[Senate Report 107-342]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 764
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-342

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



 
                     CHEMICAL SECURITY ACT OF 2002

                                _______
                                

               November 15, 2002.--Ordered to be printed

                                _______
                                

   Mr. Jeffords, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [to accompany S. 1602]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred a bill (S. 1602) to help protect the public against 
the threat of chemical attacks, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill, as amended, do pass.

                    General Statement and Background

    Congress has long been concerned about releases of 
hazardous chemicals from industrial facilities. In 1984, an 
accidental release of methyl isocyanate from a Union Carbide 
plant in Bhopal, India resulted in more than 2,000 deaths and 
hundreds of thousands of injuries. Reacting to this incident 
and a number of accidental chemical releases in the United 
States, Congress enacted several statutes to help prevent such 
releases and to improve preparedness and response capabilities.
    The Emergency Planning and Community Right-to-Know Act 
(EPCRA), passed in 1986, contains four major requirements 
designed to help facilities and communities understand, prepare 
for and respond to accidental releases of hazardous chemicals. 
\1\ The four requirements are emergency planning, release 
notification, hazardous chemical storage reporting, and toxics 
release reporting. The emergency planning provisions of EPCRA 
established State Emergency Response Commissions (SERCs) and 
Local Emergency Planning Commissions (LEPCs). LEPCs are 
comprised of emergency responders and other local officials, 
and are required to develop emergency response plans and 
communicate these plans to the public. The EPCRA notification 
and storage reporting requirements establish thresholds and 
reporting requirements for releases and storage of certain 
extremely hazardous substances held onsite. EPCRA also created 
the Toxics Release Inventory, which requires facilities to 
report their releases of more than 600 chemicals into the 
environment.
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     \1\Public Law 99-499.
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    The Clean Air Act Amendments of 1990 included requirements 
that the Occupational Safety and Health Administration 
promulgate Process Safety Management (PSM) regulations that 
apply to chemical facilities. \2\ The regulations increase 
worker safety by preventing or minimizing the consequences of 
catastrophic releases of toxic, reactive, flammable or 
explosive chemicals. The Clean Air Act Amendments of 1990 also 
include provisions in section 112(r) that are designed to 
prevent accidental releases of dangerous chemicals, and 
mitigate the consequences of releases that may occur. The 
requirements of this section apply to stationary facilities 
that process more than a threshold amount of certain dangerous 
chemicals. Approximately 15,000 facilities are subject to the 
requirements. These facilities must develop risk management 
programs that include a hazard assessment of the offsite 
consequences of releases under worst-case and alternate 
scenarios, a prevention program, and an emergency response 
program. Information about the program must be documented in a 
Risk Management Plan (RMP) that is submitted to EPA and made 
available to States and local planning agencies as well as the 
public according to procedures set forth in 40 CFR 68.
---------------------------------------------------------------------------
     \2\Public Law 101-549.
---------------------------------------------------------------------------
    RMPs were submitted by covered facilities pursuant to a 
statutory deadline on June 21, 1999. RMP data indicate that the 
potential for catastrophic chemical releases is widespread in 
the United States. According to EPA data, a ``worst-case'' 
release of toxic chemicals could threaten more than one million 
people at more than 123 U.S. facilities spread across 24 
States. In addition to these 123 facilties, there are more than 
700 facilities located in 39 States at which a ``worst-case'' 
release of toxic chemicals could threaten more than one hundred 
thousand people. \3\
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     \3\RMP Info., U.S. Environmental Protection Agency.
---------------------------------------------------------------------------
    Anticipating the deadline for submission of RMPs, Congress 
passed the Chemical Safety Information, Site Security and Fuels 
Regulatory Relief Act, Public Law 106-40, on August 2, 1999. 
\4\ This Act amended section 112(r) of the Clean Air Act to 
limit the availability of RMPs to address concerns regarding 
the potential terrorist threat posed by Internet access to 
offsite consequence analysis information. The 1999 amendments 
also mandated a comprehensive Department of Justice study of 
the vulnerability of toxic chemical handling or manufacturing 
facilities to criminal and terrorist activity. In May of 2002, 
the Department of Justice completed an interim study, nearly 2 
years after the statutory deadline of August 5, 2000. The 
results of this interim study are classified, and therefore 
cannot be discussed in this report. The final study was due to 
be completed August 5, 2002, and was not completed by that date 
or expected to be completed in the near future.
---------------------------------------------------------------------------
     \4\Public Law 106-40.
---------------------------------------------------------------------------
    Notwithstanding the failure by the Department of Justice to 
complete its full vulnerability study, existing evidence 
suggests that security is inadequate at many chemical 
facilities. In 1999, the Agency for Toxic Substances and 
Disease Registry studied security at 30 chemical plants in 
three States. \5\ The ATSDR found that ``security at chemical 
plants ranged from fair to very poor.'' In a separate study, 
the Department of Justice concluded in April, 2000 that ``the 
risk of terrorists attempting in the foreseeable future to 
cause an industrial chemical release is both real and 
credible.'' \6\ In this same report, the Department of Justice 
noted that attacking an existing chemical facility, for 
example, presents an easier and more attractive alternative for 
terrorists than constructing a weapon of mass destruction. In 
addition, the Department concluded that many plants that 
contain hazardous chemicals would be attractive targets for 
terrorists because of the plants' proximity to densely 
populated areas.
---------------------------------------------------------------------------
     \5\Agency for Toxic Substances and Disease Registry, Industrial 
Chemicals and Terrorism: Human Health Threat Analysis, Mitigation and 
Prevention, 1999.
     \6\Department of Justice. Assessment of Increased Risk of 
Terrorist or Other Criminal Activity Associated with Posting Off-Site 
Consequence Analysis Information on the Internet. April 18, 2000. pp. 
23-24.
---------------------------------------------------------------------------
    Since September 11, there have been a variety of voluntary 
industry initiatives to improve security. The American 
Chemistry Council (ACC), for example, has adopted a security 
code as part of its Responsible Care program, and will require 
adherence to that code as a condition of membership in the ACC. 
But in spite of the ACC program and related efforts, there have 
been security gaps reported at numerous chemical facilities 
since September 11, 2001. Governor Tom Ridge echoed the 
conclusions of these investigations in his testimony before the 
Senate Committee on Environment and Public Works on July 10, 
2002, stating that: ``The fact is, we have a very diversified 
economy and our enemies look at some of our economic assets as 
targets. And clearly, the chemical facilities are one of them. 
We know that there have been reports validated about security 
deficiencies at dozens and dozens of those.''
    In spite of these documented security lapses and widespread 
agreement about the vulnerability of the nation's chemical 
infrastructure, there are no Federal standards in place to 
require plants to assess their vulnerabilities and take steps 
to reduce them. As discussed above, there are several programs 
in place to plan for and mitigate the threat of accidental 
releases of chemicals. But these accidental release programs do 
not address the contingencies that a terrorist attack might 
entail, and therefore do not provide adequate protection. By 
contrast, nuclear plants are already subject to extensive 
security requirements designed to prevent armed intruders from 
sabotaging the plants. Industry groups, such as the American 
Chemistry Council, are in the process of implementing voluntary 
programs to reduce hazards and improve security at their 
plants. However, the American Chemistry Council represents only 
approximately 10 percent of facilities that use large 
quantities of dangerous chemicals, and its measures are not 
enforceable and do not involve either Federal review of 
assessments and response plans or credible third-party review 
of such assessments and plans.

