Pursuant to the Department of Homeland Security Appropriations Act of 2007 (the "Act"), DHS has recently promoted "interim" rules related to chemical facility anti-terrorism security requirements. Comments on the rules are due February 7, 2007. The proposed rules are broad and vague in scope, may impact an unknown number and variety of chemical facilities, and potentially create complex implementation issues, including the need to prepare several sensitive documents.

The proposed rules will require high risk chemical facilities to (i) conduct vulnerability assessments and (ii) develop and implement site security plans based on those assessments. Pursuant to the Act, DHS is charged with establishing the standards; approving all assessments and plans; and conducting audits, compliance inspections, and enforcement actions.

Immediate attention should be drawn to the current "comment" process for the rules. If implemented as proposed, owners and operators of chemical facilities subject to the rule will be required to reassess their security plans and develop plans that assess each facility’s vulnerabilities to terrorist attacks. First and foremost is the need for chemical facilities to weigh in during the comment period for these rules. DHS has reserved a high degree of discretion in determining which facilities are subject to the new rules and which facilities present a "high level of security risk."

Furthermore, there are significant implementation concerns for chemical companies that are subject to these rules. For example, chemical facilities will be expected to turn over sensitive and confidential information to DHS as part of the required vulnerability assessment. Finally, there are significant political considerations given the recent shift to a Democratic majority in Congress that may affect the statute governing these regulations.

Comments Required to Address Reservation of Discretion by DHS

The terms "chemical facility" and "high levels of security risk" were left undefined by the statute and were intended to be defined in the rules. For "chemical facility," DHS initially has chosen a broad definition suggested in an earlier version of the legislation:

any facility that possesses or plans to possess, at any relevant point in time, a quantity of a chemical substance determined by the Secretary to be potentially dangerous or that meets other risk-related criterion identified by the Department. As used herein, the term chemical facility or facility shall also refer to the owner or operator of the chemical facility. Where multiple owners and/or operators function within a common infrastructure or within a single fenced area, the Assistant Secretary may determine that such owners and/or operators constitute a single chemical facility or multiple chemical facilities depending on the circumstances (emphasis added).1

The bolded terms above highlight the vagueness and imprecision of the proposed rule. The practical effect of the use of these terms is that DHS has reserved important powers for itself and provided little in the way of standards to be used in making these determinations. It is impossible to gather from this section any useful information regarding which substances will be regulated (and in what quantities), which moments in time are "relevant," what will constitute "potentially dangerous," and what the other "risk-related criterion" will be.

DHS has stated that it would like input from commenters regarding the appropriate method to determine what chemicals and risk criteria will determine whether a facility is covered by the regulations. This is a crucial point that necessitates comment by members of the industry to limit the scope of this definition. A potential starting point for this effort would be Title 40, Code of Federal Regulations, Part 68. In particular, 40 C.F.R. § 68.130 sets out a list of regulated substances and threshold quantities that may be helpful in instructing DHS.

As troubling as the definition of "chemical facility" is, the definition of what constitutes a "high level of security risk" is even more worrisome. Proposed section 27.205(a) of DHS’s new rules states that:

the Assistant Secretary may determine at any time that a chemical facility presents a high level of security risk based on any information available…that, in the Secretary’s discretion, indicates the potential that a terrorist attack involving the facility could result in significant adverse consequences for human life or health, national security or critical economic assets (emphasis added).2

Here again we see the breadth of discretion that is granted to the Secretary and Assistant Secretary in making a critical determination (any time, any information, and for nearly any potential consequences). This discretion is made more significant by the fact that only limited options exist for requesting redetermination of risk and objecting to a risk classification.3 Thus, once a chemical facility has been branded a "high level of security risk" under the rules, it will be nearly impossible to remove that designation, thereby essentially allowing DHS complete subjective control over which facilities will be subject to the burden of the rules.

Since these two very unclear provisions determine which facilities will be regulated, interested parties are strongly urged to use the comment process to share their opinions and expertise as DHS refines these crucial definitions. If DHS can develop practical and unassailable definitions and regulations, industry may be spared the much broader scope of coverage that would likely result if Congress revisits its statutory language and pushes for stricter legislation (see below for more on these potential political issues). However, even if Congress retools its legislation, the implementation methods proposed by DHS would likely remain unchanged, and thus industry must begin to plan now for the many legal concerns that these regulations raise.

