[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



                           CHEMICAL FACILITY 
                       ANTI-TERRORISM ACT OF 2008

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

                                HEARING

                               before the

                     COMMITTEE ON HOMELAND SECURITY

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 26, 2008

                               __________

                           Serial No. 110-95

                               __________

       Printed for the use of the Committee on Homeland Security
                                     

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                     COMMITTEE ON HOMELAND SECURITY

               Bennie G. Thompson, Mississippi, Chairman

Loretta Sanchez, California          Peter T. King, New York
Edward J. Markey, Massachusetts      Lamar Smith, Texas
Norman D. Dicks, Washington          Christopher Shays, Connecticut
Jane Harman, California              Mark E. Souder, Indiana
Peter A. DeFazio, Oregon             Tom Davis, Virginia
Nita M. Lowey, New York              Daniel E. Lungren, California
Eleanor Holmes Norton, District of   Mike Rogers, Alabama
Columbia                             David G. Reichert, Washington
Zoe Lofgren, California              Michael T. McCaul, Texas
Sheila Jackson Lee, Texas            Charles W. Dent, Pennsylvania
Donna M. Christensen, U.S. Virgin    Ginny Brown-Waite, Florida
Islands                              Gus M. Bilirakis, Florida
Bob Etheridge, North Carolina        David Davis, Tennessee
James R. Langevin, Rhode Island      Paul C. Broun, Georgia
Henry Cuellar, Texas
Christopher P. Carney, Pennsylvania
Yvette D. Clarke, New York
Al Green, Texas
Ed Perlmutter, Colorado
Bill Pascrell, Jr., New Jersey

       Jessica Herrera-Flanigan, Staff Director & General Counsel
                        Todd Gee, Chief Counsel
                     Michael Twinchek, Chief Clerk
                Robert O'Connor, Minority Staff Director

                                  (II)

























                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Chairman, Committee on 
  Homeland Security..............................................     1
The Honorable Peter T. King, a Representative in Congress From 
  the State of New York, and Ranking Member, Committee on 
  Homeland Security..............................................     2
The Honorable Ginny Brown-Waite, a Representative in Congress 
  From the State of Florida:
  Prepared Statement.............................................     3

                               Witnesses

Col. Robert B. Stephan, Assistant Secretary, Infrastructure 
  Protection, Department of Homeland Security:
  Oral Statement.................................................     4
  Prepared Statement.............................................     6
Mr. Kevin L. Wattier, General Manager, Long Beach Water 
  Department:
  Oral Statement.................................................    11
  Prepared Statement.............................................    13
Mr. David C. Pulham, Ph.D., Director of Compliance, Siegfried 
  (USA), Inc.:
  Oral Statement.................................................    15
  Prepared Statement.............................................    17

                             For The Record

National Propane Gas Association:
  Statement......................................................    18
Chemical Bill Coalition:
  Statement......................................................    21
Mr. Rick Hind, Legislative Director, Greenpeace Toxics Campaign, 
  Greenpeace:
  Statement......................................................    22
Mr. Russell Melancon, President and CEO, Industrial Safety 
  Training Council:
  Statement......................................................    33

















 
                           CHEMICAL FACILITY 
                       ANTI-TERRORISM ACT OF 2008

                              ----------                              


                       Tuesday, February 26, 2008

                     U.S. House of Representatives,
                            Committee on Homeland Security,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10:09 a.m., in Room 
311, Cannon House Office Building, Hon. Bennie G. Thompson 
[Chairman of the committee] presiding.
    Present: Representatives Thompson, Sanchez, Markey, Jackson 
Lee, Etheridge, Cuellar, Carney, Pascrell, King, McCaul, Dent, 
Brown-Waite, Davis of Tennessee and Broun.
    Chairman Thompson. We would like to call the hearing to 
order.
    The committee meeting today will receive testimony on the 
Chemical Facility Anti-Terrorism Act of 2008.
    I now recognize myself for purposes of the opening 
statement.
    When I assumed the Chairmanship of this committee last 
January I highlighted the need to shield the Nation's critical 
infrastructure from foreign and domestic terrorism as one of my 
eight goals in charting the course toward freedom from fear. 
That is why this committee has dedicated considerable resources 
toward drafting legislation to extend DHS's authority over 
chemical plants beyond October, 2009, when it is slated to 
expire.
    Today, we are meeting to discuss a draft bill that this 
committee has been working on for the past several months, the 
Chemical Facility Anti-Terrorism Act of 2008. It is important 
to me that we have worked in an open and bipartisan manner to 
develop this legislation.
    I would especially like to acknowledge the fine work of the 
chairwoman of the Subcommittee on Transportation Security and 
Infrastructure Protection, Ms. Jackson Lee of Texas, for her 
efforts to move this process forward.
    I would also like to thank the Ranking Member of that 
subcommittee, Mr. Lungren of California, for his cooperation 
and leadership.
    In this Congress, the Transportation Security and 
Infrastructure Protection Subcommittee has held two hearings on 
the topic of chemical facilitated security, in July and 
December. At those hearings, the committee heard from Assistant 
Secretary Stephan, whose Infrastructure Protection Division is 
responsible for implementing the current Chemical Facility 
Anti-Terrorism Standards, or CFATS.
    Those hearings also allowed us to hear from a wide range of 
witnesses representing all sides of this issue. We have talked 
to large chemical manufacturers who are regulated under CFATS; 
a representative from the State of New Jersey, which is also 
regulating security at chemical facilities--and they now have 
Mr. Pascrell on the committee, who handles the New Jersey end 
of that aspect. We welcome him here again, also--
representatives from labor unions that represent chemical 
facility workers, and also academic and other experts.
    Today's hearing will continue in that spirit. We will 
receive an update from Assistant Secretary Stephan and 
testimony from Dr. David Pulham from Siegfried, a small 
chemical manufacturer, as well as Mr. Kevin Wattier from the 
Long Beach Water Department.
    Dr. Pulham is here to help us understand the impact of the 
chemical security legislation on smaller facilities, as well as 
tell us how his facility is complying with the State of New 
Jersey's chemical security requirements; and Mr. Wattier is 
here to give us the feedback from a water facility about the 
legislation, especially given that it would subject water 
facilities to the same chemical security framework as is in 
place for all other chemical facilities.
    It is worth noting that DHS considers water facilities to 
be at risk and therefore justifiably regulated along with other 
facilities that hold large volumes of toxic chemicals.
    In addition to other testimony, the committee has 
maintained an open dialog with the Department, environmental 
groups, labor representatives, large and small chemical 
manufacturers, fertilizer manufacturers, petroleum and propane 
manufacturers and distributors, as well as water facilities.
    I decided to use the vehicle of a Committee Print rather 
than an introduced bill because of the flexibility it offers 
us. This way, every time we hear a good idea on how to make the 
legislation better, we can incorporate it.
    I want to thank Ranking Member King and his staff for 
working in such a cooperative manner through the many 
iterations of the bill, and I am confident that we will have a 
legislative product we can all support.
    Securing our chemical facilities against an attack advances 
my commitment to making sure that our Government can provide 
the American people security, accountability and, most 
importantly, freedom from fear. I look forward to hearing from 
our witnesses, and I thank you for contributing to this 
process.
    The Chair now recognizes the Ranking Member of the full 
committee, the gentleman from New York, Mr. King, for an 
opening statement.
    Mr. King. Thank you very much, Chairman Thompson.
    I want to, at the outset, join you in pointing out the 
bipartisan nature of the process so far and the process which I 
am sure will continue. Obviously, when we are talking about 
chemical plants, it certainly has the opportunity to become a 
very partisan or divisive issue. It is easy for either side to 
use scare tactics or to try to accuse the other of bad motives. 
That has not been the case here at all.
    I want to thank Chairwoman Sheila Jackson Lee for her 
efforts and also Ranking Member Dan Lungren, who is right now 
recovering from knee surgery, for their efforts at the 
subcommittee level.
    I also want to commend the Department for the rapid 
progress they have made, I believe, in implementing the 
legislation that we adopted in the previous Congress. I think 
it is important to acknowledge that.
    Obviously, this is all a work in progress. It is a very new 
world that we live in, but it is important to give credit where 
credit is due, and I think the Democrat majority certainly 
deserves credit as this process is going forward.
    I believe the Congress and this committee overall observed 
progress from what went on in the past, but especially the 
Department also deserves credit for taking the legislation and 
moving forward with it. No one has prior authorship here. We 
should just continue to meet with various represents from the 
industry, from labor, from the overall Homeland Security 
community; and, of course, I look forward to the testimony of 
the Department today as to what they have done and what they 
expect to be doing as we go forward.
    I would note just one situation. The Committee Print does 
address background checks to a certain degree, but it does not 
address them to the extent that Ms. Brown-Waite did as far as 
screening individuals at high-risk facilities against the 
terrorist watch list and the immigration status database, and I 
hope that we give more close attention to that as this goes 
forward.
    But, again, the legislation we adopted was not the end. We 
should build on it, and we should also be careful not to 
disrupt what the Department is trying to do as it goes forward.
    So, with that, Mr. Chairman, I yield back the balance of my 
time and look forward to the testimony.
    Chairman Thompson. Thank you very much, Mr. King.
    Other Members of the committee are reminded that, under 
committee rules, opening statements may be submitted for the 
record.
    [The statement of Honorable Brown-Waite follows:]
              Prepared Statement of Hon. Ginny Brown-Waite
                           February 26, 2008
    Thank you Chairman Thompson and Ranking Member King for holding 
this hearing today.
    To begin, let me echo a point Ranking Member King has raised 
several times already before the full committee: this committee must 
begin work on a Department of Homeland Security authorization bill. 
Passing an authorization bill is a primary responsibility of this 
committee and we cannot overlook this duty.
    America's chemical facilities are a critical part of America's 
infrastructure. As we are all well aware, if terrorists were able to 
exploit weaknesses in this industry's security measures, there would be 
far-ranging, disastrous consequences.
    While I applaud taking responsible steps to ensure the security of 
chemical plants and facilities, our guiding principle must be a focused 
effort not to undermine any progress already made to keep these 
facilities safe.
    My major concern with the language before us involves the issue of 
background checks. I was upset to see that while there are extensive 
criteria for conducting background checks on those with access to high-
risk facilities outlined, there is no requirement to conduct these 
checks in the first place.
    It seems utterly backward to outline a detailed appeals and waivers 
process before actually requiring the background checks themselves. 
Accordingly, I offered an amendment in subcommittee markup to address 
this problem and require background checks against immigration status 
and the terrorist watchlist.
    Today, I look forward to examining this issue further, as the 
committee pursues meaningful ways to ensure the security of our 
chemical facilities.
    Thank you.

    Chairman Thompson. I now welcome our panel of witnesses.
    Our first witness, Mr. Robert Stephan, is Assistant 
Secretary for Infrastructure Protection at the Department of 
Homeland Security, which is responsible for carrying out the 
Chemical Facility Anti-Terrorism Standards. Our second witness 
is Mr. Kevin Wattier, General Manager of Long Beach Water 
Department; and our third witness is Mr. David Pulham, Director 
of Compliance with Siegfried, Incorporated.
    I welcome you here today and look forward to hearing your 
testimony.
    Without objection, the witnesses' full statements will be 
inserted in the record. I now ask each witness to summarize his 
or her statement for 5 minutes, beginning with Mr. Stephan.

     STATEMENT OF ROBERT B. STEPHAN, ASSISTANT SECRETARY, 
   INFRASTRUCTURE PROTECTION, DEPARTMENT OF HOMELAND SECURITY

    Mr. Stephan. Thank you Mr. Chairman, Ranking Member King 
and distinguished Members of this committee. It is a pleasure 
to appear before you today to address the Department's efforts 
in securing the chemical sector through the implementation of 
our CFATS regulation.
    I would also like to echo the sentiment that I recently 
heard. Without the bipartisan cooperation on this issue that 
this committee and its subcommittees have achieved with the 
Department, we absolutely could not be achieving the progress 
that we have made today with respect to implementing this 
regulation, a very, very difficult task; and, sincerely, we do 
appreciate the continued leadership and support as we move 
through this effort.
    As you all know, the fiscal year 2007 appropriations act 
directed the Department to develop and implement a regulatory 
framework addressing the high level of security risk posed by 
certain chemical facilities across the country. Consequently, 
DHS published an Interim Final Rule, known as CFATS, on April 
9, 2007. Section 550 of the Act authorized the Department to 
require high-risk chemical facilities to complete vulnerability 
assessments, develop security plans and implement protective 
measures necessary to meet risk-based performance measures 
established by the Department.
    The following core principles guided the development of 
this regulatory structure and remain in place:
    No. 1, securing high-risk chemical facilities is an immense 
undertaking that involves a national effort, including all 
levels of government and the private sector in a security 
partisanship.
    No. 2, risk-based tiering of chemical facilities that 
represent a high level of risk will ensure that resources are 
appropriately deployed and the appropriate measures put in 
place to protect them.
    No. 3, reasonable, clear and equitable performance 
standards will lead to enhanced security across the 
partnership.
    Finally, recognition of the progress many companies have 
already made in improving facility security helps leverage 
achievements and past investments.
    In terms of progress, DHS published Appendix A to the CFATS 
Interim Final Rule in November of last year. Appendix A 
contains a list of chemicals of interest and their screening 
threshold quantities.
    Possession of one or more of these chemicals of interest at 
or above the screening threshold triggers a requirement for the 
facility to complete and submit an on-line consequence 
assessment known as a Top-Screen. The data gathered to the Top-
Screen tool then informs the Department's determination of a 
facility's level of risk and the potential need for the 
facility to comply with follow-on substantive requirements of 
the regulation.
    In formulating the appendix the Department included 
chemicals based on three principal risk vectors: release, 
hazards, theft and diversion hazards, and sabotage 
contamination hazards. The Department established again a 
screening threshold quantity for each chemical based on its 
potential to create significant adverse consequences in terms 
of public health and safety, human lives and injury.
    To implement the requirements under the regulation, the 
Department developed the Chemical Security Assessment Tool, or 
the CSAT, to identify potentially high-risk facilities and 
provide a methodology that the facilities can use to conduct 
their vulnerability assessments and develop site security plans 
that are more uniform across the country. Through the 
previously discussed Top-Screen process the Department can 
identify which facilities do or do not have to or represent a 
significantly high risk and then move on in the process. Those 
facilities that are deemed high risk must complete a site 
vulnerability assessment for submission to the Department, and 
then that will in turn again inform the Department's final 
determination of the risk-based tier in which the facility will 
be placed.
    Following the site vulnerability assessment, a regulated 
facility must develop a security plan that will be based upon 
19 risk-based performance standards which are broad and 
designed to promote a great deal of flexibility in how a 
facility approaches meeting the standards applicable to it.
    Although all high-risk facilities must comply with the 
risk-based performance standards, the measures necessary to 
meet these standards will vary across the four risk tiers under 
the CFATS framework.
    Outreach and partnership efforts have been a very important 
part of an overall approach to this problem to date. Since the 
release of CFATS in April, the Department has made a concerted 
effort to inform our security partners of CFATS and its 
requirements and to engage them very productively.
    As of last week, approximately 28,000 facilities across the 
country have submitted a Top-Screen consequence assessment that 
is currently undergoing analysis. That analysis will be 
complete, I believe, by the end of next month. Approximately 
7,800 facilities have requested and received a Top-Screen 
filing extension which will expire on approximately March 22 of 
this year.
    In addition, after the release of Appendix A, we granted 
Top-Screen filing extensions to those owners and operators of 
chemicals of concern in the agricultural world that possess 
certain chemicals for agricultural use, mainly fertilizers and 
pesticides. This extension will allow the Department to engage 
agribusiness distributors and end-users in a productive dialog 
to narrow the CFATS program focus onto truly high-risk 
operations in the food and agricultural world. DHS will then 
determine whether any modification of the Top-Screen 
requirements might be warranted, particularly the approach 
toward chemicals of interest, again in the chemical world.
    The Department has also been committed to fostering a solid 
working relationship with State and local officials or first 
responders in jurisdictions with high-risk facilities, and we 
have a initial cadre of 40 inspectors that we have deployed 
across the country to begin this process.
    In terms of our fiscal year 2008 requirements or 
deliverables, we are looking at reviewing submitted site 
vulnerability assessments for final tiering determinations, 
yielding final populations of a regulated community; developing 
the CSAT site security plans; reviewing the site security plans 
and beginning Tier 1 and Tier 2 inspections; enhancing the CSAT 
suite of applications in a CSAT version 2.0, and in developing 
a comprehensive case management system; and, finally, very much 
engaging the State and local partners in terms of pushing this 
down to the grassroots level across the country.
    In closing, on the subject of proposed new legislation, I 
believe that it is critical that any new legislation on 
chemical security should be carefully crafted to continue the 
forward momentum and the success of the CFATS program, continue 
the initiative and the partnership across the various 
stakeholder groups, prior and existing efforts by the 
Department, and, most importantly, the compliance activities 
already implemented or under way by the regulated community 
should be carried forward with any new legislative authority.
    The Department and industry have invested a significant 
amount of resources and time into information collection, 
consequence assessment and risk mitigation activities and those 
efforts should be validated by incorporation or continuation to 
the maximum extent possible in any new legislation.
    Again, ladies and gentlemen, we are interested in carrying 
the momentum forward, carrying the progress forward and 
bridging the current structure from one administration to the 
next. My personal goal is to hand over a 100-percent-squared-
away operation to the next executive and congressional 
leadership team that will take office in January 2009.
    Sir, subject to your follow-on questions, I have now 
completed the initial part of my testimony.
    [The statement of Mr. Stephan follows:]
                Prepared Statement of Robert B. Stephan
                           February 26, 2008
    Thank you, Chairman Thompson, Ranking Member King, and 
distinguished Members of the committee. It is a pleasure to appear 
before you today to address progress on the implementation of the 
Department's authority over security at high-risk chemical facilities 
through the Chemical Facility Anti-Terrorism Standards (CFATS) program, 
as well as provide insight regarding a transition of the existing 
regulatory program to a permanent authorization. In terms of CFATS, 
there is significant activity to report on a recent regulatory 
deadline--the deadline for chemical facilities to submit to the 
Department a completed Top-Screen questionnaire.
                     chemical security regulations
    The fiscal year 2007 Department of Homeland Security Appropriations 
Act directed the Department to develop and implement a regulatory 
framework to address the high level of security risk posed by certain 
chemical facilities. Consequently, the Department published an Interim 
Final Rule, known as the Chemical Facility Anti-Terrorism Standards 
(CFATS) on April 9, 2007. Specifically, Section 550(a) of the Act 
authorizes the Department to require high-risk chemical facilities to 
complete Security Vulnerability Assessments (SVAs), develop Site 
Security Plans (SSPs), and implement protective measures necessary to 
meet risk-based performance standards established by the Department of 
Homeland Security.
    The following core principles guided the development of this 
regulatory structure:
    (1) Securing high-risk chemical facilities is an immense 
        undertaking that involves a national effort, including all 
        levels of government and the private sector.--Integrated and 
        effective partnerships among all stakeholders--Federal, State, 
        local, and private sector--are essential to securing our 
        national critical infrastructures, including high-risk chemical 
        facilities. Implementing this program means tackling a 
        sophisticated and complex set of issues related to identifying 
        and mitigating vulnerabilities and setting security goals. This 
        requires a broad spectrum of input. By working closely with 
        experts, such as New York and New Jersey State officials, 
        members of industry, members of academia, and Federal 
        Government partners, we leveraged vital knowledge and insight 
        to improve the regulation.
    (2) Risk-based tiering will ensure that resources are appropriately 
        deployed.--Not all facilities present the same level of risk, 
        and the greatest level of scrutiny should be focused on those 
        facilities that, if attacked, could endanger the greatest 
        number of lives, have the greatest economic impact, or present 
        other significant risks.
    (3) Reasonable, clear, and equitable performance standards will 
        lead to enhanced security.--The interim final rule includes 
        enforceable risk-based performance standards. Facilities have 
        the flexibility to select among appropriate site-specific 
        security measures that will effectively address risk, which 
        leads to a Site Security Plan (SSP). The Department will 
        analyze each facility's SSP, and, if it satisfies the CFATS 
        performance standards, approve. If an SSP does not meet the 
        CFATS performance standards, DHS will disapprove the plan and 
        work with the facility to revise and resubmit an acceptable 
        plan.
    (4) Recognition of the progress many companies have already made in 
        improving facility security leverages those advancements.--Many 
        responsible companies have made significant capital investments 
        in security since 9/11, and building on that progress in 
        implementing the CFATS program will raise the overall security 
        baseline of high-risk chemical facilities.
                 appendix a: chemicals of interest list
    The Appendix A final rule to the CFATS, published in the Federal 
Register on November 20, 2007, contains a list of chemicals and their 
Screening Threshold Quantities. Possession of one or more of these 
chemicals of interest at or above the applicable threshold quantity 
triggers a requirement for the facility to complete and submit an 
online consequence assessment known as a Top-Screen. The data gathered 
through the Top-Screen tool informs the Department's determination of 
the facility's level of risk and the potential need for the facility to 
comply with the substantive requirements of the CFATS.
    The Department published the Appendix A final rule after a notice 
and comment period. The final Appendix A lists 322 chemicals of 
interest, including common industrial chemicals such as chlorine, 
propane, and anhydrous ammonia, as well as specialty chemicals, such as 
arsine and phosphorus trichloride. The Department included chemicals 
based on the consequence associated with one or more of the following 
three security issues:
    (1) Release.--Toxic, flammable, or explosive chemicals that have 
        the potential to create significant adverse consequences for 
        human life if intentionally released or detonated;
    (2) Theft/Diversion.--Chemicals that have the potential, if stolen 
        or diverted, to be used or converted into weapons; and
    (3) Sabotage/Contamination.--Chemicals that, if mixed with other 
        readily available materials, have the potential to create 
        significant adverse consequences for human life.
    The Department established a Screening Threshold Quantity for each 
chemical based on its potential to create significant adverse 
consequences for human life, given the above three listed security 
issues.
                   chemical security assessment tool
    Implementation and execution of the CFATS regulation requires the 
Department to identify which facilities it considers high-risk. The 
Department developed the Chemical Security Assessment Tool (CSAT) to 
identify potentially high-risk facilities and to provide methodologies 
facilities can use to conduct security vulnerability assessments (SVAs) 
and to develop site security plans (SSPs). CSAT is a suite of four 
tools: facility registration, an SVA tool, an SSP template, and the 
initial consequence-based screening tool called the Top-Screen. The 
Top-Screen builds on the voluntary assessment tool referred to as the 
Risk Analysis and Management for Critical Asset Protection (RAMCAP), 
which the Department developed with technical input from industry. 
Through the Top-Screen process, the Department can identify which 
facilities do or do not have a significant potential to be the source 
of negative consequences (that is, those that are or are not high-risk) 
and can then ``screen out'' those facilities across the country that 
are not high-risk.
    The Department requires facilities that possess a chemical of 
interest at or above the listed Screening Threshold Quantity to 
complete the Top-Screen within 60 calendar days of the publication of 
Appendix A (or within 60 calendar days of coming into possession of a 
chemical of interest at or above the applicable Screening Threshold 
Quantity after publication of Appendix A). As Appendix A was published 
on November 20, 2007, the due date for initial Top-Screen submissions 
was January 22, 2008. By that date, the Department had received 23,264 
Top-Screen submissions from chemical facilities.
    If a facility is not screened out during the Top-Screen process, 
the Department will assign the facility to a preliminary risk-based 
tier. Those facilities must then complete the Security Vulnerability 
Assessments and submit them to the Department. Results from this SVA 
will inform the Department's determination of a facility's final tier 
assignment. This represents the very next phase of the CFATS process.
    All high-risk facilities fall into one of four risk-based tiers. 
These high-risk facilities will be required to develop Site Security 
Plans that address their identified vulnerabilities and address the 
performance standards and the security issues presented by the 
facility. The higher the risk-based tier, the more robust the security 
measures and the more frequent and rigorous the inspections will be. 
For example, Tier 1 facilities will have more rigorous requirements 
than Tier 4 facilities. Inspections will both validate the adequacy of 
a facility's Site Security Plan and verify the implementation of the 
plan's measures.
                    risk-based performance standards
    CFATS promulgated 19 risk-based performance standards for 
compliance. The standards themselves are broad and designed to promote 
a great deal of flexibility in how a facility approaches meeting 
standards applicable to it. Although all high-risk facilities must 
comply with the risk-based performance standards, the measures 
necessary to meet these standards will vary for the different tiers. 
For example, a Tier 1 facility with a release hazard security issue 
would be required to satisfy the performance standards for perimeter 
control, personnel access, cyber security, intrusion detection, and all 
other standards applicable to that security issue at a level 
appropriate for Tier 1 facilities.
    How the facility chooses to meet the required performance standard 
in its Site Security Plan is at the facility's discretion. In the 
example of the Tier 1 facility with a release hazard security issue, 
the ``restrict area perimeter'' performance standard at the Tier 1 
level may involve, for example, the facility establishing a clearly 
defined perimeter that cannot be breached by a wheeled vehicle. To meet 
the performance standard, the facility is able to consider a vast 
number of security measures and might ultimately choose to install 
cable anchored in concrete block along with movable bollards at all 
active gates. As long as the specific measures are sufficient to 
address the performance standard, the Department would approve the 
plan. Or, the facility might choose to ``landscape'' its perimeter with 
large boulders, steep berms, streams, or other obstacles that would 
thwart a wheeled vehicle. Again, as long as the proposed measures are 
sufficient, the Department would approve this plan.
                phased approach to cfats implementation
    The Department is using a phased approach for implementation of the 
CFATS regulation. In advance of the release of Appendix A, the 
Department began Phase 1 of CFATS implementation at certain facilities 
that the Department believed, based on available information, are 
likely to be high-risk. Following initial outreach at the corporate 
level, the Department sent letters to approximately 90 facilities, 
informing them of their selection for participation in Phase 1, and 
advising those facilities of the requirement to submit a Top-Screen. 
The facilities were to complete the Top-Screen in advance of the 
release of Appendix A and receive technical assistance from Department 
inspectors. The Department, after receiving the majority of Phase 1 
Top-Screens, reviewed these submissions for risk determinations. Those 
Phase 1 facilities determined to be high-risk will receive written 
notification from the Department informing them of the Department's 
determination and instructing these facilities on their requirements to 
complete a Security Vulnerability Assessment (SVA) for departmental 
review. The Department will provide technical assistance to those Phase 
1 high-risk facilities as they conduct the SVA process.
    In addition to the above, publication of the final Appendix A 
initiated Phase 2, the full implementation of the CFATS program. Phase 
2 covers all facilities that possess chemicals of interest at or above 
the listed Screening Threshold Quantities listed in Appendix A. For 
Phase 2, most facilities have completed the Top-Screen, although a 
number of facilities received filing extensions. Those facilities 
subsequently determined to be high-risk will receive preliminary 
tiering decisions and will be instructed to complete SVAs. Upon receipt 
of a facility's SVA, the Department will review it for purposes of 
final tiering determinations, and covered facilities will be required 
to develop SSPs. The Department will review those SSPs and conduct on-
site facility inspections to ensure compliance with the submitted plan.
                    outreach and partnership efforts
    Since the release of CFATS in April, the Department has made a 
concerted effort to publicize the rule and make sure that our security 
partners are aware of CFATS and its requirements. As part of a 
dedicated outreach program, the Department has presented at numerous 
security and chemical industry conferences, participated in a variety 
of other meetings of relevant security partners, issued several press 
releases regarding the regulations, published and distributed full 
copies of the regulations as well as various facts sheets summarizing 
critical aspects of the regulations, and developed and continually 
update a DHS.gov Chemical Security Web site. We believe these efforts 
are definitely having an impact. As of February 10, 2008:
   24,891 facilities have submitted a completed Top-Screen;
   Approximately 7,800 facilities have requested and received a 
        Top-Screen filing extension; and
   Agricultural operations possessing COI for agricultural use 
        have received a Top-Screen filing extension.
    Partially stemming from the implementation issues surrounding the 
ammonium nitrate security-related provisions within the fiscal year 
2008 Omnibus Appropriations Act, the Department granted an extension to 
a category of agricultural operations possessing COI for agricultural 
use. This extension will allow the Department to engage agri-business 
distributors and end users in dialog to narrow the CFATS program's 
focus on the truly high-risk operations. DHS is currently gathering 
more information about these issues to determine whether any 
modification of the Top-Screen requirements might be warranted. As a 
result of this research and dialog, DHS will review its approach toward 
COIs used in agricultural operations.
    Additionally, the Department intends to focus efforts on fostering 
solid working relationships with State and local officials and first 
responders in jurisdictions with high-risk facilities. To meet the 
risk-based performance elements under CFATS, facilities are likely to 
develop active, effective working relationships with local officials in 
the areas of delaying and responding to potential attacks and a clear 
understanding of roles and responsibilities during an elevated threat 
situation.
    In terms of staffing the chemical security program, the National 
Protection and Programs Directorate has launched an aggressive hiring 
effort in order to meet a wide variety of program requirements by the 
end of fiscal year 2008. In addition, the chemical security regulatory 
program has embarked on a course to fulfill in fiscal year 2008 the 
following deliverables:
   Review submitted SVAs for final tiering determinations, 
        yielding the population of facilities subject to the 
        substantive security requirements of the CFATS regulatory 
        program;
   Develop the CSAT SSP template for use by regulated 
        facilities, as well as review of Phase 1 facility SSPs and 
        conduct inspections for those facilities;
   Review SSPs, along with a select number of inspections for 
        Tier 1 facilities;
   Enhance the CSAT suite of applications, by developing 
        requirements for CSAT version 2.0, which will: (1) Provide 
        chemical facilities with the ability to conduct ``what if'' 
        analyses within the SVA based on risk assessments; (2) host a 
        portal for a personnel surety capability; (3) maintain Top-
        Screen and SVA analytical capabilities; and (4) host a case 
        management system for tracking CSAT usage; and
   Engage State and local officials and chemical facilities to 
        plan, train, and exercise activities related to delay and 
        response performance standards.
    In addition, as the committee is aware, the Department has recently 
submitted a fiscal year 2009 budget request that further details the 
chemical security regulatory program's requirements for future years, 
including additional inspector personnel to upgrade outreach, plan 
approval, inspection, and audit capabilities; further outfit the 
program's adjudications and appeals component; and further enhance CSAT 
by developing an economic modeling tool for the chemical sector, as 
well as accomplish other important program objectives.
                      ammonium nitrate regulations
    In addition to the previously legislated chemical security 
regulatory authority discussed above, in the fiscal year 2008 Omnibus 
Appropriations Act, Congress amended the Homeland Security Act of 2002 
(6 U.S.C. 361 et seq.) by adding a Subtitle J, Secure Handling of 
Ammonium Nitrate (AN). Subtitle J authorizes the Department to regulate 
the sale and transfer of AN and requires that DHS develop a regulatory 
program that oversees or requires: (1) The registration of AN 
Facilities and AN Purchasers with DHS; (2) Point-of-Sale verification 
of AN purchasers; (3) record-keeping requirements for AN sales 
transactions, with penalties for failing to maintain records 
appropriately; (4) theft or loss reporting requirements; (5) compliance 
inspections conducted by DHS; (6) guidance materials and informational 
posters for the benefit of both AN facilities and AN purchasers; (7) an 
appeals process. Subtitle J also provides DHS with the authority to 
levy civil penalties of up to $50,000 per violation of the subsequent 
regulation.
    One of the key principles of any subsequent DHS regulatory program 
resulting from Subtitle J will be to ensure that the AN-specific 
regulations are complementary to the CFATS regulations, especially as 
CFATS applies to AN facilities (that is, facilities that meet CFATS 
criteria for submitting Top Screens and high-risk facilities that must 
submit SVAs and SSPs). The goal is to ensure the secure handling of AN 
without unduly burdening buyers and sellers of AN.
    Prior to initiating the rulemaking process, Congress directed the 
National Protection Programs Directorate (NPPD) to develop a report 
that would discuss how the Department would implement and fund a 
program incorporating the above requirements within the current budget. 
DHS is currently in the process of developing that implementation 
report, which will estimate the magnitude of the costs that AN facility 
owners and operators, AN purchasers, and DHS may incur in the 
implementation of and compliance with the Act. The report is presently 
undergoing intra-Departmental review and will be presented to Congress 
in the near future.
    In addition to this new authority, the Department is currently 
engaged in a variety of efforts, both regulatory (e.g., CFATS and the 
U.S. Coast Guard's Maritime Transportation Security Act program) and 
voluntary (e.g., National Infrastructure Protection Plan's Chemical 
Sector efforts, Transportation Security Administration's security 
action items), aimed at securing the chemical supply chain, including 
ammonium nitrate.
    As discussed above, the Department is currently analyzing the 
various regulatory approaches that could be used to accomplish the 
activities required by Subtitle J. Our intent is to harmonize the new 
security authorities for ammonium nitrate with existing chemical 
security supply chain authorities, including CFATS, MTSA, and the rail 
transportation security regulations. To that end, DHS is working to 
ensure that there are no duplicative or overlapping regulatory 
requirements, and is seeking to avoid unnecessarily burdening both the 
private sector and the Federal Government.
                            new legislation
    Any new legislation on chemical security should be carefully 
crafted to continue the forward momentum and success of the CFATS 
program. Prior and existing efforts by the Department, and most 
important, the compliance activities already implemented or underway by 
the regulated population, should be carried forward with the enactment 
of any new legislative authority. The Department and industry have 
invested a significant amount of resources and time into information 
collection and consequence assessment activities, and those efforts 
should be validated by incorporation or continuation to maximum extent 
in any new legislation.
                               conclusion
    The Department is collaborating extensively with the public, 
including members of the chemical sector and environmental groups, to 
actively work toward achieving our collective goals under the CFATS 
regulatory framework. In almost every case, industry has voluntarily 
done a tremendous amount to ensure the security and resiliency of its 
facilities and systems. As we implement the chemical facility security 
regulations, we will continue to work as partners with industry, States 
and localities to get the job done.
    We must focus our efforts on implementing a risk- and performance-
based approach to regulation and, in parallel fashion, continue to 
pursue the voluntary programs that have already borne considerable 
fruit. In doing so, we look forward to collaborating with the committee 
to ensure that the chemical security regulatory effort is sufficiently 
defined in order to achieve success in reducing risk throughout the 
chemical sector. In addition to our Federal Government partners, 
success is dependent upon continued cooperation with our industry and 
State and local government partners as we move toward a more secure 
future.
    Thank you for holding this important hearing. I would be happy to 
respond to any questions you might have.

