement efforts.
    Since becoming a Partner in Responsible Care in 1990, 
SOCMA members have been dedicated to environmental, health, and safety 
performance improvement. SOCMA's members have voted to require a 
commitment to the Responsible Care Guiding Principles and 
implementation of the six Codes of Management Practices as a condition 
of Active Membership. (SOCMA's membership category for U.S. chemical 
manufacturers).
    Implementation of the six Codes has been on a phased-in basis 
according to the following schedule:
          CAER........................1990
          Process Safety..............1993
          Employee Health & Safety....1996
          Pollution Prevention........1997
          Distribution................1998
          Product Stewardship.........1999
    Preparing and submitting annual self-evaluations for each Code is a 
requirement for Active Membership in SOCMA. Copies of each Code self-
evaluation are included in this manual for your convenience. The 
initial self-evaluation for each Code is due in the year following Code 
activation, and annually thereafter.
    Responsible Care Guiding Principles
    1. To recognize and respond to community concerns about chemicals 
and our operations.
    2. To develop and produce chemicals that can be manufactured, 
transported, used and disposed of safely.
    3. To make health, safety, and environmental considerations a 
priority in our planning for all existing and new products and 
processes.
    4. To report promptly to officials, employees, customers and the 
public, information on chemical-related health or environmental hazards 
and to recommend protective measures.
    5. To counsel customers on the safe use, transportation and 
disposal of chemical products.
    6. To operate our plants and facilities in a manner that protects 
the environment and the health and safety of our employees and the 
public.
    7. To extend knowledge by conducting or supporting research on 
health, safety, and environmental effects of our products, processes 
and waste materials.
    8. To work with others to resolve problems created by past handling 
and disposal of hazardous substances.
    9. To participate with government and others in creating 
responsible laws, regulations, and standards to safeguard the 
community, workplace and environment.
    10. To promote the principles and practices of Responsible 
Care by sharing experiences and offering assistance to others 
who produce, handle, use, transport or dispose of chemicals.
    The Codes of Management Practices
    Community Awareness and Emergency Response (CAER)
    The CAER Code is intended to foster community awareness and to 
reduce potential harm to employees and the public in an emergency. 
Meeting the CAER Code requires a continuing dialogue among facility 
managers and their plant neighbors, employees, emergency responders, 
interested groups, teachers, and other individuals and organizations in 
the community. The Code calls for a continual assessment of public 
attitudes toward facilities and requires each facility to evaluate its 
outreach program regularly. Further, companies must share all relevant 
information with emergency management agencies and other public 
facilities so that all planning is coordinated. These plans must be 
tested annually. Companies must also plan to help communities recover 
from any environmental, health, or safety incidents.


    Process Safety
    The Process Safety Code is designed to help prevent fires, 
explosions, and accidental chemical releases. Companies must conduct 
safety reviews of all new and modified facilities before start-up, 
maintenance and inspection programs must be documented, and layered 
protection systems must be put in place to prevent equipment failures 
or human errors from becoming incidents. The Code calls for all 
employees to be trained in safety practices, and plants are required to 
share their safety knowledge with other facilities, as well as with the 
government and the community. It requires input from community 
officials and organizations, and requires that safety programs include 
contractor employees.
    Employee Health and Safety
    The goal of the Employee Health and Safety Code is to protect and 
promote the health and safety of people working at or visiting member 
company work sites. The Code addresses management of occupational 
health and safety programs, identifying and assessing hazards, 
maintaining employee health, preventing unsafe acts and conditions, and 
communicating safe work practices and hazards to employees, 
contractors, and visitors.
    Pollution Prevention
    The Pollution Prevention Code is designed to improve the industry's 
performance by seeking 1) ongoing, long-term reductions of all 
pollutants released to the environment; 2) steady reduction in the 
amount of wastes generated by member companies; and 3) proper 
management of remaining wastes. There is a high priority given to 
employee and community input in these processes, using the mechanisms 
established in the CAER Code. The Code also calls for companies to 
promote the pollution prevention concepts with customers, suppliers, 
other companies, and the government.
    Distribution
    The objective of the Distribution Code is to reduce employee, 
environmental, and public risks from the shipment of chemicals. This 
applies to the storage, handling, transfer, and repackaging of 
chemicals in transit. The Distribution Code fosters greater cooperation 
among manufacturers, suppliers, carriers, and customers to prevent 
incidents and to respond quickly in the case of a transportation 
emergency. The Code calls for companies to evaluate the risks in the 
chemical distribution systems and the methods they have in place to 
minimize those risks; meet or exceed all regulations and industry 
standards for chemical distribution; and review the performance of 
employees, distributors, carriers, and contractors to ensure they meet 
requirements.
    Product Stewardship
    The purpose of the Product Stewardship Code is to make health, 
safety, and environmental protection an integral part of designing, 
manufacturing, distributing, and using products, and of recycling and 
disposing waste materials. Implementing the Code will affect nearly 
every segment of a company, including research and development, 
manufacturing, distribution, and sales and marketing. The Code mandates 
the sharing of health, safety, and environmental information about the 
use, storage, and disposal of products with customers, suppliers, 
distributors, and contractors.
                               __________