                     Objectives of the Legislation

    S. 1602 is intended to ensure that the threat of terrorist 
attack on chemical facilities is addressed quickly, 
consistently and effectively across the spectrum of U.S. 
industrial facilities that have hazardous chemicals. The Act 
puts the Environmental Protection Agency (EPA) in the lead role 
in implementing the Act, with the Office of Homeland Security 
or its successor in a consultative role. This approach is 
consistent with the approach outlined in the President's 
Homeland Security strategy. \7\ The Act requires the EPA to 
consult with the Office of Homeland Security, as well as States 
and local governments, to identify ``high-priority'' facilities 
within the universe of approximately 15,000 facilities that 
have submitted risk management plans (RMPs) to EPA under the 
accidental release prevention programs established under 
section 112(r) of the Clean Air Act. Population density, 
proximity to other critical infrastructure, and additional 
criteria, as appropriate, would be used to screen the 15,000 
facilities to set the priority list. This would be accomplished 
through a rulemaking within one year of enactment. That 
rulemaking would also include requirements for each high 
priority facility to: conduct a vulnerability and hazard 
assessment, and; prepare a prevention, preparedness and 
response plan that addresses the hazards and vulnerabilities by 
improving security, employing safer technology, and other 
means. Copies of the assessments and plans must be submitted to 
EPA 12 and 18 months, respectively, after the date of 
promulgation of regulations. EPA is required to review the 
documents in consultation with the Office of Homeland Security 
to determine whether the vulnerability assessments were 
conducted in compliance with the regulations and whether the 
response plans were prepared and are being implemented in 
compliance with the regulations.
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     \7\The White House. National Strategies for Homeland Security, 
July 2002, pp. 29-35.
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                      Section-by-Section Analysis