Significant Implementation and Confidentiality Concerns

Additional legal concerns surround the implementation of the provisions in the proposed rule. As an example, the Secretary is authorized by the proposed regulations to request certain types of information from chemical facilities that:

may reflect potential vulnerabilities to a terrorist attack or incident, including questions specifically related to the nature of the business conducted at the facility; the names, nature, conditions of storage, quantities, volumes, properties, major customers, major uses, and other pertinent information about specific chemicals or chemicals meeting a specific criteria; the security, safety, and emergency response practices, operations, procedures; information regarding incidents, history, funding, and other information bearing on the effectiveness of the security, safety and emergency response programs, and other information as necessary.4

This onerous requirement applies to all chemical facilities, regardless of whether they have been classified as "high level of security risk." Chemical facilities should be concerned about releasing this information in anything but the most regulated and protected manner. However, if a chemical facility does not comply with the request for information in the proposed rules, a preliminary determination may be made that the facility presents a high level of security risk, resulting in additional burdens.5 The facility would be given notice of this determination and an opportunity to comply with the mandated disclosures. Failure to do so at that point could result in penalties, audit and inspection, or an order to cease operations.

In addition, once a facility has been deemed a high level of security risk chemical facility, it will be required to draft a vulnerability assessment and, based on that assessment, a site specific plan for addressing those concerns. The vulnerability assessment must be submitted within 60 days of notice to the facility that it is a high level of security risk facility, and the site security plan is due within 120 days of the notice.6 The legal concerns surrounding both of those documents will be varied, but will inevitably include the need to protect engineering and technical data, trade secrets, and other confidential or sensitive information. These issues will need to be carefully considered by legal counsel prior to implementation.

Overarching Political Concerns

Many Democrats were unhappy with the statutory provisions on chemical plants included in the Homeland Security Appropriations Act last fall. DHS’s proposed regulations only confirmed these Democrats’ fears that the statutory language would not mandate inherently safer technologies (IST) and would not protect state security programs from preemption. Armed with a new congressional majority and control of the legislative agenda, these Democrats may renew their efforts in the coming year to pass a broader, stricter chemical security bill.

As a representative of the only state with its own chemical security regulations, New Jersey Senator Frank Lautenberg (D-NJ) is particularly outraged over the likelihood that the DHS rules would preempt stricter state programs. Lautenberg has promised immediate action on this issue, and sources report that he may reintroduce the Chemical Security and Safety Act (S. 2486), a bill he sponsored last year with Senator Barack Obama (D-IL), which would mandate IST for chemical facilities nationwide and would explicitly sanction stricter state and local laws.

If DHS’s regulations seem to favor industry too heavily, many Democrats will be motivated to join such attempts to pass more comprehensive, stricter legislation. Additionally, nearly all activist efforts will be focused on lobbying Congress for new legislation, since time-consuming litigation strategies are practically pointless given the three year sunset provision.

Of course, the Democrats’ razor-thin majority in the Senate, President Bush’s veto pen, and an already over-full Democratic agenda may prevent the Democrats from passing broader legislation this term. However, unless the issues of preemption and IST are dealt with another way, many factors will continue to push towards renewed legislative efforts. Submitting comments may be one way for industry to explore compromises that would satisfy Democratic concerns, thus potentially eliminating the need for new legislation.

Footnotes

1. Chemical Facility Anti-Terrorism Standards, 71 Fed. Reg. 78,275 (proposed Dec. 28, 2006) (to be codified at 6 C.F.R. pt. 27) [hereinafter Chemical Facility Standards].

2. Id. at 6 C.F.R. § 27.205(a).

3. A facility is entitled to a redetermination upon making material alterations to its operations and may object to either the initial redetermination or a denial of a request for redetermination within 20 calendar days. Id. at 6 C.F.R. § 27.205(b) and (c).

4. Id. at 6 C.F.R. § 27.200(a).

5. Chemical Facility Standards, supra note 2, at 6 C.F.R. § 27.200(b).

6. Id. at 6 C.F.R. § 27.210(a).

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