    Chairman Thompson. Thank you very much for your testimony.
    I now recognize Mr.--I hope I am pronouncing it right--
Wattier to summarize his statement for 5 minutes.

  STATEMENT OF KEVIN L. WATTIER, GENERAL MANAGER, LONG BEACH 
                        WATER DEPARTMENT

    Mr. Wattier. Chairman Thompson, Ranking Member King, 
distinguished Members of the committee, my name is Kevin 
Wattier; and I am the General Manager of the Long Beach Water 
Department, an urban retail water supply agency of the city of 
Long Beach, California. I am a licensed professional engineer 
and a certified Grade 5 Water Treatment Operator in the State 
of California. I have been General Manager of the Long Beach 
Water Department since July 2001; and over a decade of my 
career was spent with the Metropolitan Water District of 
Southern California, the largest supplier of drinking water in 
the country, where for part of that time I had the 
responsibility for managing the organization's water treatment 
and distribution facilities throughout southern California.
    I would like to thank the committee for its consideration 
of chemical security oversight at our Nation's water treatment 
facilities and for inviting me to be here this morning to share 
my experience and opinion on this important policy matter.
    My testimony before you this morning will focus 
specifically on Department of Homeland Security regulation of 
chemical security practices at water treatment plants and the 
handling and storage of gaseous chlorine at the Long Beach 
groundwater treatment plant. This testimony represents my 
professional opinion as a licensed professional engineer and 
water treatment operator, and it is based on the responsibility 
I have as a water official of the city of Long Beach.
    All water treatment plants throughout the country use some 
form of chorine for at least part of their disinfection 
process. The disinfection of drinking water with chlorine is 
widely regarded as one of the greatest public health 
achievements of the 20th century. While the use of gaseous 
chlorine is often the most cost-effective and efficient method 
of water disinfection, the risks associated with the handling, 
transport and storage of large amounts of gaseous chlorine must 
be considered within the broader context of current security 
interests.
    I have closely reviewed the draft Chemical Facility Anti-
Terrorism Act of 2008 before you today and strongly support the 
proposed Department of Homeland Security risk and performance 
based regulation of chemical security practices at U.S. water 
treatment facilities. While it is imperative that this new 
regulation in no way interferes with the existing Safe Drinking 
Water Act compliance at our Nation's drinking water plants, the 
additional expertise which the Department of Homeland Security 
can provide to this critical element of our Nation's 
infrastructure is greatly needed. Close coordination between 
the Department of Homeland Security, the U.S. Environmental 
Protection Agency and the associated State and local agencies 
will ensure that our drinking water treatment plants will 
continue to provide clean, reliable, affordable drinking water 
while safeguarding the neighborhoods surrounded these plants.
    I also believe that alternatives to the handling storage, 
transport and storage of gaseous chlorine at these facilities 
should be encouraged, considered and implemented where 
feasible, without impairing critical operations. Federal 
funding to encourage the consideration and implementation of 
alternative disinfection treatment methods on a voluntary basis 
will provide the necessary stimulus to enable certain agencies 
to move forward toward implementation of inherently safer 
technologies.
    The city of Long Beach gets its water from two primary 
sources. Half of our supply is treated imported water we 
purchase from the Metropolitan Water District of Southern 
California, and half is local groundwater treated at our 
groundwater treatment facility, which is one of the largest 
groundwater treatment plants in the country, if not the 
largest. This facility employs conventional filtration 
processes, which are typical of processes used in treatment of 
surface water. Our treatment operations currently use gaseous 
chlorine as the primary disinfectant.
    Our groundwater treatment plant is located in a densely 
populated urban area in California's fifth largest city. The 
Los Angeles/Long Beach area is the most populated metropolitan 
area in the country. Our facility is immediately adjacent to 
the city of Long Beach Emergency Operations Command Center; the 
Long Beach Airport, where it sits under the flight path of 
incoming commercial aircraft and across the street from the 
control tower; the north and southbound lanes one of the 405 
freeway, one of the busiest freeways in the United States; the 
Long Beach Unified School District food distribution center; a 
professional business center; the Greater Long Beach Regional 
Red Cross headquarters, two medical buildings; and many other 
business and residential units.
    Like all other large water utilities throughout the 
country, we conducted a vulnerability assessment of our 
critical facilities following the terrorist attacks of 
September 11, 2001. While we have implemented significant 
security improvements to control site access, detect, deter and 
delay potential terrorist incidents and numerous other security 
enhancements, the consequences of an intentional attack by a 
highly motivated terrorist on our chlorine supplies merit 
further consideration.
    It is clear to us in Long Beach that the most effective way 
to protect against such an intentional attack is to eliminate 
the target. We are in the process of doing just that.
    To eliminate this vulnerability, the Long Beach Water 
Department has integrated and since March 2004 has been 
conducting operations of a demonstration-scale 700-pound per 
day on-site chlorine generation system. On-site gaseous 
chlorine generation is a relatively new process, and I believe 
Long Beach may be among the first in the United States to begin 
integrating such a system into our water treatment operations. 
We are pleased with the results of our demonstration-scale 
project and have now begun to increase the capacity of the 
system to 2,000 pounds per day, which is Phase 1 of an eventual 
6,000-pound-per-day on-site generation system. The total 
capital cost of completely eliminating the handling and storage 
of gaseous chlorine and bringing on-site chlorine generation 
on-line at the Long Beach groundwater treatment plant is 
estimated to cost between $2 million and $3 million.
    While Long Beach is pursuing this particular alternative 
chlorination method, it is important for this committee to 
understand that there are numerous commercially available 
alternative disinfection technologies that exist that have been 
successfully implemented at various water and wastewater 
treatment operations across the United States. However, 
numerous local considerations and other critical site-specific 
factors must be considered on a strict case-by-case basis to 
determine feasibility of integrating any of these alternative 
technologies. In a few cases, it may be infeasible to integrate 
any of these alternative technologies into treatment 
operations. Any consideration of alternative technologies must 
include assurances that maintain reliability of water systems 
as well as the flexibility needed to enable water treatment 
operators to adhere to strict Federal and State water quality 
standards.
    I would propose that the committee amend its current draft 
to include an authorization of appropriations for voluntary 
integration of technologies that reduce or eliminate the risk 
posed by transport and storage of containerized gaseous 
chlorine. Federal participation in voluntary demonstration-
scale projects of this type would have a profound impact on the 
United States water treatment industry.
    I want to thank the committee again for allowing me to give 
you my thoughts on these matters. My organization and I make 
ourselves available for any further discussion on these and any 
other matters related to the Chemical Facility Anti-Terrorism 
Act of 2008 upon your request.
    I would be happy to answer any of your questions. Thank 
you.
    Chairman Thompson. Thank you very much. For the record, we 
have already incorporated that suggestion in the print.
    Mr. Wattier. Thank you sir.
    [The statement of Mr. Wattier follows:]
                 Prepared Statement of Kevin L. Wattier
                           February 26, 2008
    Chairman Thompson, Ranking Member King, distinguished Members of 
the committee, my name is Kevin Wattier, and I am the General Manager 
of the Long Beach Water Department, an urban, retail water supply 
agency of the city of Long Beach, California. I am a licensed 
Professional Engineer and certified Grade 5 Water Treatment Operator in 
the State of California. I've been General Manager of the Long Beach 
Water Department since July 2001. Over a decade of my career was spent 
with the Metropolitan Water District of Southern California, the 
largest supplier of drinking water in the country, where for part of 
that time I had responsibility for managing the organization's water 
treatment and distribution facilities throughout southern California.
    I would like to thank the committee for its consideration of 
chemical security oversight at our Nation's water treatment facilities, 
and for inviting me to be here this morning to share my experience and 
opinion on this important policy matter. My testimony before you this 
morning will focus specifically on Department of Homeland Security 
regulation of chemical security practices at water treatment facilities 
and the handling and storage of gaseous chlorine at the Long Beach 
Groundwater Treatment Plant. This testimony represents my professional 
opinion as a licensed professional engineer and water treatment 
operator; and it is based on the responsibility I have as a water 
official for the city of Long Beach.
    All water treatment plants throughout the country use some form of 
chlorine for at least part of their disinfection process. The 
disinfection of drinking water with chlorine is widely regarded as one 
of the greatest public health achievements of the 20th century. While 
the use of gaseous chlorine is often the most cost-effective and 
efficient method of water disinfection, the risks associated with the 
handling, transport and storage of large amounts of gaseous chlorine 
must be considered within the broader context of current national 
security interests.
    I have closely reviewed the draft ``Chemical Facility Anti-
Terrorism Act of 2008'' before you today, and strongly support the 
proposed Department of Homeland Security risk- and performance-based 
regulation of chemical security practices at U.S. water treatment 
facilities. While it is imperative that this new regulation in no way 
interferes with the existing Safe Drinking Water Act compliance at our 
Nation's drinking water treatment plants, the additional expertise 
which the Department of Homeland Security can provide to this critical 
element of our Nation's infrastructure is greatly needed. Close 
coordination between the Department of Homeland Security, the USEPA, 
and the associated State and local agencies will ensure that our 
drinking water treatment plants will continue to provide clean, 
reliable, affordable drinking water while safeguarding the 
neighborhoods surrounding these plants.
    I also believe that alternatives to the handling, transport and 
storage of gaseous chlorine at these facilities should be encouraged, 
considered, and implemented where feasible, without impairing critical 
operations. Federal funding to encourage the consideration and 
implementation of alternative disinfection treatment methods, on a 
voluntary basis, would provide the necessary stimulus to enable certain 
agencies to move toward implementation of inherently safer 
alternatives.
    The city of Long Beach gets its water from two primary sources. 
Half of our supply is treated imported water we purchase from the 
Metropolitan Water District of Southern California, and half is local 
groundwater treated at our groundwater treatment facility, which is one 
of the largest groundwater treatment facilities in the United States, 
if not the largest. This facility employs conventional filtration 
processes, which are typical of processes used in the treatment of 
surface water. Our treatment operations currently utilize gaseous 
chlorine as the primary disinfect.
    Our Groundwater Treatment Plant is located in a densely populated, 
urban area in California's fifth largest city. The Los Angeles/Long 
Beach area is the most populated metropolitan area in the country. Our 
facility is immediately adjacent to the city of Long Beach Emergency 
Operations Command Center, the Long Beach Airport (where it sits under 
the flight path of incoming commercial aircraft and across the street 
from the control tower), the north and southbound lanes of the 405 
Freeway, one of the busiest freeways in the United States, the Long 
Beach Unified School District food distribution center, a professional 
business center, the Greater Long Beach Regional Red Cross 
Headquarters, two medical buildings and many other business and 
residential units.
    Like all other large water utilities throughout the country, we 
conducted a vulnerability assessment of our critical facilities 
following the terrorist attacks of September 11, 2001. While we have 
implemented significant security improvements to control site access, 
detect, deter and delay potential terrorist incidents, and numerous 
other security enhancements, the consequences of an intentional attack 
by a highly motivated terrorist on our chlorine supplies merit further 
consideration.
    It is clear to us in Long Beach that the most effective way to 
protect against such an intentional attack is to eliminate the target. 
We are in the process of doing just that.
    To eliminate this vulnerability, the Long Beach Water Department 
has integrated, and since March 2004, has been conducting operations of 
a demonstration-scale 700 lb/day on-site chlorine generation system. 
On-site gaseous chlorine generation is a relatively new process and I 
believe Long Beach may be among the first in the United States to begin 
integrating such a system into its water treatment operations. We are 
pleased with the results of our demonstration-scale project and have 
now begun work to increase the capacity of the system to 2,000 lbs/day, 
which is Phase 1 of an eventual 6,000 lb/day on-site generation system. 
The total capital cost of completely eliminating the handling and 
storage of gaseous chlorine, and bringing on-site chlorine generation 
on-line at the Long Beach Groundwater Treatment Plant is estimated to 
cost between $2 million and $3 million.
    While Long Beach is pursuing this particular alternative 
chlorination method, it is important for this committee to understand 
that there are numerous commercially available alternative disinfection 
technologies that exist that have been successfully implemented at 
various water and wastewater treatment operations across the United 
States. However, numerous local considerations and other critical site 
specific factors must be considered, on a strict case-by-case basis, to 
determine feasibility of integrating any of these alternative 
technologies. In a few cases it may be infeasible to integrate any of 
these alternative technologies into treatment operations. Any 
consideration of alternative technologies must include assurances that 
maintain reliability of water systems, as well as the flexibility 
needed to enable water treatment operators to adhere to strict Federal 
and State water quality standards.
    I would propose the committee amend its current draft to include an 
authorization of appropriations for voluntary integration of 
technologies that reduce or eliminate the risk posed by transport and 
storage of containerized gaseous chlorine. Federal participation in 
voluntary demonstration-scale projects of this type would have a 
profound impact on the United States water treatment industry.
    I want to thank the committee again for allowing me to give you my 
thoughts on these matters. My organization and I make ourselves 
available for any further discussion on these and any other matter 
related to the ``Chemical Facility Anti-Terrorism Act of 2008'' upon 
your request.
    I would be happy to answer any of your questions.

    Chairman Thompson. Dr. Pulham.

 STATEMENT OF DAVID C. PULHAM, PH.D., DIRECTOR OF COMPLIANCE, 
                     SIEGFRIED (USA), INC.