Section 1. Short Title
    The Chemical Security Act of 2002.
Sec. 2. Findings
    Section 2 contains four findings, which can be summarized 
as follows: 1) the chemical industry is a crucial part of the 
United States' critical infrastructure; 2) the possibility of 
attacks on chemical facilities poses a serious threat to public 
health, safety and welfare as well as critical infrastructure 
and national security; 3) the possibility of chemical theft 
from a chemical facility also poses such threats, and; 4) there 
are significant opportunities to prevent attacks and threats, 
and reduce harm that would result by using safer technologies 
and improving site security.
Sec. 3. Definitions

                                SUMMARY

    Section 3 defines ten terms for the purposes of the Act. 
Definitions include:

      ``Chemical Source'' is a stationary source (as 
defined in section 112(r) of the Clean Air Act) that contains a 
substance of concern.
      ``Employee'' means a duly recognized collective 
bargaining representative at a chemical source; or, in the 
absence of such a representative, other appropriate personnel.
      ``Head of the Office'' means the head of the 
Office of Homeland Security or a successor agency.
      ``Safer Design and Maintenance'' includes, to the 
extent practicable: use of inherently safer technology, use of 
secondary containment equipment, implementation of security 
measures, and use of buffer zones.
      ``Security Measure'' means an action to increase 
the security of a chemical source, including employee training 
and background checks, perimeter and access controls, and 
cybersecurity.
      ``Substance of Concern'' is any regulated 
substance under 112(r) of the Clean Air Act, and any substance 
added by the Administrator through rulemaking.
      ``Unauthorized Release'' is the removal or 
release from a chemical source of a covered substance of 
concern that is unauthorized or is caused, in whole or in part, 
by a criminal act.
      ``Use of Inherently Safer Technology'' means use 
of a technology (or product, practice, etc.) that as compared 
with current practices, reduces or eliminates the possibility 
of a release of a substance of concern or threat to public 
health resulting from such a release.

                               DISCUSSION

    The definitions of ``chemical source'' and ``substance of 
concern'' set the parameters for the universe of substances and 
entities potentially covered by the Act, as described in the 
discussion of Section 4. The definition of ``employee'' is used 
in Section 4 to require that workers be consulted in the 
development of vulnerability assessments and response plans. 
The definition and its use in this Act in no way affects 
employer obligations under section 8(a)(2) of the National 
Labor Relations Act. The definition of ``head of the Office'' 
reflects the fact that Congress is considering the 
establishment of a Department of Homeland Security, which would 
replace the existing Office of Homeland Security. The term 
``practicable,'' as used in the definition of ``safer design 
and maintenance,'' is intended to incorporate consideration of 
both technical feasibility and cost.
Sec. 4. Designation and Regulation of High Priority categories

                                SUMMARY

            Subsection 4(a).--Designation and Regulation of High 
                    Priority Categories by the Administrator
    Subsection 4(a)(1).--Within one year of enactment, requires 
the Administrator, in consultation with the Office of Homeland 
Security or its successor, and State and local emergency 
response agencies, to designate ``high priority'' combinations 
of chemical sources and substances of concern based on the 
threat of a release and criteria in subsection (a)(2). 
Subsection (a)(5) authorizes the Administrator, in consultation 
with the Office of Homeland Security, to add substances of 
concern as part of the rulemaking under subsection (a)(1).
    Subsection 4(a)(2).--Sets safety and security criteria for 
the Administrator, in consultation with the Office of Homeland 
Security, to consider in designating ``high priority'' 
categories, including severity of harm that could be caused by 
a release, proximity to population centers, threats to national 
security or critical infrastructure, threshold quantities of 
substances of concern that pose a serious threat, and such 
other safety or security factors that the Administrator 
considers appropriate.
    Subsection 4(a)(3).--Requires the Administrator, in 
consultation with the Office of Homeland Security, the Chemical 
Safety Board, and State and local agencies, to establish 
regulations for ``high priority'' chemical sources within one 
year of designating such categories under subsection (a)(1). 
Such regulations shall require chemical sources, in 
consultation with local law enforcement/emergency responders 
and employees, to:

      conduct a vulnerability assessment;
      identify hazards that could result from a 
release;
      prepare a plan that includes actions, and 
procedures, including safer design and maintenance, to 
eliminate or significantly reduce the potential consequences of 
a release.

