[Senate Hearing 106-160]
[From the U.S. Government Publishing Office]
S. Hrg. 106-160
WILL Y2K AND CHEMICALS BE A VOLATILE MIX?
=======================================================================
FIELD HEARING
before the
SPECIAL COMMITTEE ON THE
YEAR 2000 TECHNOLOGY PROBLEM
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
on
Y2K PROBLEMS AS THEY IMPACT THE CHEMICAL INDUSTRY
__________
MAY 10, 1999
TRENTON, NJ
__________
Printed for the use of the Committee
Available via the World Wide Web: http://www.access.gpo.gov/congress/senate
--------
U.S. GOVERNMENT PRINTING OFFICE
56-950 CC WASHINGTON : 1999
_______________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, DC 20402
SPECIAL COMMITTEE ON THE
YEAR 2000 TECHNOLOGY PROBLEM
[Created by S. Res. 208, 105th Cong., 2d Sess. (1998)]
ROBERT F. BENNETT, Utah, Chairman
JON KYL, Arizona CHRISTOPHER J. DODD, Connecticut,
GORDON SMITH, Oregon Vice Chairman
SUSAN M. COLLINS, Maine JOHN EDWARDS, North Carolina
TED STEVENS, Alaska, Ex Officio DANIEL PATRICK MOYNIHAN, New York
ROBERT C. BYRD, West Virginia, Ex
Officio
Robert Cresanti, Staff Director
T.M. (Wilke) Green, Minority Staff Director
(ii)
C O N T E N T S
------
STATEMENT BY COMMITTEE MEMBERS
Robert F. Bennett, a U.S. Senator from Utah, Chairman, Special
Committee on the Year 2000 Technology Problem.................. 1
CHRONOLOGICAL ORDER OF WITNESSES
Gerald Poje, Board Member, Chemical Safety and Hazard
Investigation Board............................................ 4
Francis J. Frodyma, Deputy Director, Policy Directorate,
Occupational Safety and Health Administration.................. 6
Paul Couvillion, Global Director, DuPont Year 2000 Project....... 9
Jamie Schleck, Executive Vice President, Jame Fine Chemical...... 11
Charlie B. Martin, Jr., Site Safety Director, Hickson Danchem
Corporation.................................................... 20
James L. Makris, Director, Chemical Emergency Preparedness and
Prevention Office, Office of Solid Waste and Emergency
Response, Environmental Protection Agency...................... 22
Paula R. Littles, Legislative Director, Paper, Allied-Industrial,
Chemical and Energy Workers International Union................ 25
Lt. Colonel Michael Fedorko, Acting Superintendent, New Jersey
State Police................................................... 27
Jane Nogaki, Board Member, New Jersey Work Environment Council
and Pesticide Program Coordinator, New Jersey Environmental
Federation..................................................... 28
ALPHABETICAL LISTING AND MATERIAL SUBMITTED
Bennett, Hon. Robert F.:
Opening statement............................................ 1
Prepared statement........................................... 35
Couvillion, Paul:
Statement.................................................... 9
Prepared statement........................................... 36
Fedorko, Lt. Col. Michael A.:
Statement.................................................... 27
Responses to questions submitted by Chairman Bennett......... 38
Frodyma, Francis J.:
Statement.................................................... 6
Responses to questions submitted by Chairman Bennett......... 76
Littles, Paula R.:
Statement.................................................... 25
Prepared statement........................................... 78
Responses to questions submitted by Chairman Bennett......... 79
Makris, James L.:
Statement.................................................... 22
Prepared statement........................................... 80
Responses to questions submitted by Chairman Bennett......... 85
Martin Jr., Charlie B.:
Statement.................................................... 20
Prepared statement........................................... 88
Responses to questions submitted by Chairman Bennett......... 90
Nogaki, Jane:
Statement.................................................... 28
Prepared statement........................................... 92
Responses to questions submitted by Chairman Bennett......... 94
Poje, Gerald V.:
Statement.................................................... 4
Prepared statement........................................... 96
Responses to questions submitted by Chairman Bennett......... 111
Schleck, Jamie:
Statement.................................................... 11
Prepared statement........................................... 116
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
The American Crop Protection Association......................... 120
Prepared Statement of the Chemical Manufacturers Association..... 127
Prepared Statement of the Chlorine Institute, Inc................ 131
Prepared Statement of Audrey R. Gotsch, DrPH..................... 134
Overview of Responsible Care........................... 135
Prepared Statement of Geary W. Sikich............................ 138
WILL Y2K AND CHEMICALS BE A VOLATILE MIX?
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MONDAY, MAY 10, 1999
U.S. Senate,
Special Committee on the Year 2000
Technology Problem,
Trenton, NJ.
The committee met, pursuant to notice, at 12 noon, in
Committee room 11, Fourth floor, Statehouse Annex, 125 West
State Street, Trenton, New Jersey, Hon. Robert F. Bennett
(chairman of the committee), presiding.
Present: Senator Bennett.
OPENING STATEMENT OF HON. ROBERT F. BENNETT, A U.S. SENATOR
FROM UTAH, CHAIRMAN, SPECIAL COMMITTEE ON THE YEAR 2000
TECHNOLOGY PROBLEM
Chairman Bennett. Good afternoon. The committee will come
to order.
My name is Robert Bennett. I am the chairman of the Special
Senate Committee on the Year 2000 Technology Problem, and I am
grateful to the State of New Jersey for making these facilities
available to us, to allow us to hold this field hearing on Y2K
problems as they impact the chemical industry.
I apologize for our late start from our earlier advertised
time. Even though Y2K has not struck yet, the planes were still
late coming out of Washington, and delayed the schedule on that
basis.
Also, we had invited, and expected, Senator Lautenberg to
come. He is not a member of the committee, but he had expressed
an interest in being here, and we are always delighted to have
him join us. We are told that there is a funeral that he has to
attend, a death of someone close to him that has changed his
schedule, and we extend our condolences to him and of course
excuse him from being here. That means you are going to have to
put up with me alone for the balance of the afternoon, along
with of course the witnesses.
We are pleased to hold the hearing in New Jersey, not only
because of the importance of the industry to New Jersey but
because it is nice to get out of Washington every once in a
while and hear from people who are in the real world instead of
who are in the somewhat hothouse atmosphere inside the beltway.
Now I have just come from a tour of Sybron Chemicals in
Birmingham, and I was impressed with what I found there. They
have taken the Y2K problem very seriously in terms of effort
and money. The two of course always go together. And I hope
that most of the chemical plants in America are as far along as
they are. They gave me some insights into some of the
challenges that they had, and that is again one of the reasons
we hold these hearings outside of Washington when we can,
because we can always tie them to a visit to actual facilities,
instead of just having people describe them to us.
Today we have an excellent group of witnesses who have
taken time out from their busy schedules to help shed light on
the Y2K problem. We will have two panels, and I am grateful to
all of the witnesses.
Before we begin with the witnesses, let me talk briefly
about the importance of the chemical industry to America and of
its place with respect to this problem. Chemicals, almost like
computers, seem to be everywhere. The crude oil refining
industry keeps America's transportation running, and it is
dependent on chemicals. Our health, sometimes our lives, are
dependent on pharmaceuticals that go back to the chemical
industry.
The manufacturer of virtually every consumer product in one
way or another is dependent on chemical ingredients, and we put
up this chart in the form of a home that demonstrates that.
Chemical products are present in the chart from everything from
shampoo to floor polish and almost everything in between.
Now, on the economic side, the $392 billion chemical
industry is the largest industry in the manufacturing sector.
Manufacturing has been overtaken by the service sector, but
still in the manufacturing sector of our economy the chemical
industry is the largest one. It employs over a million workers.
It is our largest exporter, accounting for $69.5 billion or 10
percent of the exports in 1997, which easily outdistances the
second largest industry in exporting, which is agriculture. It
generates a trade surplus on the average of more than $16
billion annually over the last 10 years. So it is not only
everywhere in our lives, it is a very significant part of our
economic structure as well.
The chemical industry has set very high standards for
safety. We take it for granted with respect to this industry.
They handle highly toxic and dangerous materials every day and
have turned safety into a routine experience rather than the
exception. This is an industry that is already accustomed to
dealing with risks, and that is the good news with respect to
the Y2K problem because it is a problem that raises the
possibility of risks.
But the reason we focus on it is because if there is an
accident in this industry, it can have potentially devastating
effects. Even though it happened over 15 years ago, and
fortunately for us, in another country, most of us remember the
Bhopal accident that killed several thousand people and injured
tens of thousands of others.
We have never seen a chemical release of that size in the
United States, we hope we never will, but the potential is
always there. Something like Y2K that could trigger a failure
in a plant is a logical reason for us to step back and take a
look at it. An estimated 85 million Americans, which is roughly
30 percent of the population, live within five miles of one of
the 66,000 sites that handle hazardous chemicals, so that is
another reason why we need to look at this very closely.