    Mr. Pulham. Good morning, Chairman Thompson, Ranking Member 
King and distinguished Members of the committee. My name is Dr. 
David Pulham, Director of Compliance at Siegfried (USA) in 
Pennsville, New Jersey. Prior to joining Siegfried, I spent 27 
years with the Food and Drug Administration as a National 
Expert Investigator. My responsibilities with FDA included 
inspecting pharmaceutical facilities around the world and 
assessing foreign regulatory agencies. As Director of 
Compliance at Siegfried, I am responsible for ensuring FDA, 
DEA, EPA, OSHA and DHS compliance.
    Thank you for this opportunity to share with you my 
company's perspective on the Chemical Facility Anti-Terrorism 
Act of 2008, specifically with regard to inherently safer 
technology. My remarks will address generally the issue of 
inherently safer technology, reference our experience with the 
State of New Jersey security provisions and conclude with our 
recommendation on the bill going forward.
    Siegfried's Pennsville, New Jersey, facility has been in 
existence for over 70 years and manufactures both exclusive and 
generic bulk pharmaceuticals with over 150 employees. Most of 
Siegfried's products are controlled substances and are 
therefore highly regulated by the Drug Enforcement 
Administration. Due to Siegfried's commitment to compliance in 
all areas, Siegfried takes great pride in the sterling 
compliance record it has developed with virtually all Federal 
and State agencies.
    Siegfried is a member of the Synthetic Organic Chemical 
Manufacturers Association, SOCMA, which is the leading chemical 
industry organization representing the batch, custom and 
specialty chemical industry since 1921. As a member of SOCMA, 
Siegfried adheres to the principles of the ChemStewards 
program, which is an environmental, health, safety and security 
management system. This self-imposed program requires companies 
to develop systematic approaches to environmental and chemical 
risk management with independent, third-party verification. 
ChemStewards incorporates SOCMA security vulnerability 
assessment methodology, which is recognized by the Center for 
Chemical Process Safety and is accepted by the Department of 
Homeland Security for Tier 4 facilities under the Department's 
Chemical Facility Anti-Terrorism Standards. SOCMA makes this 
methodology publicly available in its effort to serve as a 
leading industry resource for assessing security 
vulnerabilities at chemical facilities.
    New Jersey recently amended its Toxic Catastrophe 
Prevention Act to require existing facilities to complete an 
inherently safer technology review. Siegfried's assessment of 
this process is that it was essentially a paperwork exercise to 
document in great detail steps and considerations that we take 
as a normal part of our process. Simply put, inherently safer 
technology is a concept that the chemical industry invented; 
and we consider it continuously as we design, modify and 
enhance our production processes.
    Securing our products is an ongoing responsibility. So is 
complying with the comprehensive system of existing State and 
Federal laws. These regulatory regimes require extensive 
process hazard analysis, risk management planning and public 
reporting on chemicals we handle on-site and, in some cases, 
prior to handling them on-site. We feel that these regulations, 
complemented by our own process-safety decisionmaking, provide 
a concrete and meaningful level of consequence reduction at all 
stages of the product lifecycle.
    Speaking specifically of existing Federal rules, Siegfried 
supports DHS's existing Chemical Facility Anti-Terrorism 
Standards, which do not include any IST mandates. These rules 
require comprehensive vulnerability assessments and security 
plans, and those plans have to meet almost 20 rigorous security 
performance standards. We encourage the committee to support 
the current approach.
    Mr. Chairman, I have heard people say that since the 
industry already considers inherently safer technology in its 
decisionmaking process and since we are already bound by 
regulated regulatory regimes it should be easy for us to comply 
with a new layer of IST regulation. In fact, it is never a 
simple task to integrate a new set of rules imposed by a new 
regulatory entity with the numerous engineering and compliance 
programs we already have to manage. An IST mandate would 
complicate and in some cases could undermine existing practices 
or compliance. Mandating IST for companies like Siegfried that 
manufacture hundreds of batches of specialty batched products 
every year is a much greater exercise than what may appear on 
the surface. Having to debate which approach is inherently 
safer in any given case would slow down our ability to meet 
customer needs, and it could be dangerous if we are compelled 
to accept and go along with an approach that we personally 
think may not be the lowest-risk approach. With all due 
respect, this issue is vastly more complicated than most people 
appreciate.
    Thank you for the opportunity to share with you Siegfried's 
perspective on inherently safer technology and existing Federal 
security rules. I look forward to your questions.
    [The statement of Mr. Pulham follows:]
                 Prepared Statement of David C. Pulham
                           February 26, 2008
    Good morning Chairman Thompson, Ranking Member King, and 
distinguished Members of the committee. My name is Dr. David C. Pulham, 
Director of Compliance at Siegfried (USA), Inc. in Pennsville, New 
Jersey. I spent 27 years with the Food and Drug Administration as a 
National Expert Investigator. Part of this responsibility required 
inspecting pharmaceutical facilities around the world and qualifying 
foreign regulatory agencies. As Director of Compliance at Siegfried, my 
responsibilities include FDA, DEA, EPA, OSHA, and DHS compliance.
    Thank you for this opportunity to share with you my company's 
perspective on the Chemical Facility Anti-Terrorism Act of 2008, 
specifically with regard to inherently safer technology. My remarks 
will speak generally to the issue of inherently safer technology, 
reference our experience with the State of New Jersey's security 
provisions, and conclude with our recommendation on the bill going 
forward.
    Siegfried (USA)'s Pennsville, New Jersey, facility manufactures 
bulk pharmaceuticals and employs 150 personnel. Most of Siegfried's 
products are controlled substances. Therefore, we are highly regulated 
by the Drug Enforcement Administration. Siegfried takes pride in its 
compliance record with all Federal and State government agencies.
    Siegfried (USA) is a member of the Synthetic Organic Chemical 
Manufacturers Association (SOCMA), which is the leading chemical 
industry association representing the batch, custom, and specialty 
chemical industry since 1921. As a member of SOCMA, Siegfried adheres 
to the principles of the ChemStewards program, an environmental, 
health, safety, and security management system. This self-imposed 
program requires companies to develop systematic approaches to 
environmental and chemical risk management with independent, third-
party verification. ChemStewards incorporates SOCMA's security 
vulnerability assessment methodology, which is recognized by the Center 
for Chemical Process Safety and is accepted by the Department of 
Homeland Security for Tier Four facilities under the Department's 
Chemical Facility Anti-Terrorism Standards. SOCMA makes this 
methodology publicly available in its effort to serve as a leading 
industry resource for assessing security vulnerabilities at chemical 
facilities.
    New Jersey recently amended its Toxic Catastrophe Prevention Act 
(TCPA) rules to require existing facilities to complete an ``Inherently 
Safer Technology Review.'' Siegfried's assessment of this process is 
that it is essentially a paperwork exercise to document, in great 
detail, steps and considerations that we take as a normal part of our 
process. Simply put, inherent safety is a concept that the chemical 
industry invented, and we consider it continuously as we design and 
modify our production processes.
    Securing our products is an ongoing responsibility. So is complying 
with the comprehensive system of existing State and Federal laws. These 
regulatory regimes require extensive process hazard analysis, risk 
management planning, and public reporting on chemicals we handle on-
site and, in some cases, prior to handling them on-site. We feel that 
these regulations, complemented by our own process-safety 
decisionmaking, provide a concrete and meaningful level of consequence 
reduction at all stages in the product lifecycle.
    Speaking specifically of existing Federal rules, Siegfried supports 
DHS's existing Chemical Facility Anti-Terrorism Standards, which do not 
include any IST mandates. These rules require comprehensive 
vulnerability assessments and security plans, and those plans have to 
meet almost 20 rigorous security performance standards. We encourage 
this committee to support the current approach.
    Mr. Chairman, I've heard people say that, since the industry 
already considers inherent safety in its decisionmaking process, and 
since we're already bound by related regulatory regimes, it should be 
easy for us to simply comply with a new layer of IST regulation. In 
fact, it is never a simple task to integrate a new set of rules, 
imposed by a new regulatory entity, with the engineering and compliance 
programs we already have to manage. An IST mandate would complicate, 
and in some cases could undermine, existing practices or compliance. 
Mandating IST for companies like Siegfried that manufacture hundreds of 
specialty batch products every year is a much greater exercise than 
what may appear on the surface. Having to debate which approach is 
inherently safer in a given case would slow down our ability to meet 
customer needs. And it could be dangerous, if we are compelled to 
accept, or go along with, an approach that we personally think may not 
be the lowest-risk approach. With all due respect, this issue is vastly 
more complicated than most people appreciate.
    Thank you for the opportunity to share with you Siegfried (USA)'s 
perspective on inherently safer technology and existing Federal 
security rules. I look forward to your questions.

    Chairman Thompson. I thank all the witnesses for their 
testimony.
    I remind each Member that he or she will have 5 minutes to 
question the panel.
    Before I start my questions, I would like to ask unanimous 
consent to submit four statements for the record. One is a 
statement from the National Propane Gas Association, one a 
statement from the Chemical Bill Coalition, one a statement 
from Greenpeace and finally a statement from the Industrial 
Safety Training Council. Without objection, the statements are 
inserted into the record.
    [The statements follow:]
           Statement of the National Propane Gas Association
                           February 26, 2008
    The National Propane Gas Association (NPGA) appreciates the 
opportunity to submit the following statement on the proposed Chemical 
Facility Anti-Terrorism Act of 2008.
    NPGA is the national trade association of the LP-Gas (principally 
propane) industry with a membership of about 3,600 companies, including 
39 affiliated State and regional associations representing members in 
all 50 States. The single largest group of NPGA members are retail 
propane marketers whose total membership is approximately 3,000 
companies, the vast majority of which are small businesses. These 
companies operate approximately 10,000 retail facilities that serve 
propane customers in every State and county in the United States. 
Customers use propane in residential and commercial installations, in 
agricultural applications, in industrial processing, and as a clean air 
alternative engine fuel for both over-the-road vehicles and nonroad 
engines such as those used in forklifts.
    The proposal has been released in draft in several different forms, 
the latest being dated February 19, 2008. In general, the bill would 
extend and revise the authority of the Department of Homeland Security 
(DHS) to administer the Chemical Facility Anti-Terrorism Standards 
(CFATS), which have been in their final form for less than 100 days. In 
fact, the initial round of determinations of facility risk performed 
through the Top Screen process have not been issued by DHS to our 
knowledge. Nevertheless, the bill proposes to make major changes to the 
legal environment in which the CFATS are written and administered. NPGA 
urges Congress to exercise extreme caution not to enact provisions that 
increase confusion in the private sector with no increase in security.
 the propane industry is highly regulated for both safety and security
    The propane industry is one of the most highly regulated industries 
in the United States. The industry's commitment to the safety and 
security of industry personnel and customers is paramount, and leads us 
to support appropriate provisions at the Federal, State, and local 
levels.
    Since 1931, NPGA's primary mission has been to increase the safety 
of propane use. Since September 11, 2001, NPGA's scope of activities 
has broadened to include security considerations. Our efforts began 
with intensive outreach to industry members to facilitate their 
interaction with Federal officials representing agencies such as the 
Department of Transportation's (DOT) FMCSA and RSPA (now known as 
PHMSA) and the Department of Defense. We distributed DOT's Security 
Awareness Training CD-ROM to the industry and invited key policymakers 
to address our association meetings. In addition, the propane industry 
sits on the Oil and Natural Gas Sector Coordinating Council providing 
direct interaction with other industries and Federal security 
personnel.
    The industry supports background checks of industry personnel, and 
performs detailed security plans required by the Department of 
Transportation. These security plans are broad in scope and address 
personnel security, the en route security of delivery trucks, and the 
security of the propane storage facilities themselves against 
unauthorized access. Perhaps the most important initiative, however, 
has been the modernization of the primary propane safety standard to 
include security measures. National Fire Protection Association (NFPA) 
Standard 58, LP-Gas Code, is updated triennially to make continual 
improvements in safety for the storage and handling of propane. This 
standard is adopted by reference or by transcription in all 50 States 
and has included security-specific language since the 2004 edition. 
Section 6.16.5 of NFPA 58 prescribes requirements for the security and 
protection against tampering for propane systems. It also requires the 
facility operator to provide security measures to minimize entry by 
unauthorized persons and, at a minimum, security awareness training. 
Other requirements cover industrial-type fencing, guard service, 
lighting and ignition source control.
 congress should not enact policies that conflict with current federal 
                tax policies encouraging propane storage
    Federal tax policy, both directly and indirectly, has been 
encouraging increased storage capacity for propane for many years. 
Since 1992, Federal tax law has directly encouraged increasing the use 
and storage of alternative fuels, including propane. From 1992 until 
2005, Section 179A of the U.S. Tax Code provided for a special 
deduction for certain clean fuel refueling property, including the 
storage of propane. In 2005, this deduction was succeeded by a new 
Federal tax credit (Section 30C), again designed to increase the 
storage capacity for alternative fuels, including propane.
    Additionally, in 2005, Federal tax law added a credit for 
alternative fuels (Section 6426) and alternative fuel vehicles (Section 
30B). Again, these credits included propane as a recognized alternative 
fuel. These credits for propane fuel and propane vehicles encourage the 
increasing of propane storage capacity in a logically indirect way. 
Indeed, all three credits (fuel, vehicles, and storage) work together 
to advance each particular piece of the equation necessary to sustain 
propane vehicle technology. The more propane vehicles you have, the 
more propane fuel you need. The more propane fuel you need the more 
propane storage capacity is necessary to store that fuel. The more 
storage and fuel available the more likely manufacturers will want to 
produce propane vehicles. This all adds up to increased use of a clean 
burning alternative fuel that helps address today's environmental 
concerns. Thus all these credits work to accentuate each other.
    Other aspects of Federal tax policy also encourage propane storage, 
also in an indirect manner. A high percentage of propane retailers are 
small- to mid-size businesses. As such they are highly sensitive to how 
tax law treats capital investments, such as storage. Thus dramatic 
increases in expensing (the amount that a business may deduct for 
capital investments immediately rather than depreciate over time) can 
often dictate whether a small business will proceed with a new capital 
investment. For years, the standard expensing figure has been in the 
range of $25,000. However, since 2002 that figure has been increased 
substantially to $125,000 and in the recently enacted Economic Stimulus 
Package that figure was increased to $250,000 for the year 2008 only.
    Moreover, businesses both big and small can benefit from ``Bonus 
Depreciation'' which has been enacted for various periods of time over 
the past 10 years, again most recently in the 2008 Economic Stimulus 
Package. The provision would allow business to write off 50 percent 
percent of the cost of depreciable property (capital expenditures) 
acquired in 2008.
    Both the expensing and depreciation provisions, in addition to the 
previously mentioned credits, serves as a clear indication to the 
propane industry that the Federal Government is strongly encouraging 
the overall increase of propane storage capacity.
    The Federal Government has consciously chosen to favor increased 
storage capacity for propane in general. While we have already 
mentioned the advantages as far as encouraging the use of alternative 
fuel vehicles, there is another important element related to propane 
use for heating and appliances. Propane used as heating fuel is largely 
centered in rural and agricultural areas throughout the country due 
primarily to its portable properties. In the winter when demand is at 
its peak, prices for propane, as with other fuels such as natural gas, 
can fluctuate greatly. Therefore, encouraging increased storage 
capacity for propane makes sense for the many consumers using propane, 
particularly in heating and agricultural applications. Congress should 
not enact policies that will simultaneously encourage and discourage 
propane storage.
               concerns with direction of reauthorization
    NPGA has a number of concerns with the direction being taken by the 
committee in drafting the DHS reauthorization legislation.
1. DHS Should Retain An Ability To Make Determinations Based Upon Risk 
        (Section 2102)
    NPGA is pleased that the most recent draft of the bill recognizes 
that DHS needs the authority and the flexibility to use judgment in 
deciding which facilities to regulate. Under the CFATS, DHS administers 
the Top Screen process so that it can make judgments about whether 
particular facilities need additional scrutiny and must therefore be 
placed in a risk-based tier. Eliminating this ability and forcing DHS 
to automatically place all facilities storing more than threshold 
quantities will swamp DHS in data, making it harder for them to target 
resources toward high-risk facilities.
2. Inherently Safer Technology (IST) Policy Creates an Explicit Need To 
        Consider Fuel Switching
    NPGA is very concerned that Congress is setting forth a mechanism 
by which facilities storing propane will be required to consider other 
technologies or energy sources in place of those currently listed by 
CFATS.
    Strictly from a customer perspective, the bill requires propane 
consumers to report on the possibility of substituting propane with 
another fuel, using a less hazardous fuel, using smaller quantities, or 
reducing propane storage. In doing so, the Government effectively tells 
propane customers to create their own ``roadmap'' for switching from 
propane to other fuels. With every new legislative or regulatory 
mandate, the incentive to switch from clean-burning propane to less 
environmentally friendly fuels such as diesel fuel or electricity 
ratchets up as customers seek to remain unregulated. Worse still, 
energy sources competing with propane remain largely unregulated from a 
homeland security perspective, when they are not inherently safer or 
more secure than propane.
    Propane is a common fuel used safely by millions of homes, farms, 
and businesses around the Nation. We are concerned that the 
``inherently safer technology'' assessment required in Section 2110(b) 
will make propane marketers and customers either reduce their propane 
storage or switch from propane to other fuels not covered by the CFATS. 
Specifically, the IST requirement would require propane marketers and 
customers to assess, among other things, the following as it applies to 
their locations: (1) Process redesign; (2) Input substitution; (3) Use 
of less hazardous or benign substances; (4) Use of smaller quantities 
of substances of concern; and (5) Reduction or elimination of storage, 
transportation, handling, disposal, and discharge of substances of 
concern.
    All of these factors, but particularly Item 5, are troubling to 
propane retailers and customers. By requiring propane marketers to 
address reducing or eliminating propane storage, the Government is, in 
effect, asking marketers to choose between proven industry safety 
concerns and a supposedly more secure way of doing business. 
Considering the favorable tax treatment extended by Congress to propane 
discussed above, it is inappropriate at best for Congress to establish 
a national policy encouraging the reduction of propane storage. NPGA 
believes this is no choice at all. The safest portion of the propane 
distribution chain is stationary storage, the very aspect that Congress 
is suggesting could be ``inherently safer'' if it were reduced.
    Enacting a policy that encourages reductions in propane storage 
will have other negative impacts in the field. First, it will reduce 
safety by requiring retailers to make more deliveries of smaller 
quantities throughout the heating season. Not only will more trucks 
need to be on the road to serve the existing demand, but it will 
increase the number of transfer operations. Less on-site fuel storage 
will also lead to supply bottlenecks, particularly in the busy winter 
heating season, because fuel supplies will run out faster. Any 
disruption to the fuel delivery infrastructure, such as winter snow and 
ice storms that slow down or stop truck deliveries, could severely 
impact essential deliveries of heating and cooking fuel to rural 
America as well as jeopardize vital agricultural operations. 
Ironically, when fuel shortages (due to bad weather, or man-made supply 
chain problems) leave people without power and crops without proper 
care, Congress will be the first to call into question the propane 
storage and delivery system.
    In the name of safety, fairness, fuel neutrality, and consistency 
with existing tax preferences, NPGA strongly urges the committee to 
eliminate fuels, such as propane, from inherently safer technology 
reporting requirements in the draft legislation.
3. Weakening Preemption Will Weaken National Consistency of Regulation
    NPGA also strongly opposes the limits the legislation seeks to 
impose on Federal preemption in Section 2107. Allowing 50 individual 
States and tens of thousands of localities to write more stringent laws 
or regulations than currently exist at the Federal level will lead to a 
hodge-podge of State chemical facility security laws, all with 
differing procedures, compliance requirements and enforcement mandates. 
The propane industry is already highly regulated at the State and local 
level. In fact, providing States and localities the freedom to go their 
own way on security will jeopardize the entire system of propane safety 
regulations, since fire and building codes regulating propane are 
administered at the State level. Adding numerous new State chemical 
facility security laws will only create more red tape, and more 
confusion. Furthermore, propane companies and customers--most of them 
small businesses--will need to dedicate new financial and personnel 
resources to comply with all the overlapping security requirements. To 
avoid this, NPGA urges a strong statement from Congress in support of 
Federal preemption of State homeland security laws.
4. There Is No Compelling Reason To Act Now
    Finally, NPGA is confused as to why there is a rush to seek such 
substantive changes to the DHS Chemical Facility Anti-Terrorism 
Standards (CFATS). We understand that the authority to administer the 
rules expires in October 2009, but they have only recently finished the 
CFATS Top-Screen process which determines which chemical facilities 
will be regulated and which will not (compliance letters to be sent 
soon). Nonetheless, the committee via this legislation seems determined 
to rewrite how DHS will administer chemical facility regulations before 
DHS has a chance to test the utility of current regulations. The new 
requirements in this legislation will only slow down the process of 
securing vital chemical facilities as DHS will be forced to go back 
through the regulatory process to address new congressional priorities. 
At most, Congress should enact a simple reauthorization without 
significant changes to the program.
    NPGA appreciates this opportunity to submit comments to the House 
Homeland Security Subcommittee on Transportation and Infrastructure 
Protection. Should you have questions or require further information, 
please contact us anytime.
                                 ______
                                 
                Statement of the Chemical Bill Coalition
                           February 26, 2008
    Member of Congress, we represent American agriculture, food 
processing, energy, forest products, chemistry, medicine, 
transportation, building materials and other businesses and local city 
services that make up our national infrastructure. Protecting our 
communities and complying with Federal security standards is a top 
priority to us.
    We are concerned that the ``Chemical Facility Anti-Terrorism 
Security Act'' would cause disruptions of new Federal security 
standards in the short term, and weaken infrastructure protection and 
economic stability in the long term.
    The Department of Homeland Security (DHS) began enforcement of 
landmark new chemical security standards last month. Companies in 
thousands of communities are just beginning to comply with these 
significant new requirements while continuing to provide essential 
products and services for our daily lives. Our industries and DHS are 
investing time, training and other resources to adapt to comprehensive 
security standards. However, this bill would detract from compliance 
efforts and, in some cases, impede progress that is underway. We 
believe that counter-productive, mid-stream adjustments to the current 
law would undermine security at facilities all around the country.
    Our primary concern is that the bill goes beyond requiring security 
protections based on risk by creating a mandate to change products and 
processes to a Government-selected ``safest'' technology. Congressional 
testimony has stated that this would possibly increase risk and weaken 
the businesses that it intends to protect. Such a standard is not 
measurable and would likely lead to confusion and prohibitive legal 
liability. The bill would also weaken protections for sensitive 
security information and create overlapping and conflicting security 
requirements.
    Making extensive changes now is also premature. The DHS security 
regulations being implemented are protecting thousands of facilities 
that provide the food, water, energy, pharmaceuticals and other 
chemical manufacturing that are essential for our national security and 
economic vitality. Rushing approval of this bill would significantly 
disrupt the recently implemented chemical security standards and create 
economic uncertainty in many communities. We urge you to reconsider 
this approach. While we would support straightforward legislation to 
remove the sunset date and make the chemical security regulations 
permanent, we strongly urge Congress to refrain from overhauling the 
program at least until it has been given a fair chance to be 
implemented and evaluated.
    Thank you for your consideration of our views.
Agricultural Retailers Association; American Farm Bureau Federation; 
American Forest & Paper Association; American Frozen Food Institute; 
American Petroleum Institute; Beer Institute; Calorie Control Council; 
Chemical Producers & Distributors Assn; Consumer Specialty Products 
Assn; Croplife America; Environmental Technology Council; Independent 
Liquid Terminals Assn; Institute of Makers of Explosives; Int'l Assn of 
Refrigerated Warehouses; International Food Additives Council; Midwest 
Food Processors Association; National Agricultural Aviation Assn; 
National Assn of Chemical Distributors; National Association of 
Manufacturers; National Assn of Truck Stop Operators; National Cotton 
Council of America; National Mining Association; National Oilseed 
Processors Assn; National Paint and Coatings Assn; Nat'l Petrochemical 
& Refiners Assn; Petroleum Equipment Suppliers Assn; Petroleum 
Marketers Assn of America; The Carpet and Rug Institute; The Fertilizer 
Institute; U.S. Chamber of Commerce; USA Rice Federation.
                                 ______
                                 
    Statement of Rick Hind, Legislative Director, Greenpeace Toxics 
                          Campaign, Greenpeace
                           February 26, 2008
current law and department of homeland security regulations (cfats) are 
       inadequate; permanent legislation is essential to security
 inherently safer technologies can eliminate catastrophic consequences 
                         of a terrorist attack
``We don't want a chemical plant sitting somewhere in a place like 
Boston become a bomb because it is not properly secured,''--Secretary 
Chertoff, February 7, 2008.

``You know, the threat is just staring us in the face. I mean, all 
you'd have to do is to have a major chemical facility in a major 
metropolitan area go up and there'd be hell to pay politically. People 
will say, `Well, didn't we know that this existed?' Of course, we 
knew.''--Former Senator Warren Rudman (R-NH), November 2003.