    Subsection 4(a)(4).--Requires the Administrator, in 
consultation with the Office of Homeland Security, to revise 
the regulations under subsections (a)(1) and (a)(3) within 5 
years.

                               DISCUSSION

    Subsection 4(a) requires a two-part regulatory process that 
establishes the major requirements of the Act. First, the EPA 
must consult with the Office of Homeland Security, as well as 
the State and local agencies listed, to identify ``high 
priority'' categories. These high priority categories are 
combinations of chemical sources and substances of concern. It 
is the committee's expectation that the facilities currently 
subject to EPA's Risk Management Program requirements, 
established under Section 112(r) of the Clean Air Act, would be 
EPA's starting point for determining the high priority 
categories. There are approximately 15,000 of these facilities, 
each of which has onsite more than a threshold quantity of at 
least one of 140 listed toxic or flammable chemicals. The high 
priority list would be developed by screening the RMP list of 
15,000 facilities using the criteria listed in subsection 
4(a)(2). These criteria include the severity of harm that could 
be caused by a release of a substance of concern, proximity to 
population centers, threats to critical infrastructure or 
national security and threshold quantities. The size of the 
universe of high-priority facilities would therefore likely be 
smaller than the 15,000 that are subject to EPA's RMP 
requirements.
    While the decision of how to develop and apply the criteria 
listed in subsection 4(a)(2) is left to the EPA, the committee 
does not expect that facilities located in remote areas, such 
as many agricultural retailers, would be included in the high 
priority categories. In addition, the committee notes that some 
facilities subject to the RMP requirements may exceed the RMP 
threshold quantities for brief periods during the year, making 
them less attractive targets for attack than RMP facilities 
that consistently exceed the threshold quantities. EPA should 
consider the frequency and duration that the threshold 
quantities of substance of concern are onsite at a particular 
facility in designating high priority categories.
    Subsection 4(a)(3) establishes the requirements applicable 
to high priority category chemical sources. These requirements 
must be developed through rulemaking no later than one year 
after enactment of the Act. The committee is aware that there 
are voluntary security programs currently being implemented at 
some of the facilities that may be subject to the requirements 
of this Act. For example, the American Chemistry Council has 
developed and adopted a security code as part of its 
Responsible Care program, and has made adherence to the 
security code a condition of membership in the American 
Chemistry Council. In addition, energy producers have conducted 
vulnerability assessments at a portion of their facilities in 
conjunction with the Department of Energy under Presidential 
Decision Directive 63. Finally, some community water suppliers 
are required to conduct vulnerability assessments with respect 
to attacks that could cause a disruption in water supplies 
under the bioterrorism bill that was signed into law earlier 
this year. The committee recognizes that these efforts may 
overlap with the assessment and planning requirements in 
subsection 4(a)(3). The committee does not intend unnecessary 
duplication of efforts, however, the committee has left to the 
Administrator and the Office of Homeland Security the 
determination of whether assessments required by other laws are 
duplicative of the purposes and requirements of this Act. With 
respect to voluntary programs such as the American Chemistry 
Council Responsible Care program, EPA may consider the 
requirements of such programs as it develops its regulations, 
but may not relieve any facility of the responsibility to 
comply with the provisions of this Act on the basis of 
participation in any such program.
            Subsection 4(b).--Compliance Certification
    Subsection 4(b)(1).--Requires each owner and operator of 
each high-priority chemical source to certify compliance with 
the vulnerability/hazard assessment regulations within one year 
of promulgation of applicable regulations.
    Subsection 4(b)(2).--Requires each owner and operator of 
each high-priority chemical source to certify compliance with 
the prevention, preparedness and response plan regulations 
within 18 months of promulgation of applicable regulations.
    Subsection 4(b)(3).--Requires review of assessments and 
plans and re-certification by chemical sources every 3 years.
    Subsection 4(b)(4).--Exempts from disclosure under the 
Freedom of Information Act all information provided to the 
Administrator under this section, with the exception of the 
compliance certifications described in subsections 4(b) and 
5(a). The subsection also requires the Administrator, in 
consultation with the Office of Homeland Security, to develop 
protocols necessary to prevent unauthorized disclosure of 
assessments and plans.