In addition to safe onsite operations, chemical processing
plants must prepare to deal with external services which might
be Y2K vulnerable. Let me give you an example. On November 24,
1998, a power outage caused the shutdown of a plant in
Washington, a refinery in Washington. As the refinery was
returned to operation after a cool-down period, an accident
occurred that took the lives of six workers.
Now, the power outage may not have directly caused the
accident, but it caused the condition that put the workers into
a harmful situation. It created the circumstances that put six
men into danger and ultimately cost them their lives. This, in
a way, is reminisent of what happened at Chernobyl. People
always raise the Chernobyl example as one of their fears with
Y2K.
It is interesting to note that the release of nuclear
material into the atmosphere at Chernobyl was not caused
directly by the shutdown or failure of the plant. It was human
error that occurred as they were trying to deal with the
failure of the plant. And that is, again, a paradigm of what
might happen here. If we have a shutdown because of Y2K, the
difficulty of bringing the plant back might then trigger an
accident which the shutdown itself did not.
I am told, I didn't know this before, that the two most
dangerous times and accident prone-times in a chemical plant
are when it is shutting down and starting up; sort of like an
airplane, the two most dangerous times are when it is taking
off and landing.
So the industry must prepare itself for some unexpected Y2K
shutdowns and be very careful about the safety connected, also,
with starting up. An industry with many harmful and toxic
substances gives us one where there is very little room for
error.
Now, as we do in these hearings, because the committee has
no ability to pass a law stating that there will be no
problems, or pass a law stating that the arrival of the Year
2000 will be delayed for 6 months while we get ready for it,
one of the things we have done historically in the committee is
to focus on the regulators who have access in the industry and
have some degree of influence.
I knew that we were getting somewhere when my son-in-law,
who works for a bank, came to me and said, ``I don't know what
has happened, but the bank examiners from the Federal Reserve
Board now have only one thing on their minds, and that is Y2K.
They have turned it into the top priority in the bank.'' And
since we had had the Federal Reserve Board before our committee
and talked to them about Y2K, I quietly took a little credit
for that and said maybe, for one of the few times in
government, something that we are doing is having an impact.
And that is one of the things we will be doing here today,
also, not only finding out about where the industry is but
talking to the regulators, and both stimulating them to help
solve the problem and giving them an opportunity to inform the
public as to what they have been doing and where we are. That
kind of information is very important.
You can get on the Internet and find web sites that will
tell you Y2K is going to lead to TEOTWAWKI. ``TEOTWAWKI'' for
those who have not been on the Internet, is maybe the world's
longest acronym, and it stands for ``the end of the world as we
know it.'' I don't think it will be TEOTWAWKI, but it is still
something we need to focus on, and we can prevent panic by
getting out accurate information. This hearing will give us the
opportunity to do that.
So with those preliminary remarks, we will now introduce
the members of our first panel, some of whom have already
testified before the committee and are familiar with what we
do. We will hear from the Honorable Dr. Jerry Poje, who is a
member of the U.S. Chemical Safety and Hazards Investigation
Board. He is principal author of the March 1999 report on this
subject, which first got this committee stimulated to pay
attention to chemicals.
He will be followed by Mr. Francis Frodyma, the acting
director of Policy at the Occupational Safety and Health
Administration. Then we will hear from Mr. Paul Couvillon, who
is global director for DuPont's Year 2000 Project, and Mr.
Jamie Schleck, executive vice president of Jame Fine Chemicals,
a specialty chemical manufacturer here in New Jersey. I see one
more at the table, and I am not sure exactly who you are, sir.
Mr. Cohn. My name is Don Cohn. I am legal counsel for
DuPont.
Chairman Bennett. OK, so you are here to make sure that Mr.
Couvillon doesn't say something that will cause him to go to
jail, or DuPont to be sued.
Mr. Cohn. Yes.
Chairman Bennett. To go back to another hearing, you are
not a potted plant. Very good.
Dr. Poje, again, we thank you for your leadership in this
area, and appreciate your help and appreciate your testimony.
Let me give you one word on logistics here.
We have asked each of the witnesses to limit his testimony
to 5 minutes. We have received much more extensive statements
from them in writing, which will be part of the record of the
hearing.
And we have this device to tell us when the 5 minutes are
up. Unlike the one we use in the Senate, that has an amber
light that can tell you when 4 minutes are up, this one is
either red or green. No nonsense here in New Jersey, you are
either up or you are down. But what we will do, we will turn
the red light on after 4 minutes, as if it were the amber
light, so you do get some kind of a warning and you don't have
to cutoff in mid-sentence.
We don't usually do that in the Senate. That is left up to
the Supreme Court, where a lawyer once asked the Chief Justice,
``May I finish my sentence?'' and he said, ``If it's a short
one.'' We won't be quite that dramatic, but we would appreciate
your paying attention to the time limits so that will give us
time for more interaction within the panel and more questions
and other comments.
So with those ground rules, Dr. Poje, again we are grateful
for your being here and look forward to your testimony.
STATEMENT OF GERALD POJE, BOARD MEMBER, CHEMICAL SAFETY AND
HAZARD INVESTIGATION BOARD
Mr. Poje. Good afternoon, Mr. Chairman. I am Gerald V.
Poje, member of the U.S. Chemical Safety and Hazard
Investigation Board, a position nominated by the President and
confirmed by the Senate.
I oversee the Board's efforts on reducing risk of accidents
associated with the Year 2000 computer problems. The Board and
its members thank you for inviting us to testify regarding this
critical issue.
The Chemical Safety Board is an independent Federal agency
with the mission of ensuring the safety of workers and the
public by preventing or minimizing the effects of industrial
and commercial chemical incidents. The CSB is a scientific
investigatory organization responsible for finding ways to
prevent or minimize the effects of chemical accidents at
commercial or industrial facilities. The Board is not an
enforcement or regulatory agency.
Our Board views the Y2K issue within the larger
evolutionary trend of expanding automation and information
technologies in the chemical handling sectors. New technology
will continue to pentrate the work place, affecting management,
workers, equipment, and interrelationships with suppliers,
customers, regulators, and the surrounding community.
Chairman Bennett. His mike is on, so OK, go ahead.
Mr. Poje. How our Nation and businesses manage the Y2K
problem will provide important lessons for other new technology
issues. If Y2K failures become sufficiently apparent in 1999 to
2000, policymakers will likely need to consider three major
issues:
First, the absence of adequate data reqarding Y2K
compliance, despite widespread recognition of the problems,
deadlines for compliance, and consequences; second, inadequate
application of established principles for managing process
safety in facilities, particularly as it relates to automation
and information technologies; and, third, gaps in process
safety training, technical assistance, and research,
particularly as it applies to small and mid-size facilities and
those in low-income and minority communities.
The problem before this committee is urgent and
significant. As you already pointed out, there are some
projections of risk to the U.S. population. Even this
projection from EPA may underestimate the full risk to the U.S.
population.
Late last year your committee asked the Chemical Safety
Board to investigate the issues of chemical safety and the Year
2000 computer technology problem, requesting that we evaluate
the extent of the Y2K problem as it pertains to automation
systems and embedded systems; the awareness of large, medium
and small companies within the industry; their progress to date
in addressing the Year 2000 problem; the impact of the Year
2000 problem on EPA's risk management plans; and Federal agency
roles in preventing disasters due to the Year 2000 problem.
In December 1998 our Board convened an expert workshop on
Y2K and chemical safety, involving leaders from industries,
equipment vendors, insurance companies, regulatory agencies,
research agencies, universities, labor organizations,
environmental organizations, trade associations, professional
engineering associations, and health and safety organizations.
As a result, the Board considers the Y2K problem to be a
significant problem in the chemical manufacturing and handling
sector.
Enterprises with sufficient awareness, leadership,
planning, lead time, financial and human resources, are
unlikely to experience catastrophic failures and business
continuity problems unless their current progress is
interrupted or there are massive failures of utilities. Many
larger corporate entities fit this profile. The overall
situation with small and mid-size enterprises is less
determinate, but efforts on the Y2K problem appear to be less
than appropriate, based upon inputs from many experts.
While the impact of RMP should be positive, there are no
special emphases or specific mention of Y2K technology hazards
in either EPA or OSHA regulations. Compliance activities
reported to the Safety Board to date have not found a single
failure which, by itself, could cause catastrophic chemical
accidents. However, it is unclear what the outcome might be
from multiple failures, multiple control system failures,
multiple utility failures, or a combination of both.
Surveillance of the industrial sector that handles
hazardous chemicals is insufficient to draw detailed
conclusions regarding the totality of the sector's Y2K
compliance efforts.
Special workshop attendees reached consensus on the
importance of four issues related to Y2K problems: First, small
and medium-size enterprises' risks and needs are greater than
those of larger corporate entities; second, existing risk
management programs provide the most substantial framework for
addressing this issue; third, the discontinuity of utilities
threatens all chemical handling entities; and, fourth,
management of Y2K problems will require responsive
communication among the stakeholders.