    The September 11 terrorist attacks successfully used our own 
infrastructure against us with tragic results. They also demonstrated 
that tight perimeter security, such as in the case of the Pentagon, is 
incapable of preventing such attacks. Should a chemical plant be 
targeted, a truck bomb, a small plane, helicopter or a high powered 
rifle would easily render the industry's current reliance on fence-line 
security totally useless. In fact, U.S. chemical facilities have been 
referred to as ``pre-positioned'' weapons of mass destruction (WMD).
    Reports during the summer of 2007 of renewed terrorist's capacity 
to carry out attacks inside the United States are a sobering reminder 
of the nearly 6 years of neglect following the 9/11 attacks. The 
vulnerability of U.S. chemical plants to terrorism and serious 
accidents such as the 1984 disaster in Bhopal, India have been widely 
recognized. The potential magnitude of these risks surpasses the 9/11 
attacks. Once released these chemicals and gases can remain dangerous 
for up to 14 miles in an urban area (20 miles in a rural area) and put 
the lives of millions of people at risk.
    The nature of these risks meets any definition of a weapon of mass 
destruction. The manner in which people would be killed and injured is 
terrifying. Poison gases such as chlorine will literally melt the lungs 
of its victims causing them to drown in their own lung fluid (pulmonary 
edema). Survivors could be left with life-long disorders.
    Although we would all like to believe the threat of a terrorist 
attack is unlikely, U.S. intelligence officials now believe terrorist 
attacks are more likely today than before the United States invaded 
Iraq in 2003 (September 24, 2006, N.Y. Times). More recently on July 
10, Department of Homeland Security (DHS) Secretary Michael Chertoff 
told the media that he had a ``gut feeling'' that ``we are entering a 
period this summer of increased risk.''
    Following the 9/11 attacks it was reported that 9/11 ring leader, 
Mohamed Atta, visited a Tennessee chemical plant asking lots of 
questions (December 16, 2001, Washington Post). In the first 6 months 
of 2007 at least five successful terrorist attacks in Iraq used 
relatively small (150 to 250 pound) cylinders of chlorine gas to kill 
dozens of people. As a result the DHS began briefing local bomb squads 
and chemical plants across the country (April 24, 2007, USA Today).
    In February and April 2007 thefts of 150 pound cylinders of 
chlorine gas occurred in California prompting questions by members of 
this committee to the DHS about their response to these thefts, any 
other thefts and plans to eliminate these vulnerabilities by using 
inherently safer technologies.
    U.S. chemical facilities were not built or designed to defend 
against terrorist attacks. Predicting where an attack will take place 
is a fool's errand. No one predicted that Timothy McVeigh would attack 
the Federal Building in Oklahoma City in 1995, killing 168 innocent 
people.
    On June 25, 2007, DuPont Chairman Charles O. Holliday Jr. told the 
media that he worries most about a computer system failure or a 
security breach at one of the company's chemical plants around the 
world. ``I feel very comfortable that we've taken all the reasonable 
steps, but obviously if someone wants to fly an airplane into a plant, 
it's very hard to guard against it,'' said Holliday.
    The Nation's most infamous example of this threat is the Kuehne 
Chemical Company in South Kearny, New Jersey. According to Kuehne's own 
reports to the U.S. Environmental Protection Agency (EPA), their plant 
puts 12 million people in the Newark-New York City region at risk in 
the event of a catastrophic release of chlorine gas stored on-site. 
This is the largest single chemical plant risk in the Nation, but 
according to the DHS more than 3,000 other plants each put 1,000 or 
more people at risk. More than 100 U.S. plants each put a million or 
more people at risk, according to their reports to the EPA.
    What makes the Kuehne plant inherently dangerous is the use of 
large quantities of chlorine gas to produce relatively harmless liquid 
bleach (sodium hypochlorite). While Kuehne's largest business is water 
disinfection, there are many safer alternatives to chlorine, including 
ultra-violet light, ozone and liquid bleach. A competitor of Kuehne, 
KIK Custom Products, wrote Representative Edward Markey (D-MA) a Member 
of the House Homeland Security Committee on July 26, 2006. In their 
letter KIK committed to converting to a safer technology that produces 
``high strength liquid bleach in one continuous operation thereby 
eliminating the need to ship or store chlorine'' on-site and therefore 
eliminating the risks posed by large quantities of chlorine gas. KIK is 
the second largest producer of household bleach in North America. More 
details on their technology is at: http://www.k2pure.
com/.
What Happens When Perimeter Security Fails?
    Continuing negligence by industry or Government will not be judged 
kindly by posterity. Stephen Flynn, Senior Fellow in National Security 
Studies at the Council on Foreign Relations wrote in his book, America 
the Vulnerable, ``The morning after the first terrorist strike on this 
sector, Americans will look around their neighborhoods and suddenly 
discover that potentially lethal chemicals are everywhere, and be 
aghast to learn that the U.S. Government has still not developed a plan 
to secure them. The subsequent political pressure to shut down the 
industry until some minimal new safeguards can be put in place--as we 
did with commercial aviation following the 9/11 attacks--will be 
overwhelming.''
   In July, 2004, the Homeland Security Council estimated that 
        an attack on a single chlorine facility could kill 17,500 
        people, severely injure an additional 10,000 and result in 
        100,000 hospitalizations and 70,000 evacuations.
   In January, 2004, the U.S. Naval Research Laboratory 
        testified before the Washington, DC City Council warning that 
        100,000 people could be killed or injured in the first 30 
        minutes of a catastrophic release of a tank car of chlorine or 
        similar chemical within blocks of Capitol Hill. They further 
        estimated that people could ``die at rate of 100 per second.''
   In June, 2003 FBI specialist on weapons of mass destruction, 
        Troy Morgan, in a speech at a chemical industry conference 
        warned, ``You've heard about sarin and other chemical weapons 
        in the news. But it's far easier to attack a rail car full of 
        toxic industrial chemicals than it is to compromise the 
        security of a military base and obtain these materials.''
  the 2006 interim chemical security law and regulations are fatally 
                                 flawed
    The best that can be said for the new Department of Homeland 
Security (DHS) chemical security regulations, ``Chemical Facilities 
Anti-Terrorism Standards'' (CFATS) is that they represent an official 
recognition of the widespread vulnerability of U.S. chemical plants to 
terrorism.
    The new DHS rules are based on a 744-word ``rider,'' Sec. 550 of 
the Homeland Security Appropriations Act 2007. Sec. 550 authorizes 
``interim'' regulations that will expire on October 4, 2009. It was 
enacted with the expectation that Congress would expeditiously enact 
permanent, comprehensive legislation to ``supersede'' Sec. 550's 
regulations.
    The DHS rules finalized on November 20, 2007 fail to provide 
adequate protection for the Nation and communities living in the shadow 
of thousands of U.S. chemical plants.
The Interim Chemical Security Law and DHS Rules (CFATS)
   Prohibit the DHS from requiring any ``particular security 
        measure'' including safer technologies that can reduce or 
        eliminate the magnitude of an attack at virtually any chemical 
        facility.
    To satisfy the chemical lobby, this was added to Sec. 550(a) to 
prevent the use of safer technologies as a security measure but it also 
undermines the effectiveness of the entire statute by undercutting the 
DHS to credibly require ANY ``particular security measure.''
   Fail to ensure priority protection of the 3,400 to 4,391 
        facilities each of which put 1,000 or more people at risk 
        according to the DHS.
    Sec. 550 gives the Secretary of the DHS discretion to determine 
which facilities will be considered to ``present high levels of 
security risk.'' With regard to high priority facilities, the DHS rules 
call for a Top Screen process that considers the consequences of an 
attack but the Security Vulnerability Assessment also factor in 
``threat assessments.'' If the likelihood of an attack was considered 
small it could de-prioritize high-risk facilities. Over the last 4 
years, the DHS has never identified more than a few hundred (360 to 
272) facilities as the sites of greatest concern (putting 50,000 or 
more people at risk). Given resource constraints and other anti-
regulatory tendencies, the DHS's record has been to focus on chemical 
plant risks that are an order of magnitude higher than the loss of life 
following the 9/11 attacks.
   Fail to protect approximately 3,000 U.S. water treatment 
        plants as well as several other exempted categories.--
        Approximately 100 water treatment plants each put 100,000 or 
        more people at risk.
    This exemption, also in Sec. 550(a), covers public water systems 
regulated by the Safe Drinking Water Act and the Federal Water 
Pollution Control Act, the Maritime Transportation Security Act of 
2002, facilities owned or operated by the Department of Defense, 
Department of Energy or regulated by the Nuclear Regulatory Commission. 
In June 2007 Secretary Chertoff spoke to water facilities operators 
warning them that even though they are exempt under the interim law 
they are ``on the hook because you're going to have to do this 
yourselves because the consequences of ignoring risks . . . will be 
quite severe.''
   DHS asserted the authority to prohibit States from 
        establishing stronger security standards.
    Without any explicit statutory authority, the DHS asserted the 
authority to preempt State programs that ``frustrate'' their 
regulations. Although no State has yet been cited, this policy could 
have had a chilling effect on new programs and appears aimed at serving 
a chemical industry agenda to prevent States, such as New Jersey, from 
requiring safer more secure technologies. However, this provision was 
reversed in an amendment to Sec. 550 by Senator Frank Lautenberg (D-NJ) 
in the DHS omnibus spending bill in December 2007. However, the interim 
law expires in October 2009 and permanent legislation must retain the 
right of States to set more protective standards than the Federal 
Government.
   Fail to protect the public's right-to-know by asserting 
        authority to classify previously public information as secret, 
        including information used in civil or criminal enforcement 
        actions.
    Sec. 550(c) and resulting new DHS regulations over-reach by going 
beyond protecting common sense security plans and vulnerabilities into 
undermining enforcement and covering up governmental incompetence or 
corporate liability.
   Assert the right to ``displace'' other Federal right-to-know 
        statutes including, the Emergency Planning and Community Right 
        to Know Act, Clean Air Act of 1990, Clean Water Act and CERCLA.
    This directly contradicts the savings clause in Sec. 550(f) which 
says, ``Nothing in this section shall be construed to supersede, amend, 
alter, or affect any Federal law that regulates the manufacture, 
distribution in commerce, use, sale, other treatment, or disposal of 
chemical substances or mixtures.''
   Fail to require meaningful involvement of plant employees in 
        developing Security Vulnerability Assessments and Site Security 
        Plans.
    The DHS responded to comments saying that ``there is nothing in the 
rule that prohibits chemical facilities from involving employees in 
their security efforts.'' While we should be thankful for that, such a 
policy fails to tap the expertise of a workforce that is formally 
trained in chemical hazard protection, accident prevention and 
emergency response. Employees are the first line of defense and the 
eyes, ears and noses of chemical facilities. The failure to formally 
involve employees in developing vulnerability assessments and security 
plans is foolish from both a security and scarce resource perspective.
   Fail to include whistleblower protections that would enhance 
        enforcement.
    The DHS rules promise to set up an anonymous tip line but ignores 
the long history of whistleblowers who have exposed waste, fraud and 
abuse. And in this case they could save thousands of lives.
   Fail to enhance enforcement by allowing citizens to sue to 
        enforce the law, while allowing companies liberal appeals 
        procedures to challenge DHS orders and decisions.
    Sec. 550(d) prevents anyone but the DHS from suing a plant owner or 
operator to enforce any provision of this law. Once again, the law is 
balanced in favor of protecting the rights of recalcitrant facilities 
and/or violators and leaving innocent citizens facing overriding lethal 
risks with no legal recourse.
   Prohibit the public from knowing which facilities are 
        ``high-risk'' or ``Top Tier'' plants.
    Both DHS and corporate credibility will be in jeopardy if 
communities cannot determine if a local chemical plant that poses a 
threat is being dealt with or is in violation or is resisting orders by 
the DHS. Nor will communities have the peace of mind of knowing whether 
a plant has voluntarily converted to safer technologies and no longer 
poses a threat to their community.
    In their Federal Register Notice of rulemaking, the DHS said, ``The 
Department will continue to work with Congress on chemical security 
matters.'' However, neither the President nor the Secretary of Homeland 
Security has asked for additional authority from the 110th Congress to 
fill in the huge gaps in Sec. 550 or to correct provisions that will 
undermine its effectiveness and enforcement. Meanwhile the chemical 
industry argues for waiting a few years even though Sec. 550 
regulations will expire on October 4, 2009.
    The failure of the Bush administration and DHS to ask Congress for 
broader permanent statutory authority to correct the deficiencies in 
the temporary law is irresponsible.
Prioritize the Most Dangerous Chemicals
    The largest category of hazardous substances that can be 
transformed into chemical weapons of mass destruction (WMDs) are toxic-
by-inhalation (TIH) gases. According to the U.S. EPA just four TIH 
gases account for 55 percent of all chemical processes that threaten 
communities Nation-wide. These are:
   anhydrous ammonia--32.5 percent (8,343 processes);
   chlorine--18.3 percent (4,682 processes);
   sulfur dioxide--3 percent (768 processes);
   hydrogen fluoride--1.2 percent (315 processes).
    Unfortunately, the DHS has set dangerously high threshold 
quantities for many of these substances such as: Anhydrous Ammonia: 
10,000 lbs.; Chlorine: 500 to 2,500 lbs.
    Given the successful terrorist attacks in Iraq using small 
quantities of chlorine (approximately 150 lbs.) and recent thefts in 
the United States, it would be prudent to establish lower threshold 
quantities for such ubiquitous hazardous substances. Lower thresholds 
won't necessarily trigger more regulations, they simply give the DHS a 
more complete picture of where hazards are. Regulations should be 
driven by populations at risk.
     safer technologies can eliminate the consequences of an attack
    While these chemical processes deserve high priority because of 
their prevalent use at thousands of facilities, especially at high 
threat facilities, there are widely available safer alternatives for 
each of them. For example, the Center for American Progress (CAP) 
conducted an analysis of EPA's Risk Management Program data and 
identified 284 facilities that have converted since 1999. See full 
report at: http://www.americanprogress.org/issues/2006/04/
b681085_ct2556757.html.
    Examples of conversions from these chemicals and continuing threats 
include:
   More than 200 water treatment facilities (including 
        Washington, DC) converted to safer alternatives such as 
        ultraviolet light, eliminating the use of chlorine and sulfur 
        dioxide gas. But over 100 water treatment plants still threaten 
        more than 100,000 people.
   Ninety-eight petroleum refineries use safer alternatives to 
        hydrogen fluoride (HF). But 50 refineries still threaten 
        millions of people with the use of HF.
   At least 36 electric power plants use safer alternatives to 
        anhydrous ammonia gas such as dry urea. But 166 power plants 
        still use anhydrous ammonia gas each threatening an average of 
        21,506 people.
    While the CAP analysis proves the technological feasibility of 
safer alternatives, CAP estimates that at this rate of conversion, 
without any new regulatory requirements, it will take 45 years to 
eliminate hazards that pose the highest risk to America's hometowns.
    The CAP analysis shows that 87 percent of the converted facilities 
spent less than $1 million and half spent less than $100,000. Clearly 
these conversion costs pale in comparison to the cost of disaster 
response, relocating communities, defending against personal injury 
lawsuits or resolving environmental clean up liability or even 
conventional security costs.
    A 2006 GAO report (GAO-06-150), Homeland Security DHS Is Taking 
Steps to Enhance Security at Chemical Facilities, But Additional 
Authority Is Needed, concluded, ``Implementing inherently safer 
technologies potentially could lessen the consequences of a terrorist 
attack by reducing the chemical risks present at facilities, thereby 
making facilities less attractive targets.''
    A Government Accountability Office report (GAO-05-165) identified 
chlorine gas and 90-ton chlorine rail cars as ``among the top five 
terrorist-related wastewater system vulnerabilities.'' Among the top 
three recommendations: ``Replacing gaseous chemicals used in wastewater 
treatment with less hazardous alternatives.'' In addition, the largest 
majority of experts gave replacing these chlorine facilities the 
highest priority for Federal funding.
Examples of Safer Technologies at Water Facilities
    For example, the Blue Plains sewage treatment plant in Washington, 
DC halted its use of chlorine and switched to safer chemicals just 8 
weeks after the 9/11 attacks due to fears of another attack. The plant 
had seven rail cars of chlorine on site following the 9/11 attacks. The 
conversion only cost approximately $0.50 per year for each water 
customer. In other words, by using safer technologies we can neutralize 
and eliminate targeting by terrorists and prevent catastrophic 
accidents as well at negligible costs.
    Switching to safer ``drop-in'' chemicals, such as relatively 
harmless sodium hypochlorite (liquid bleach) without a long-term plan 
can leave lingering risks in communities where the bleach is produced. 
While switching to bleach at a sewage plant clearly eliminates the 
immediate hazard at that facility, the bleach formulators who use and 
store large quantities of chlorine gas to make bleach still pose 
serious risks to workers and surrounding communities. In July 2006, KIK 
Custom Products, which operates 23 plants in the United States and 
Canada, announced plans to commercialize a new process that will 
eliminate the need to receive large shipments of chlorine gas. See 
details at: http://www.k2pure.com/.
    These bleach and water disinfectant formulators are well positioned 
to guide their customers toward other safer alternatives such as ozone 
and ultra-violet light (UV) which are widely available and do not pose 
catastrophic hazards. UV is superior to chlorine or chlorine bleach 
because it also kills deadly anthrax and the parasite cryptosporidium 
which chlorine does not. In 1993 more than 100 people were killed and 
400,00 were made sick by cryptosporidium when it overwhelmed the 
chlorine-treated drinking water system of Milwaukee, Wisconsin.
State Preemption
    As the DHS acknowledged in their proposed rule, ``Sec. 550 was 
silent on preemption'' of States' authority to set stronger security 
standards. However, the DHS chose to assert Federal preemption without 
statutory authority in an apparent effort ``to preserve chemical 
facilities flexibility to choose security measures.'' Fortunately, this 
provision was reversed in an amendment to Sec. 550 by Senator Frank 
Lautenberg (D-NJ) in the DHS omnibus spending bill in December 2007. 
However, the interim law expires in October 2009. Any permanent 
legislation must clearly retain the right of States to set more 
protective standards than the Federal Government.
    While few would argue that the Federal Government should not 
preempt States' authority to establish minimum standards, it is self-
defeating to bar States from setting stronger security standards by 
establishing a Federal limit or ceiling on security protections.
    The Federal Government should welcome every State pitching in to 
address the unique situation it faces. New Jersey was the first State 
to implement a chemical security program that requires an assessment of 
safer, more secure technologies. According to Governor Corzine, a 
federally mandated rollback of New Jersey's protections ``could have 
the effect of weakening chemical security and leaving New Jersey and 
its neighbors--including New York City--more vulnerable to devastation 
from a terrorist attack on our chemical facilities.''
    The DHS appeared more concerned about protecting industry exposure 
to State tort liability when it asked: ``How could State tort law 
impose liability for actions specifically approved under a Federal 
program?'' Is DHS attempting to shield chemical facilities from State 
tort suits? How does this contribute to the safeguarding of communities 
from existing and preventable threats?
Risk-Based Performance Standards & Safer Technologies
    A safer technology provision was contained in the 2006 House 
Homeland Security Committee passed bill, H.R. 5695. That bill required 
priority chemical facilities to utilize safer, more secure 
technologies, where feasible and cost effective to reduce or eliminate 
the magnitude of an attack on a chemical facility. By substituting 
inherently dangerous chemicals or processes with inherently safer 
technologies (IST) the risk of a catastrophic release at a chemical 
plant can be eliminated or dramatically reduced. IST is the best tool 
available to completely mitigate facility vulnerabilities and safeguard 
communities.
    The DHS has wide discretion to establish ``risk-based performance 
standards.'' The DHS could have chosen to establish performance 
standards that deter an attack or mitigate the consequence of an attack 
by safeguarding, reducing or eliminating the risk or desirability of 
the facility as a target. This could have been achieved by issuing 
guidance to suggest that counter measures include the use of safer, 
more secure technologies to meet the performance standard or opt out of 
the regulations entirely.
    In fact, the DHS mentioned in their Federal Register notice of 
proposed rulemaking, Annex B, page 78315, that a ``security event may 
be larger than the typical EPA Risk Management Program (RMP) worst-case 
analysis.'' In a 2001 U.S. Army Surgeon General study estimated that 
900,000 to 2.4 million people could be killed or injured in a terrorist 
attack on a U.S. chemical plant in a densely populated area. According 
to the Environmental Protection Agency (EPA), 106 chemical plants 
threaten a million or more people. Chlorine gas is the most common 
industrial chemical hazard at the 100 highest-risk plants. According to 
the Chlorine Institute, a chlorine gas cloud can drift through a city 
and remain dangerous for at least 14 miles and 20 to 25 miles in rural 
areas.
    These alternatives include a wide range of options such as process 
changes, chemical substitutions, smaller storage vessels or any other 
measures that will reduce or eliminate the inherent hazard posed by the 
facility's storage, use or production of an ultra-hazardous substance. 
This range of options is far from requiring any ``particular security 
measure,'' it is up to the plant operator to choose which safer 
technology, process, chemical or storage vessel reduces or eliminates 
these risks.
    Only about 13 percent of the universe of facilities in the EPA's 
Risk Management Program (RMP) are members of the chemical manufacturers 
trade association, the American Chemistry Council. Whereas the 
overwhelming majority of RMP facilities are chemical users, including: 
petroleum refineries that use hydrogen fluoride; power plants that use 
anhydrous ammonia and water treatment plants that use chlorine and 
sulfur dioxide gas. All of these have safer alternatives already widely 
in use at hundreds of facilities.
Benefits of Safer Technologies
    The use of safer technologies offers a more competitive and stable 
business plan with fewer regulations, potentially zero liability, 
sustainable profitability, better relationships with workers and 
neighboring communities and no threat of a catastrophic attack or 
accident. Specifically, the use of safer technologies will likely 
result in a facility no longer being subject to DHS's CFATS 
regulations.
    Obviously, chemical facilities located on-site at nuclear power 
plants, water treatment works, iconic facilities such as Disney World, 
Camp David, etc. also need to be considered for priority protection. 