                               DISCUSSION

    Subsection 4(b)(4) exempts the assessments and plans from 
disclosure under FOIA. It also directs EPA to develop protocols 
to prevent disclosure to unauthorized persons of the 
assessments and plans. During committee markup of the Act, an 
amendment was offered by Senator Bond, and accepted by voice 
vote, that requires specific protocols prohibiting disclosure 
to unauthorized persons to be developed. Notwithstanding the 
FOIA exemptions and protocols mentioned above, this subsection 
provides that certifications of compliance will be publicly 
available, so that the public will know whether a local 
facility has complied with the law. In addition, the 
certifications will provide a checklist to indicate whether the 
chemical source has implemented each of the four elements of 
safer design and maintenance. It is not the committee's intent 
that such certification be utilized as demonstration of full 
compliance with the requirements of the Act. Rather, the EPA 
may utilize the authorities contained in current law to request 
access to and inspection of documents, facilities and other 
information to ascertain compliance with the Act.
Sec. 5. Enforcement
            (a) Review of Assessments and Plans
    Subsection 5(a)(1).--Requires the Administrator, in 
consultation with the Office of Homeland Security, to review 
vulnerability assessments and response plans to determine their 
compliance with applicable regulations.
    Subsection 5(a)(2).--Requires the Administrator to certify 
each compliance determination in writing, including a checklist 
indicating consideration of safer design and maintenance.
    Subsection 5(a)(2)(C).--Establishes an ``early compliance'' 
authority. The Administrator, in consultation with the Office 
of Homeland Security, shall review assessments and plans 
submitted prior to publication of proposed regulations to 
determine compliance with the Act. No further revisions to the 
assessments or plans will be required if such a determination 
is made. This provision has been included to enable facilities 
that already have assessments and plans underway--such as 
American Chemistry Council members--to continue their work and 
submit the assessments and plans for early approval by the 
Administrator if the Administrator determines that they 
assessments and plans meet the requirements of the Act.
    Subsection 5(a)(2)(D).--Requires the Administrator to 
establish a schedule for reviewing assessments and plans, not 
to exceed 3 years beyond the deadline for submission of such 
assessments and plans.
    5(b) Compliance Assistance.--Requires the Administrator to 
provide notice and compliance assistance to a chemical source 
if the Administrator, after consultation with the Office of 
Homeland Security, determines that a chemical source has not 
complied with the assessment or planning regulations; or that a 
threat exists that is beyond the scope of a plan or 
implementation of a plan.
    5(c) Compliance Orders.--Thirty days after the later of the 
date that the Administrator first provides compliance 
assistance or a chemical source receives notice under (b), the 
Administrator may issue an order directing compliance after 
notice and opportunity for hearing.
    5(d) Abatement Orders.--Requires the Office of Homeland 
Security to provide notification to a chemical source if the 
Office of Homeland Security, in consultation with local law 
enforcement and first responders, determines that a terrorist 
threat exists that is beyond the scope or implementation of a 
response plan submitted by a chemical source. Requires the 
Office of Homeland Security to notify the Administrator and the 
Attorney General if the Office of Homeland Security determines 
that actions taken by a chemical source in response to the 
notification are insufficient. Once these preliminary steps 
have been taking, the Administrator and the Attorney General 
are then authorized to secure relief through court orders to 
protect the public health or welfare.

                               DISCUSSION

    Section 5 establishes requirements for review of 
assessments and plans submitted to EPA, and authorities and 
procedures for EPA to address deficiencies in these documents.
    Section 5(c) establishes an ``early compliance'' provision. 
As noted in the discussion of Section 4, industry groups such 
as the American Chemistry Council are in the process of 
implementing voluntary security measures. The aim of the Act is 
to encourage such voluntary efforts to continue, while ensuring 
that they meet the standards set out in the Act. To accomplish 
this goal, the Act includes an ``early compliance'' provision. 
Under this provision, chemical sources can submit assessments 
and response plans for review at any time after enactment of 
the Act. Assessments and plans received prior to publication of 
draft regulations must be reviewed by the Administrator and 
must meet the standards in the Act. Assessments or plans 
received after that date must meet the requirements of the 
final regulations.
Sec. 6. Recordkeeping and Entry
    Section 6 establishes record retention requirements for 
covered chemical sources. The section also establishes 
authority for the Administrator, in carrying out the Act, to 
enter or request information from a chemical source.
Sec. 7. Penalties
    Section 7 establishes civil penalties for violations of the 
Act and criminal penalties for knowing violations of the Act.
Sec. 8. No Effect on Requirements Under Other Law
    Section 8 states that nothing under this Act affects any 
duty or other requirement imposed under any other Federal or 
State law.
Sec. 9. Authorization of Appropriations
    Section 9 authorizes such sums as are necessary to carry 
out this Act.