Limited research indicates that large multinational
companies are, in general, following well thought out and well
managed paths toward Y2K compliance. These have, in addition to
their Y2K compliance efforts, made extensive contingency plans,
including in some cases plans to shut down batch operations for
limited periods at the turn of the century.
The CSB conclusions vis-a-vis large and multinational
companies should not be construed to mean that there is no
potential for Y2K-related catastrophic events at these
facilities. Some Y2K impacted components may not achieve 100
percent completion. Multiple failures may not have been
considered and may result in accidents, and in addition, the
erosion of commodity pricing, merger and acquisition
activities, loss of critical Y2K staff for 1999, may create
unique threats to the successful completion of the Y2K project.
In summary, I would like to say that given the time
constraints, altering this situation requires a massive effort.
Much work has been done to date. The Board has concluded that
these efforts should focus on, one, providing easy-to-use
tools; two, promoting accessible resources; and, three,
providing attractive incentives for Y2K compliance.
I would be happy to answer your questions at an appropriate
time.
[The prepared statement of Mr. Poje can be found in the
appendix.]
Chairman Bennett. Thank you very much.
Mr. Frodyma.
STATEMENT OF FRANCIS J. FRODYMA, DEPUTY DIRECTOR, POLICY
DIRECTORATE, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION
Mr. Frodyma. Thank you, Mr. Chairman, and thank you for
this opportunity to appear today to describe the Occupational
Safety and Health Administration's efforts to protect workers
in the chemical industry. Before I discuss what we are doing
with the Y2K issue, though, I would like to just spend a minute
to talk about OSHA and who we are.
OSHA's core mission is to provide a safe and healthy
workplace for every working man and woman in Nation. The
language in our statute is very broad. It requires the agency
to set standards and conduct inspections at over 6 million
workplaces employing more than 100 million Americans.
This statutory responsibility covers all industrial
sectors, including manufacturing; construction; longshoring;
yes, chemicals; health care; retail trade; and many service
sectors. The Act also allows States to operate their own OSHA-
approved safety and health programs, and 25 States and
Territories have elected to do so.
With regard to OSHA and the chemical industry, OSHA has
been particularly concerned about the chemical industry since
the mid-'80's, since the Bhopal, India catastrophe. And yet
despite this impression created by a catastrophic accident and
releases and other high publicity events, that this is a
dangerous industry, from an occupational safety and health
perspective, the overall injury/illness rate for the chemical
production sector is substantially below the national average.
Therefore, the chemical industry has not been to date targeted
for OSHA programmed inspections.
However, OSHA does recognize that there is a continuing
need to address the risk of catastrophic accidents in this
industry, including those that might be caused by unsafe
operation and/or equipment failure due to the Y2K problem. And,
indeed, OSHA enforces numerous safety and health standards
applicable to the chemical processing industry. The most
important one to the Y2K issue is our Process Safety Management
standard, or as we call it, PSM.
PSM requires employers who possess a threshold quantity of
any substances on a list of highly hazardous chemicals to
assess the risks posed to workers and to develop a plan for
mitigating those risks. The employer must, as part of a hazard
analysis, assure process safety by conducting an evaluation and
controllling the associated hazards created by the technology
(e.g., Y2K) of the process itself. Therefore, under this rule,
employers now have a responsibility to assure that the effects
of the Y2K problem on any such equipment or controls are
appropriately managed.
However, for OSHA to rely solely on enforcement of
regulations through PSM inspections to assure Y2K readiness is
not practical, in part for the following reasons:
First, coverage. Whether a facility is covered by a PSM
standard depends on the quantities and types of highly
hazardous chemicals on their site. Coverage is not always
determined by an industry or an SIC code. Thus, there are many
facilities outside the chemical industry which are covered by
process safety management, and some facilities within the
chemical industry that are not covered. So many chemical
facilities potentially facing Y2K compliance issues are,
strictly speaking, not covered by the rule; and many covered
facilities that do not engage in the type of processing
activities considered at most risk of Y2K complications are
covered.
The second reason is that for OSHA, process safety
management inspections are complex and time-consuming. A
quality process safety management inspection by OSHA takes over
4 weeks. In addition, OSHA just has a few inspectors with the
necessary training and experience to conduct PSM inspections.
Therefore, OSHA must target--moreover, OSHA's inspection
force of 2,000 compliance officers is responsible for, as I
said, the 6 million establishments. Therefore, our agency must
target its resources at the most dangerous workplaces, as
indicated partly by the higher than average injury and illness
rates. As I mentioned earlier, the chemical industry has a
substantially lower than average injury/illness rate, and OSHA
could not conduct a program of Y2K inspections at PSM-covered
workplaces without diverting limited enforcement resources from
industries where workers face a much higher probability of
death or injury.
Therefore, OSHA has concluded that the existing regulatory
framework will not effectively deal with the Y2K problem.
Instead, we feel that it can be most effective in addressing
this problem through a compliance assistance approach that
involves outreach and dissemination of education materials.
This is the approach that was also suggested by the Chemical
Safety Board in its March 1999 report to your Committee.
As part of our efforts, I would like to mention quickly a
few of the steps we have taken. In September, 1998 we published
a fact sheet entitled ``How the Millennium Bug Can Affect
Worker Safety and Health.'' The sheet lists possible failure
conditions and identifies specific hardware and electronic
devices that should be evaluated for possible errors, and that
fact sheet has been available through OSHA's web site since
December 1998.
We have also begun dissemination of information to high
hazard employers, and last month OSHA mailed letters to 12,500
employers with the highest injury/illness rates in the Nation,
alerting them they need to take action to improve their safety
record. We included the Y2K fact sheet in that mailing, which
was also sent to 1,200 companies who use chemicals in high
volume, such as those in the chemical, printing, rubber and
paper industries.
We also conduct about 32,000 inspections annually, and in
each of those inspections our compliance officers now
distribute Y2K fact sheets to all employers after every
inspection, regardless of the industry inspected. Also, those
fact sheets have been made available to State inspectors, who
conduct an additional 60,000 inspections.
And then, finally, our OSHA consultation programs, which
operate in all 50 States, have also been distributing the Y2K
fact sheet, and these consultants visit more than 20,000
workplaces annually.
Mr. Chairman, in conclusion I would like to say that OSHA
thinks that we can most effectively address the Y2K problem
through aggressive outreach and education efforts, and we will
continue to distribute information and additionally seek new
ways to spread the word about the need for every employer to
seriously and thoroughly consider how Y2K affects the health
and safety of their employees.
Mr. Chairman, I would be happy to answer any questions, at
your convenience.
Chairman Bennett. Thank you.
Mr. Couvillion.
STATEMENT OF PAUL COUVILLION, GLOBAL DIRECTOR, DuPONT YEAR 2000
PROJECT
Mr. Couvillion. Good afternoon, Senator Bennett. My name is
Paul Couvillion, the Global Director----
Chairman Bennett. Couvillion, I apologize. I apologize for
mispronouncing your name.
Mr. Couvillion. That is quite all right, sir.
I am the global director for DuPont's Year 2000 Project.
Thanks for inviting me this afternoon to discuss this very
important issue.
DuPont has made some formal disclosures through the SEC,
and today's statement will not be covering those again. The
data that I have, contained in the statement that was sent to
you, are up-to-date data as of the end of May, and I want to
ask that you use this statement in conjunction with those
earlier disclosures.
I have worked for DuPont for 35 years and was appointed to
lead this global effort almost 2 years ago. I was selected to
lead this work because of my experiences in leading people and
in managing manufacturing processes in a number of DuPont's
businesses.
The remediation of Year 2000 issues in our plant process
control systems, computer hardware, applications software,
embedded chip equipment, and in our suppliers' and customers'
systems, is very important to DuPont. Based on our current
plan, we should have more than 98 percent of our critical and
significant computer systems Year 2000 capable by the end of
June, with the remainder completed by year-end.
DuPont has been in business for almost 200 years. We are a
world leader in science and technology with a range of
disciplines and products, including high performance materials,
specialty chemicals, pharmaceuticals, and biotechnology.
DuPont's 93,000 employees are dedicated to bringing science to
the marketplace in ways that benefit people and generate value
for our stockholders.
This project is one of the top corporate initiatives
identified by DuPont's president and CEO, Chad Holliday. We
have proactively addressed Year 2000 issues since 1995. We have
established two key goals for the project. The first,
consistent with our commitment to continuously improve our
safety performance, is to prevent safety, health or
environmental incidents that could occur as a result of the
Year 2000 problem. Second, we want to maintain the continuity
of our businesses and service to our customers, employees,
stockholders and communities.
This task has required mobilizing employees around the
globe. The DuPont Year 2000 project consists of more than 40
teams and about 2,000 people from businesses, regions and
functions that comprise the company worldwide. These teams work
together with our information technology partners, Computer
Sciences Corporation and Anderson Consulting, who operate the
majority of DuPont's global information and technology systems
infrastructure.