However, using safer technologies as a countermeasure at these 
facilities will lessen the lethality that an attack on them would pose. 
DHS will also be able to better utilize its limited resources ($25 
million for fiscal year 2008) for more effective use of conventional 
security measures to defend against and respond to attacks on targets 
even where a chemical risk is removed.
    Given DHS's finite resources and the late start the Nation has in 
addressing chemical security it is urgent that we use safer 
technologies to mitigate the consequence of an attack. By doing so we 
eliminate risks, safeguard communities and save scarce money and 
resources to protect targets that cannot be so neutralized (airports, 
U.S. Capitol, etc.).
    The Annex in the DHS proposed rule suggests that plant owners and 
operators should assume that ``international terrorism'' is possible at 
every facility. A better assumption would be to recognize that every 
plant could be the target of someone no one anticipated. The bombing of 
the Federal Building in Oklahoma City in 1995 was initially thought to 
be committed by ``Middle Eastern terrorists.'' It turned out to be the 
insane act of a U.S. Army-trained Gulf War veteran. How many more 
Americans have been trained in the art of war since then? Other 
incidents and threats ranging from Columbine, to international drug 
cartels and the spectacularly failed intelligence leading up to the 9/
11 attacks, makes guessing where such an attack will come from nothing 
more than a fool's errand. The only prudent thing to do is attempt to 
remove unnecessary vulnerabilities as soon as technically feasible. 
Even without terrorist attacks, we will save countless lives in 
accident prevention.
Top Tier High-Risk Facilities
    According to a June 2005 Congressional Research Service report 
examining EPA's RMP database, the EPA has identified 6,883 facilities 
that each put 1,000 or more nearby residents at risk and 553 of these 
put 100,000 or more people at risk.
    However, using a methodology that includes only \1/6\th the area 
surrounding a plant, the Department of Homeland Security (DHS) has 
estimated at different times a range of 3,400 to 4,391 chemical 
facilities that each put 1,000 or more people at risk. Of these DHS 
identified 272 facilities that each put 50,000 or more people at risk. 
The DHS calculation looks at a 60 degree ``kill zone'' downwind from a 
facility. The EPA's RMP program uses a methodology that creates a 360-
degree ``vulnerability zone'' around a facility. Under the RMP, 
chemical plant owners and operators submit worst-case disaster 
scenarios using U.S. Census data to calculate the number of people 
living in each ``vulnerability zone.'' In Annex B of the DHS proposed 
rule on FR page 78315 warns, ``the security event may be larger than 
the typical EPA RMP worst-case analysis.''
    At a minimum, any facility that endangers 1,000 or more people 
should be considered a ``top tier'' or ``high-risk'' facility.
Alternative Security Plans (ASPs)
    The new DHS rule allows the high priority facilities in Tier 1 and 
2 to use ASPs for their Site Security Plans. However, these same 
facilities cannot use ASPs for their Security Vulnerability 
Assessments.
    ASPs were written by and for oil and chemical industry trade 
associations. All of them avoid requiring safer technologies and do not 
represent the best way to safeguard communities at risk. Congress 
should not allow the DHS to substitute ASPs for Site Security Plans for 
high priority facilities.
Consultation With Other Agencies
    As a new department with minimal resources, the DHS should 
routinely collaborate and consult with other more experienced 
Government agencies. In their January 2006 report (GAO-06-150) the 
Government Accountability Office concluded, ``By tapping EPA's 
expertise on chemical facilities and general facility safety issues, 
DHS can enhance its efforts to identify high-priority facilities and 
assess facility vulnerabilities as well as better target Government 
resources to those facilities posing the greatest risk.''
    Congress should require the DHS to consult with the EPA as the GAO 
recommended and develop guidance documents to rapidly identify high-
risk facilities and promote the use of inherently safer technologies as 
a mitigation and countermeasure technique to reduce risks and safeguard 
communities. Similar consultation with the U.S. Chemical Safety and 
Hazard Investigation Board, which has enormous experience in diagnosing 
chemical accidents and recommending mitigation techniques, should be 
aggressively pursued.
Buffer Zones
    According to the EPA (Belke, 2000), the high number of facilities 
that put residents at risk as far as 14 to 25 miles away from a release 
``is primarily due to the prevalent use of 90-ton rail tank cars for 
chlorine storage.'' The Chlorine Institute pamphlet 74, ``Estimating 
the Area Affected by a Chlorine Release'' (1998), shows a plume can be 
hazardous up to 41.5 miles.
    The Bureau of Alcohol Tobacco, Firearms, and Explosives regulations 
(27 CFR 555.218) prohibits the storage of a similar quantity of 
explosives within 2,010 feet of inhabited buildings.
    In 2006 the Netherlands and Akzo Nobel completed a $270 million 
program to relocate chlorine production facilities within Holland to a 
location that will eliminate the transport of chlorine by rail in the 
Netherlands.
    Given the large potential plume of toxic-by-inhalation substances 
and large quantities of some flammables such as propane, a much larger 
buffer zone is called for with regard to high risk TIH facilities.
    Without the use of safer technologies to convert existing plants 
into safer functioning plants, relocating them to more remote areas 
should be a an option, especially if an owner/operator insists that 
there is no safer alternative.
    Short of relocation, the DHS should be required to issue guidance 
to mitigate these threats by using smaller storage vessels that would 
help reduce risks, deter and discourage potential attackers. In 
addition, the DHS should facilitate owner/operator collaboration with 
local government and emergency responders to conduct practice 
evacuation drills. If a plant cannot substantially reduce its risks, 
the owner/operators and government agencies have an obligation to 
ensure that at-risk citizens can reasonably be evacuated.
    New facilities should be prohibited from locating in densely 
populated areas.
Brief History of Federal Inaction
    While the DHS proposed rule issued December 28, 2006 contained a 
``Brief History of Federal Pre-Existing Chemical Security and Safety 
Programs,'' it ignored the ``general duty clause'' in Section 112r of 
the 1990 Clean Air Act which gives the President and the Environmental 
Protection Agency (EPA) broad authority to require chemical facilities 
to prevent catastrophic releases of poison chemicals. After drafting 
legislation, guidance and regulations in June 2002, the administration 
withdrew it's proposals, in part, under pressure from the oil and 
chemical industry.
    On July 22, 2004 ``The 9/11 Commission Report'' identified four 
failures in preventing an attack by the U.S. Government the first of 
which was the failure of ``imagination.'' A continuing lack of 
imagination today exposes millions of Americans to Bhopal magnitude 
risks largely because new laws or regulations have not yet been adopted 
to clarify the chemical industry's obligation to prevent catastrophic 
releases at U.S. chemical plants. In June, 2002 a promising proposal 
drafted by the EPA could have completed the first phase of such a 
program by the middle of 2003 but it was derailed by the White House in 
the fall of 2002. It was not unlike a bill (S. 1602) authored in 2001 
by Senator Jon Corzine (D-NJ) and based on a bill introduced by Senator 
Frank Lautenberg (D-NJ) in 1999.
    The EPA's 2002 proposal included ``substituting less hazardous 
chemicals for extremely hazardous ones.'' The conversion of Washington, 
DC's main sewage treatment plant from chlorine to safer chemicals, just 
8 weeks after 9/11, exemplifies the feasibility of such a strategy. At 
the time of the attacks they had 7 90-ton rail cars of chlorine stored 
on-site.
    Of the 15,000 facilities required to report their worst-case 
chemical disaster scenarios to the EPA's RMP, 7,728 plants pose an 
``off-site consequence'' (OSC) to more than 1,000 people. Approximately 
100 facilities reported an OSC to the EPA putting 1 million or more 
people at risk. Approximately 65 percent of these facilities' ``worst-
case-scenarios'' are chlorine disasters. Rather than address these 
risks through the new regulations suggested by the EPA, the DHS used a 
new methodology that downsized the priority list of chemical plants by 
43 percent to 3,400 facilities that put 1,000 or more people at risk.
    EPA's 2002 chemical security proposal was slated for a media 
``rollout'' at the White House. According to draft documents, ``higher 
priority chemical facilities should be able to complete a vulnerability 
assessment and address security vulnerabilities as described in the 
guidance in 12-18 months.'' In other words many facilities could 
already have eliminated or reduced their hazards by early 2004.
    EPA's 2002 documents included a question-and-answer sheet for EPA 
Administrator Whitman which said, ``Using existing authority under the 
Clean Air Act, we believe that the guidance and regulation I have 
announced today are the quickest paths to improving chemical facility 
security . . . If we later find that there are legislative gaps, then 
we will consider seeking legislation.''
    Ultimately, the reversal by the Bush administration and the 
lobbying pressure by the industry (American Chemistry Council, American 
Petroleum Institute, etc.) paid off and chemical security legislation 
was excluded from the Homeland Security Act signed into law in November 
2002.
    In March, 2003 a report by the General Accounting Office (GAO) 
concluded ``EPA has not attempted to use these Clean Air Act provisions 
[because] EPA is concerned that such an interpretation would pose 
significant litigation risk''. The GAO concluded that chemical facility 
security would be more effectively addressed by passage of specific 
legislation.
    In December 2003 President Bush further undermined EPA's authority 
and issued a directive (Directive/HSPD-7) limiting EPA's role on 
chemical security to ``drinking water and water treatment systems.'' 
Under questionable legal authority, this directive attempts to shift 
responsibility for 15,000 chemical plants to the DHS, which at the time 
had no legislative authority, experience or inclination to regulate 
this industry.
    In January 2005, former White House homeland security deputy, 
Richard Falkenrath told the Senate Homeland Security and Governmental 
Affairs Committee, ``the Federal Government has made no material 
reduction in the inherent vulnerability of hazardous chemical targets 
inside the United States. Doing so should be the highest critical 
infrastructure protection priority for the Department of Homeland 
Security in the next 2 years.''
    In his book, ``America the Vulnerable'' Stephen Flynn, of the 
Council on Foreign Relations warned, ``The chemical industry deserves 
urgent attention because the stakes are high, the opportunities for 
terrorists are rich, and no credible oversight process exists. It is 
the very ubiquity of the U.S. chemical industry that gives it potential 
to be a serious source of national alarm.''
    In 2006 an intensive industry lobbying campaign successfully killed 
comprehensive chemical security legislation (H.R. 5695 & S. 2145) that 
was voted out of the authorizing committees in the House and Senate in 
2006. Instead, the industry worked closely with Republican leaders to 
draft a 740-word ``rider'' to the 2007 DHS Appropriations bill. The 
only major concession they made was to keep it an ``interim'' 3-year 
statute until Congress enacts permanent legislation. In 2007, the 
industry is urging Congress NOT to change this temporary statute.
    To better understand the lobbying resources the industry used to 
derail legislation in 2006 we surveyed the lobbying records of the 
relevant industries in the Office of the Secretary of the Senate at: 
http://sopr.senate.gov.
    Greenpeace identified 215 industry lobbyists that listed chemical 
security as part of their portfolio in 2006. Based on their lobby 
reports we estimate that industry lobbyists spent between $16.4 and 
$74.5 million (less than half of their total reported spending) to 
lobby on chemical plant security legislation in 2006. Lobby 
organizations identified included 13 trade associations such as the 
American Chemistry Council (ACC), American Petroleum Institute (API), 
U.S. Chamber of Commerce (including CEO Thomas Donahue), Edison 
Electric Institute (EEI), 30 member companies such as Dow Chemical, 
ExxonMobil and Halliburton and 13 lobby firms such as Akin & Gump and 
Holland & Knight.
    In comparison, the 2007 fiscal budget for chemical security at the 
DHS was only $10 million. DHS is asking for an increase of $15 million 
for a total of $25 million for their 2008 fiscal budget on chemical 
security.
    Our survey of lobbying records may have underestimated industry 
spending because we excluded lobbyists who did not specifically list 
chemical security legislation on their lobby reports. A notable 
example, the National Association of Manufacturers (NAM) was not 
included in the survey even though they registered to lobby on chemical 
security in 2005, signed on to industry letters in 2006, and formally 
commented on DHS proposed regulations in 2007. As a result, none of 
NAM's 56 lobbyists and $15 million budget were not counted as part of 
this lobbying campaign. It is unclear whether this is a violation of 
the LDA or the result of a split within the NAM.
    Alternatively, member companies of the Association of American 
Railroads (AAR), such as CSX, BNSF & Norfolk Southern, are also members 
of NAM. Yet the AAR testified in support of the use of safer chemicals 
as a way to eliminate industry vulnerability and liability to potential 
terrorist attacks on rail cars carrying hazardous chemicals.
    Of the 215 chemical security lobbyists we identified, 90 directly 
represent the ACC (the trade association of major chemical 
manufacturers), or its member companies. However, the 2,000 chemical 
plants owned and run by ACC members account for only 13 percent of the 
15,000 chemical facilities the EPA has identified as posing a risk to 
communities. Most of the rest are ``users'' of chemicals such as 
refineries, water treatment plants, power plants and paper mills. It is 
in these sectors where more than 200 plants have converted to safer 
chemicals or processes since 9/11.
    Our survey also identified chemical front groups and allies such as 
the Agricultural Retailers Association (ARA), led by Dow and other 
large firms and the Farm Bureau. Every lobbyist registered with the ARA 
as well as the Farm Bureau also reported lobbying on chemical security 
in 2006 even though most high-risk plants are not located in rural 
areas.
Deadly Accidents
    The 1984 Union Carbide's Bhopal, India plant had the worst 
industrial accident in history. Forty tons (half a rail car) of 
methylisocyanate (MIC) leaked into the community at midnight killing 
8,000 people within days and claiming another 12,000 lives since.
    In June, 2004, three people were killed in a train accident in a 
remote area southwest of San Antonio, Texas when a tank car carrying 
chlorine broke open in the 25 mph crash, releasing a portion of the 
tank car contents.
    On January 6, 2005 ten people were killed, 58 hospitalized and 
hundreds sought treatment in Graniteville, South Carolina when chlorine 
was released again when one train slammed into a parked train in the 
middle of the night. The cars involved were allegedly state-of-the-art 
construction.
    Both of these tragedies could have resulted in a much higher number 
of fatalities and injuries if they had occurred in densely populated 
areas.
Comprehensive and Permanent Chemical Security Legislation Is Urgently 
        Needed
    We have lost over 6 years since the 9/11 attacks. Legislation in 
name only will not protect communities. Programs limited to fence-line 
or perimeter security will not prevent an attack or eliminate the 
consequence of a successful attack.
    A key test of whether chemical facility security legislation will 
protect the millions of Americans still at risk is whether it contains 
minimum standards and truly protective provisions that:
   Require all plants to assess the feasibility of safer more 
        secure methods and technologies that can eliminate the 
        consequences of an attack on a chemical plant.
   Require ``high-risk'' facilities to use safer methods, 
        technologies or chemicals.
   Ensure that the 3,400 to 4,400 facilities that DHS 
        identified as posing a risk to 1,000 or more people are 
        included in the ``high-risk tier.''
   Includes protection of approximately 3,000 U.S. water 
        treatment plants and other chemical facilities currently 
        explicitly exempted by the temporary law.
   Expedite deadlines by when DHS will require and approve Site 
        Security Plans.
   Require meaningful involvement of plant employees in 
        developing Security Plans.
   Include whistle-blower protections to enhance enforcement.
   Provide basic information to the public on facility 
        compliance or non-compliance of the law.
   Ensure the right of all States to establish stronger 
        security standards.
   Enhance enforcement by allowing citizen suits.
Q & A on Sec. 2110 ``Methods to Reduce the Consequences of a Terrorist 
        Attack''
    Are all facilities required to use or implement safer methods or 
technologies?
    No. Only facilities in the ``high-risk'' tier would be required to 
implement safer methods or technologies. Other facilities would merely 
be required to assess safer methods.
    What if it is not feasible or too costly to implement safer methods 
or technologies?
    No facility would be required to implement safer technologies if 
they are either infeasible or too costly or would result in greater 
risks.
    Will converting high-risk plants to safer methods or technologies 
financially burden chemical facilities?
    No. A survey by the Center for American Progress identified 284 
facilities that switched to safer methods since 1999. They found that 
87 percent spent less than $1 million, and one half reported spending 
less than $100,000. Thirty-four percent of survey participants expected 
to save money or improve profitability because safer methods reduce the 
need for barriers, secondary containment, security training, and 
liability concerns. The Washington, DC sewage treatment plant converted 
90 days following the 9/11 attacks for less than $0.50 per water 
customer per year.
    Will this result in shifting risks rather than reducing them?
    No. Safer methods will not be required unless they ``significantly 
reduce'' the consequences of an attack. The DHS will also ensure that 
facilities use methods that significantly reduce risks at a plant and 
do not accept halfway steps that merely shift risks elsewhere. In fact, 
there are now hundreds of real-world examples of water treatment, 
electric power plants and petroleum refineries that have already 
switched without shifting risks.
    Will requiring high-risk facilities to use safer methods put the 
DHS in the business of micromanaging chemical facilities?
    No. Facilities are free to choose any of their own methods or opt 
out if they can show the DHS that there is no feasible, cost-effective 
or safer method for their facility (see list of examples below).
    Is it the role of government to require safer methods to be used in 
the private sector?
    The FAA has issued regulations on security and safety for decades. 
The feasibility and cost-effectiveness are routinely considered and 
balanced against security and safety needs. For example, after 9/11 
detailed regulations to harden cockpit doors were sped into force for 
thousands of different jet liners and airplanes, and X-ray machines for 
all airline baggage were mandated at hundreds of airports.
    Is this proposal more appropriate in environmental legislation than 
in a security bill?
    No. The June 2006 National Academy of Sciences study, commissioned 
by the DHS, endorsed the adoption of safer technologies as ``the most 
desirable solution to preventing chemical releases'' from terrorist 
attack. The Association of American Railroads in testimony before 
Congress said, ``Railroads agree, and strongly support efforts aimed at 
finding and utilizing `inherently safer technologies' as substitutes 
for hazardous materials, especially TIH.''
Range of Examples of Safer Methods Included but not Limited to in Sec. 
        2110
    ``METHOD TO REDUCE THE CONSEQUENCES OF A TERRORIST ATTACK.--For 
purposes of this section, the term `method to reduce the consequences 
of a terrorist attack' includes--
    (1) input substitution;
    (2) catalyst or carrier substitution;
    (3) process redesign (including reuse or recycling of a substance 
        of concern);
    (4) product reformulation;
    (5) procedure simplification;
    (6) technology modification;
    (7) use of less hazardous substances or benign substances;
    (8) use of smaller quantities of substances of concern;
    (9) reduction of hazardous pressures or temperatures;
    (10) reduction of the possibility and potential consequences of 
        equipment failure and human error;
    (11) improvement of inventory control and chemical use efficiency; 
        and
    (12) reduction or elimination of the storage, transportation, 
        handling, disposal, and discharge of substances of concern.''
Additional Expert Opinions on Safer Technologies
    2006 GAO report (GAO-06-150), Homeland Security DHS Is Taking Steps 
to Enhance Security at Chemical Facilities, But Additional Authority Is 
Needed, concluded, ``Implementing inherently safer technologies 
potentially could lessen the consequences of a terrorist attack by 
reducing the chemical risks present at facilities, thereby making 
facilities less attractive targets.''
    May 2006 report by the National Academy of Sciences, ``Terrorism 
and the Chemical Infrastructure: Protecting People and Reducing 
Vulnerabilities,'' recommended more research on new technologies but 
stated, ``The most desirable solution to preventing chemical releases 
is to reduce or eliminate the hazard where possible, not to control it. 
This can be achieved by modifying processes where possible to minimize 
the amount of hazardous material used, lower the temperatures and 
pressures required, replace a hazardous substance with a less hazardous 
substitute, or minimize the complexity of a chemical process.''
    ``Railroads agree, and strongly support efforts aimed at finding 
and utilizing `inherently safer technologies' as substitutes for 
hazardous materials, especially TIH.''--Association of American 
Railroads (AAR) President, and CEO Edward R. Hamberger in testimony 
before the House Transportation and Infrastructure Committee's Railroad 
Subcommittee.
    Retired Rohm and Haas engineer, Dennis Hendershot advised, ``The 
first solution to a process safety problem should always be to get rid 
of the hazard, not control it.''
    Trever Kletz, formerly with Imperial Chemical Industries (ICI) 
said, ``The very best way to prevent an explosion is to simply replace 
the material that explodes with one that does not or at least keep the 
stock down so low that it hardly matters if it all leaks out.''
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    McGinn, Anne Platt. Worldwatch Paper 153: Why Poison Ourselves? A 
Precautionary Approach to Synthetic Chemicals.  2000, Worldwatch 
Institute.
    National Research Council. Alternative Agriculture.  1989 National 
Academy Press.
    Orum, Paul, ``Preventing Toxic Terrorism How Some Chemical 
Facilities are Removing Danger to American Communities,'' the Center 
for American Progress, April 2006.
    Schierow, Linda-Jo, Congressional Research Service, ``Chemical 
Facility Security'' Updated March 24, 2006.
    Stringer, Ruth; Johnston, Paul. Chlorine and the Environment: An 
Overview of the Chlorine Industry.  2001 Kluwer Academic Publishers.
    The 9/11 Commission Report. Final Report of the National Commission 
on Terrorist Attacks Upon the United States.  2004 W.W. Norton & 
Company
    The Chlorine Institute, Inc. Pamphlet 74: Estimate the Area 
Affected by a Chlorine Release.  1998 The Chlorine Institute, Inc.
    The Chlorine Institute, Inc. Pamphlet 66: Recommended Practices for 
Handling Chlorine Tank Cars.  January 2001 The Chlorine Institute, 
Inc.
    Thornton, Joe. Pandora's Poison: Chlorine, Health, and a New 
Environmental Strategy.  2000 Massachusetts Institute of Technology.
    U.S. General Accounting Office, ``Rail Safety and Security Some 
Actions Already Taken to Enhance Rail Security, but Risk-based Plan 
Needed,'' (GAO-03-435).
    U.S. Government Accountability Office, ``Wastewater Facilities: 
Experts' Views on How Federal Funds Should Be Spent to Improve 
Security,'' (GAO-05-165), January 2005.
    U.S. Government Accountability Office, ``Homeland Security DHS Is 
Taking Steps to Enhance Security at Chemical Facilities, But Additional 
Authority Is Needed,'' (GAO-06-150), January 2006.
    U.S. Naval Research Laboratory, testimony before the City Council 
of Washington, DC by Dr. Jay P. Boris, Chief Scientist and Director of 
the Laboratory for Computational Physics and Fluid Dynamics, October, 
6, 2003.
                                 ______
                                 