                          Legislative History

    S. 1602 was introduced on October 31, 2001 by Senator 
Corzine, with Senators Jeffords, Boxer and Clinton as 
cosponsors, and was referred to the Committee on Environment 
and Public Works. A hearing was held by the Subcommittee on 
Superfund, Toxics, Risk and Waste Management on November 14, 
2001 to consider S. 1602; and a full committee oversight 
hearing was held on July 10, 2002 to receive testimony the 
creation of a Department of Homeland Security. The full 
Committee on Environment and Public Works met on July 25, 2002 
to consider S. 1602, and ordered it reported to the Senate with 
an amendment in the nature of a substitute.

                                Hearings

    On Wednesday, November 14, 2001, the Subcommittee on 
Superfund, Toxics, Risk and Waste Management of the Committee 
on Environment and Public Works held a legislative hearing to 
receive testimony on S. 1602, the Chemical Security Act. There 
were no prior congressional hearings on this legislation. 
Witnesses at the hearing appeared in the following order: 
Robert C. Shinn, Jr., Commissioner, New Jersey Department of 
Environmental Protection; Mr. Fred Webber, President and Chief 
Executive Officer, American Chemistry Council; Mr. Paul Orum, 
Director, Working Group on Community Right-to-Know; Mr. Bill 
Stanley, Synthetic Organic Chemical Manufacturers Association; 
and Ms. Rena Steinzor, Academic Fellow, National Resources 
Defense Council.

                             Rollcall Votes

    On July 25, 2002, the Committee on Environment and Public 
Works met to consider S. 1602. The committee agreed, by voice 
vote, to an amendment in the nature of a substitute offered by 
Senator Corzine. Also, agreed to by voice vote was an amendment 
by Senator Bond that directs the Administrator to develop 
protocols to protect sensitive information received by EPA in 
the form of chemical facility vulnerability assessments and 
response plans. Finally, agreed to by voice vote was a 
technical amendment by Senator Corzine to the definition of 
``unauthorized release'' on page 6, line 18. A recorded vote on 
S. 1602 was requested by Senator Corzine and seconded by 
Senator Clinton. A recorded vote occurred on the bill, as 
amended. S. 1602 was unanimously ordered reported by 19 ayes.

                      Regulatory Impact Statement

    In compliance with section 11(b) of rule XXVI of the 
Standing Rules of the Senate, the committee makes evaluation of 
the regulatory impact of the reported bill. The bill does not 
create any additional regulatory burdens, nor will it cause any 
adverse impact on the personal privacy of individuals.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the committee finds that S. 1079 would not 
impose any Federal intergovernmental unfunded mandates on 
State, local, or tribal governments.

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 1, 2002.

Hon. James M. Jeffords, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1602, the Chemical 
Security Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susanne S. 
Mehlman (for Federal costs), who can be reached at 226-2860, 
Greg Waring (for the State and local impact), who can be 
reached at 225-3220, and Lauren Marks (for the private-sector 
impact), who can be reached at 226-2940.
            Sincerely,
                                            Dan L. Crippen.
                              ----------                              