The Company's approach to the Year 2000 challenge, as shown
in the written statement, involves the use of a multiphase
process being used by many companies worldwide. This process is
being applied through a large and diverse range and number of
systems that are connected in complex and extensive networks
across businesses and regions.
Our Year 2000 project is managed centrally with a small,
diverse team of experienced people. The work is executed
locally within each business unit, function and region.
Corporate direction is provided by our Operating Group, who
receive updated biweekly. My team reports to an Executive
Steering Committee every month, and the role of my team has
been to develop and provide common technology and processes for
the project, to monitor business unit progress against those
goals, collect metrics, hold periodic reviews, and provide
support to unit projects.
We estimate total expenditures to become internally capable
to be in the range of $350 to $400 million, and through March
1999 we have expended $225 million or about two-thirds of our
4-year estimated expenditures.
DuPont has more than 80,000 suppliers and 20,000 customers,
with 150 joint ventures around the globe. A business partner
work stream was established to develop an informed view of the
readiness of more than 5,000 critical suppliers, 2,000 key
customers, and all of our joint ventures.
About three-fourths of the suppliers that we surveyed
responded. Of those assessed, 15 percent have potentially--will
potentially create interruptions to the continuity of supplies
or services to our value chain. Key reasons for our concerns
are ``no response,'' ``no program in place,'' ``late
completion,'' or ``no supplier assessment in place.'' We have
initiated and have almost completed four special emphasis
surveys aimed at key infrastructure operations, shown in the
written statement. The initial conclusions indicate that we are
likely to experience a low probability of failure among these
groups of infrastructure providers. However, we found in some
specific areas around the globe where we could have services
interruptions and contingency plans may be required.
About half our customers surveyed responded. Of those
responding, we have assessed 33 percent as potentially creating
interruptions to our business processes.
In regard to the assessment of critical suppliers and
customers, we rely heavily on and trust what we are told about
their Year 2000 readiness. As a result, we cannot guarantee the
readiness of any of our companyies external to DuPont's
operations. At best, we have been able to create informed
judgments.
In summary, this project is critical to DuPont's success.
We have committed the necessary resources to get this work done
on time. From this work we have learned and gained much from
this large global project. We intend to meet our goal of safe,
continuous operation through the millennium.
At midnight on December 31, 1999, the world--companies,
governments, and institutions--will be given a test. I don't
know about you or others in this Year 2000 class, but each time
I take the test, I get a little nervous and anxious. We have
done our homework, have taken reasonable approaches, and I
believe we have prepared ourselves well for this final exam.
There are no guarantees that we will succeed, but because of
the extensive work we have committed and done for Year 2000, we
expect to get an A for both our effort and our results.
Thanks for the opportunity to appear this afternoon.
[The prepared statement of Mr. Couvillion can be found in
the appendix.]
Chairman Bennett. Thank you very much.
Mr. Schleck.
STATEMENT OF JAMIE SCHLECK, EXECUTIVE VICE PRESIDENT, JAME FINE
CHEMICALS
Mr. Schleck. Chairman Bennett and members of the committee,
I would like to thank you for this opportunity to come and
speak before you about this very important topic. My name is
Jamie Schleck. I am executive vice president of Jame Fine
Chemicals, a specialty chemical manufacturer, family owned. We
have approximately 44 employees. We manufacture products for
the pharmaceutical, cosmetic, dietary supplement,
chemiluminescent, and disinfectant industries.
I myself am a software engineer, and I have spent 6 years
in general management of this company. As such, I feel I have a
unique perspective on this issue, as well as the industry
dynamics of companies in the same roles that Jame Fine
Chemicals is in.
I would like to talk to you first about these industry
dynamics. I will then talk to you about the specific Y2K
compliance efforts that Jame Fine Chemicals has undertaken. I
will then talk to you about the exposure that I have identified
within my company, which I think may be indicative of other
companies also in the same roles as Jame Fine Chemicals. And
finally, I will talk about industry initiatives which we have--
which have been brought to bear on companies such as my own,
and the impact that they have had in terms of Y2K compliance.
First, the industry dynamics: What I have found in reading
some of the reports involved in--concerning the chemical
industry, there seems to be a lack of understanding of batch
processing versus continuous process. Batch processing involves
the intermittent use of raw materials in the production of
chemicals, as opposed to continuous processing which has a
continuous input and a continuous output of manufacturing of
chemicals.
As you stated earlier, one of the major dangers that could
be identified from Y2K is the startup and shutdown of
processes. At Jame Fine Chemicals we startup and shut down
processes every day as a matter of normal business. Batch
processing provides for flexibility and low-cost manufacturing
of these products.
If I could draw an analogy between the types of specialty
chemicals that my company manufactures and commodity chemicals,
specialty chemicals could be considered like diamonds, whereas
commodity chemicals would be compared to coal. As such,
automation usually is not cost-effective for companies such as
my own.
The reduction of labor costs and cycle times clearly has a
second order effect when compared to yield management and the
importance of maintaining tender loving control over the
process. We have highly skilled operators, many of whom are
paid more than $30 an hour to operate our processes.
I would next like to talk about Jame Fine Chemicals'
specific Y2K compliance initiatives. We began examining the Y2K
compliance problem in 1997. Our process involved assessment,
prioritizing those processes which could be affected by Y2K,
remediation, and finally, implementation of our compliance
initiatives.
What we did was, we identified every process that could be
remotely affected by embedded chips, by software-related
intrusions into the process, as well as anything that would be
affected by any kinds of Y2K compliance issues. We then began
prioritizing those specific problems that we saw, and then we
began implementing a program to eliminate Y2K compliance
problems.
We expect that by June 30th of this year we will have
completely ruled out any problems of Y2K compliance. As of
today, we have two issues which are not Y2K compliant. One is a
process controller on a freeze drying operation. The second is
our phone system.
Next I would like to talk to you about some of the exposure
that we have identified throughout our Y2K compliance issues.
As many chemical companies have already identified, we are of
course very dependent upon utilities--electricity, gas and
water. It will be important for us, at the coming of December
31st, 1999, to ensure that we are not engaged in any processes
which are dependent upon these utilities.
Additionally, we feel that there could be some exposure in
terms of raw material availability. Again, on December 31st we
will not be manufacturing any processes for which we do not
already have raw materials in store.
Again, I mentioned that our phone system was something
which was not Y2K compliant, but we do not consider this to be
a critical business function, as we could just go back to using
a normal phone system or roll our clocks back so that voice
mail will again be usable.
There have been several industry initiatives that also have
brought this important topic to light for companies such as my
own. ``Responsible Care'' by SOCMA; software validation, which
is brought forth through cGMP compliance, and also insurance
compliance. It was important for us this year, when we did our
annual insurance review, that the Y2K statements were up-to-
date and were identifying all possible risk to our insurance
company.
In conclusion, I would like to say that I feel that
companies in the industry that I am in and in the role that I
am in have limited exposure to Y2K problems because of the
dynamics of the industry.
I will be happy to take your questions. Thank you.
[The prepared statement of Mr. Schleck can be found in the
appendix.]
Chairman Bennett. Thank you all very much. I at some point
would like to get Mr. Schleck and Mr. Couvillion into a
conversation about the large and the small and some of the
contrasts and complementary activities that you get involved in
chemical manufacturing.
Let me start with you, Dr. Poje. Throughout your statement
you focused again and again on the small and medium-sized
enterprises as the area where you either have the least
information or where the most remediation needs to be done, and
this of course is a concern that the committee has.
In general terms, we find on the committee that the people
who are willing to come testify to us, regardless of what the
situation is, are the people who are in good shape, and very
often then there is a tendency to extrapolate into the unknown
area the good results that you have out of the known area. I
think you have appropriately said we can't do that.
We can't at the same time extrapolate bad assumptions into
the unknown area, but I think we would be terribly naive if we
assumed that everybody who didn't report was in the same shape
as those who did report.
So do you have any thoughts--or any of the rest of you,
chime in on this, even though I am focusing it with Dr. Poje--
as to what we could do to increase our information for the
small and medium-sized enterprises that have not reported,
either through their trade association or their regulator or to
your inquiries, as to where they are?
Mr. Poje. Senator, thank you for that question. We are very
concerned about the small, mid-size enterprises because we want
them to succeed in this area as we do in other areas. The Board
has to confront, unfortunately, terrible tragedies that have
occurred in the last year or so involving such entities.
In March of this year we had to begin an investigation into
a small company in Allentown, Pennsylvania that was
manufacturing a material called hydroxylamine. In preparing a
more purified solution of this chemical, something went awry in
the process. The situation resulted in a catastrophic
explosion. Four workers were killed inside the plant. One
worker was killed in a business nearby. Eleven buildings were
damaged in the area, and the explosion was felt 15 miles away,
throughout Allentown.
