Voice For Liberty

Category: Regulation

  • Chemical security bill passes committee

    On Tuesday, the United States House Energy and Commerce Committee’s Energy and Environment Subcommittee passed H.R. 2868, the “Chemical Facility Anti-Terrorism Act of 2009.”

    This bill contains provisions for Inherently Safer Technology (IST). These regulations seek to force companies to replace existing methods and raw materials with those deemed to be safer. But the legislation may not produce its intended effect. Congressional testimony found that this could actually increase risk to the businesses that the bill intends to protect.

    The problem, as with much government regulation, lies in the unintended consequences. The article Inherently Safer Technology (IST) not always that explains how these regulations can work to increase the real danger that Americans might face. In this example, a switch to a different input chemical would mean many more chemical tanker trucks would be on our nation’s highways.

    Chemical manufacturing and processing is a complicated matter, and mandates that force the use of one chemical instead of another can have consequences that lead to less safety, not more.

    In a letter to Henry Waxman and Joe Barton, Chair and Ranking Members of the House Energy and Commerce Committee, Charles T. Drevna, the president of the National Petrochemical & Refiners Association, told how “The bill’s IST provisions may result in simply transferring risk to other points along the supply chain instead of reducing risks as intended.”

    He also said that these mandates will increase cost: “Not only will IST mandates fail to reduce risk, but they will also impose significant financial hardship on refiners and petrochemical producers struggling in the current economic recession. In addition to the fact that mandated switches may not reduce risk, some estimates indicate that forced changes could cost in the hundreds of millions of dollars per facility.”

    There are existing regulations that have been effect for some time, and have proven to work. As one industry group wrote earlier this year: “The current chemical security regulations are enforced by the Department of Homeland Security, which has clear authority to inspect facilities and apply strong penalties for non-compliance. Since the regulations have been in place, not one incident as a result of terrorism has occurred. These regulations have been effective.”

    We have working regulations in place. So why are we contemplating more burdensome regulations that will surely increase cost, while at the same time increasing the risks Americans face?

  • The good thing Senator Ted Kennedy did

    John Berlau reminds us of the legacy of Senator Edward M. “Ted” Kennedy:

    Most tributes to the “Liberal Lion” focus on his accomplishments at expanding government spending and regulation. And indeed, those were the bulk of his achievements.

    But for a brief, shining moment, in the mid to late 1970s, Kennedy viewed smaller government as the most compassionate answer in one area of economic life: transportation. Kennedy was the prime mover in Congress behind the airline and trucking deregulation bills that were signed by President Jimmy Carter. He saw the impact of regulation in these industries as protecting entrenched companies from competition, and decided that the liberal, compassionate thing to do was to deregulate to give consumers lower prices and more choices.

    The full article is at Ted Kennedy’s Deregulatory Legacy on Airlines and Trucking.

  • Government regulation failed again, yet more is called for

    “No matter how much the government controls the economic system, any problem will be blamed on whatever small zone of freedom that remains.”

    That’s the opening shot in Sheldon Richman‘s article The Madoff Scandal Exposes Government Failure.

    Richman quotes a columnist who wrote, as have many, “The long, bipartisan experiment with financial deregulation has failed utterly.” As if that happened. Richman counters: “… there has been no relevant financial deregulation to speak of. In fact, since Enron’s collapse, regulation has intensified and the regulatory budget has grown.”

    Richman makes these major points:

    • “A false sense of security is worse than none at all.” Relying on a faulty protector is worse than no protector at all. Then, at least you know that you have to fend for yourself.
    • “Advocates of regulation may reply that even seasoned investors may not be able to recognize inadequate disclosure of key factors.” Recall that many of those who lost money to Madoff were wealthy and successful people. As Richman states, “What makes anyone think government regulators are better able to spot fraud than potential investors and professional watchdogs?”
    • “The call for regulation assumes — without grounds — that government can protect investors from con men.” We see failure of regulation all the time. A meat packing plant has one or more full-time government inspectors, yet the plant still sends out contaminated product.

    In conclusion: “The claim of free-market advocates is not that we need no protection from the unscrupulous. Rather, it’s that protection is maximized by undiluted market discipline — profit and loss — and buyer-beware skepticism.”

  • Good news on chemical security

    There’s been some good news from Congress recently about Chemical Facility Anti-Terrorism Standards, or CFATS. The National Association of Manufacturers reports:

    The Senate last week passed H.R. 2892, the Department of Homeland Security’s appropriations bill, which included a one-year extension of department’s authority over security for chemical facilities potentially threatened by terrorist attacks. This one-year extension helps continue the progress that the agency and chemical industry have made in implementing safety and security regulations adopted in 2007, the Chemical Facility Anti-Terrorism Standards. (CFATS).

    The House has also passed a one-year extension, and the approach is far superior to the permanent legislation passed by the House Homeland Security Committee, H.R. 2868, the Chemical Facility Antiterrorism Act. That seemingly well-intentioned piece of legislation would U.S. production and storage of chemicals more burdensome and costly while providing no benefit public safety or national security.

    Bill Allmond, vice president of government relations at the Society of Chemical Manufacturers and Affiliates (SOCMA), put it well: “As we have argued for the past several months, Congress needs to address the October 2009 CFATS deadline expeditiously. Because the House appears, so far, to be more interested in passing controversial amendments like inherently safer technology (IST) to the existing regulations rather than make the rules permanent, this extension is the most responsible action.”

    Link to original story: Chemical Security: Keeping A Good Start Going. More reporting on this issue may be read by clicking on Chemical Facility Anti-Terrorism Standards.

  • Inherently Safer Technology (IST) not always that

    Currently Congress is considering new regulations for chemical plants — Chemical Facility Anti-Terrorism Standards or CFATS — that will, if enacted, require substitution of technologies believed to be less vulnerable to terrorist attack.

