Last week saw the release of two reports criticizing Koch Industries for its opposition to heavy-handed regulation of the chemical industry. Greenpeace released a report with highly charged words in its title: “Toxic Koch: Keeping Americans at Risk of a Poison Gas Disaster.” Other articles commenting on this were highly sensational, such as this example: “Do the Koch Brothers Want a Toxic Disaster?”
Koch Industries has responded to these articles in a response on KochFacts.com website. Among many facts, we can see that Koch companies have received 386 safety awards and 28 environmental awards just since President Obama took office.
Much of the Greenpeace report criticized Koch for its opposition to H.R. 2868, the Chemical and Water Security Act of 2009. Koch and most of the chemical industry instead favored continuation of Chemical Facility Anti-Terrorism Standards, a set of less intrusive standards that have been effective.
Greenpeace characterizes the regulatory measures in H.R. 2868 as so mild that it can’t imagine why anyone would object. At issue is a concept known as “Inherently Safer Technology” or IST. If passed into law or regulation, regulators could require manufacturers to substitute alternative processes, in the name of safety. That, however, poses many problems, as explained below.
The Greenpeace report contains an economic analysis of what H.R. 2868 might do to the economy. This bill passed the House of Representatives, but not the Senate. The report estimates that the cost of IST would be slightly less than $1 billion per year. The analysis concludes that the extra costs of IST regulation would eliminate jobs, but the extra spending on IST would add roughly the same number of jobs. The net impact is therefore zero.
But we shouldn’t infer that a net loss of zero jobs means no economic harm is done. There will be dislocation, as the people who gain jobs won’t likely be the people who lost jobs.
But most importantly, this extra cost is spent paying for something that isn’t a problem. The Greenpeace report concedes there have been no attacks on U.S. chemical plants since the terrorist attacks of 9/11. The reports says various terrorists would like to conduct such attacks. That’s hardly news. What is news is that, for whatever reason, they haven’t succeeded.
It’s true that the words “Inherently Safer Technology” don’t appear in H.R. 2868. But in an explanatory document produced by Greenpeace, we see the bill isn’t as mild as Greenpeace claims: “If a facility disagrees with the DHS’s finding they have 120 days to appeal and the DHS must consult with a wide range of experts and those expert recommendations must be included in any order to implement safer chemical processes.” (emphasis added)
That sounds like heavy-handed regulation and the implementation of IST. Or maybe it’s just wishful thinking on Greenpeace’s part. At any rate, once initiated these regulatory regimes have a way of growing, often far exceeding the intent of Congress when it passed the legislation creating the initial regulation.
But that’s the goal of the political left: Regulation. And if they can accomplish this goal while at the same time beating up on Koch Industries, the chemical industry, the oil industry, and capitalism in general, so much the better for them. Underlying the quest of Greenpeace and its allies is a hatred of capitalism, hated so much that they will do whatever it takes to discredit and defeat its proponents and practitioners.
The problems with Inherently Safer Technology regulation
A document titled Final Report: Definition for Inherently Safer Technology in Production, Transportation, Storage, and Use supplies some useful information about IST:
IST’s are relative: A technology can only be described as inherently safer when compared to a different technology, including a description of the hazard or set of hazards being considered, their location, and the potentially affected population. A technology may be inherently safer than another with respect to some hazards while being inherently less safe with respect to others, and may not be safe enough to meet societal expectations.
IST’s are based on an informed decision process: Because an option may be inherently safer with regard to some hazards and inherently less safe with regard to others, decisions about the optimum strategy for managing risks from all hazards are required. The decision process must consider the entire life cycle, the full spectrum of hazards and risks, and the potential for transfer of risk from one impacted population to another.
This hints at the difficulty in regulating complex processes such as manufacturing. There may be many tradeoffs to make. An an example, a process might use a toxic catalyst. It would seem that eliminating its use would lead to greater safety.
But: the tradeoff. Eliminating the use of the catalyst would mean the company has to increase the temperature and pressure of the process, two factors that increase risk. The end result might be a process with more risk than the original process.
At a committee hearing in 2009, Senator Susan M. Collins gave another example of how IST might force more hazardous trucks on highways:
According to one water utility located in an isolated area of the Northwest, if Congress were to force it to replace its use of gaseous chlorine with sodium hypochlorite, then the utility would have to use as much as seven times the current quantity of treatment chemicals to achieve comparable water quality results. In turn, the utility would have to arrange for many more bulk chemical deliveries, by trucks, into the watershed. The greater quantities of chemicals and increased frequency of truck deliveries would heighten the risk of an accident resulting in a chemical spill into the watershed. In fact, the accidental release of sodium hypochlorite into the watershed would likely cause greater harm to soils, vegetation and streams than a gaseous chlorine release in this remote area.
In its discussion on IST, the “Final Report: Definition for Inherently Safer Technology in Production, Transportation, Storage, and Use” report notes the tradeoffs that are commonplace:
IST options can be location and release scenario dependent, and different potentially exposed populations may not agree on the relative inherent safety characteristics of the same set of options. For example, two options for handling a toxic gas might be receiving the material in ten, 1-ton cylinders or one, 10-ton truckloads. To a population several miles from the site, the 1-ton cylinders would be inherently safer because the maximum potential release size is smaller and less likely to expose them to a hazardous concentration of the gas. However, operators, who would now have to connect and disconnect 10 cylinders for every 10 tons of material used, instead of a single truck, would consider the truck shipments to be inherently safer. Thus, evaluation of IST options can be quite complex, and dependent on the local environment. There is currently no consensus on either a quantification method for IST or a scientific assessment method for evaluation of IST options.
We need to consider also who is in the best position to judge the relative risks: government bureaucrats, or the operators of the plant. The view of government regulators is that any risk is bad, and through technology — IST in this example — we can eliminate risk.
But this ignores the tradeoffs involved, as illustrated above. It also ignore the costs of these regulations in their attempt to lessen risk, notwithstanding the economic analysis commissioned by Greenpeace.
A common response we see in the media — certainly we see it from the political left and attack groups like Greenpeace as well as government regulators — is that greedy plant owners will use whichever method is cheapest, so as to produce the greatest profit.
This ignores the fact that there are laws and regulations already in place. It ignores the fact that market forces give plant operators a huge incentive to operate safely, for their own safety, the safety of the employees they can’t operate without, and the safety of the surrounding communities. Besides the potential loss of human life, unsafe plants expose their operators to huge economic costs. Besides being liable for damage and loss of life due to accidents, unsafe workplaces have to pay employees more to work there. Insurers charge higher rates for unsafe plants they believe present a high risk of having to pay claims.