It is unlikely that such a small, mom-and-pop operation
would be part of an association. So, yes, we have worked with
associations, we will continue to try to work with associations
to build models of performance that could be useful for all
such entities. I think the characterization by Mr. Schleck of
the difference in scales are very important issues that need to
be addressed by all such entities.
We would welcome other associations, in addition to the
Chemical Manufacturers Association, to provide such examples of
how to deal with specific Y2K related problems that are likely
to be had in common across such small entities. Smaller
businesses lack the large corporate communication structure
which allows for learning to be disseminated from one facility
to another, such as might happen in a very coordinated program
described by Mr. Couvillion.
The Board would like to see is an acceleration of
surveillance efforts so that we would have a better picture on
the membership and how they are complying. However, we also
would like to see additional models developed within each of
those associations that could be used as examples to others
within or outside the association, identifying how facilities
can address contingency planning and compliance efforts that
are effective throughout the rest of this year.
Chairman Bennett. Mr. Schleck, you are the closest thing on
the panel to a mom-and-pop operation, only you have grown to
sisters and cousins and aunts, and far beyond just mom-and-pop,
but do you have any comment at all as to how we might reach
some of these small operations that Dr. Poje is talking about?
Mr. Schleck. Well, I would first of all characterize us
possibly as a mom-and-pop operation, certainly a pop-and-son.
My father is still active with the business.
Chairman Bennett. Well, OK. Is it named after you?
Mr. Schleck. You know, people always ask me that, and his
name is James, and it was started at the time that I was a
young child, so possibly. It is commonly confused, though. I
think that----
Chairman Bennett. Be like the politicians. Take credit for
it anyway.
Mr. Schleck. I shall. One thing that I think is critical
for anyone involved in industry such as the chemical industry
is to have adequate operating procedures which would rule out
any kind of catastrophic events as we saw in Allentown. One
thing that we have is a hazard operations procedure which runs
down all the selected ``what if'' scenarios, which include the
failure of utilities, the interruption of gas or water supply.
As I recall from reading about that incident, that was a
company that had really just started, and they probably did not
have the types of operating procedures that were--that are
necessary to operate in this business. That being said, I think
that it is important for industry trade associations to
identify, through initiatives like ``Responsible Care'' and
cGMP, which is actually an agency compliance issue with the
Food and Drug Administration, to ensure that companies such as
the one in Allentown, such as Jame Fine Chemicals or other
companies, are in fact implementing and following those
important operating procedures.
Chairman Bennett. Mr. Frodyma?
Mr. Frodyma. Yes, Mr. Chairman.
Chairman Bennett. You spoke about the dissemination and
distribution of your fact sheet. I have a fact sheet, single
page. Is this what we're talking about?
Mr. Frodyma. Yes, Mr. Chairman.
Chairman Bennett. Well, I don't mean to make your afternoon
uncomfortable, but this is woefully inadequate. There is
nothing here that you couldn't pick up from the Sunday
supplement in terms of information.
EPA has a four-pager which incidentally has in one small
box what you take half a page to cover, and they just tuck it
up there, with more information, web sites, addresses, a lot of
alerts and so on.
Mr. Frodyma. Well, we have also distributed other web site
material to our--the groups that I mentioned in my testimony.
The President's Y2K web site, which discusses the chemical
industry, we have mentioned. We have also distributed to the
small and medium-size--we are targeting the small and medium-
size establishments. The SBA's web page, which has a lot more
information on it which is more detailed.
But in addition to just the fact sheet, we have also had
discussions with our managers about not just the information on
the fact sheet but what they can talk to the employers about
when they do visits. So we haven't--although the fact sheet,
the document, we have also had discussions with the managers
about how to use the fact sheet.
Chairman Bennett. Well, again, there are very few facts on
the fact sheet. If I might, if it doesn't offend your
sensibilities to use another agency's information, here is the
EPA ``Prevent Year 2000 Chemical Emergencies.'' It describes
the problem in greater detail than yours does, then goes on to:
your software, your process control equipment, your service
providers, hazard awareness and reductions. There is a box on
some dates to watch. A lot of people don't realize that the
first of January is not the only date that is affected, and
there are a series of dates here, leap year and so on. Steps to
address the problem, remedy, test, develop, so on.
Then here is the box with the items that are on your fax
sheet included, and then a full page of information resources,
Y2K freeware and shareware, national bulletin board for Year
2000, National Fire Data Center. I am just reading a few of
them. Here is the President's Council on Year 2000 conversion
product, compliance information, Chemical Manufacturers
Association survey, and so on.
Again, I realize that Federal agencies (and I have worked
in one before I came to the Senate, I served in the executive
branch) get very jealous about turf, but I would suggest that
simply reprinting this from EPA and putting it in your
distribution channel would be very, very helpful.
I have seen the material put out by the Small Business
Administration. It is not tailored to the chemical industry,
and simply would help somebody deal with his billing or payroll
kinds of problems. But I think something more than what we have
seen under the banner of OSHA should be distributed through the
OSHA network, because you have the largest network of anybody
at the table.
Mr. Frodyma. Well, we certainly can use the EPA's fact
sheet. In fact, we have--our people have worked with EPA on
development of their fact sheet and we can easily see that the
EPA's material is also made available through all of our
sources. It is a very good suggestion.
Chairman Bennett. Thank you. I will look forward to see
what goes on.
OSHA has perhaps the highest visibility in manufacturing of
any Federal agency. I remember walking into a company that had
a little sign on the window that said, ``If you think OSHA is a
small town in Wisconsin, you are in real trouble.'' So
everybody is aware of you, and you can be of great help in
getting more detailed information. And not to beat up on you
personally, but the single page fact sheet that we have a copy
of is, in our opinion, inadequate.
Dr. Poje, you want to get in?
Mr. Poje. Senator, if I could just chime in here, one of
the recommendations from our Board's report was to have a high
level Federal meeting coordinated through the President's
Council on Y2K. I think this would be a way in which such
information could be shared very expeditiously between
agencies, and could maximize the impact of such common
information. OSHA's reach is quite impressive. EPA has a
similar reach but maybe in a different angle. There are other
research entities, such as the National Institute for
Occupational Safety and Health, which are working on Y2K.
That recommendation, which has yet to be acted upon, that
the President's Council coordinate such a meeting. We could
invite the associations, who also have a very important
perspective on how to reach their members, and work
expeditiously, in coordinated fashion, to make the message
heard.
The Health and Safety Executive in the United Kingdom has
produced a number of informational resources specific to
health, safety and environmental protection. I think that these
provide strong models for us to examine and adapt for an
approach that is useful here in the United States.
Chairman Bennett. Thank you. John Koskinen, who chairs that
effort on behalf of the President, he and I talk every week,
and I will mention that to him this week. I always tell him
what comes out of these hearings, and he tells me what he is
doing, and this is one that I can pass on to him as a very
specific suggestion.
Yes, sir, Mr. Couvillion?
Mr. Couvillion. Thank you, Senator. I had four thoughts,
the first one of which, even though my name is French, I did
not invent the company, though I do believe I made a
contribution to it over my years of time. So just a little bit
of an aside here.
I guess the four thoughts I had were, No. 1 is that we have
135 plant locations or site locations around the world. Among
those sites, we have some 320 operations, a significant number
of operations. We found that the only way to manage such a
large operation is to leverage it on a global basis and to
communicate daily, if not weekly, on the successes, the
learnings, and the findings.
And so the idea would be, for example, a small plant might
have 40 people in it, a large plant of ours might have 3,000
people. So the idea of leveraging among multiple site locations
within a given industry, be it a small company industry, would
have a high value I believe for those companies sharing
information about their findings, their learnings, and their
application to Year 2000, all the way into the contingency
planning processes. So if you can model what we do at our plant
sites around the globe, it would be a very, very critical piece
of success.
The second area deals with process safety management. I
think clearly process safety management forces you to think
about Year 2000 not as a device that might fail, but within
what system does it fit, and are we doing the necessary testing
and integration work that is necessary to create success? And a
sound process safety management process, built upon for Year
2000, is another way of assuring success in the business. So I
think to me a recommendation would be to have very strong views
of process safety management, as Dr. Poje has already spoken
about, I think are really key to that whole process.
I think the third area of value for us has been a learning
that with the Chemical Industry Technology Alliance, a group
consisting of about 60 large Fortune 500 companies, we
participate on a quarterly basis in reviews. We will get groups
of suppliers to come in and share what they are doing to the
whole industry. We will get the power providers to come in and
share what they are doing as a key learning. So if there is
some way to create an alliance of small businesses to get
together to listen to large providers, telecommunications,
power industry providers and so forth, would be another key
value. I don't know if such an industry, small industry forum,
exists today.
I think the last one would be to create an open sharing of
information, so the fear of litigation, the fear of legal
barriers doesn't stand in people's way to get this work done.
Maybe an extension to the current disclosure act might be a
valued thing, and the CMA work we have done in creating a
supply chain pledge, where people sign a mutual pledge in this
process, to commit the effort and energy to get this work done,
might be a way to sort of cap it off and put the icing on the
cake.