                 Prepared Statement of Geary W. Sikich

    ABOUT THE AUTHOR:
    Geary W. Sikich is the author of, ``It Can't Happen Here: All 
Hazards Crisis Management Planning'', published by PennWell Books. His 
second book, ``Emergency Management Planning Handbook'', is published 
by McGraw Hill. He is a Principal with Logical Management Systems, 
Corp. (LMS) based in Munster, Indiana. Mr. Sikich has over 20 years 
experience in management consulting in a variety of fields. He consults 
on a regular basis with companies worldwide on crisis management 
issues. As a Senior Executive, Mr. Sikich is experienced in human 
resource development, strategic planning, competitive intelligence and 
crisis management planning in diverse industries. A key player in 
developing business solutions for clients worldwide.

          Designed world class training system; acclaimed, duplicated 
        worldwide.
          Developed & conducted workshops, seminars & conferences 
        worldwide.
          Directed critical infrastructure vulnerability assessments.
          Designed competitive intelligence systems for executive 
        decision-makers.
          Created business continuity management systems for public/
        private sector clients.
          Guided combined teams to validate numerous clients crisis 
        management programs.

    Internationally recognized speaker, writer and conference leader. 
Publications include two books on crisis management and numerous 
articles appearing in various print media. Symposium leader for 
international conferences and workshops; frequently interviewed for 
television and other media. Results oriented leader adept at increasing 
revenue, identifying problems, defining solutions and implementing new 
processes and procedures. A skillful negotiator, communicator, 
motivator.

          M.A.-Management, Central Michigan University (completed 
        courses toward degree)
          M.Ed.-Counseling and Guidance, University of Texas; 1981
          B.S.-Criminology, Indiana State University; 1973

          Who's Who in Executives and Professionals 1997-1998
          Life Member, Association of Former Intelligence Officers
          Member, American Society for Industrial Security
          Member, Union League Club of Chicago

    Statement of: Geary w. Sikich
                                Principal
                                Logical Management Systems, Corp.

    To: US Senate Special Committee on the Year 2000 Technology Problem

    Background

    At the request of members of the US Senate Special Committee on the 
Year 2000 Technology Problem, I have prepared the following statement. 
I specialize in crisis management, business continuity management 
planning, training and issues analysis for companies and organizations. 
I have become involved in the assessment of Year 2000 related issues 
for clients, the preparation of Year 2000 contingency plans and 
providing advisory services regarding the adequacy of Year 2000 
preparedness activities for clients and Year 2000 workshop attendees at 
conferences that I have been engaged to speak at.

    The following is a brief synopsis of recent speaking engagements 
concerning the Year 2000 issue:

          Critical Elements: Year 2000...; East West Corporate Corridor 
        Association, 1998.
          How to Prepare Your Year 2000 Crisis Management Team, 
        International Quality & Productivity Center, 1999.
          Integrating Contingency Planning into Your Y2K Business 
        Continuity Strategy, Institute for Gas Technology, 1999.
          Year 2000 Background and Critical Issues, Institute of Gas 
        Technology, 1999.
          Year 2000 Contingency Planning, Institute of Gas Technology, 
        1999.
    Understanding the Y2K Business Continuity Planning Process, 
International Quality & Productivity Center, 1999.
          Business Continuity Plans: Crisis Management for a Smooth 
        Transition into the Next Millennium, International Quality & 
        Productivity Center, 1999.
          Auditing Your Year 2000 Contingency Plan, International 
        Quality & Productivity Center, 1999.
          Managing the Rollover Weekend, Drilling Your Year 2000 
        Emergency Management Plan, International Quality & Productivity 
        Center, 1999.
          Year 2000 How Will It Work, East West Corporate Corridor 
        Association, 1999.
          Managing Crisis at the Speed of Light, Disaster Recovery 
        Journal Conference, 1999.
          Critical Elements, Year 2000, The 21st Century... Are You 
        Prepared, The Airport Mobility Network Group, Resource Library, 
        1999.
          All Hazards Crisis Management Planning, Airport Professional, 
        Issue 8, 1999, The Airport Mobility Network Group.
          Y2K Expert Testimony: Who will be the Experts, Institute of 
        Gas Technology, 1999.
          Crisis Management Planning Guidelines: Y2K, American Society 
        for Industrial Security, 1999.

