DHS Chemical Regulations Coming Soon to a Business Near You

How can your company best prepare?

In June 2007, the Department of Homeland Security (DHS) finalized its Chemical Facility Anti-Terrorism Standards and within the next several months, DHS is expected to finalize its list of Chemicals of Interest, which will trigger significant reporting consequences for a myriad of businesses that manufacture, use, store, or transport a wide-range of chemicals, including some of the most commonly used chemicals in manufacturing, processing, construction, and printing.

DHS' efforts are paved with good intentions, but may yield unintended consequences for many small and medium-size businesses that do not even consider themselves "Chemical Facilities." This article summarizes the Chemical Facility Anti-Terrorism Standards (CFATS), their applicability, and what businesses can do now to determine if they will be covered by DHS' regulations.

The Need to Regulate Access to High-Risk Chemicals

On April 19, 1995, the U.S. witnessed the devastating effect of the combination of ammonium nitrate fertilizer, nitro-ethane, and some explosive charges when Timothy McVeigh detonated a homemade truck bomb outside the Alfred P. Murray Federal Building in Oklahoma City. Until the September 11, 2001 attacks, it was the deadliest act of terrorism on U.S. soil. Since that attack, Congress has been concerned about the identification, protection, and monitoring of so-called "high-risk" chemicals that could be used by either foreign or domestic terrorists to create explosives or poison gases.

However, the Congressional debate consistently bogged down on striking a balance that effectively regulated the safekeeping of "high-risk" chemicals without unreasonably disrupting commerce. Twelve years later, as part of the 2007 DHS Appropriation Act, Congress delegated to DHS the responsibility of striking this balance while identifying, assessing, and ensuring effective security at "high risk" chemical facilities.

DHS Provides an Interim List of the Chemicals of Interest

In April 2007, DHS issued interim regulations governing its Chemical Facility Anti-Terrorism Standards. Under these interim regulations a "chemical facility" is any business that possesses a threshold quantity of chemicals designated by the DHS to be potentially dangerous. Those potentially dangerous chemicals are identified in DHS' "Proposed Appendix A: DHS Chemicals of Interest," which is found at www.dhs.gov/xprevprot/laws/gc_1175537180929.shtm.

The Proposed Appendix A identifies over 300 chemicals, many of which are commonly used in manufacturing, processing, construction and other industries. Some of these commonly-used chemicals identified by DHS include: acetone, ammonia, ammonium perchlorate, chlorine, ethylene, methane, nitric acid, nitric oxide, propane and sodium nitrate. Given the breadth and nature of the chemicals identified in the Proposed Appendix A, DHS has estimated that as many as 50,000 facilities will probably be subject to an initial screen to determine if they are a "high-risk facility."

Indeed, the industry codes used by DHS to arrive at this estimate gives some insight into how many different types of industries might be subject to the final rules, including: chemical facilities; chemical transportation companies; paint and plastics manufacturers; hardware stores; pharmaceutical companies; construction companies; food-processing plants; warehouse clubs; fuel dealers; pulp mills and paper manufacturing; and electronic equipment manufacturing. Again, these are just some of the hundreds of industries that DHS has identified as possibly being subject to an initial review.

Narrowing the Number of Regulated Facilities through the 'Top Screen'

Once DHS publishes the final version of Appendix A, businesses that possess any of the chemicals listed in the Appendix A at or above the designated threshold amounts will have sixty (60) days to complete an online Chemical Security Assessment or "Top Screen." The Top Screen is completed by logging onto DHS' computerized Chemical Security Assessment Tool ("CSAT"). Once logged onto the CSAT system, the user will be asked a series of questions regarding, among other things, the chemicals manufactured, processed, used, stored at or distributed by the facility in order to help DHS to determine if the facility qualifies as a "high risk." DHS will determine risk by considering the types and quantities of chemicals at a particular facility, the vulnerabilities that could be exploited to do harm to the facility or the surrounding community, and the potential consequences to human life and the nation's economy.

Implications for a "High-Risk" Facility

Based on the results of the Top Screen, DHS will place the facility into one of four risk-based tiers with tier 1 representing the highest risk and tier 4 representing the lowest risk. Facilities that fall into one of the top three tiers will be required to complete a Security Vulnerability Assessment ("SVA"), which will provide additional information to enable DHS to evaluate specific security concerns, including off-site release, theft or diversion, and sabotage or contamination. In addition, "high-risk" facilities must also develop Security Site Plans ("SSP"), which must describe security measures (both physical and procedural) in place as well as the measures that a facility plans to implement in order to fulfill the applicable risk-based performance standards that DHS will identify for each facility.

A "To Do" List for Businesses

In anticipation of the DHS publishing the final Appendix A "Chemicals of Interest," businesses should do the following:

  • Review the interim Appendix A to determine if any of your individual facilities possess any of the chemicals of interest in amounts above the stated thresholds;
  • If so, register online with DHS to obtain a username and password to complete the Top Screen assessment;
  • Evaluate security vulnerability assessments and security plans to determine whether existing security measures and protocols are adequate to detect, prevent, and respond to unauthorized access to designated chemicals; and
  • Coordinate with local fire, police and rescue departments to ascertain if there any applicable municipal emergency response or evacuation protocols in the case of a chemical emergency.

It is important to remember that even if a business does not fall within the DHS' chemical regulations, it is advisable from an insurance and liability standpoint for a business to routinely assess the vulnerabilities and risks to its facility, employees, and operability.

Joseph D. Lipchitz, Esq. is the co-founder of the Homeland Security Practice Group at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Joe uses his background as a former officer in the U.S. Army Judge Advocate General's Corps to help counsel Homeland Security businesses on various issues in this complex sector. Joe can be reached at [email protected] or 617-348-3030.

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