So those are four suggestions at least that I think about
in the learnings we have had in this project.
Chairman Bennett. We appreciate that. We have tried to
facilitate the exchange of information with the legislation
that Senator Dodd and I passed, or convinced the Congress to
pass, last year. Unfortunately, we have not seen as much
exchange of information as we had hoped. Not to slam your
companion there, but the legal departments of many companies
have said, ``Well, the law notwithstanding, don't tell anybody
anything. That's the safest way to go.''
Mr. Couvillion. I join you in that.
Chairman Bennett. Yes. Let me ask you a tough question, but
you mentioned it in your opening statement and I think you
might want to elaborate it a little more. You say you are over
90 percent there?
Mr. Couvillion. Ninety-eight percent.
Chairman Bennett. Ninety-eight percent there, but you have
spent only two-thirds of the money.
Mr. Couvillion. We are finding----
Chairman Bennett. Does that mean that you have left the
really tough part still to do, or that you got it done much,
much cheaper than you anticipated? If it is the latter, then
you are the only company that I know of in that situation.
Mr. Couvillion. We are finding that we are in the labor-
intensive part of this work today. Our spend rate is pretty
high right now through the summer months. And I think, second,
that we are in fact seeing ourselves spending less money than
we originally estimated in this project.
Now, those are the two fundamental reasons for this. We are
going to spend it out. I had $225 million. We have come a long
way and done a lot of work. Particularly we found ourselves
spending less capital than we originally anticipated to get
work done.
Chairman Bennett. That is surprising. Just about everybody
else that appears before the committee ends up spending
substantially more than they originally had thought, very much
including the Federal Government. The initial estimates for the
Federal Government were that we would spend $2.5 billion. We
are probably going to go over $10 billion, and there are still
parts of the government that are saying, ``Gee, we could use a
little more.'' Of course, they say that all the time.
Let me ask you one other question, Mr. Couvillion. Dr. Ed
Yardeni, whom everyone who is connected with Y2K knows very
well, looked at your disclosure, I don't mean to pick on you,
but you're the only one available--and he said that 65 percent
of your key suppliers were at a high risk of not being Y2K
ready. You are saying now that 15 percent of your suppliers are
at high risk. Do you want to reconcile those two numbers, for
anybody who may be watching?
Mr. Couvillion. Sure. The data--we are constantly reviewing
and looking at our status in this information--the data shown
in the statement reflects current information, last week's
state of the business in terms of our supplier relations
process. The earlier data probably comes from the third or the
fourth quarter report, I don't know which offhand.
What we have done is----
Chairman Bennett. Is there any difference between critical
suppliers and key suppliers?
Mr. Couvillion. No, they are the same, one and the same.
Chairman Bennett. OK.
Mr. Couvillion. We have found that calling supplier forums,
we have called entire groups, supplier groups together, to come
to DuPont, to share with them what they are doing, and we have
found a significantly greater openness in the last three to 4
months.
We have initiated face-to-face contacts with everyone in
the infrastructure processes--transportation, shipping,
telecommunications, the power industry, and the natural gas
industry. We have called on each one of those on a face-to-face
basis, and frankly we have found that that has paid off
tremendous dividends just to go talk to people face-to-face,
rather than depending on the earlier processes where we used a
significant amount of written survey data and asked people to
fill the blanks in and send data back to us.
So starting with telecommunications, open forums for both
customers and suppliers, as well as getting these face-to-face
discussions, has made a tremendous difference in the process
for us.
Chairman Bennett. Well, I think that is a significant
contribution, because when we are dependent on surveys by trade
associations, we miss a whole lot of folks. Mr. Schleck, do you
have any thoughts as to where such a forum could be put
together, that we could do the kinds of things that Mr.
Couvillion is talking about.
Mr. Schleck. Well, I would like to just supplement his
comments in saying that, as is the case, we supply as a
specialty chemical manufacturer many large pharmaceutical
companies such as DuPont, specialty chemical companies such as
DuPont or Cytec or----
Chairman Bennett. Are you going to ask him for an order, as
long as you are here?
Mr. Schleck. No, but my point is that actually it is, as a
business priority it is important for us to be Y2K compliant
and show that to our customers, because this is obviously a
competitive advantage and an important business function that
we can play for our customers. So as DuPont has called in their
key suppliers, we have also been questioned by some of our
major customers about our Y2K compliance strategy and what our
plans were.
Chairman Bennett. One last question. As we look at this
overall from the Senate point of view, we think the United
States is probably going to be in fairly good shape. I don't
have the same confidence at all overseas.
And both you, Mr. Schleck, and Mr. Couvillion, do you have
foreign suppliers, raw materials or finished goods, that you
are concerned about, that you have looked at as part of this?
And do you share our concern that there is greater risk
overseas, or do you think this is going to be all right? Mr.
Schleck, we will start with you.
Mr. Schleck. As I mentioned before, we found that it is
important for us to have an increase of our raw materials
supplies come year-end. We are fairly dependent upon raw
materials from other countries. We have audited those
suppliers. We visit them usually on a yearly basis. This past
year it has been somewhat more frequently.
And what I have found from many of these suppliers, again,
there is a different industry dynamic from what is commonly
associated with the chemical industry. There is much less
automation, higher value products, so therefore certainly
justifying the need for specialized labor and less automation.
The exposure that I see is in regard to shipping, customs
clearance, those types of issues, and those may really have a
nuisance value to us which can be mitigated by having the
adequate raw materials supply at the end of the year.
Chairman Bennett. So you are stockpiling?
Mr. Schleck. Yes. We are probably going to be increasing
our base inventory by approximately 20 percent, which is about
1 month's supply.
Chairman Bennett. OK. Mr. Couvillion?
Mr. Couvillion. Yes. As I indicated earlier, we have about
5,000 critical suppliers, or key suppliers, if you want to call
it that, of the roughly 80,000 we deal with. Now, that accounts
for probably 90-plus percent of our purchases. Half of those
suppliers are outside of the United States.
And so we have a process that is very similar to what we
are doing here. We are going out, we are calling on people, we
are talking to people in a very similar fashion. We have had
very good success in our Asia Pacific region, very good success
in our European region, and very good success in Mexico, for
example, in getting data back from suppliers.
I think the aggressiveness and the energy which you put
into it will determine the outcome of the process, and our view
is that we have put a significant amount of energy because we
view this as an absolutely critical part of our success.
We do have, as I indicated in the statement, some 15
percent who we are not comfortable with. We are going to go out
and, in fact, have contingency plans. Our intent is not to
build inventory. The belief on our part is that it is critical
from a quality point of view to get the work done, not to put
inventory in place. Although we don't discount it, we see some
view of being able to get at that.
Now, we are looking at direct suppliers only in this
particular case, not those further back in the stream. At least
it gives us very strong comfort about where we are.
Chairman Bennett. You are not stockpiling. Are you going to
change any suppliers if you decide they are not going to be
ready? Are you going to cut them off for future?
Mr. Couvillion. We have that as one of our contingencies,
and we have a group of suppliers we call mission critical,
limited alternatives, that we look at. And in those cases we
are going to find a way, if we can't get business, we will find
alternatives to do that. We have not pulled the trigger on
doing that yet, though.
Chairman Bennett. OK, fine. Let me thank you all. This has
been a very informative panel, and I have enjoyed the
discussion as well as your opening statements.
We will now go to the second panel. We have Mr. James
Makris, who is the director of the Chemical Emergency
Preparedness and Prevention Office at EPA; Mr. Charlie Martin,
he is the safety coordinator for Hickson DanChem Corporation in
Danville, Virginia. We appreciate Mr. Martin's coming up here
to emphasize that this is a problem we must be concerned about
across the Nation.
We have Ms. Paula Littles, who is the citizenship and
legislative director of the PACE International Union; Lt. Col.
Michael Fedorko, the state director of the New Jersey Office of
Emergency Management; and Ms. Jane Nogaki, who represents the
New Jersey Work Environment Council and the New Jersey
Environmental Federation.
So we appreciate all of your being here. Let's see. I
introduced Mr. Makris first, but Mr. Martin, you seem to be on
the far end, so let's go down in the physical order in which
you are seated and start with you, Mr. Martin.
STATEMENT OF CHARLIE B. MARTIN, JR., SITE SAFETY DIRECTOR,
HICKSON DANCHEM CORPORATION
Mr. Martin. Yes, sir. Good afternoon, Chairman Bennett. My
name is Charlie Martin, and I am the site safety coordinator at
Hickson DanChem Corporation. I would like to take this
opportunity, if I may, to introduce Mr. Jonathan Miels, to my
left, who is our information systems manager at Hickson
DanChem, and he has also been our prime leader in our Y2K
compliance efforts.