  Statement of Russell Melancon, President and CEO, Industrial Safety 
                            Training Council
                           February 26, 2008
                            i. introduction
    My name is Russell Melancon and I am the President and Chief 
Executive Officer of the Industrial Safety Training Council (ISTC). I 
want to thank you Mr. Chairman and Members of the committee for this 
opportunity to submit written testimony regarding the proposed Chemical 
Facility Anti-Terrorism Act of 2008. This testimony supports the ISTC's 
legislative recommendations to accomplish the following four goals:
   Make explicit that a chemical facility that is also a 
        regulated facility under the Maritime Transportation Security 
        Act (MTSA) must comply with the Chemical Facility Anti-
        Terrorism Act of 2008 and/or related regulations for personnel 
        surety purposes;
   Provide legislative authority for public and private sector 
        entities, which obtain a personnel surety Alternative Security 
        Program (ASP) designation, to submit names to the Department of 
        Homeland Security (DHS), or a designated agency such as the 
        Transportation Security Administration (TSA), for processing 
        against the Consolidated Terrorist Watch List;
   Provide legislative authority for public and private sector 
        entities, which obtain a personnel surety ASP designation, to 
        submit fingerprints to the Criminal Justice Information Service 
        (CJIS) at the Federal Bureau of Investigation (FBI) so as to 
        supplement the ISTC's existing identification verification 
        process and also supplement the ISTC's existing criminal 
        history background check; and
   Establish a method by which public and private sector 
        entities, which obtain a personnel surety ASP designation, may 
        submit names to the appropriate Federal agency in order to 
        perform a range of immigration status checks.
                             ii. background
    The ISCT is a 501(c)3 not-for-profit training and educational 
organization located in Southeast Texas. The ISTC and thirteen other 
safety councils, located throughout Texas, the Gulf Coast, and several 
other States, comprise the Safety Council Security Consortium (SCSC). 
Both the ISTC and the SCSC are key parts of the highly regulated 
chemical industry. Together, the ISTC and the SCSC operate an 
established, highly successful and comprehensive identification 
verification and background screening process for contractors and their 
employees as well as facility employees working at over 75 chemical and 
refining facilities. The ISTC also provides safety training and site-
specific job safety orientations for facility workers.
    The ISTC/SCSC identification verification employs a layered 
identification process using several identifiers, including Social 
Security numbers, dates of birth, and a visual comparison of an 
individual against a photograph on a Government-issued identification 
document. The identity verification portion of the ISTC/SCSC process is 
completed in an average of 20 minutes. The ISTC/SCSC has conducted 
identification verification checks on more than 300,000 workers seeking 
admittance to chemical and refining facilities.
    The ISTC/SCSC has also conducted comprehensive criminal history 
background checks on almost 200,000 of these workers. When a 
participating chemical or refining facility hires a contractor or new 
employee, the facility sends the worker to the appropriate safety 
council for training and background screening. The ISTC/SCSC utilizes a 
nationally recognized consumer reporting agency (CRA) to conduct these 
background checks. This CRA is experienced in conducting name-based 
background screening and is fully compliant with all of the privacy and 
consumer protections in Federal and State Fair Credit Reporting Acts.
    The background check searches criminal history records on Federal, 
State, and local levels, including physical searches of court-based 
State and local criminal history records. All criminal history checks 
search felony and misdemeanor convictions (from the previous 7 years), 
pending arrests, outstanding warrants, and deferred adjudications. 
Additionally, the screening process includes a search of motor vehicle 
reports as well as a Patriot Act search against the Office of Foreign 
Assets Control (OFAC) lists, which contain the names of individuals who 
are ``specially designated nationals,'' and who are ``blocked'' from 
conducting business with U.S. persons for various reasons.
    The rejection rate for the baseline background screening process is 
5 to 8 percent. The ISTC/SCSC screening program works rapidly to 
provide the results of a full screen in an average of 2 days time, 
allowing workers to begin jobs quickly. This is especially important 
due to the near reliance on transient workers at chemical and refining 
facilities. The ISTC/SCSC background screening process is both thorough 
and timely, but it is also cost-effective. The ISTC/SCSC is able to 
perform the identification verification and background screening 
process for an initial fee of about $55 per worker.
    The ISTC/SCSC process also provides, in addition to the rigorous 
baseline background screening, a customized series of additional 
services, which allow chemical and refining facilities and their 
contractors to obtain various types of background checks based upon the 
facility's and/or the contractor's specific security needs and 
preferences in view of an individual's expected duties and 
responsibilities at a facility. These additional checks can include:
   Civil records of lawsuits filed by or against the applicant;
   Educational verification;
   Prior employer verification;
   Military records checks;
   Credit checks;
   Professional licenses and registration checks;
   Numerous other categories of background data including 
        license verification and workers' compensation reports; and
   Background screens run by the previous employers of an 
        applicant.
    Once the identification verification and background screen is 
complete, the ISTC/SCSC process returns a graded or tiered report, 
which chemical and refinery facility owners and operators use to make a 
risk-based determination of whether the individual's background is 
appropriate for a particular assignment.
    The ISTC/SCSC graded reports present an individual's grade using a 
number scale:
   An individual with a clear record, or no hits, would receive 
        a grade of ``00;''
   An individual with hits for non-violent misdemeanors would 
        receive a grade of ``01;''
   An individual with hits for violent misdemeanors would 
        receive a grade of ``02;''
   An individual with hits for lesser felonies would receive a 
        grade of ``03;''
   An individuals with hits for 03 felonies, and 02 
        misdemeanors would receive a grade of ``04;''
   An individual with hits for more serious felonies would 
        receive a grade of ``05;''
   An individual with hits for 05 felonies, and 02 misdemeanors 
        would receive a grade of ``06;'' and
   An individual that showed hits on the Patriot Act (OFAC) 
        search would receive a grade of ``07.''
    Most applicants have a clear record, or a record with only non-
violent misdemeanors:
   About 77 percent of the graded background screens return a 
        grade of 00;
   About 11 percent return a grade of 01;
   About 4 percent return a grade of 02;
   About 1 percent return a grade of 03;
   Less than 1 percent return a grade of 04;
   About 5 percent return a grade of 05;
   About 1 percent return a grade of 06; and
   Less than 1 percent return a grade of 07.
     Finally, the ISTC/SCSC background check process from the initial 
application to the graded report is privacy-protective and applicant-
friendly. Because the ISTC/SCSC background screening program represents 
an industry, non-governmental solution incorporating a national CRA, 
the process is fully compliant with State and Federal Fair Credit 
Reporting Act (FCRA) requirements, as well as all relevant State and 
Federal privacy protections. In compliance with State and Federal 
FCRAs:
   Criminal history information older than 7 years is not 
        reported.
   Only open arrests and criminal convictions are reported.
   Potential employers provide applicants with ``pre-adverse 
        action'' notification if the report returns information that 
        would preclude the applicant from receiving a job or being 
        denied access to a chemical or refining facility site based on 
        information in the screen results. This notice must be sent 
        before the employer takes any adverse action.
   The applicant has rights under the FCRA to dispute negative 
        information and have inaccurate information corrected.
   The employer must allow a ``reasonable'' time for the 
        applicant to dispute negative information before taking an 
        adverse action.
                    iii. legislative recommendations
    Section 550 of the Chemical Facility Act required DHS to promulgate 
regulations ``establishing risk-based performance standards for 
security of chemical facilities.'' Pub. L. 109-295, sec. 550. 
Accordingly, on April 2, 2007, DHS expressly and appropriately adopted 
a regulatory approach in the DHS Chemical Facility Anti-Terrorism 
Standards (CFATS) regulations that increases the level of security as 
the level of risk increases. This risk-based, tiered approach to 
security reflects the fact that the working environment in chemical and 
refining facilities is unique to the chemical industry and presents 
unique challenges.
    A private sector solution to personnel surety requirements is 
consistent with the ``alternative security program'' (ASP) approach in 
the CFATS regulations. The ISTC/SCSC recommends an ASP system that 
allows the chemical industry to use authorized third parties to help 
meet personnel surety requirements. The ISTC/SCSC process is a uniform 
and consistent credentialing system with high recognition value in the 
areas in which the ISTC/SCSC process operates. More than 75 chemical 
and refining facility owners and 2,240 contractor companies participate 
in the ISTC/SCSC process. As described earlier, the ISTC/SCSC process 
is comprehensive and proven to provide its chemical industry 
participants with an appropriately high level of security. The ISTC/
SCSC technologies are already in place, and the system has been 
producing successful results for many years. Chemical and refining 
facilities should be permitted to continue using established personnel 
surety solutions under any new regulatory regime.
    However, in order for the ISTC/SCSC process and other private 
sector personnel surety alternatives to be approved by DHS as an ASP, 
the private sector must be able to demonstrate that the ASP can provide 
a level of security equal to or greater than that provided by a 
Government-based approach. Therefore, in order for the ASP system to 
have any meaningful effect, private sector entities require the same 
level of access to necessary security information as is provided under 
other Government-based personnel surety solutions. In order to preserve 
the highly effective personnel surety processes currently in place at 
chemical and refining facilities Nation-wide, the ISTC recommends that 
the proposed Chemical Facility Anti-Terrorism Act include provisions 
that:
   Make explicit that a chemical facility should be regulated 
        as a chemical facility and not as a maritime facility for 
        personnel surety purposes;
   Allow private sector ASPs to submit names to DHS for 
        processing against the Consolidated Terrorist Watch List;
   Allow private sector ASPs to submit fingerprints to the 
        FBI's Criminal Justice Information Service (CJIS) database for 
        identification verification and a criminal history background 
        check; and
   Establish a method by which private sector ASPs may submit 
        names to the appropriate Federal agency in order to perform 
        immigration status checks.
A. Regulate Chemical Facilities as Chemical Facilities
    In compliance with the existing CFATS regulations, the ISTC/SCSC 
process provides a robust, nuanced, responsive, privacy-sensitive and 
inexpensive identification verification and background check that 
satisfies the risk-based performance standards set forth in CFATS. The 
chemical industry should be permitted to continue to use personnel 
surety processes and procedures developed to satisfy the industry's 
unique security challenges. The ISTC/SCSC believes that applying 
outside solutions, such as the Transportation Worker Identification 
Credential (TWIC) program to ISTC/SCSC participating chemical and 
refining facilities would be inappropriate because TWIC lacks many 
characteristics of the existing ISTC/SCSC process.\1\
---------------------------------------------------------------------------
    \1\ On October 13, 2006, the President signed into law the Security 
and Accountability for Every Port Act (SAFE Port Act) amending the 
Maritime Transportation Security Act of 2002. These laws require DHS to 
develop a biometric credential to serve as a transportation security 
card allowing individuals to gain access to secure areas of a vessel or 
maritime facility. The TWIC process was developed to implement the SAFE 
Port Act.
---------------------------------------------------------------------------
   The strength of the ISTC/SCSC process allows chemical and 
        refinery owners and operators greater flexibility to decide 
        whether an individual should be permitted any unescorted access 
        within the facility or whether the individual should be 
        restricted to employment in non-sensitive areas. TWIC merely 
        provides a pass/fail clearance for a worker to access the 
        entire facility without distinguishing which workers may enter 
        more sensitive areas within the facility. Under TWIC, an 
        individual who is denied a credential is also denied the 
        possibility of any form of employment.
   As stated under the DHS Chemical Regulations, DHS believes 
        that the level of screening for employees should be 
        commensurate with the level of access provided. The ISTC/SCSC 
        screening process provides exactly this kind of nuanced 
        approach. The TWIC enrollment program merely identifies whether 
        an applicant is eligible or ineligible to receive a TWIC. 
        Industry stakeholders have expressed concerns that certain 
        disqualifying offenses may be too stringent under TWIC and 
        could lead to employees unnecessarily losing their jobs 
        regardless of the level of security risk which their particular 
        employment may present.
   As discussed earlier, the chemical industry's heavy and 
        necessary reliance on transient workers requires that these 
        workers be credentialed quickly. According to the TWIC proposed 
        rule, it could take 30 to 60 days for the TSA to perform 
        background checks, produce the TWIC cards, and issue these 
        cards to employees.
   Because of the transient nature of chemical industry 
        employment, neither employees nor employers find it financially 
        attractive to invest significant moneys on a credential that an 
        employee may carry for only a few short months. In contrast to 
        the ISTC/SCSC baseline check at a cost of $55, a new TWIC card 
        must be purchased by the employee for $132.
   The ISTC/SCSC process is in place right now and continues to 
        process thousands of prospective workers each week. It is a 
        proven process with many years of recorded success. TSA has 
        made progress toward full implementation of the TWIC program, 
        but only in the maritime sector and without a strict timeline 
        for completion. TWIC is not ready for full-scale implementation 
        in chemical and refining facilities across the country.
    Implementation of the TWIC process for personnel surety could well 
result in a personnel surety gap while facilities wait for the TWIC 
process to become fully operational. Distribution of access cards to 
employees through an incomplete TWIC process without adequate 
compliance with personnel surety requirements could allow persons who 
pose a terrorist threat to compromise a chemical or refining facility. 
Chemical facility security requires a risk-based and performance-based 
approach that is not met by the standards set for the maritime sector.
B. The Consolidated Terrorist Watch List
    In order to ensure that private sector entities have a meaningful 
ability to provide the level of security necessary to qualify as an ASP 
under the proposed legislation, the ISTC/SCSC recommends that the 
proposed legislation permit ASPs to submit names for checking against 
all Federal watch lists and anti-terrorist databases. DHS already 
provides a process for TWIC vendors to submit names to the TSA to be 
checked against the Consolidated Terrorist Watch List. DHS should 
assure that the same comprehensive terrorist watch list check is 
conducted for applicants and employees of chemical facilities, 
contractor employees, and visitors requiring unescorted access to 
chemical facilities.
    The ISTC and the SCSC have already submitted a request to DHS to 
enhance the ISTC/SCSC's ability to check for terrorist ties. DHS has 
indicated that it will, ``designate a secure portal or other method for 
the submission of application data for each employee or contractor.'' 
The ISTC and the SCSC look forward to working with DHS to incorporate 
this step into the existing ISTC/SCSC process. The ISTC/SCSC 
recommendation would authorize DHS to move forward with any plans to 
allow owners and operators and their designated third party agents to 
submit names to be checked against the combined terrorist watch lists.
C. CJIS
    The ISTC is planning to implement a fingerprint-based, live-scan 
``gatekeeper'' system into its existing process. Under this system, 
individuals who qualify for an ISTC credential would obtain an 
identification card that includes a digitized representation of their 
fingerprints. That card, prior to entrance into a secure portion of the 
chemical facility, would be processed through a live-scan system which 
compares the digitized print on the card with the live fingerprint of 
the person seeking admittance.
    To make the collection and use of worker biometric information more 
than just a tool for identification verification, the ISTC/SCSC 
supports inclusion of language in the proposed bill that would allow 
the ISTC and all ASPs providing personnel surety solutions the 
authority to submit to CJIS the fingerprints of workers and other 
individuals requiring unescorted access to chemical and refining 
facilities. The ISTC advocates that all approved ASPs have the ability 
to include a search of FBI criminal history records to supplement 
already robust identification verification and criminal history 
background check processes.
D. Immigration Checks
    The ISTC/SCSC process has the ability to include a customized 
series of immigration checks that can supplement the baseline search. 
However, as additional Federal programs are developed to monitor 
various immigration records, such as immigration status and employment 
eligibility, the ISTC/SCSC endorses legislative language that would 
ensure that private sector ASPs may participate in these programs.
                             iv. conclusion
     Today, the need to maintain high levels of security at chemical 
and refining facilities is self-evident. The ISTC/SCSC recommends that 
if a chemical or refining facility has identified a private sector 
solution that can meet the personnel surety needs and legal 
requirements at a particular facility, that customized solution should 
be preserved as an ASP under any proposed chemical facility security 
legislation. Chemical facilities should be regulated by chemical laws 
and regulations that reflect the unique needs of the industry. Thus, 
private sector ASPs that provide personnel surety programs should be 
enabled with access to the information necessary to fully and 
comprehensively perform these security functions.
    The ISTC and the SCSC appreciate the opportunity to provide this 
written testimony, and we urge you to contact us if we can provide 
additional information concerning this vitally important matter.