S. 1602, the Chemical Security Act of 2002, as ordered reported by the 
        Senate Committee on Environment and Public Works on July 25, 
        2002
Summary
    S. 1602 would require the Environmental Protection Agency 
(EPA) to develop regulations to identify sources of industrial 
chemicals or facilities vulnerable to unauthorized releases of 
hazardous chemicals. The regulations would require owners and 
operators of those facilities to perform vulnerability 
assessments of chemical sources and to establish safety and 
security plans. EPA also would be responsible for developing 
methods to guard against inappropriate disclosure of the 
vulnerability assessment plans prepared by the owners of 
chemical sources that may pose a security threat, and for 
certifying their compliance with these plans.
    CBO estimates that implementing this bill would cost $80 
million over the 2003-2007 period, assuming appropriation of 
the necessary funds. Enacting S. 1602 could affect direct 
spending and receipts because this bill would provide for civil 
and criminal penalties against owners of chemical sources who 
fail to comply with the bill's requirements. However, CBO 
estimates that any such increase in civil and criminal 
penalties would be not be significant.
    S. 1602 would require the owners and operators of certain 
facilities to undertake measures to protect against the 
unauthorized release of chemical substances. Because the owners 
and operators of those facilities include both public and 
private-sector entities, the requirements would be both 
intergovernmental and private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA). Based on information from 
EPA and industry sources, CBO estimates that the cost to comply 
with the mandates would not exceed the annual thresholds 
established by UMRA ($58 million for intergovernmental mandates 
and $115 million for private-sector mandates in 2002, adjusted 
annually for inflation).
Estimated Cost to the Federal Government
    The estimated budgetary impact of S. 1602 is shown in the 
following table. The costs of this legislation fall within 
budget function 300 (natural resources and environment).


                                    By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                                       2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                 SPENDING SUBJECT TO APPROPRIATION
Development of Regulations:
    Estimated Authorization Level..................................        1        1        *        *        *
    Estimated Outlays..............................................        1        1        *        *        *

Coordination with Office of Homeland Security and Technical
 Support:
    Estimated Authorization Level..................................        2        2        2        1        1
    Estimated Outlays..............................................        2        2        2        1        1

Review of Vulnerability Assessments, Certification of Compliance,
 and Enforcement:
    Estimated Authorization Level..................................        1       10       31       21        9
    Estimated Outlays..............................................        1        9       27       22       11

2Total Proposed Changes:
    Estimated Authorization Level..................................        4       13       33       22       10
                         Estimated Outlays                                 4       12       29       23       12
----------------------------------------------------------------------------------------------------------------
NOTE : * = Less than $500,000.