    I have authored ``It Can't Happen Here: All Hazards Crisis 
Management Planning'', published by PennWell Books in 1993, ``Emergency 
Management Planning Handbook'', published by McGraw Hill in 1995, and 
now available in a Spanish Language edition, published by McGraw Hill 
in 1997.

    Logical Management Systems, Corp. provides consulting services to 
clients in the Financial, Energy, Telecommunications, Security, 
Healthcare, Chemical, Manufacturing, Utilities, Public and Private 
Sector.

    Objective

    The objective of this Statement for Record is to heighten the 
awareness of individuals, communities and industries regarding the 
potential vulnerabilities facing the Chemical industry sector as a 
result of potential Year 2000 systems failures.

    Statement

    I am pleased to present the following statement regarding Year 2000 
contingency preparedness issues facing the chemical industry. Portions 
of this statement have been discussed verbally with members of the 
Senate Year 2000 Technology Problem Committee staff. This statement 
summarizes my experiences in dealing with the potential issues faced by 
the industry in preparing for the Year 2000 transition.

    The Chemical Industry has recognized the potential for significant 
disruption of operations as a result of the Year 2000 date change. Many 
companies have sought to develop contingency plans and reduce 
vulnerability to the Year 2000 issues. The plans that have been 
developed have focused on critical areas such as, potentially affected 
operations, management/response organization, plan validation, training 
and documentation.

    Having conducted evaluations for clients focusing on regulatory 
issues, such as, Risk Management Planning, Hazardous Waste Operations 
and Emergency Response, Oil Pollution Act and other regulatory driven 
initiatives, I have found that six (6) areas of analysis are of concern 
with regard to the Year 2000 issue:

          1. Organizational Readiness
          2. Threat Assessment Review
          3. Year Contingency Plan Analysis
          4. Documentation and Record-keeping
          5. Training and Plan Validation
          6. Critical Infrastructure Dependencies

    Organizational Readiness

    The involvement of the all levels of management within a company in 
the Year 2000 contingency planning and emergency preparedness program 
is essential to its success. To this end many companies are achieving 
their goal of organizational awareness. Such involvement includes 
leadership in the development of the program and the direction of 
program activities.

    The methods of demonstrating leadership in Year 2000 contingency 
planning and emergency preparedness program include, but should not be 
limited to:

          setting priorities
          developing policy statements
          setting standards
          determining program objectives and direction
          ensuring that safety related issues are a part of the audit 
        and appraisals process
          establishing reporting relationships at the senior 
        management/officer level for the Year 2000 contingency planning 
        and emergency management/response staff
          conducting assessment tours and inspections
          participation in special Year 2000 contingency planning 
        meetings
          reviewing program Year 2000 contingency planning audits
          ensuring that proper involvement and response to 
        recommendations, at all levels within the company
          presenting and attending Year 2000 awareness meetings with 
        all employees to ensure their level of understanding, concerns 
        are heard, addressed and demonstrate commitment to a successful 
        program.

    Specific Leadership and Administration issues include:

          Year 2000 Contingency Preparedness Policy Development

          A corporate policy statement addressing Year 2000 contingency 
        planning should be developed by all affected entities. This 
        policy should provide a statement of policy regarding Year 2000 
        contingency planning and the limits of the contingency planning 
        effort. The following is an example of a policy statement that 
        could be used for Year 2000 Contingency Planning.

                          [COMPANY NAME] Year 2000 Contingency Planning 
                        and Management philosophy is based on three 
                        precepts: Prevention, Preparedness and 
                        Proactive Response. Effective response and 
                        management of incidents are essential to 
                        [COMPANY NAME]'s business philosophy because we 
                        want to minimize the impact of any event on 
                        shareholder value. We are committed to this 
                        goal through a proactive incident management 
                        effort focused on protecting our people, 
                        operations and assets.

                          Response to incidents affecting [COMPANY 
                        NAME] operations will be coordinated by the 
                        Year 2000 Contingency Management Team supported 
                        by Business Continuity Plans, Staff and 
                        Technology applications. We will comply with 
                        applicable laws and regulations in the 
                        implementation of our crisis response and 
                        management effort.