    Chairman Thompson. Mr. Stephan, I want to talk a little bit 
about the current CFATS regulation, and I want to talk a little 
bit about an example. Since our Ranking Member is here from the 
New York area and Mr. Pascrell is here from New Jersey, I will 
be a little more specific.
    As I understand it, a plant that produces industrial 
chemicals like chlorine and is located 5 miles outside of New 
York City would be subject to chemical security regulations. Is 
that correct?
    Mr. Stephan. Sir, that would depend on the chemical of 
interest that was part of the Appendix A list of approximately 
322 chemicals at or above a certain threshold quantity defined 
in that appendix.
    Chairman Thompson. All right. Now if that same plant was 
just outside of Manhattan but instead was a water treatment 
facility, would it have to implement chemical security 
safeguards?
    Mr. Stephan. Sir, the CFATS regulatory program by 
congressional exemption does not apply to any wastewater or 
water treatment--wastewater or water facilities across the 
country.
    Chairman Thompson. But I think you see where we are headed. 
That is a significant potential target of a facility such as 
that----
    Mr. Stephan. Yes, sir.
    Chairman Thompson [continuing]. And I think we are just 
trying to establish that as part of the record.
    Mr. Wattier, do you have any opinion on that?
    Mr. Wattier. Well, I think I stated in my statement, sir, 
that we think it is a significant----
    Chairman Thompson. Speak directly into the mike.
    Mr. Wattier. We think it is a significant issue, and that 
is why we are here today--at least I am here today--to suggest 
that the Homeland Security Department ought to have some 
authority over this matter to secure the chlorine.
    Chairman Thompson. Can you share with us how you think IST 
has benefited your facility?
    Mr. Wattier. Well, in addition to obviously reducing the 
risk, which is our primary motivation, there would be a lot of 
other benefits of reducing the storage of chlorine on-site. 
There are a number of regulatory requirements that go along 
with the storage of gaseous chlorine that involve everything 
from worker training to there is obviously the public 
information aspect of this that would be much preferable if 
chlorine was not stored on-site. So there are a whole host of 
regulatory requirements that come in when you are handling 
gaseous chlorine that I think would be eliminated or 
streamlined by reducing or eliminating the amount of chlorine 
that you have on-site, the chlorine gas.
    Chairman Thompson. Thank you.
    Dr. Pulham, are those facilities owned by Siegfried 
presently in compliance with all New Jersey laws?
    Mr. Pulham. Yes, we are.
    Chairman Thompson. In pursuit of those compliance laws I 
would assume that you committed considerable capital resources 
and man hours toward meeting those requirements?
    Mr. Pulham. We have, Mr. Chairman. But, in our business, 
pharmaceutical manufacturing, it is integrated with a process. 
So in developing a process and understanding its optimization 
IST is part of the process. It is not new to us. It is 
something that we have always done and have had to do to make 
our products safe not only for patients but also from exposure 
to employees.
    Chairman Thompson. So as a normal, everyday business 
practice you look for, obviously, the safest technology 
possible?
    Mr. Pulham. Yes, sir. We look to optimize the processes. 
But, as I said in my comments, it is not that easy. Because we 
are regulated by FDA, we are regulated by DEA, our customers 
are also regulated by FDA. So for us to effect a change in a 
process can take from 2 to 3 years because of all the approvals 
that a change has to go through. But inherent in that review or 
the change in a process is, absolutely, safety and 
environmental concerns. It is all part of our daily development 
and optimization of chemical manufacturing.
    Chairman Thompson. Thank you.
    Mr. Stephan, we put in this proposed print a budget of 
about $325 million; and that basically takes into consideration 
moneys you are spending already. Have you had an opportunity to 
look at that number and do you have an opinion on it at this 
point?
    Mr. Stephan. Sir, I have not had an opportunity to view any 
of the possible pieces of legislation or had any number 
associated with them so far.
    As you know, we have put in a 2009 request for $63 million 
to cover current CFATS requirements in the current regulated 
community, which assumes around 5,000 facilities. If we would 
add, for example, water and wastewater treatment facilities, we 
could probably double or more the number of high-risk 
facilities that would enter the CFATS framework; and I am not 
certain whether or not that number includes new requirements 
dealing with Ammonium Nitrate point-of-sale registration and 
regulation.
    Chairman Thompson. As well as some red team exercises and 
some other things?
    Mr. Stephan. Yes, sir.
    Chairman Thompson. I yield 5 minutes to the Ranking Member.
    Mr. King. Thank you, Mr. Chairman.
    Secretary Stephan, let me just follow up on a point the 
Chairman was making before.
    Let me also, at the outset, again commend you for the 
outstanding work I think you have done in your position. It is 
a thankless job. You are doing a terrific job at it, I believe, 
so I wanted to put that on the record.
    Just to be clear, following up with what the Chairman said, 
do you believe it is important to include water and wastewater 
treatment facilities in the legislation?
    Mr. Stephan. Sir, I think the additional regulatory 
authority is a very complex issue. But I think, as the Chairman 
or Secretary Chertoff has stated numerous times, that we do 
believe we have a gap in terms of the water sector or the 
wastewater sector across certain facilities. Just let me give 
you an example what I mean by that. This is kind of the same 
situation we had with the chemical industry writ large prior to 
CFATS.
    Lots of people in the water and wastewater business have 
made important security investments and significant security 
investments since September 11. Others have not. For those that 
have made security investments, it is very difficult for me to 
measure the effectiveness of those investments against various 
or multiple terrorist threat vectors or hazards. So I do not 
have the knowledge of understanding that I do underneath the 
CFATS framework with respect to the water and wastewater world.
    But we do have elements of that community, major elements 
of that community that are taking this very seriously. They 
have probably one of the best information-sharing networks that 
we have across our sectors. They have probably the best 
education, training and awareness programs for their sector 
members at the facility level of all the 17 critical 
infrastructure sectors, some of the most committed leadership 
on the part of the other Federal agencies, like the EPA, DHS, 
the FBI, State and local associations and the water sector or 
private council sector members themselves.
    So, again, a complex situation, but we do believe there is 
a security gap inherent with the fact that these pieces do fall 
outside any established regulatory framework. It just makes 
them less-known quantities to us.
    Mr. King. Dr. Pulham, if I could ask you at a very 
practical level, is there any conflict in complying with New 
Jersey's inherently safer technology, regulations and DHS's 
regulations?
    Mr. Pulham. I don't see a conflict. I just don't quite 
understand the need, to be honest. As I said, this IST is so 
inherent in our business. We went through the assessment that 
the State of New Jersey required us to do, and it was about a 
week-long exercise with 10 to 15 of our people facilitated by a 
safety expert, and there were no recommendations. So the 
measures that we take just to run a pharmaceutical chemical 
business incorporates these provisions.
    Mr. King. I guess the point I was trying to make from our 
perspective is, whether we like it or not or you like it or 
not, New Jersey is an activist--I am just wondering, is there 
anything the Department is doing interfering with that? Is 
there anything New Jersey is doing interfering with the 
Department and do you feel that both are in sync and can you 
work with both? Whether you want to or not, as a practical 
matter, can you do it and are you doing it?
    Mr. Pulham. I think, practically, we could.
    Again, I am not so sure that I quite appreciate the need, 
but I think certainly that if it were a requirement we would do 
it, obviously.
    Mr. King. On the issue of background checks, Secretary 
Stephan, have you had a chance to look at the Committee Print 
as to how far it goes, it doesn't go?
    Mr. Stephan. Sir, I believe there are a lot of parallels in 
a previous edition. I understand there is an edition of the 
Committee Print that came out last night or early this morning. 
I have not yet seen that document. But in previous editions I 
think there are some pretty close parallels between what you 
have in your proposed legislation and what we have currently 
inside the CFATS regulation.
    Mr. King. I would like to yield to Ms. Brown-Waite, if she 
wants to follow-up on that issue, because she is very concerned 
with it.
    Ms. Brown-Waite. I thank the gentleman for yielding.
    We have got to be concerned that the draft that we have 
seen of the bill actually doesn't have the specific language in 
there requiring background checks. It sets up the parameters 
for the background checks but doesn't actually require the 
background checks. I think all Americans need to be concerned. 
How can we believe that these chemical facilities are really 
safe if we are not requiring background checks on those who are 
at the highest-risk facilities?
    I would appreciate your comment on that.
    Mr. Stephan. Yes, ma'am, we agree with you.
    I, again, have not seen the latest version of--as this is a 
very continuously-evolving draft piece of legislation. Trying 
to keep up with this has been a bit of a challenge.
    But inside the current CFATS regulation there is a mixture 
of things that have to be considered as part of the facility 
security plan. They include personal identification, 
verification and authentication, you are who you say you are; a 
background check against commercially available private sector 
databases to do a criminal records-type investigation; 
verification of validation of right to work or authorization to 
work under the I-9 process; and then a check against a system 
that would verify whether or not the individual of concern 
would have unrestricted, unfettered access to key elements or 
assets inside a facility's perimeter against a possible 
terrorist nexus or terrorist ties. We feel all those four 
components are critical in terms of the personnel surety 
function of a security plan.
    Ms. Brown-Waite. And the criminal background checks?
    Mr. Stephan. Yes, ma'am, the criminal background checks 
using publicly or commercially available databases, that is a 
requirement in the current CFATS regulation.
    Mr. King. Ms. Brown-Waite, I would like to reclaim my time.
    I would just like to say, Mr. Chairman, again, as this 
process goes forward, and speaking for Mr. Lungren, we look 
forward to working with you and Ms. Jackson Lee and also the 
Department to make sure we get it right; and all indications 
are that this is going forth the way both sides would like it 
to.
    With that I thank you, and I yield back.
    Chairman Thompson. Thank you. I can assure you we will take 
the background situation into consideration.
    If I am not mistaken, Dr. Pulham, for the record, 
background checks for all your employees at your company is 
mandatory?
    Mr. Pulham. Yes, sir, for employees, contractors, anyone 
who comes on-site and customers.
    Chairman Thompson. Mr. Wattier.
    Mr. Wattier. Preemployment background checks are required 
for all of our employees at the city of Long Beach, yes, sir.
    Chairman Thompson. Thank you very much.
    I yield 5 minutes to the gentlelady from California, Ms. 
Sanchez.
    Ms. Sanchez. Thank you, Mr. Chairman, and thank you for 
holding such an important hearing; and thank you, gentlemen, 
for being before us.
    Assistant Secretary Stephan, in your testimony, you 
provided an overview of the consultation and outreach that the 
Department conducted as it began to implement the Chemical 
Facility Anti-Terrorism Standards as required by the fiscal 
year 2007 Homeland Security Appropriations Act; and you 
mentioned initial outreach at the corporate level, publicity of 
the role to security partners, presentations at chemical 
industry conferences and coordination with the State and local 
officials. I think that is all great. But my concern was did 
you mention any--you didn't mention any direct outreach to 
labor, the people who actually work in your facilities and 
would be directly affected by any security threat and who would 
also in a sense be the first responders or be the direct 
attacks and would be the first ones at the incident and the 
first ones to have some type of response to that.
    So my question is, did the Department do any outreach, 
request any information, have anybody at the table that will be 
from, for example, labor unions during this initial and ongoing 
implementation of the CFATS?
    Mr. Stephan. Yes, ma'am. I think through two principal 
means. First, through the publication of this regulation in its 
advance notice form and the Appendix A draft piece. We did that 
through the Federal Register process and received a number of 
comments from labor unions, environmental groups and others 
that would have the concerns that you mention.
    We also, in concert with the leeway we have to conduct 
listening sessions, basically invited lots of folks with 
interest in this ongoing evolution of the regulation and the 
Appendix A piece to come and provide their comments to us.
    I would have to go back and check with my staff to verify 
that labor union representatives or environmental groups were 
indeed among those audiences. I don't have personal knowledge 
of everybody that was in those listening sessions. But I think 
principally through the Federal Register process, as well as 
the listening sessions, we were able to gather sufficient 
comments from those types of organizations.
    Ms. Sanchez. So what you are saying is you basically left 
it up to labor unions to look through the Federal Register to 
figure out that they were going to be involved in the process. 
You didn't really make an outreach to the workers' groups to 
see if they--I mean, they have a direct--as I said, they have a 
direct effect to this and they are the first responders, in a 
sense.
    Mr. Stephan. A member of my staff advised me--that does 
have personal knowledge--that we did make two outreach efforts 
and conducted two listening sessions specifically with labor 
union groups and their representatives during the final rule 
development as well as the Appendix A piece.
    Ms. Sanchez. Great. I would like to get that information, 
for you to go back and to document for me how you did the 
outreach to the workers who actually would be affected by the 
regulations and who would actually be affected by any incident 
that might happen.
    Mr. Stephan. Yes.
    Ms. Sanchez. I would also like to know what you are going 
to do in the future to keep these people in the process.
    Mr. Stephan. I guess we will go back and use the same 
process that we--any type of possible change or amendment to 
the documents, the regulation itself or the Appendix A, will go 
back to the Federal Register piece. We will mobilize the same 
system we used to convene these two sessions with those types 
of organizations and continue to make this as inclusive as 
possible as we go forward.
    Ms. Sanchez. I would suggest that instead of treating them 
as you would the normal public in just the Federal Register 
process, that because they are so heavily involved, because 
they are really the ones who might be involved in some type of 
attack, and because they are the ones who are the eyes and ears 
to what is happening, you might want to figure out some way in 
which you make sure that they are involved and helping in the 
process. I have always found that these groups have first-hand 
knowledge of things that might occur, just as I am sure one of 
the employers might--you know, when you are trying to figure 
out how to make a process better down on the plant floor you 
probably ask your employees because they are the ones who are 
doing the motions every single day. Am I not correct about 
that?
    Mr. Pulham. Absolutely.
    Ms. Sanchez. So they might have some knowledge.
    Mr. Stephan. We will follow the two-track approach, the 
Federal Register notice, and we will convene the listening 
sessions with those types of groups represented as we have done 
to get to this point.
    Ms. Sanchez. Great. The Department's current process 
classifies chemical facilities into four different tiers based 
on risk. In this process, what is the most important factor in 
determining whether a facility is high-risk?
    Mr. Stephan. I think at this point in time the most 
important factor is direct impact on human public health and 
safety, human lives and injuries that would be suffered in the 
event of a terrorist attack against that type of facility 
housing the chemical of interest above a certain threshold 
quantity. So public health and safety, human lives and 
injuries.
    Ms. Sanchez. I also have a question, and I am glad that 
Long Beach Water is here today. Obviously, right in my own 
backyard. I want to always let you know we really value the 
fact that you come out here and that you testify before our 
committee; and, of course, I think Californians do it better 
than New Yorkers.
    Mr. King. I move to----
    Ms. Sanchez. So we are only interested in the cutting 
ground with respect to what you are working on.
    My big question is, the project that is your on-site 
chlorine gas generation demonstration project, you say that the 
system will reduce the amount of chlorine gas being shipped to 
our Nation's railways, which of course will reduce the risk, 
especially out the highway, if you will, and our people out 
there, how long will it take you to complete all the phases of 
this project? Your testimony said that it costs between $2 
million and $3 million to implement this new system. How are 
you going to recover that? How is it going to affect your 
costs? I am just trying to get a feel for how others upgrade to 
protect our citizenry and yet at the same time figure how we 
are going to afford it.
    Mr. Wattier. Well, $2 million to $3 million--to put that in 
context, our total annual budget--annual operating and capital 
budget at the Long Beach Water Department is about $100 
million. So a $2 million to $3 million one-time expenditure, 
while significant, is something that is certainly achievable 
within our financial capabilities. In fact, a number of 
utilities around the country of our size, even before 9/11, 
chose on their own to make some of these conversions. So there 
are a number of them that have already made this conversion 
within their own financial capability.
    There will also be additional increased, ongoing operations 
and maintenance costs associated with any conversion to any 
alternative technology, but those are also financial 
obligations that we think are well within our financial 
capability. So we will handle them within our local financial 
capability through our revenues that we get from our 
ratepayors.
    Ms. Sanchez. Remind me if your particular agency has to go 
through a regulatory process in order to decide what it is that 
you are charging your customers.
    Mr. Wattier. Well, under California law, there are various 
processes we have to go to change our rates every year and have 
a formal public hearing process and all that. We think again 
this can be incorporated within that existing process.
    Ms. Sanchez. What advice would you offer to other water 
treatment facilities that are considering implementing this 
type of process?
    Mr. Wattier. Well, again, I think there are several 
alternatives that should be considered. The one that we are 
pursuing is something that many people didn't view as a proven 
technology a few years ago, nor did we. But we have tested it 
out, and we are now comfortable that this technology is now 
reliable to the extent that we are ready to move ahead.
    I would encourage my colleagues to talk to their other 
utilities who have made changes to review what has been done to 
see what has worked and what has not worked. The water 
associations have already done a lot of that good communication 
sharing among the utilities, and so I would just encourage 
people to look at what others have done and get some lessons 
learned and then find the thing that works for them.
    It will be a case-by-case, very site-specific analysis. 
Because in some cases space constraints might direct you in one 
direction versus another. In some cases, electrical capability 
might move you in one direction. But there are several 
alternatives. I would encourage my colleagues to consider the 
full gamut and then pick the one that works best for them.
    Ms. Sanchez [presiding]. Great. Thank you for your 
testimony today.
    I will now recognize for 5 minutes Mr. Broun.
    Mr. Broun. Thank you, Madam Chairwoman.
    I want to begin by saying that I am an original intent 
constitutionalist and I believe that the main function of the 
Federal Government should be the defense of our Nation, whether 
it is national defense or homeland security. I was very honored 
and pleased to be assigned to this committee, and I believe 
that the main purpose of this committee is to authorize the 
functions of DHS. I believe it to be relevant the committee 
must pass an authorization bill before the House considers a 
DHS appropriations bill later this spring, and so I encourage 
the Chairman and this committee to do exactly that.
    Now, having said that, Secretary Stephan, I have had an 
opportunity to sit down with those in the industry that have 
significant concerns about the effect that this Committee Print 
has on the implementation of the current regulations. I think 
it is important to secure our Nation's high-risk chemical 
facilities. But, in doing so, it is important that new 
legislation does not disrupt the work that DHS is currently 
doing to secure these facilities.
    Do you believe that the industry's concerns are valid and 
what impact would this Committee Print have on the 
implementation of the current regulations? If you would in your 
response I would like for you to address its impact on the 
Maritime Transportation Security Act regulated facilities.
    Mr. Stephan. We would have a concern that any potential 
regulation--again, not having seen the latest draft out of the 
committee--would involve a complex and very complicated rule-
making process that would involve a considerable amount of 
time. So from several dimensions I come at you with this plea 
for assistance. Please do no harm in developing a new proposed 
piece of legislation to the current CFATS implementation. It is 
very important to sustain the momentum, sustain the important 
partnership relationships and keep this moving. Because we 
absolutely need to do this, especially in light of the fact at 
the end of this year we will be undergoing a transition of 
administration one to another and we need to keep the 
continuity and the flow moving.
    Also, people have begun to make very significant 
investments on the private sector side with respect to the 
current CFATS requirements; and if those change to a 
significant degree we now no longer offer continuity and 
consistency and stability in terms of our private sector 
partners that are absolutely trying to do the right thing. 
Again, taking this very seriously, there is no one I work with 
on a daily basis in the industry that is not taking this very 
seriously; and we want to do the right thing here.
    This also throws curve balls to our State and local 
government counterparts that have to take a very complex role 
in a partnership in the planning process and the implementation 
process itself.
    So, again, lots of people at stake here, lots of momentum, 
lots of continuity.
    Sir, what specific aspect of the MTSA rule would you like 
me to address?
    Mr. Broun. Well, the industry leaders that came and visited 
with me about it were just concerned about the implementation; 
and their concern was that the current regulations are being 
complied with and they are just concerned about any new 
regulations being put on top of the current ones, not only the 
cost but the implementation of such. So that is the reason I 
ask you.
    Mr. Stephan. Yes, sir. I think the same logic that I just 
articulated would apply in the case of the MTSA-regulated 
facilities and also for the committee's awareness. We have a 
working group with the Coast Guard and actually TSA to make 
sure that we are harmonizing the various security-related 
authorities regarding hazardous materials, chemicals of 
interest, so on and so forth, between the three principal DHS 
components that have a dog in this fight--again, the Office of 
Infrastructure Protection, TSA and Coast Guard--to make sure 
that we are harmonizing and that there is not a seam or a gap 
between us that could be exploited by our adversaries.
    Mr. Broun. Do we have any data or even a guesstimate about 
what these unfunded mandates are going to cost the industry and 
government across the Nation that ultimately the consumer is 
going to have to pay?
    Mr. Stephan. No, sir, I have not had time to conduct that 
analysis. In fact, I have diverted considerable resources from 
CFATS implementation to figuring out the new Ammonium Nitrate 
authority going down to the point-of-sale.
    So, again, I have a limited resource pool now; and you 
ladies and gentlemen should be aware of this. This is a year of 
program build for CFATS. We are building up personnel, we are 
building up capability, and we are building up a boots-on-the-
ground partnership effort here this year. Any significantly 
impactful new legislation with additional requirements has the 
potential of pulling more resources off implementation of the 
current regulation into something else, and some of the 
provisions that I have seen in previous aspects of the 
legislation have appeared to me to be a very significant cost 
behind them or associated with them.
    Mr. Broun. Thank you. I yield back.
    Ms. Sanchez. Thank you, Mr. Broun.
    I just want to also make a note. Staff tells me that this 
will not take place until October, 2009, is that correct?
    Mr. Stephan. In my understanding, the goal or the intent of 
the legislation is to do something about the inevitable sunset 
of the current CFATS authority October 1, 2009.
    Ms. Sanchez. Great. I just wanted to put that on the 
record.
    My good friend from North Carolina, Mr. Etheridge, for 5 
minutes.
    Mr. Etheridge. Thank you, Madam Chairwoman.
    Let me thank each of you for being here this morning.
    Dr. Pulham, I have heard from chemical facilities in North 
Carolina that there are some problems with the chemical 
terrorism vulnerability information that DHS is asking--that 
they are asking for under CFATS. My question to you, has DHS 
classification of CVI been a problem that keeps you and your 
colleagues from controlling your own information or knowing 
what you are able to do with it? Also, have you been precluded 
from sharing information with State and local authorities 
because the information has been classified CVI?
    Mr. Pulham. As I said in my opening comments, Siegfried is 
a little different from many pharmaceutical manufacturers in 
that the lion's share of our product line is controlled 
substances. So, by nature, some of the information is not 
readily available just for security reasons. But we are very 
controlled by DEA, we are very controlled by FDA and also DEP. 
So all of our systems and all of our processes are very 
transparent to authorities. So in this way it has not been a 
problem for us at Siegfried.
    Mr. Etheridge. Okay. Thank you.
    Assistant Secretary Stephan, let me follow that up with 
you. What is DHS doing to rationalize the classification regime 
of CVI so that companies can maintain control over their 
proprietary information, ensuring the proper running of their 
businesses, and appropriately communicate with local law 
enforcement about their security needs without risking the 
disclosure of classified information?
    Mr. Stephan. Sir, thank you for your question.
    First of all, CVI is a very important program. We are 
asking industry to give us information that is very 
comprehensive, very detailed. We have never had this 
granularity before in terms of vulnerability and security 
information, hence, the need to make sure 1,000 percent 
protection of this type of information.
    But also we feel it very important--in fact, it is a 
requirement--to make sure that that information gets into the 
hands of those with a need to know, and those who have been 
properly certified and cleared to have access to that 
information, to include State and local officials, law 
enforcement, first responders, emergency managers--absolutely 
No. 1 goal of this program.
    But we have to do it in a controlled way so that we don't 
in some way, shape or form inadvertently have this information 
end up in the hands of terrorist planners and operators. That 
is the No. 1 goal, as well, of this program.
    We pushed the initial user guide, defining the CVI program 
guide, attempting to make it user-friendly. We have had some 
very overwhelming feedback in terms of certain aspects of that 
user's guide. Because of that feedback, we have had from the 
private sector, State and local folks--in fact, we have got a 
working group set up specifically with State and local 
government partners to help us sign these issues out.
    Our Office of General Counsel is in the process of 
modifying that into a second user's guide that I believe will 
answer the concerns of both industry that has to work with this 
new regime as well as the State and local officials they would 
have to work the regime.
    Mr. Etheridge. All right. Let me follow that up with 
another one, because, as you know, there is a great deal of 
concern about the security--chemical security regulation as it 
relates to rural and small businesses, and really, rural and 
small water systems because there are a lot of them in this 
country. There are very few water systems the size of New York 
and San Diego and large systems; there are a lot of small ones.
    Could you please explain any efforts the Department is 
trying to take to mitigate these concerns and whether any 
subsequent legislation should include some specific exemptions 
for small systems where we will have a tough time complying or 
may not be able to comply with the major changes that would not 
have resources?
    Mr. Stephan. Yes, sir. Currently, there are no water 
systems or wastewater systems that have fallen inside the 
regulatory authority of the CFATS regimes. So those are 
completely off the table in terms of this program, for me, in 
terms of some of the things that represent concern to small 
businesses, household farmers across the country.
    Through the appendix A process, we have attempted very 
clearly to articulate the fact that the intent of this 
authority is not to impact small businesses, small households, 
individual family farms across America that really don't 
represent a significant public health and safety risk. So we 
have upped the threshold screening quantities where people 
would have to enter in the first part----
    Mr. Etheridge. What is that threshold?
    Mr. Stephan. Sir, it varies by chemical. For example, for 
ammonia nitrate, it is 2,000 pounds. But we have gone out 
because we have found that the 2,000-pound piece could, in 
fact, get us hypothetically down to the individual farmsteads 
across the country; so we have put a temporary hold on any 
regulatory compliance requirements to the top screen entry 
process for those folks until we go through this first wave of 
data that will take us down to the distributor level.
    Then we are going to push out a second questionnaire, an 
automated questionnaire, to the distributors to really help us 
zero in on where in the farming operations community--
principally, pesticides or fertilizers--do we have people that 
do hold in store for significant amounts of time the quantities 
of these kinds of substances that we are concerned about.
    So I think we have done a lot, listening to the concerns, 
finding out more about the operational nature of the food and 
ag world and how CFATS is critically impacted. We have frozen 
those things where we need more time and more information, and 
we will deal with them during the summer time frame as we 
gather the analysis from this first round of data.
    Mr. Etheridge. Thank you. I yield back.
    Ms. Sanchez. I thank the gentleman from North Carolina. Now 
we will have 5 minutes with Mr. Dent.
    Mr. Dent. Thank you. I guess my question will be to Dr. 
Pulham.
    This whole notion of inherently safer technologies, it 
seems to be a practice that was born out of industry; is that 
correct, sir?
    Mr. Pulham. Yes, sir.
    Mr. Dent. I guess the question I have too is, I represent 
an area where we have a large company that actually designs and 
builds chemical plants and gas plants. One thing that I guess 
concerns me: It is always in my understanding that some of the 
most toxic and dangerous chemicals produced are often used in 
the manufacture of semiconductors. Is that an understanding 
that you have as well?
    Mr. Pulham. It is. But that is not my area; mine is 
pharmaceuticals.
    Mr. Dent. It seems to me that this inherently safer 
technology is an engineering practice or a process. Is that a 
fair assessment?
    Mr. Pulham. Yes. It begins right from drug discovery and it 
goes all the way through development, scale-up, pilot and 
commercial manufacturing.
    Mr. Dent. If we, as a Congress, were to mandate inherently 
safer technology under certain circumstances for those high-
risk facilities or, I guess, most hazardous of chemicals, do 
you believe that we would in some circumstances maybe be 
incenting those facilities to manufacture those particular 
chemicals offshore as opposed to in the United States?
    Mr. Pulham. It certainly has happened in the pharmaceutical 
industry. When the regulations have become too strict or too 
onerous, companies have outsourced some of the supplies of--
some of the, certainly, early raw materials to offshore 
manufacturers. So I wouldn't be at all surprised if that were 
true also in this case.
    Mr. Dent. What is a typical wage you would pay to somebody 
working in a chemical plant or a gas plant?
    Mr. Pulham. Fifty dollars an hour.
    Mr. Dent. Fifty dollars an hour. So I guess what you are 
suggesting is that we should be very careful in terms of how we 
proceed on this issue. I understand why.
    Mr. Pulham. If I could just add, having worked for FDA for 
27 years, I have seen it many times where we take tough 
regulatory positions, try to impose a lot of GMP or other 
requirements on companies, and so the company will just provide 
that material from one of its other facilities in Europe or the 
Far East or the Mideast.
    So the thinking is that we are very strict in controlling 
these companies, when, in fact, we are losing control because 
they are now manufactured offshore, we have less control, less 
oversight of the facility and the quality of the product.
    Mr. Dent. Is inherently safer technology more of a--it 
seems to be more of a--is it more of a workplace safety process 
or procedure than it is a chemical plant security tool?
    Mr. Pulham. No, sir. It is more of a process safety and 
more--to deal with the process and the product than it is with 
security. So----
    Mr. Dent. Yes. I guess that is the point, I guess, I am 
trying to make. How will this affect the overall security of a 
plant as opposed to the actual safety of the work site, which 
of course is important, but is that the role of the homeland 
security community?
    Mr. Pulham. Right. In my view, it has more to do with the 
safety of the product and the manufacturing process than it 
does with security of the site. So the way we optimize 
processes, the way we control the reactants and ingredients 
that go into the processes to obtain ultimate yield in a safe 
environment for the operators is of utmost concern with the IST 
aspect in my view, not necessarily in the security of the site.
    Mr. Dent. Understood. I guess my next question will be 
then, I guess, to Mr. Wattier.
    How will the implementation of this IST affect the 
operation of water treatment facilities? How will the burden of 
installing these technologies affect the water use rates of 
local taxpayers who ultimately, you know, have to pay for the 
implementation of these technologies?
    Mr. Wattier. Well, again, we estimated for our situation a 
$2 million to $3 million one-time cost which again--put that in 
the context of a $100 million budget, we would incorporate that 
into our long-term rate setting. Then the ongoing costs would 