Basis of Estimate
    For this estimate, CBO assumes that S. 1602 will be enacted 
near the beginning of 2003. According to EPA, 12,000 to 15,000 
chemical plants and storage sites handle hazardous chemicals 
that could be vulnerable to unauthorized releases of hazardous 
material caused by terrorist attacks. Under this legislation, 
EPA would work with owners and operators of these facilities to 
develop vulnerability assessment guidelines, identify and 
correct problems related to the production and storage of 
hazardous chemicals, and obtain verification that problems have 
been remedied. CBO estimates that implementing these provisions 
would cost $80 million over the 2003-2007 period, assuming 
appropriation of the necessary amounts. Such spending would 
fund additional personnel, travel expenses, and contract 
support services necessary to implement EPA's three main 
responsibilities under this bill--to develop regulations, 
coordinate with the Office of Homeland Security (OHS) and 
provide technical support, and enforce the bill's new 
requirements.
    Over the next 5 years, CBO estimates that efforts to 
support the development of regulations under S. 1602 would 
require about 12 staff-years at a cost of about $1 million, as 
well as $1 million in contract services to support economic 
analyses and research required to establish the regulations.
    S. 1602 would require EPA to coordinate its oversight and 
enforcement activities with OHS and to establish and maintain 
computer systems for tracking information about possible 
threats and other recordkeeping associated with hazardous 
chemical sites. CBO estimates that coordinating with OHS and 
developing and maintaining information technology would require 
about 20 staff-years at a cost of about $2 million, as well as 
$6 million in contract services over the 2003-2007 period.
    Enforcing the bill's requirements would demand the most 
resources from EPA. The bill would require the agency to review 
vulnerability assessments submitted by the owners and operators 
of chemical sources, certify whether sites are in compliance, 
and pursue enforcement actions when necessary. CBO estimates 
that over the 2003-2007 period such activities would require 
about 200 staff-years at a cost of about $20 million, plus $22 
million in travel expenses and $28 million in contractor 
support services.
    Based on information from EPA, CBO assumes that following 
the submission and review of vulnerability assessments, EPA and 
contractor staff would travel to most of the 12,000-15,000 
chemical sites or facilities. A site visit would include up to 
a three-person team performing inspection duties over a three-
to 5-day period. Furthermore, because EPA expects that about 85 
percent of the owners and operators of the sites would submit 
their assessments sometime in 2004, CBO estimates that the 
majority of the site inspections would occur over the 2004-2006 
period. Thus, most of the personnel and related travel expenses 
would occur during that time period.
    Because those prosecuted and convicted for violation of the 
provisions of S. 1602 could be subject to criminal fines, the 
Federal Government might collect additional fines if the 
legislation is enacted. Collections of such fines are recorded 
in the budget as governmental receipts (revenues), which are 
deposited in the Crime Victims Fund and later spent. Civil 
penalties for violations could also be imposed under the bill, 
and such collections are recorded in the budget as governmental 
receipts. In recent years EPA has imposed fines on firms 
handling hazardous chemicals for violations of the clear air 
act totaling $1 million to $2 million a year. CBO expects that 
the amount of additional fines collected under this bill would 
be insignificant.
Intergovernmental and Private-Sector Impact
    The bill would require EPA to develop regulations 
designating certain facilities as ``high priority,'' based upon 
the severity of the threat posed by an unauthorized release of 
chemicals from those facilities. Owners and operators of 
facilities designated as high priority would be required to 
undertake specific measures to protect against terrorist 
attacks, criminal acts, or other types of chemical releases. 
Because the high-priority facilities would be selected from 
about 15,000 public and private entities (including public 
water utilities and firms in the chemical industry), the bill 
would impose both intergovernmental and private-sector 
mandates, as defined in UMRA.
    Specifically, S. 1602 would require that owners and 
operators of affected facilities conduct an assessment of the 
vulnerability of their facility, identify the hazards that may 
result from a substance's release, and develop and implement a 
plan to prepare, prevent, and respond to a release. According 
to EPA, owners and operators would be granted some flexibility 
in developing and implementing the response plans and could 
choose to upgrade security, redesign the manufacturing, 
refinement, or treatment processes that occur at the facility, 
or substitute for the materials used in their chemical 
processes. S. 1602 would further require that owners and 
operators certify completion of both the assessment and plan, 
submit copies to EPA, maintain records at the facility, and 
complete a periodic review of the assessment and plan.
    According to government and industry representatives, a 
substantial number of the facilities potentially affected by 
the bill's provisions are actively engaged in activities 
similar to those that would be required under S. 1602. Such 
facilities are acting either in response to the terrorist 
attacks of September 11, 2001, as a condition of membership in 
chemical industry associations, or to comply with the Public 
Health Security and Bioterrorism Preparedness and Response Act 
of 2002. EPA has indicated that the efforts of such facilities 
would likely satisfy the requirements of the bill. Therefore, 
CBO expects that enactment would impose few additional costs on 
those facilities. Further, EPA does not expect to use its 
authority under the bill to require that owners and operators 
incorporate the more costly measures of process redesign or 
material substitution in order to mitigate the threat of a 
chemical release.
    Assuming that EPA does not use such authority, and based on 
information from government and industry sources on the costs 
of measures that would protect against a release, CBO estimates 
that the total cost of the mandates contained in the bill would 
not exceed the annual thresholds established by UMRA ($58 
million for intergovernmental mandates and $115 million for 
private-sector mandates in 2002, adjusted annually for 
inflation).

2Estimate Prepared By: Federal Costs: Susanne S. Mehlman (226-
2860); Impact on State, Local, and Tribal Governments: Greg 
Waring (225-3220); Impact on the Private Sector: Lauren Marks 
(226-2940).

2Estimate Approved By: Robert A. Sunshine Assistant Director 
for Budget Analysis.

                   Additional Views of Senator Inhofe

    On July 25, 2002, I supported the reporting of this bill 
from the Environment and Public Works Committee with every 
expectation that major improvements to the bill would occur. 
The legislation as reported out of committee does not address 
all of the concerns that were raised in the committee, 
including the role of the Department of Homeland Security, 
human resource needs, distribution of sensitive site 
vulnerability information, and incentives for early action on 
the part of companies. Additionally, the committee must address 
concerns regarding agricultural operations, fire emergency 
prevention and mitigation, consolidation of national security 
responsibility, energy assurance, overlapping government 
authorities, and others that have arisen from scores of 
stakeholders upon thoughtful consideration of this legislation.
    I wholeheartedly support the goal of ensuring the security 
of our nation's chemical infrastructure. However, Congress 
should not let our chance to address such a critical issue miss 
the mark and possibly hurt our nation in the process. At a time 
when Congress has such major issues before it, I believe that 
Congress must work together to craft an effective solution to 
improving the security of our nation's chemical infrastructure.

                        Changes in Existing Law

    Section 12 of rule XXVI of the Standing Rules of the 
Senate, provides that reports to the Senate should show changes 
in existing law made by the bill as reported. Passage of this 
bill will make no changes to existing law.

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