    Senior and Middle Management Participation

    The level of participation by Senior and Middle Management, is 
essential for the success of any Year 2000 Contingency preparedness 
program. One critical aspect to assure the involvement by senior and 
middle management will be the development of the Year 2000 policy 
statement and the development and presentation of Year 2000 contingency 
plan training and awareness materials. It is important to get the 
``word out'' to all levels of management within companies. To this end, 
the Year 2000 contingency plans and the plan validation programs 
established by many companies will provide the basis for integrating 
awareness throughout the companies. Information flyers should also be 
developed to educate the employees, suppliers and customers on the Year 
2000 issues and the activities the company has undertaken to address 
Year 2000 contingencies.

    Management Guidelines

    Management guidelines (protocols) should be developed to assist 
management implement the Year 2000 contingency plans. In addition, 
guidelines and protocols for answering customer concerns, media 
requests and SEC disclosure requirements should also be considered for 
development.

    Management Audits

    Review and approval of the Year 2000 contingency plans and 
supporting materials is of critical importance to the assuring the 
ability to respond to Year 2000 identified contingencies. Once the Year 
2000 contingency plans have been developed and validated they must be 
assessed for commitments, evaluated for appropriateness and kept up-to-
date. This can be accomplished by reviewing actual responses, through 
the training and plan validation process (drills and exercises) and by 
preparing and conducting a detailed audit of the Year 2000 contingency 
planning system. A suggested evaluation program, outlined below, should 
be designed to assess the Year 2000 contingency plans and the ability 
of personnel to complete sequences of critical tasks, under emergency 
conditions, using available resources as outlined in the Year 2000 
contingency plans and associated materials. The audit approach should 
be based on analysis and evaluation of:

          1. Program Administration (Plans and Supporting Materials)
          2. Year 2000 Contingency Management/Response Organization
          3. Year 2000 Contingency Management/Response Training and 
        Retraining
          4. Emergency Facilities and Equipment
          5. Plan Implementing Procedures
          6. Coordination with External Entities
          7. Plan Validation: Drills and Exercises
          8. Communications
          9. Hazard, Vulnerability, Risk and Issues Evaluation

    The ultimate benefits to be gained from implementing the evaluation 
program are in terms of integrating the Year 2000 contingency planning 
effort into the day to day operations, related programs (internal/
external) and the assurance of adequate management planning and 
preparedness for the employees and the general public. In order to 
accomplish this task, a periodic evaluation of all operations should be 
undertaken. An approach for the audit should generally be to conduct:

          1. Personnel Interviews:
          The personnel interviews should consist of answering Year 
        2000 awareness questions related to the operational area they 
        represent, interviews regarding the knowledge of the extent of 
        potential hazards, general information on emergency 
        preparedness, identification of potentially hazardous 
        situations, record keeping and training.
          2. Overview of Written Plans, Policies, Procedures, etc.:
          The overview should consist of a comparison of any written 
        plans, policies, procedures, etc. for consistency with 
        applicable regulatory and non-regulatory guidance.
          3. Site/Facility Analysis:
          Site/facility analysis should consist of a periodic walk 
        through assessments of operating locations to accomplish the 
        following:

          A. Identify equipment and processes that could be affected by 
        Year 2000 failures.
          B. Identify potential areas of vulnerability (internal/
        external).
          C. Familiarization with the general area conditions.

    The ultimate benefits to be gained from this type of evaluation are 
in terms of identifying areas in need of attention, establishing a list 
of commitments that have to be met and documenting current efforts. The 
questions developed for this evaluation program should be assessed on a 
periodic basis to ensure they are kept up-to-date.

    In planning the Year 2000 contingency plan audit, four elements 
should be taken into consideration:

          1. What goals did the Year 2000 contingency program set?
          2. What goals did company set for emergency management and 
        response activities?
          3. What goals does the Year 2000 contingency audit have?
          4. What actions will be taken to resolve Year 2000 
        contingency audit identified deficiencies?

    Year 2000 Reference Library

    Companies should establish a Year 2000 reference library should by 
formal protocol if necessary. The protocol should define the accepted 
and approved sources of information for Year 2000 information. A 
clearinghouse should be established to disseminate Year 2000 
information throughout the company. This will reduce the amount of 
potentially conflicting sources of information and establish a basis 
for the Year 2000 contingency planning effort. Suggested sources are 
the Securities and Exchange Commission (SEC). Other sources should be 
reviewed by management and legal advisors to determine the 
acceptability and adequacy of the information presented.