certainly be less than 1 percent of our ongoing operations and 
maintenance costs, comparing--switching to an on-site 
generation technology as opposed to the current practice of 
buying chlorine.
    So I don't see any significant ongoing impact on our rates 
in terms of the O&M costs.
    Mr. Dent. Thank you.
    Do you also feel the regulatory scheme for water 
purification facilities, currently in existence under the Safe 
Drinking Water Act and the Waste Water Treatment Act, is 
appropriate to ensure the physical security of our water 
treatment facilities? Are these facilities safe now?
    Mr. Wattier. I believe that they can be made safer by 
assistance from the Department of Homeland Security.
    That was my testimony, sir.
    Mr. Dent. Okay. I will yield back my time.
    Ms. Sanchez. I thank the gentleman.
    Next on the list would be Mr. Pascrell for 5 minutes.
    Mr. Pascrell. Thank you, Madam Chairwoman.
    I just wanted to make clear in my own mind, we are talking 
about the control and protection of particularly lethal 
chemicals and their mixtures. We have already determined that 
modern technology could bring us to the point of recommending 
different mixtures to prevent or minimize the amount of damage 
that could be done in an accidental or an intentional attack.
    Second, we are talking also about the security of the 
facility within which this process takes place, be it fencing, 
be it personnel, be it modern technology. I wanted to make that 
very clear because I am very disappointed when we talk about 
fear.
    See, we don't want to establish fear in people. Yet, how 
about these questions, how much will it cost the consumer? You 
know, establish that fear in people so, oh, my God, it is going 
to cost that much.
    You said, Secretary Stephan, in your explanation of your 
chemicals of interest list, we are talking about chemicals that 
are toxic, that are flammable, explosive chemicals that have 
the potential to create significant adverse consequences, in 
your own words.
    Mr. Stephan. Yes, sir. Correct.
    Mr. Pascrell. You talked about theft and aversion of these 
chemicals, that if they are stolen, they have the potential to 
go into the hands of the wrong people.
    Mr. Stephan. That is correct, sir.
    Mr. Pascrell. And risk for sabotage if they are mixed with 
readily available materials have the potential to create 
significant adverse consequences for human life.
    Most of that is your own words, right, Mr. Secretary.
    Mr. Stephan. Yes, sir.
    Mr. Pascrell. Now, Dr. Pulham, I am proud to say that the 
State of New Jersey is a standard-bearer nationally for 
chemical security and chemical security protections, and I 
believe the State should be applauded for that. In fact, New 
Jersey passed the Toxic Catastrophic Prevention Act way back in 
1986 when, I imagine, few people even believed chemical 
security was an issue.
    In April of last year the Department of Environmental 
Protection proposed amendments to the act to require all 
companies subject to the program to evaluate the potential of 
incorporating inherently safer technologies at the facilities. 
I think it is worth noting that in New Jersey, the inherently 
safer technology requirement under the chemical sector best 
practice standards, something like that, represents a 
practicality issue, practicability test. It is not mandatory 
that a covered facility implement this process, only that they 
evaluate it.
    So, Dr. Pulham, the Committee Print for the Chemical 
Facility Anti-Terrorism Act calls for the same kind of non-
mandatory IST approach for the great majority of facilities 
like yours--like yours--which seem to be operating just jim-
dandy. Yet in your testimony, you call for this committee to 
take a less rigorous approach to IST standards. You even 
referred to this as paperwork, this is basically paperwork.
    Why can't it be implemented by the Federal Government if 
inherent safety is a concept that the chemical industry 
invented, as you said, and we consider it continuously as we 
design and modify our production processes? Can you tell this 
committee why you believe facilities like yours in New Jersey 
should not have to even evaluate ICT standards when they have 
not hindered your ability to operate profitably and efficiently 
in the State of New Jersey?
    I can't wait to hear this answer.
    Mr. Pulham. What I said was that we went through the 
requirements, we did an IST evaluation, we did an SVA 
assessment, we did all of those----
    Mr. Pascrell. You followed the law?
    Mr. Pulham. We did all of those evaluations and found that 
there were no opportunities for improvement. They had no impact 
because the nature of our business required that we already had 
these implemented. That is what I meant.
    Mr. Pascrell. You are still working in a profit and you are 
still working efficiently in the State of New Jersey underneath 
this ``paperwork,'' as you call it, standard?
    Is that what you are trying to tell us?
    Mr. Pulham. I would say underneath the requirements for a 
pharmaceutical/chemical manufacturer which incorporates these, 
absent this requirement to go through the assessment.
    Mr. Pascrell. So many of the facilities in New Jersey are 
already operating under the American Chemistry Council's 
Responsible Care Program, as you well know.
    Are any of your facilities already operating under a 
security program such as the Responsible Care Program? Because 
it is basically a private program. Are any of yours?
    Mr. Pulham. Yes. Yes.
    Mr. Pascrell. Will the new CFATS regulations which we are 
talking about require those facilities to make significant 
security upgrades?
    Mr. Pulham. Since the red line came out again last night, I 
don't know all of the requirements. So that is hard for me to 
assess.
    Mr. Pascrell. How do you feel about the Committee Print's 
provision enabling facilities to submit alternative security 
procedures that are produced for other regulatory purposes, in 
whole or in part, to meet the security assessment or the 
security plan improvement? How do you feel about that?
    Mr. Pulham. The DEA mandates certain security, physical 
security requirements on us, so--we can't deviate from those, 
so we have fences with razors, we have cameras all along the 
fence lines. We have card access not only to the facility, but 
to each building within the facility, restricted access. We 
have vaults that have certain construction requirements that we 
are mandated to have to store certain products in. So our 
physical security program is pretty well established by the 
requirements of the DEA.
    Mr. Pascrell. Well, we would--can I just finish my 
statement I just started?
    Ms. Sanchez. Mr. Pascrell, you are 3 minutes over.
    Mr. Pascrell. I know. Can I ask--I am not going to ask a 
question, but make a statement.
    Ms. Sanchez. Make a statement. Make it short.
    Mr. Pascrell. Thank you, Madam Chairwoman. This is very 
important. We have to understand the urgency of this particular 
situation.
    Why was this committee a few years ago so concerned about, 
for instance, the 2-mile stretch on the Turnpike then? There 
was good reason. We just didn't invent it. We didn't wake up 
one morning and say, Oh, I wonder what is happening in the 
chemical industry over in New Jersey.
    We are talking about the whole country, first of all. There 
was a vulnerability. So for you to talk about paperwork to me 
is very demeaning when the State--I know the work that this 
State put in on trying to put the process together, and I would 
ask you, because of the urgency, to take a second look at this 
before coming out, guns blazing, because I am ready myself.
    Thank you, Madam Chairwoman.
    Ms. Sanchez. Dr. Pulham, before we go on, I just have a 
quick question with respect to the offshoring issue. Do you 
have any knowledge of any facilities that are leaving New 
Jersey because of New Jersey's chemical security regulations 
regarding IST?
    Mr. Pulham. Not specifically the chemical security 
regulations.
    Ms. Sanchez. Thank you, Doctor.
    Next we will have Mr. Davis of Tennessee for 5 minutes.
    Mr. Davis.
    Mr. Davis of Tennessee. Thank you, Madam Chairwoman. I 
would like to thank the panel as well. Thank you for being here 
today. Thank you for what you do in our economy and in our 
country. I would like to start with Secretary Stephan, if I 
may.
    The Committee Print includes the requirements that the 
Department in certain situations mandate inherently safer 
technologies that reduce the risk of terrorist attacks. Is 
there a good definition of what inherently safer technologies 
are?
    Mr. Stephan. Sir, I think the concept of inherently safer 
technologies means many things to many people. In some cases it 
may refer to a process, in some cases it may refer to the 
reduction of a chemical, in some cases it may refer to the 
elimination of a chemical on a particular facility's premises. 
So I am not sure that I understand clearly a single definition 
of that term.
    Mr. Davis of Tennessee. It always concerns me when we are 
asking an organization or group or any entity to move forward 
when there is not a clear, concise definition. So I hope we can 
move forward on that.
    Does the Department have a methodology developed to assess 
the differing levels of risk for certain processes versus other 
processes?
    Mr. Stephan. Sir, our methodology is a security-based 
methodology. It deals with aspects of consequentiality in terms 
of public health and safety.
    The next phase, we will take a look at the impacts on 
national/regional economy, national mission accomplishments, 
such as impacts on the national security establishment if 
certain things were to happen at a certain chemical facility. 
We do not have a methodology in place that would evaluate 
different processes or safety-related processes.
    I would suggest that perhaps the EPA that regulates the 
safety process world of the chemical industry might be a better 
place to go for that answer.
    Mr. Davis of Tennessee. Considering that the Department of 
Homeland Security issued the current regulations only 8 months 
ago, do you believe Congress should be acting now to codify and 
expand these regulations? Or should we wait and see if what we 
have already done is working well?
    Mr. Stephan. Sir, in my opinion, as the implementer of the 
existing, very complex set of rules and regulations that we 
have to push out the door, I have to maintain 100 percent focus 
on getting what we currently have in terms of authority and in 
terms in writing a rule that is very complex and reaches across 
the United States. I have got to dedicate everything I have to 
getting that out the door. Significant new changes beyond 
simply allowing the current CFATS authority to continue beyond 
October 1, 2009, would not be my preferred way to do business.
    I would also ask that the committee consider the concept of 
time in terms of lessons learned in the implementation of the 
existing program and how they might apply to future legislation 
for something that has only been around for a few months. We 
don't have the lessons learned captured in granular detail; 
they just haven't appeared, so that they would be useful to you 
in some future legislation effort that would involve a 
rulemaking.
    So I would say, give us some time to get this in place. 
Don't allow the wind taken out of the sails and let us go full 
blown to getting this program up and running in transition to 
the incoming administration, as it should be.
    Mr. Davis of Tennessee. Thank you, Mr. Secretary.
    Dr. Pulham, you stated that being mandated to adopt IST 
could be dangerous. Could you explain that statement?
    Mr. Pulham. Pardon me?
    Mr. Davis of Tennessee. You have stated that mandating IST 
could be dangerous. Can you explain that statement?
    Mr. Pulham. Yes. What I mean is, if someone mandated us to 
use an alternate chemical, for example, or an alternate 
process, and we had to do that even though our own assessment 
was that it was not the safest, that could be dangerous. You 
know, the developers, the innovators of a process and a product 
are really the experts in that process and the ramifications of 
it. So I am concerned there is a potential that if someone from 
the outside then takes a look at this process and mandates 
changes in it without knowing all of the related issues with 
it--so we have worked with the process for 10 years maybe 
bringing it to market, and we know all of the aspects of it, 
and if we are mandated from the outside to consider an 
alternate process or an alternate free agent, for example, that 
in our view is not as safe, that could be, in my view, 
dangerous.
    Mr. Davis of Tennessee. Do you have concerns that you would 
have people other than scientists making those mandates?
    Mr. Pulham. People that maybe are not as experienced with 
the process as are our scientists. So we have quite a staff of 
Ph.D.'s in various disciplines that develop a process based on 
the literature and their experience with it at a laboratory 
scale, and then it is scaled up to commercialization. So if 
someone that hasn't--doesn't have that in-depth knowledge tries 
to modify it or mandate a modification to it, I think there is 
a potential it could be more dangerous, rather than less.
    Mr. Davis of Tennessee. Thank you. I yield back.
    Ms. Sanchez. The gentlewoman from Texas, Ms. Jackson Lee, 
for 5 minutes.
    Ms. Jackson Lee. Let me thank the witnesses for their 
presentation and express how important this issue is to all of 
us. I hope that with the Committee Print we can find a 
constructive road map and legislative document that is going to 
put in place security for Americans.
    I want to go to the issue of the background checks, Mr. 
Stephan, and note my colleagues had mentioned that the 
background checks were not mandatory. Of course, in the 
Committee Print on page 8, we have a listing of the issues that 
should be addressed in doing background checks and suggesting 
that they should be done.
    Is a background check being mandatory something that the 
administration would support?
    Mr. Stephan. No. In terms of the current CFATS regulation, 
that is one of the criteria that would constitute part of the 
security plan in terms of the performance measure that we have 
against personnel surety, that a criminal background check 
using publicly available commercial databases is an important 
component of a security plan.
    Ms. Jackson Lee. Is it now mandatory or as one of the 
elements of the security plan?
    Mr. Stephan. As you will recall, based on the authority we 
have, we don't have the authority to make any single element 
mandatory inside the CFATS framework. But that is one of the 
recommendations we have inside the----
    Ms. Jackson Lee. Or if the legislation made it mandatory, 
you would have the authority. So I am asking you, in terms of 
Committee Print, would that make for a more secure setting to 
require that background checks be done?
    Mr. Stephan. We support a requirement for a background 
check, as stated in the interim final role for the CFATS final 
regulation.
    Ms. Jackson Lee. Would you go to the next level of making 
sure that there is an element in that? I am asking you, do you 
want to make that element mandatory?
    Mr. Stephan. I don't want to make any statement in favor of 
or against a piece of proposed legislation I haven't had a 
chance to look at. But generally, I am supportive of the 
concept of a background check, a criminal background check, as 
part of the personal surety element of a----
    Ms. Jackson Lee. So you would be open to the structure that 
presently exists, where it is an element; or you might be open, 
as well, to where it might be mandatory?
    Mr. Stephan. If the current CFATS authority allowed me to 
make that piece mandatory, I believe that would be a wise thing 
to do.
    Ms. Jackson Lee. Okay.
    Let me also ask you that you have gotten a budget under the 
fiscal year 2008 budget, and it is my understanding that 
Congress has provided the CSCD a substantial boost from the 
President's budget.
    My question is, do you now have enough funding for 
inspectors and for training?
    Mr. Stephan. In terms of--this program is being implemented 
in phases, and in terms of the program work activities and 
objectives, milestones, deliverables for fiscal year 2008, the 
answer is ``yes.'' We, of course, bleed over now into the 2009 
request where the administration has requested $63 million; and 
I believe that is an adequate amount of money to realize our 
goals and objectives for the program in fiscal year 2009.
    Ms. Jackson Lee. You believe that or you really are 
committed and dedicated to the fact that you have enough money?
    Mr. Stephan. There is not a 100 percent, certain thing 
anywhere in my life. Again, the budget assumes a regulated 
universe of 5,000 facilities. Based upon our preliminary 
tiering analysis, that we are doing now, if that universe of 
regulated facilities exceeds 5,000, then of course we would 
have to go back within the administration and talk about that, 
and then of course come over here following a process to have a 
dialog with you.
    But if you assume 5,000 is the number of facilities that 
would fall in this framework, the budget numbers that you have 
seen from the administration are adequate to do the job.
    Ms. Jackson Lee. Well, let me thank you for supporting the 
administration. I frankly believe they are not.
    Let me quickly raise this question, Dr. Pulham, to tell 
me--and I want to get it out to answer it before the bell goes 
off--to speak to the lack of difficulty in implementing the 
IST, which has been discussed before, which is contemplated in 
the Committee Print.
    The second question is: The value of creating chemical 
security excellence centers so that you involve the academic 
community in devising new technology as it relates to security 
in that arena?
    Mr. Pulham. Yes, ma'am.
    As I said earlier, our industry is heavily regulated by DEA 
and FDA. So for us to make a change in a process is not an easy 
thing and would take from 2 to 2\1/2\ years to implement. Our 
customers have applications with FDA that have to be amended. 
We would have to change our process. They would have to 
reformulate the drug product, do studies, stability studies and 
efficacy studies; and all that would have to go through FDA 
approval.
    In addition, the DEA controls a quota that we are allowed 
to produce against. So it is very difficult for us to make a 
change in a process without severely interrupting the supply to 
our customers, or we are certainly taking a long time to affect 
the supply.
    From a security point of view, we have, as I mentioned 
earlier, many layers of security at our facility because of the 
nature of the compounds that we handle. So we have things from 
card access to cameras to guards at all the entrances and 
exits. So just because of the nature of our business, we are 
very heavily controlled by DEA and the types of security 
systems that we have to have in place.
    Ms. Jackson Lee. You wouldn't have any problem complying 
with the rules?
    Mr. Pulham. Implementing a change would be difficult, so if 
we said we had to change the process, that would be difficult 
for us to do in a timely manner.
    Ms. Jackson Lee. Madam Chairwoman--did you answer the 
question about the academic collaboration that institutions of 
higher learning on cutting-edge technology?
    Mr. Pulham. Yes, ma'am. We have academic advisors so we 
have advisors at the university level to consult on chemistry 
and medicinal chemistry aspects of our business. So that would 
not be difficult.
    Ms. Sanchez. The gentlewoman's time has expired.
    I will now call on Mr. McCaul for 5 minutes.
    Mr. McCaul. Thank you, Madam Chairwoman.
    Thank you to the witnesses for being here today. I had a 
couple of follow-ups from my colleague from Texas on some of 
the questioning--the background, background checks 
specifically; and I believe, Colonel Stephan, you said that 
would be a wise thing to do to make those mandatory. Is that 
correct?
    Mr. Stephan. Yes, sir, in terms of the criminal background 
checks that we currently have as a consideration inside the 
existing CFATS rule, yes.
    Mr. McCaul. I would have to agree with that opinion, as 
well. The current draft of the Committee Print will include 
provisions regarding these checks, and it requires the 
Secretary to provide an appeal and a waivers process to 
employees who undergo the background check.
    Could you tell me how the Department can meet that 
requirement and who would bear the cost of that?
    Mr. Stephan. Sir, again, not having seen the current 
Committee Print, I am not able to probably provide the level of 
detail that is required. But right now, inside the existing 
CFATS regulation, we have the industry consider using 
commercially or publicly available data bases through which to 
conduct a criminal background investigation.
    We also have a consideration for a check of terrorist 
nexus, or terrorist ties, in terms of people to have unescorted 
access to certain preidentified critical areas of inside a 
facility where the most harm could be done if impacted by a 
terrorist attack.
    In practical terms, the only way to get to that problem 100 
percent is to go through the terrorism screening database. That 
is an inherently governmental function, and we would have to--
and of course, under the CFATS rule, are now working with our 
TSA partners in the screening coordination office inside the 
DHS headquarters to figure out how we would make that available 
through a secure, automated portal setup with the facilities 
that would be presenting us a list of people that run through 
that check process.
    Mr. McCaul. I think that would be--in implementing this, 
assuming this passes, I think that would be an excellent idea 
to have that nexus or the ability to check it with the 
terrorist list as well.
    Currently, that is not being done, right?
    Mr. Stephan. Currently, it is not. We are not at that phase 
of the regulation's implementation at that point. But that is a 
thing that is looming on the horizon for about two phases from 
now.
    Mr. McCaul. Is the current background check that is 
implemented more along the lines of an NCIC, sort of FBI 
background check?
    Mr. Stephan. It is a background check that the facility 
would initialize or get under way through commercially or 
publicly accessible databases. Some facilities are working with 
the FBI; some are working with local law enforcement. There are 
a variety of ways that the individual facilities are tackling 
this issue.
    Mr. McCaul. Okay. Thank you.
    With respect to the administration's budget request, $63 
million, do I understand you correctly that that would be 
sufficient to carry out your duties? Or would you need 
additional resources?
    Mr. Stephan. Sir, based upon the universe of things that 
are known to me at this point in time, principally I am 
assuming, until I get my analysis completed here within the 
coming weeks, that I am looking at about 5,000 facilities 
across the country. All of our manpower and budget 
justifications to this point have been against that baseline. 
So I am happy if the baseline stays at $5,000 that the 
resources request that you have seen, as Members of Congress, 
are sufficient to do the job. If we go beyond our regulated 
universe of 5,000 facilities, then I am going to have to go and 
do another costing analysis and run that up my chain of 
command.
    Mr. McCaul. You will certainly let us know about that if 
that happens, right?
    Mr. Stephan. Sir, you will be among the first to know.
    Mr. McCaul. If a subcommittee amendment was added to the 
bill that addressed technical and academic requirements for the 
head of the Office of Chemical Security, how would this 
language compare with the Department's current plans for 
leadership of this office?
    Mr. Stephan. Sir, I think in the previous versions of this 
proposed legislation that I have seen, it kind of puts lots of 
different technical, professional, managerial, leadership 
qualifications all into the--all into one person. I am not 
quite sure that that person exists, to be quite honest with 
you. It is an incredible amount of detail in terms of those 
specific technical, professional, leadership and managerial 
qualifications.
    The concept the Department is pursuing is to achieve all of 
those various technical, professional, leadership and 
management qualifications through a leadership team of three 
individuals. One would be a senior-executive-level technical 
advisor; one would be a senior-executive-service-level deputy 
director; and one would be a senior-service-executive-level 
principal director for the office. So a three-person team at 
the senior-executive level, that between them they would have 
the mix of all of the things that I have seen in the way of 
personnel qualifications in, initially, the amendment of Ms. 
Jackson Lee and, finally, the most recent version of the----
    Mr. McCaul. In your opinion, does that language give you 
enough flexibility to hire the right person for the job?
    Mr. Stephan. No, sir, I don't believe that it does. In 
fact, I believe I will be on a possibly never-ending search for 
that particular individual, because there are so many embedded 
qualifications inside that one position. If that person does 
exist, they are probably making a lot more money somewhere in 
the public sector than I will ever be able to pay them.
    Mr. McCaul. That is very good to know.
    One last question, Madam Chairwoman. I would respectfully 
request this committee pass an authorization bill before the 
House considers the DHS appropriations bill. I think it is 
relevant to this committee. I think if we want to remain 
relevant, we need to do that.
    So I will yield back.
    Ms. Sanchez. I will remind Mr. McCaul that it has always 
been our intent every year to try to pass an authorizing 
committee, even though most of the time the Senate doesn't get 
that bill out of conference with us. So we will probably try 
once again. I can't speak for the Chairman himself, but I would 
imagine he would like to see that.
    I would like to give now 5 minutes--recognize Mr. Markey of 
Massachusetts for 5 minutes.
    Mr. Markey. Thank you, Madam Chairwoman, very much.
    Mr. Stephan, as you know, the legislation requires the 
highest-risk facilities to implement methods to reduce the 
consequences of a terrorist attack, such as substituting 
smaller shipments of less toxic chemicals for the ones that are 
being used. These methods would only be required when they are 
technically feasible, when they would not make it impossible 
for the company to continue to do its business, and when they 
would not result in the creation of a new, high-risk facility 
somewhere else.
    Does the Department support these provisions?
    Mr. Stephan. Sir, again, not having seen those provisions 
in terms of the most recent draft of the Committee Print, I 
think I would like to make a point that I am a security guy, 
and I am very comfortable talking about things in my area of 
core competency, which is security.
    When we start talking about process safety, reduction of 
chemicals, possible rippling effects across the national 
economy, I soon get out of my area of core expertise as well as 
out of the area of core expertise of the inspectors that we 
would have on the ground. I would feel very bad one day if I 
woke up, and because of a decision that we made, for example, 
to reduce a chemical, change a process, eliminate a chemical 
and approve that as part of somebody's chemical facility 
security plan three States over, we have now somehow 
inadvertently stopped the flow of safe drinking water into a 
very large----
    Mr. Markey. No.
    I am saying, the legislation in the earlier drafts, as 
well, contains similar language. Would you support it if those 
concerns which you just mentioned were dealt with and were 
giving you the flexibility to deal with it?
    Mr. Stephan. Sir, again, I would like to not make myself, 
by virtue of this proposed legislation, into a safety or a 
process expert. I want to maintain my security core competency 
and make----
    Mr. Markey. That is what we are trying to do. We are trying 
our best to reduce the need to have you do your job by 
obviously substituting less dangerous chemicals, so you have 
less to work on.
    As you know, there have been numerous attacks in Iraq using 
chlorine cylinders as weapons. According to press reports 
several weeks ago, undercover New York Police Department 
investigators secretly set up a fake water purification company 
last year to demonstrate how easily and anonymously terrorists 
could purchase toxic chlorine on the Internet for a deadly 
chemical strike against the city.
    Evidently, last June, undercover officials successfully 
purchased three 100-pound cylinders of chlorine using the 
Internet and were never once asked for an ID. They concluded 
that at the present time, few, if any, barriers stand in the 
way. That is the New York Police Department.
    Do you think the vendors of chlorine and other dangerous 
chemicals should be required to verify the identity and 
legitimacy of orders of these dangerous chemicals, since that 
sort of validation is already required for the sales of 
radioactive materials that could be used to make a dirty bomb?
    Mr. Stephan. Sir, let me answer that question by just 
reading you very briefly from the current regulation that 
addresses your question, I think, fairly clearly.
    Inside our performance-based standard No. 6 under the 
current CFATS regulation, Theft and Diversion, we have a know-
your-customer provision. The facility has an active documented 
know-your-customer program that includes a policy refusing to 
sell chemicals of interest to those who do not meet pre-
established customer qualification criteria such as a 
confirmation of identity, verification, and/or evaluation of 
on-site security, verification that shipping addresses are 
valid business locations, confirmation of financial status, 
establishment of normal business-to-business payment terms and 
methods, e.g., not allowing cash sales----
    Mr. Markey. No. I can hear what the intent is. As a result 
of that existing regulation, are you coordinating now with the 
New York Police Department, given their investigation?
    Mr. Stephan. Sir, we coordinate on a lot of issues on a 
day-to-day basis with New York City.
    You have to understand where we are in terms of the phase 
of implementation of the CFATS reg. This will be a piece, part 
and parcel, of the security planning process----
    Mr. Markey. Do you know what went wrong in New York City, 
why they were able to purchase this chlorine online?
    Mr. Stephan. Sir, I am not sure what went wrong. What I can 
tell you is, when this regulation takes effect and we get to 
this phase of CFATS implementation, the chances for something 
like that happening diminish quite greatly.
    Mr. Markey. You are saying that this language in our bill 
would be complementary rather than contradictory to what your 
policy is?
    Mr. Stephan. I fully support the language that I just read 
to you, and if your language in any way, shape or form is close 
to this, we can take a look at it.
    But you should also know that that facility in question 
actually just completed a top-screen process, as do the other 
five companies under that corporate label; and they are 
involved now in the first phase of our regulatory process.
    Mr. Markey. One final question: Do you agree that DHS 
should be able to enforce security regulations at all dangerous 
chemical facilities, including water treatment facilities?
    Mr. Stephan. Sir, I believe that we ought to be able to 
enforce security regulations according to the authority that is 
provided to us by the U.S. Congress. Right now, we do not have 
the authority----
    Mr. Markey. Would you object to us giving you that 
authority?
    Mr. Stephan. At this point in time, I am not able to give 
you a ``yes'' or ``no'' answer because the issue of regulating 
water and wastewater treatment facilities, for example, bears 
considerable dialog between Members of Congress and the 
Department. We would be happy to engage you in that dialog to 
make sure that the ramifications are fully including water and 
wastewater treatment facilities are fully understood by all 
parties involved.
    Mr. Markey. I understand that. But if we gave you that 
authority, you would be able to implement it, I assume?
    Mr. Stephan. Sir, if you give us the authority, I am going 
to implement whatever authority you give us that is signed off 
by the President of the United States, absolutely.
    Mr. Markey. Thank you very much, Madam Chairwoman.
    Ms. Sanchez. I thank the gentleman from Massachusetts.
    I now recognize Mr. Green of Texas for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman.
    Let's start with the background checks. The appeal process 
is of some concern, and it is of some concern because we have 
had Members of Congress who have found themselves on watch 
lists and have had some difficulty extricating themselves.
    Can you tell me a little bit more about how this process 
would work, such that a person who really shouldn't be in a 
position of possibly losing a job or of being put in a position 
where he is under suspicion, or she, can extricate himself or 
herself?
    Mr. Stephan. Sir, are you referring to an appeals process 
associated with the new proposed legislation?
    Mr. Green. Yes.
    Mr. Stephan. Sir, I am not familiar with that new proposed 
legislation, so I am not able to really answer that question.
    Mr. Green. Okay. You agree that there will be one based on 
the legislation?
    Mr. Stephan. Sir, I believe that part and parcel of a 
background check requirement, an appeals process is in line 
with the principles of American democracy and government. We 
have a very--in terms of all the aspects of the current CFATS 
rule, we have a fairly extensive appeals process to find in the 
rule itself, the main body of the rule, for very technically 
complicated--many steps, a process that actually represents a 
very open, fair and honest petition process with multiple 
layers, or sequences, for someone to walk through if they feel 
that they have a grievance in terms of any aspect of CFATS.
    Now, again, the new proposal, I am not familiar with you-
all's provisions.
    Mr. Green. I understand that. Let me strike what I said 
about the new proposal and talk about what you have currently, 
so that I can get some indication of what you currently have, 
as to how you will handle future circumstances.
    With your current rules, have you had a circumstance where 
persons have been on your list of persons who are under 
suspicion, and they have had to hire lawyers to extricate 
themselves?
    Mr. Stephan. Sir, the answer to your question is ``no'' 
because we have not yet gotten to that phase of implementation 
of our program. That will occur probably 6 to 8 months from 
now. We are in the security plan development process, so we 
just haven't come to that bridge yet in CFATS implementation.
    Mr. Green. When you come to that bridge, is this system one 
that anticipates that persons will have legal counsel?
    Mr. Stephan. I believe that the appeals process that is 
outlined in the regulation has that provision and other 
technically complex pieces.
    I would ask, sir, that your staff and perhaps my staff can 
get together. We can give you a full briefing in terms of where 
we are currently with CFATS. I am just not able to do that with 
you in great detail.
    Mr. Green. If it does anticipate legal counsel, does the 
person who is challenging a ruling have to hire the counsel 
himself or herself?
    Mr. Stephan. Sir, I don't have that degree of familiarity 
with that piece of the process. So I would ask that we be able 
to come to you and give you a more technically detailed 
briefing or presentation on this.
    Mr. Green. With reference to the chemical security 
regulations, is it your opinion that water plants should not be 
regulated?
    Mr. Stephan. Sir, it is my opinion that the question of 
regulating water plants has a lot of nuances to it. They are 
currently, as you know, not inside our regulatory authority.
    There are certain aspects of the Bioterrorism Act of 2002 
that give the EPA a bit of regulatory authority relative to 
security in that space. We don't currently have it.
    I think we need to have a dialog with you all to understand 
the ramifications and the consequences of including, one way or 
another, water, wastewater plants into a regulatory framework.
    Mr. Green. Thank you, Madam Chair.
    Ms. Sanchez. I thank the gentleman from Texas.
    Seeing no other Members, I thank the witnesses for their 
valuable testimony and the Members for their questions. The 
Members of the committee may have additional questions for the 
witnesses. We will ask you to respond quickly to those in 
writing.
    Ms. Sanchez. Hearing no further business, the committee 
stands adjourned.
    [Whereupon, at 11:56 a.m., the committee was adjourned.]

                                 
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