I thank you for inviting me today to appear before you and
this distinguished panel. Although our company is not
physically located in New Jersey, the issue we are discussing
here today does not vary across State lines. I am here today to
present my industry's perspective on Y2K contingency planning
from both inside and outside the company fence.
Hickson DanChem is engaged in custom manufacturing of
organic and inorganic specialties for major chemical companies.
It also produces a comprehensive line of textile chemical
auxiliaries and specialty surfactants. In layman's terms, we
make the chemicals that are used for fabric conditioning, paint
additives, and personal care products. The company employs 132
persons at our plant in Danville, Virginia and uses batch
manufacturing processes, which is inherently different from the
continuous operations.
As the site safety coordinator, I serve on the Y2K
compliance team. Since the last panel addressed Y2K initiatives
generally, I will focus my comments on the last step of Y2K
preparation, which is contingency planning. It should be noted
that our company will be Y2K compliant on June 30, 1999.
In developing the final draft of our emergency contingency
plan, Hickson DanChem tried to foresee every possible
situation, however remote. Our plan covers safe process
operations, emergency response planning, and community dialog.
As Hickson DanChem conducted its Y2K assessment, employees
played a critical role. In fact, employee involvement is not
unique to Y2K safety activities. Recognizing that their
contribution is paramount to a successful employee health and
safety program, we have always included our employees in
developing safety plans and procedures.
This involvement enhances our compliance with Federal
regulations such as the Occupational Safety and Health
Administrations Process Safety Management or PSM rule and the
``Responsible Care'' code guidelines. Coupled with regulatory
requirements, these guidelines address many of the potential
results of Y2K technology problems.
Some specific activities at Hickson DanChem that our
employees play a dynamic role in are our formal Site Safety and
Health Committee, which is comprised of eight task groups.
These groups participate in various areas of our safety
program. They also perform hazard assessment audits. We hold
monthly shift training sessions on related OSHA and regulatory
topics; departmental safety meetings, which are also held
monthly; and 5-minute supervisor safety talks that are
performed daily.
Hazard/Operability or HAZOP studies are performed on new
and existing processes, and include recommendations for
corrective actions that will preclude potential failures. HAZOP
action items result in decisions such as installing emergency
shutdown devices in conjunction with process control systems.
Regarding specific impacts of Y2K, our onsite Y2K
assessment team performed evaluations on business information
systems, process control systems fire and security systems,
field control units, and QC lab equipment. During the roll over
period of December 31, 1999 through January 1, 2000, provisions
were considered for a phased startup of utilities, system
checkouts, and status verifications with the emergency response
agencies before manufacturing processes are resumed.
Another important aspect of an effective safety program is
involvement with local emergency response teams and
participation with local emergency planning committees, better
known as LEPC's. Hickson DanChem participates in the
Pittsylvania County LEPC by providing technical expertise in
the planning process, assisting with training of local
responders, and hosting regular plant tours and emergency
response drills for local responders.
In fact, we had a major emergency response drill on March
11, 1998, in which Y2K related issues were addressed. The drill
was noted as being the first of its magnitude in our area.
Since that time, lessons learned have enabled us to identify
potential challenges and make continuous improvements in our
system.
Because of strong involvement in the county LEPC, we were
chosen to serve on the city of Danville Emergency Planning
Committee, as well.
As you can tell, handling chemicals has led the industry to
develop extensive plans to address potential incidents covering
both onsite and offsite consequences. However, Y2K presents a
unique set of potential consequences, such as potential
multiple system failures. As such, our emergency response plans
designate actions to be accomplished should these type
situations arise.
Communicating Y2K compliance with your local community
establishes public confidence and provides opportunities for
open dialog between the community and the plant. Several of our
customers, suppliers and business support agencies have
requested and been provided information on our Y2K progress.
Our information systems manager participated in a Y2K drill
with our regional medical center. The drill proved beneficial
for both Danville Regional Medical Center and Hickson DanChem.
Participation in the Pittsylvania County Safety Roundtable
provides vital information to small industries on topics such
as risk management plan or RMP preparations. A seminar hosted
by the Danville LEPC was held on April 29, 1999, to further
explain RMP requirements. Hickson DanChem also sponsors
programs such as Educators in the Workplace, which provides
awareness information to local teachers and guidance
counselors.
In conclusion, Hickson DanChem is committed to having an
effective emergency response plan that avoids the potential Y2K
technology concerns. Many of the contingency planning
activities for Y2K readiness in the chemical industry are
already being addressed through procedures and practices.
However, Hickson DanChem has added additional measures to
ensure the safety of our employees, neighbors, environment and
equipment come December 31, 1999 and January 1, 2000. The
involvement of our employees and local emergency responders has
led us to develop an effective and open community dialog and on
and offsite contingency plans.
Mr. Chairman, we appreciate the opportunity to appear
before you today. The Y2K issue warrants the collaborative
efforts of all stakeholders before you today. We welcome your
leadership and look forward to a transition to a safe and
prosperous new millennium. Thank you very much.
[The prepared statement of Mr. Martin can be found in the
appendix.]
Chairman Bennett. Thank you.
Mr. Makris.
STATEMENT OF JAMES L. MAKRIS, DIRECTOR, CHEMICAL EMERGENCY
PREPAREDNESS AND PREVENTION OFFICE, OFFICE OF SOLID WASTE AND
EMERGENCY RESPONSE, U.S. ENVIRONMENTAL PROTECTION AGENCY
Mr. Makris. Thank you, Mr. Chairman. My name is Jim Makris,
and I am at the Environmental Protection Agency. It is really a
pleasure, a terrific opportunity, to be here, share some of
these views with you.
I also would like to make a comment to Paul Hunter, who has
been a terrific aide to I think all of the Federal agencies as
we have worked through some of these processes. He has just
been a terrific ally and a supporter.
Within EPA----
Chairman Bennett. On his behalf, I will thank you.
Mr. Makris. Pardon me?
Chairman Bennett. On his behalf, I will thank you for your
kind comments.
Mr. Makris. Well, I know he wouldn't say that himself, but
within the agency my responsibilities are to be the emergency
coordinator of EPA, which covers a wide variety of difficult
and technical tasks. I am also responsible for managing the
Chemical Emergency Preparedness Program and right-to-know
programs as they relate to chemical accidents. I am accompanied
by Oscar Morales, the associate director of the Information
Management Division in TSCA, who has the Toxic Release
Inventory responsibilities, and Don Flattery, who is EPA's
sector outreach coordinator for 2000.
Within our agency, as in most agencies, we have three basic
tasks. One is to be sure that the agency's business will go on
uninterrupted. It is a fundamental issue. The President said,
``Do it.'' You wanted it done. So what we are doing is making
sure that EPA's systems are in good order, and I think we have
gotten an A from some of the committees that have rated us and
from OMB. We didn't start there, but we are there now.
The second responsibility that we have is to deal with
sectors that have been assigned to us, one of which is the
chemical industry sector which we are talking about today.
And then of course the third obligation we have as an
agency is, if things go wrong, if there are accidents involving
chemical releases or other releases, is EPA ready to meet its
emergency response responsibilities which, in conjunction with
the Coast Guard and the other Federal agencies, we have carried
out for so many years dealing with hazardous materials and oil
spills.
But we are the agency with the responsibility for ensuring
that the environment and the public are protected from the
unreasonable risk of toxic chemicals. We identify hazards in
the environment, regulate their use, assess the risks of
release to public health, and indeed deal with prevention
programs.
Following the world's largest chemical accident in Bhopal,
India, which has been mentioned by several people including the
Chairman, Congress passed a law which required EPA to work
closely with industries to participate in emergency planning,
to notify their communities of the existence of releases, and
to allow local communities to enhance emergency preparedness
and accident prevention.
I think it is very important to note that that law moved
things in a different way than a lot of previous regulation
around industry that EPA was managing. It changed the paradigm
from complete command and control to a recognition that
communications was critical.
Senator Lautenberg, I wish he had been here today. He was a
key part of passing this original Community Right-to-Know Act
in 1986. But it is fundamentally against Thomas Jefferson's
statement, where he said people are inherently capable of
making proper judgments when they are properly informed. And I
think that, you know, that is in all EPA's little brochures,
but I think fundamentally it says that if you get information
to the public and you create an environment and a forum in
which they can communicate, the risk-taker with the risk-maker,
progress will be made.
And I think that the Act created the Act of 1986 created a
whole lot of dialog between the public and private sector,
leading to reductions in risk on a voluntary basis by the
chemical industry accompanied by exposure and disclosure and
discussions at the local level. We also have, obviously, the
Superfund law, and most all EPA environmental laws provide some
emergency provisions to be able to move forward.
Based on our legislative authorities, EPA was asked by the
Council to take responsibility for the chemical sector, and we
felt that it could be well achieved within the legislative
framework that the agency already had, and we stepped forward
in that manner. We have taken a broad array of outreach
activities in consultation with the chemical industry trade
associations. The Administrator has asked that all EPA speakers
talk about Y2K in any kind of issues with which they deal.