    Assignment of Responsibility and Planning Efforts

    Responsibility for Year 2000 contingency planning should be 
assigned to a designated department and/or specific individual. In this 
way accountability for coordinating the planning effort, continuity of 
plans and consistency within an organization's planning effort and 
resultant plans can be assured. This can serve to reduce the potential 
confusion resulting from the simultaneity of events occurring during 
the Year 2000 transition period. Year 2000 Contingency Plan operating 
procedures and emergency related mutual aid agreements should be 
considered for development to support internal plans.

    Threat Assessment Review

    Many companies have developed risk assessment methodologies based 
upon identification of threats, estimation of the probability of the 
threat occurring, establishment of forewarning of threat occurrence, 
determination of the duration of the effect, impact and establishment 
of preventative measures that can be planned and implemented. This 
methodology has produced many databases replete with information 
regarding functions that may be affected, key contacts within the 
companies and the determination of steps to be taken to diminish the 
potential impact of the identified threat.

    While many companies have produced a valuable tool for assessing 
internal risk and the determination of potential threats to operations, 
consideration should be given to developing an assessment of potential 
scenarios that involve external situations that can impact on the 
company and its ability to conduct normal business operations.

    One threat that has been considered by many companies from an 
internal perspective is embedded systems. However, the failure of 
external embedded systems, for example at a wellhead or within a 
pipeline distribution system, while not controlled by the company could 
have a significant impact on operations. External factors, that present 
a potential cascading effect, should be taken into consideration as the 
Year 2000 contingency plans are developed.

    Embedded systems failures can trigger technological disasters which 
can impede and immobilize efforts to address critical infrastructure 
disruptions. Infrastructure disruptions in and of themselves be 
expected to tax emergency response capabilities to the limit. It is 
estimated that there may be from 10 to 25 billion embedded systems in 
existence. It is known that some small percentage of these are data 
sensitive. Of these, a small but significant percentage are not Year 
2000 compliant. Estimates range from 0.2% to over 1%. That could mean 
that from 20 million to 250 million embedded systems failures could 
occur owing to the Year 2000 related non-compliance problems (source: 
The Gartner Group).

    These include small failures that could have major impacts. 
Malfunctions could occur in all manner of equipment, devices, 
appliances and systems found in homes, hospitals, buildings, plants, 
facilities and systems. Malfunctions could occur as well in everything 
from subway systems to water purification plants, waste water disposal 
plants, oil and gas pipelines, oil refineries, oil tankers, off-shore 
platforms, chemical plants, manufacturing plans, coal-fired plants, 
nuclear power plants, hazardous materials storage facilities, 
laboratories, defense facilities (biological & chemical warfare 
facilities) and weapons systems of all kinds.

    Under Executive Order 13010, certain national infrastructures have 
been identified and designated as so vital, that their incapacity or 
destruction would have a debilitating impact on the defense or economic 
security of the United States. A report by the President's Commission 
on Critical Infrastructure Protection (PCCIP), indicates a significant 
dilemma facing the United States today is the growin interdependence of 
critical infrastructures. For example, water, sewage and public 
utilities are commonly found linked together within a city's control 
system. The report of the PCCIP states in its introduction:

          ``The United States is in the midst of a tremendous cultural 
        change--a change that affects every aspect of our lives. The 
        cyber dimension promotes accelerating reliance on our 
        infrastructures and offers access to them from all over the 
        world, blurring traditional boundaries and jurisdictions. 
        National defense is not just about government anymore, and 
        economic security is not just about business. The critical 
        infrastructures are central to our national defense and our 
        economic power, and we must lay the foundations for their 
        future security on a new form of cooperation between the 
        private sector and the federal government.''

    The Critical Infrastructures studied consist of:
      Electric and Gas Power Supplies
      Gas and Oil
      Telecommunications
      Banking and Finance
      Transportation
      Water Supply Systems
      Emergency Services
      Continuity of Government

    The Commission divided its work into five ``sectors'' based on the 
common characteristics of the included industries. The sectors are:

      Information and Communications
      Banking and Finance
      Energy (Including Electrical Power, Oil and Gas)
      Physical Distribution
      Vital Human Services

    Of concern in the assessment of threat issues for companies should 
be the potential for a government intervention, based on a threat to 
national security. Under this scenario, a company could have its assets 
commandeered by the government and be dictated to regarding the 
distribution of products to users. While this issue is of concern, a 
strong effort on the industry's part to establish coordination, 
information exchange and an understanding of expectations, agenda and 
focus of various entities may serve to assist the industry in the 
management of this Year 2000 issue.