    These regulations would affect facilities in addition to those we usually picture when thinking of chemical plants. The Wichita water treatment plant, for example, could be affected.

    The problem is that chemical manufacturing and processing is a complicated matter, and mandates that force the use of one chemical instead of another can have consequences that lead to less safety.

    An example of this may be found in the study Petroleum Refiners & Inherently Safer Technology: The Realities of Hydrofluoric and Sulfuric Acid. (I recommend reading the executive summary.) It’s from the National Petrochemical & Refiners Association, a national trade association.

    Proponents of IST would like oil refineries to switch to sulfuric acid as a safer alternative to hydrofluoric acid. This sounds like a reasonable measure, until you dig a little deeper. Then, you’ll find this:

    The alkylation process takes roughly 250 times more sulfuric acid than hydrofluoric acid to achieve the same result; therefore, a forced switch to sulfuric acid would result in a significant increase in transportation and transfer of the substance. For a 10,000 barrel per day alkylation unit, this equates to one to two truckloads of hydrofluoric acid delivered to the refinery each month, compared to three to four truckloads of regenerated sulfuric acid coming in and three to four truckloads of spent sulfuric acid going out each day.

    This is an example of how seemingly small shifts in technology can have a big impact. In this case, many more trucks carrying a still-dangerous acid would be on our roads and highways.

    There’s also a cost consideration: “A mandate for a refinery to switch from hydrofluoric acid to sulfuric acid will result in capital and design costs between $45 and $150 million dollars per refinery and an increase in operating costs of between 200 and 400 percent.”

    As all refineries would face these costs, it’s very likely that these costs would be passed on to consumers. Except: foreign refiners would not be subject to these expensive technology requirements. This raises the possibility of the United States importing gasoline in large quantities — an unintended consequence that I don’t believe Congress intends.

  • Homeland Security may impose new regulations on agriculture

    At the Kansas Meadowlark, there’s some video about Chemical facility anti-terrorism standards.

    The video is from recent Congressional hearings, and is valuable for its explanation of Inherently Safer Technologies, or IST. Click on Homeland Security may impose new regulations on agriculture for the video and commentary.

  • In the world of chemical security, the real world

    A post on a blog sponsored by the National Association of Manufacturers explains a few of the problems with the proposed Chemical facility anti-terrorism standards legislation now making its way through Congress.

    One of the issues mentioned in the post In the World of Chemical Security, the Real World is the threat of excessive litigation:

    “But there are problems with the proposals, as he makes clear. He cites the ‘private right of action,’ i.e., encouraging litigation against companies as a parallel regulatory process.”

    Unlike environmental statutes, CFATS is not a series of prescriptive statutory measures with which compliance is mandatory, like emission standards or discharge limitations, and therefore it is much more difficult for an outsider — whether it be a citizen or judge — to ascertain if a standard is being met or to decide what needs to be done to address an alleged deficiency.

  • Congress could give government bureaucrats more control of farms and industry

    The Kansas Meadowlark blog has a detailed post that explains some of the harm to agriculture that proposed legislation — chemical facility anti-terrorism standards — could cause.

    The post also contains a section of helpful related links. Click on Congress could give government bureaucrats more control of farms and industry to read.

  • Current chemical security regulations should be reauthorized

    Currently two committees in the United States House of Representatives are considering legislation that would harm a vital American industry.

    This industry is already regulated, and the regulations have accomplished their goal. As explained by the Texas Chemical Council:

    The current chemical security regulations are enforced by the Department of Homeland Security, which has clear authority to inspect facilities and apply strong penalties for non-compliance. Since the regulations have been in place, not one incident as a result of terrorism has occurred. These regulations have been effective. Removing the sunset date and making the chemical security regulations permanent would provide the certainty needed to both protect citizens and support our nation’s economic recovery.

    The bill, H.R. 2868, is known as Chemical facility anti-terrorism standards. More information from the Texas Chemical Council is below.

    (This is a Scribd document. Click on the rectangle at the right of the document’s title bar to get a full-screen view.)

    Current chemical security regulations should be reauthorized By Hector Rivero, President & CEO, Texas Chemical Council Americans should take note of the Chemical Facility Anti-terrorism Act being debated in Congress. At a time when millions have already lost their jobs, the Chemical Facility Anti-terrorism Act (HR 2868) would force more people out of work by imposing needless and harmful regulations on American industry. It would also raise prices for many everyday products, including food, water, pharmaceutical drugs, fertilizers and energy. Securing chemical facilities against deliberate attack is crucial to protecting Americans. The fact is that since 2006, clear and comprehensive chemical security regulations have been in place. Those regulations secure everything from chemical facilities to warehouses and university labs. The rules require facilities to address a wide range of threats, from preventing a bomb-laden car from reaching a target to preventing theft or diversion of materials from a site. The current chemical security regulations are enforced by the Department of Homeland Security, which has clear authority to inspect facilities and apply strong penalties for noncompliance. Since the regulations have been in place, not one incident as a result of terrorism has occurred. These regulations have been effective. Removing the sunset date and making the chemical security regulations permanent would provide the certainty needed to both protect citizens and support our nation’s economic recovery. Proposed legislation poses threats Legislation being proposed by Congress should concern us all. It would create overlapping and conflicting security requirements that will cause disruptions of federal security standards, increase government red tape, and create more economic instability. The proposed regulations also go beyond security protections by placing mandates on American manufacturers as to which products and process they use. These mandates will be imposed without any regard for practicality, availability or cost. If current provisions of the proposed bill are implemented, unemployment will shoot even higher and consumers may see prices for everyday consumer products skyrocket. The chemical industry understands the importance of operating safe and secure manufacturing facilities. However, this can be accomplished without compromising our economic security.