    In addition to the above threat analysis activities companies 
should determine the time critical, time sensitive and time dependent 
issues that will affect them during the Year 2000 transition period. 
Examples are:




    Further investigation of external issues relating to Year 2000 
threats, risks and issues on the part of the industry is warranted in 
order to evaluate exposures to external factors that pose a threat to 
disrupt operations. This can be accomplished through various government 
organizations and other Year 2000 working groups sponsored by industry.

    Year 2000 Contingency Plan Analysis

    An evaluation of Year 2000 contingency plans should be conducted to 
determine the viability of the documents and the ability of the 
companies to implement the plans. Assessment should focus on:

          levels of planning for incident response
          integration of incident management and response activities
          life safety issues
          systematic shutdown of facilities
          continuation of vital operations
          identification of emergency use equipment needs
          identification and protection of vital records
          establishment and coordination with organizations and 
        agencies that would provide assistance in the event of an 
        incident
          programs for reentry and recovery of operations

    Assess should also consider:

          Administration

          How is the Year 2000 contingency preparedness program 
        administered and who is responsible for coordinating the 
        planning efforts.

          Year 2000 Contingency Plans and Supporting Information

          What plans have been prepared and how will they be validated. 
        Are the Year 2000 contingency plans integrated with the 
        existing plans established under regulatory agencies 
        guidelines. Plans should establish a standard format so as to 
        ensure the integration of departmental efforts.

          Year 2000 Contingency Plan Implementing Procedures

          Year 2000 Contingency Plans should be augmented by the 
        development of supporting procedures to aid in the 
        implementation of the plans. Contingency Plan Implementing 
        Procedures (CPIPs) should contain specific detailed instruction 
        and guidance for response to Year 2000 related contingencies. 
        The CPIPs should assign responsibilities to personnel, and 
        include flowcharts and checklists where appropriate to improve 
        contingency management and response.

    A suggested format and definition of terms is provided below:

          1.0 PURPOSE - A statement that defines the basic purpose of 
        the procedures, such as: ``This Management Practice provides 
        guidance and instruction for personnel assigned to plant site 
        locations''.

          2.0 SCOPE - This section describes the specific issues 
        addressed in the procedure and lists the individuals, by 
        position description, who generally will implement the 
        procedure.

          3.0 REFERENCES - References to other supporting documents, 
        technical information and other sources of information are 
        listed in this section of the procedure.

          4.0 DEFINITIONS - With the paucity of acronyms, abbreviations 
        and foreshortened wordings it is advisable to define any new or 
        unusual terminology. This section of the procedure also 
        clarifies any terms as to their meaning.

          5.0 RESPONSIBILITIES - A listing of responsibilities, general 
        information, initial actions and subsequent actions is provided 
        to assist the individual implement the procedure.

          6.0 PROCEDURE - This section contains information pertinent 
        to the accomplishment of the function or task prescribed in the 
        procedure.

          7.0 FLOWCHART - Any supporting flowcharts, diagrams or other 
        pictorial representation of steps in the procedure.

          8.0 APPROVAL - This section contains the signatures of 
        approval authorities for the procedure.

    The Year 2000 Contingency Plans should introduce concepts which are 
expanded upon and supported by Appendices and Contingency Plan 
Implementing Procedures. CPIPs, however, will be the tools used to 
implement the plans. They can be grouped into four general categories, 
as discussed below.

          ADMINISTRATIVE CATEGORY

          Administrative procedures consist of management guidelines. 
        These procedures provide guidance and prescribe the manner in 
        which plan maintenance activities such as, monthly calibration 
        tests or communications tests are to be accomplished.

          INCIDENT CLASSIFICATION CATEGORY

          Incident Classification CPIPs provide step-by-step immediate 
        action procedures for the identification and classification of 
        the severity of an incident, they should:

                          Determine the severity of the incident
                          Determine the extent of activation of the 
                        Emergency Organization
                          Determine the notification requirements
                          Determine the protective action 
                        recommendations to be given to the offsite 
                        authorities

          INCIDENT MANAGEMENT/RESPONSE ORGANIZATION

          Duties of the individuals assigned to the Incident 
        Management/Response Organization are described in these 
        procedures. Duties of various personnel who play management or 
        response roles in during an incident are delineated in these 
        procedures.

          INCIDENT OPERATIONS

          Incident Operations procedures provide guidelines for 
        conducting operations focused on incident mitigation. Step-by-
        step instructions to direct specific personnel activities 
        during an emergency are presented.

          REENTRY & RECOVERY

    Reentry and Recovery procedures include step-by-step task oriented 
sequences for personnel responsible for business recovery and 
resumption activities. These procedures assure that appropriate 
Recovery Organization personnel and equipment are available when 
reentry and recovery operations commence.

    Training and Proficiency Demonstrations (Drills and Exercises)

    Validation of the Year 2000 contingency plans is of critical 
importance. To this end a program for the training of personnel should 
be developed, as should a program of plan validation (drills & 
exercises). The details for the training and validation program should 
be documented in a separate section of the Year 2000 contingency plans.

    Communications

    Communication protocols should be developed in support of the Year 
2000 contingency plans. An assessment of communications interfaces 
(technology and human) should be accomplished. The critical nature of 
communications to a company's operations, is readily apparent. The 
dependency on the telecommunications system to provide operational and 
administrative support has been recognized by many companies and 
evaluations of communications dependencies are being undertaken. Backup 
systems, such as radio and cellular telephones are under investigation. 
It should be noted that the general proliferation of telephones in the 
United States for the home, office, voice and data have had an impact 
on available telephone numbers, that could cause the system to run out 
of numbers. This remains one of the critical nodes in the Year 2000 
contingency planning process. Protocols should be developed for 
communication activities, such as: incident notification (for internal 
and external resources), communicating during incidents and alternate 
communication methods and equipment.

    Emergency Facilities and Equipment

    Many companies maintain a Command Center for incident related 
operations. An analysis of the adequacy of Command Centers should be 
accomplished to determine the vulnerability of equipment to Year 2000 
failure/degradation. In addition, it is strongly recommended that the 
Year 2000 contingency plans include options for alternate Command 
Center locations should the primary Command Center become unusable.

    Coordination with External Groups and Agencies

    It is highly recommended that the companies in the chemical 
industry become involved in coordination with external groups, 
companies and governmental agencies to facilitate the Year 2000 
expectations of these entities, as well as, determine what support will 
be available to them in the transition period should Year 2000 
incidents cause a degradation of infrastructures critical to the safe 
operation of the company.

    Public Information

    A critical element of the Year 2000 contingency preparedness 
program is the education of the public as to the potential impacts of 
Year 2000 on company operations. Consideration should be given to 
preparing a public information flyer describing the company's efforts 
to address the Year 2000 issue.

    Record Keeping

    In order to facilitate Year 2000 contingency planning requirements, 
a record of all initiatives should be retained. These records will 
serve to document the accomplishments, requirements, commitments and 
reports relating to various Year 2000 contingency planning program 
requirements. The identification of commitments in the areas of Year 
2000 compliance requirements, incident preparedness, training and plan 
validation is important. The establishment of a defined information 
management and commitment tracking system structure will ensure that 
documentation will be available when needed.

    Senior management must be kept well informed about Year 2000 
initiatives. Information must be shared and managed effectively. 
Information management is also critical during an incident. The need 
for an interactive system to provide information on materials, 
personnel, capabilities and processes is essential.

    It is advisable to have a system (and adequate back-up systems) in 
place that serves to identify, catalog, set priorities and track issues 
and commitments relating to Year 2000 contingency planning commitments, 
incident management and response activities.

    Comprehensive evaluations or audits to verify that the incident 
management capability, as well as, physical facilities are in 
compliance with standards prescribed in codes, industry or consensus 
standards and regulations is necessary. Year 2000 contingency planning 
activities can be grouped into eleven categories representing the 
contingency management and response program. A database can be prepared 
that identifies, tracks and documents commitments within these eleven 
categories. The following subsections provide a discussion of each of 
the eleven subject categories in greater detail.

          PLANS:

          All commitments stated in the Year 2000 contingency plans 
        would be listed under this subject category. Commitments that 
        have been identified from project files should also be cited as 
        they apply under this subject category.

          FACILITIES:

          All commitments relating to the Emergency Facilities (Command 
        Center, News Center, etc.) should be cited under this category. 
        Generally, these commitments should be focused upon the design, 
        construction and habitability aspects as well as the incident 
        response functions of each facility.

          EQUIPMENT:

          All commitments regarding emergency use equipment have been 
        input under this subject category. Equipment commitments 
        primarily deal with the stocking, inventory, operability, 
        operability checks, manufacturer information, and the 
        replenishment of expended or expired equipment and supplies.

          COMMUNICATIONS:

          Commitments concerned with communications hardware, lines of 
        communications, notification systems, communications systems 
        tests and system availability are cited in this subject 
        category.

          TRAINING:

          All commitments to provide training for the Incident 
        Management/Response Organization, other identified emergency 
        responders and various offsite response organizations are 
        listed under this heading.

          PROFICIENCY DEMONSTRATIONS: DRILLS/EXERCISES:

          All commitments for drills, exercises, tabeltop, scenario 
        development and critiques are presented under this subject 
        heading.

          ORGANIZATION:

          Commitments concerned with the Incident Management/Response 
        Organization, its composition, personnel qualifications and 
        staffing are cited in this category. Additionally, non-company 
        emergency organizations may be represented in this category as 
        well as commitments by the operating subsidiaries that impact 
        these organizations.

          ADMINISTRATION:

          Commitments focusing on the continuity operations and 
        maintenance of the incident management/response capability is 
        provided under this heading.

          PUBLIC INFORMATION:

          The focus of the Public Information category is on the prompt 
        notification, public awareness, public education and news media 
        commitments.

          OFFSITE COORDINATION:

          Commitments made to interface and/or support various response 
        organizations (State, County, Local, Federal and Private) are 
        cited when it was determined that they had a direct impact on 
        emergency management/response capability.

    A computerized commitment tracking and information management 
system, can be designed to monitor the status of Year 2000 contingency 
planning commitments. The computerized system can provide a user 
friendly structure which allows the company the ability to track 
commitments, perform data entry and perform routine database 
maintenance. Additionally, the commitment tracking system provides a 
``tickler'' that allows for the prompt scheduling and completion of 
Year 2000 requirements and other periodic commitments.

    A suggested database structure would consist of a categorical 
breakdown of commitments as follows:

    Item No: A chronological numeric listing of the commitments is 
maintained in the database file. In this manner, the number of records 
contained in the database is easily ascertained by the user. 
Additionally, recurring items have been provided a unique identifier to 
assist in identification and sorting.

    Responsibility: Identification of the specific individual 
responsible for completion of the action item/commitment or the 
individual with overall authority for ensuring completion of the 
commitment.

    Com-Date: Lists the Month, Day, Year that the commitment is 
anticipated to be completed.

    Status: Open, Closed or Recurring are used to identify the status 
of a commitment/action item.

    Training and Plan Validation

    Effective management of an incident requires a high degree of 
competence in the areas of emergency management and response 
activities. For the experienced manager, this learning involves the 
application of fundamental management principals to the recognition, 
evaluation and control of all incident exposures. For the less 
experienced manager, it requires reinforcing and expanding their 
knowledge of basic management techniques and integrating incident 
management practices into those techniques. Year 2000 incident 
management training should provide the knowledge each manager needs to 
be effective in dealing with the response to Year 2000 related issues, 
as well as, business resumption issues.

    The establishment of a comprehensive Year 2000 contingency plan 
training program can ensure that all staff receive the requisite 
training. All personnel and visitors, including those individuals 
working on a temporary basis or in a training status, should receive an 
orientation on the Year 2000 Contingency Plans, to orient them of their 
expected actions and to ensure their safety in the event of an 
incident.

    Suggested training modules may include, but are not limited to:

          Year 2000 Contingency Plan Overview

          This training should be provided to all personnel. The 
        objectives of the training include familiarization of the 
        student with the background for Year 2000 contingency planning, 
        the specific Year 2000 contingency plan, Year 2000 contingency 
        plan activation and implementation; emergency communications 
        skills, record-keeping requirements and an overview of the 
        concept of operations.

          Incident Management/Response Organization

          As appropriate personnel assigned to the Incident Management/
        Response Organization should be provided training in their 
        assigned functions.

    In order to fully assess the effectiveness of the training provided 
to personnel a program of periodic drills and exercises should be 
designed and implemented in accordance with the aforementioned Year 
2000 policy guidance. The establishment of a comprehensive drill and 
exercise program can provide a system to effectively evaluate the 
ability of personnel to implement the Year 2000 contingency plans.

    Conclusion

    The structure of the Year 2000 contingency plan should provide a 
flexible framework, addressing a variety of situations. It is important 
that companies in the chemical industry strive to ensure consistency in 
the development of their plans.

    This statement and the recommendations contained herein are 
provided based on my experience in addressing crisis management, 
emergency response and business continuity planning issues for a 
variety of industries. I feel that the observations and recommendations 
presented herein, serve to summarize my perceptions regarding the 
current efforts to address contingency planning for the Year 2000. It 
is the option of industry management to avail themselves of the 
observations and implement these recommendations as they feel 
necessary.
                               __________

                                
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