I thank you very much for the compliment on the fact sheet
that we put out. It was an innovation to try in plain English
to reach out and get as many words as we could to the private
sector over what might go wrong. I also have to say that OSHA
helped us to that, as did CMA and some others, so that we were
clear, to put out a message that was understandable and that
was in plain English.
I think EPA has--we have put a lot of tools in our toolbox
that are useful to small and medium-size enterprise, and
specifically with the case of the fact sheet, have distributed
it broadly to LEPC's throughout the country, to State emergency
response commissions. We submitted it to SBA, who are
redistributing it to some of their constituents. And so we feel
that that brochure, together with some of the other information
that we have created, will be very useful indeed.
We work with CMA on the ``Responsible Care'' program--I am
going to turn pages rapidly now. I think that in the matter of
surveys, we are working hard to try to get the best input we
can from the field. We keep being told by industry they are
being surveyed to death, so we think that it is important to do
some pointed surveys rather than any more of the broad surveys.
We are getting to the--we are getting to a point now where we
need specific information, not broad ``How are you doing it?''
But at the moment, the surveys seem to be showing that most
people are doing a really terrific job.
Going to the end, I think that we are ready to deal with an
emergency if it happens. We were part of the FEMA visit to 10
regional offices; EPA was on that podium. I personally was in
both Philadelphia and Newark, New York, and also Atlanta. I
understand that just today there was a meeting of 300 people
here in New Jersey dealing with the Y2K issue, specifically
around emergency management, but leading to the chemical
industry.
I was reminded this morning of the importance, and Mr.
Martin mentioned it again, of using the local emergency
planning committees that were created by the Congress in 19808
and 1986 as an outreach mechanism directly to the community and
directly to the industry, and to provide the LEPC's with
questions that they can pose to the industry in their local
communities about Y2K, just as we ask them to do that regarding
chemical safety generally.
I guess in conclusion I would like to make it real clear
that I am also the chairman of the National Response Team. We
have a monthly meeting. The meeting always includes a Y2K
discussion. We had full briefings by agencies. We have had DOE
and HHS. We will have the other agencies presenting to us where
they are in the emergency planning process during subsequent
National Response Team meetings.
We, as you may or may not know, Senator Bennett, some
companies were concerned with testing, that in order to test
they might have a release. EPA found a way to allow a testing--
``amnesty'' is a peculiar word, but at least a testing
flexibility, to allow moderate releases under certain
preestablished conditions that would allow a company to take
the risks of testing without having a Federal sanction.
And the last thing I would like to comment on is, the risk
management planning process that we have under Section 112(R)
of the Clean Air Act requires that companies meet their general
responsibilities and general duties. The essence of our
publication is to say, ``Industry, you have a general duty to
operate safely, and that includes Y2K.'' Thank you, Mr.
Chairman.
[The prepared statement of Mr. Makris can be found in the
appendix.]
Chairman Bennett. Thank you.
Ms. Littles.
STATEMENT OF PAULA R. LITTLES, LEGISLATIVE DIRECTOR, PAPER,
ALLIED-INDUSTRIAL, CHEMICAL, AND ENERGY WORKERS INTERNATIONAL
UNION
Ms. Littles. Thank you, Mr. Chairman. Good afternoon. My
name is Paula Littles, and I am the legislative director of
PACE International Union. Our union represents workers employed
nationwide in paper, allied-industrial, chemical or refining,
and nuclear industries. Workers at these facilities are
responsible for critical plant operations. They implement the
contingency measures used during emergencies, from inclement
weather to system failures to fires and/or explosions.
The Chemical Safety Board report released in March 1999
explained that ``The Year 2000 technology problem is
significant in the chemical manufacturing and handling sector,
posing unique risks in business continuity and worker and
public health and safety.'' We firmly believe that chemical
workers, emergency responders, and local government agencies
that focus on environmental and emergency response should be
provided with training and tools to adequately address Y2K
issues. Currently workers are provided training on contingency
plans for single device failures, for example, loss of a boiler
or loss of electricity or some other similar utility.
However, multiple device failure possibilities are not
normally considered in the current process hazard analysis. It
is unclear what the outcome might be due to such failures--
possible multiple control system failures, multiple utility
failures, or a combination of both.
Contingency planning for Y2K-related emergencies has to be
designed and implemented with worker involvement--workers
provide the day-to-day operations of these facilities, and they
have the day-to-day operating knowledge--and should also be
designed to include safe operations, safe shutdown, and
emergency response. Any such planning must also take into
account human factors such as appropriate staffing, hours of
continuous work, rest intervals, and worker stress levels.
We have discussed this issue with the companies that employ
our members at their facilities, and it is felt in our
organization that a number of the larger companies are taking
the Y2K problem seriously and are expending large amounts of
resources to correct the problem. A number of these facilities
have shared their concern regarding the reliability of their
utility suppliers.
Petrochemical facilities have a great dependency on
purchased utilities for their day-to-day operations. We
strongly urge and encourage greater communications between
utility providers and the facilities they serve, to ensure that
each entity is doing their part in addressing this issue.
We are also very concerned with the small and mid-size
facilities where we represent workers, and also where we don't
represent workers. Unfortunately, we do not believe these
facilities have the capability to expend the necessary
resources to test the design and Y2K contingency measures for
all of their systems and provide the necessary training for
their employees.
We would encourage the companies that are ahead of the
curve on their Y2K efforts to provide assistance to those that
are not proportionately comparable. In the short period of time
remaining before Y2K, we feel that this is one viable option to
assist these employers that have been unable to adequately
address this issue.
No matter what size the company, the Y2K issue could
threaten worker and public health and safety. We would
encourage companies to follow the proposed emergency response
planning as specified in the Chemical Safety Board report
through Y2K contingency planning on three levels.
Level one should address continued safe operations that
include preplanning of actions that will allow the facility to
continue to run in a safe and environmentally sound manner.
Level two should address safe shutdown. This level of planning
assures the availability of personnel, equipment, utility
services, and other resources needed to ensure a safe shutdown
of a facility. Level three is activated when contingency level
one fails to ensure continued safe operations; and contingency
level two fails to ensure safe shutdown. This will likely
initiate a process safety incident.
PACE strongly believes that both employers and government
agencies should designate worker representatives and include
them in discussions regarding Y2K contingency planning, because
ultimately workers will be the ones responsible for
implementing these plans.
In conclusion, I would like to say that because of the lack
of adequate planning for reaching Y2K compliance, contingency
planning and worker training should be initiated immediately to
build an emergency response infrastructure to respond to
environmental disruptions, chemical releases, and worker public
health and safety. Thank you, Mr. Chairman, for allowing me to
speak to you today.
[The prepared statement of Ms. Littles can be found in the
appendix.]
Chairman Bennett. Thank you for being with us.
Colonel Fedorko.
STATEMENT OF LT. COLONEL MICHAEL FEDORKO, ACTING
SUPERINTENDENT, NEW JERSEY STATE POLICE
Mr. Fedorko. Good afternoon, Senator. I am Lt. Colonel Mike
Fedorko. I serve as the acting superintendent of the New Jersey
State Police, and as State director of the New Jersey State
Police Office of Emergency Management. Thank you for the
opportunity to testify before the Senate Subcommittee on the
Year 2000 Technology Problem.
In New Jersey, Y2K readiness is coordinated by Governor
Christine Todd Whitman's office, resulting in a comprehensive,
coordinated effort by all State agencies. The role of the State
Police Office of Emergency Management in this process is to
oversee and guide the activity of local emergency planning
committees. LEPC members interface directly with
representatives of chemical facilities in their communities on
issues related to hazardous materials, emergency planning and
emergency response.
Our State is home to nearly 1,000 chemical facilities that
are regulated under the Superfund Amendments Reauthorization
Act or the U.S. Environmental Protection Agency risk management
rule. New Jersey's unique emergency management legislation
mandates the establishment of a local emergency planning
committee and the development of a State-approved emergency
operations plan in every one of our 21 counties and 566
municipalities.
Our Y2K recommendations to the county and local emergency
management personnel are that they assess potential risks,
determine how those risks will impact on the local emergency
operations plan. We are urging local emergency management
personnel to examine, assess and build on the disaster
readiness capabilities they already have.
This office is supporting those recommendations through
training sessions and outreach programs aimed at the emergency
response community. In cooperation with the Office of the
Governor, the Department of Law and Public Safety, the
Department of Community Affairs, we have developed an outreach
program concerning Y2K issues to address our elected officials
and the emergency response community.
We have scheduled three regional conferences and invited
the elected officials, business administrators, emergency
response personnel, and emergency management personnel from all
of our 21 counties and 566 municipalities. The timing of this
hearing is notable, as we held one of our Y2K training sessions
in Morris County this morning. To date, we have reached 14
counties and over 235 municipalities.
Plan appropriately, prepare responsibly: This is New
Jersey's Y2K message to local governments and community
members. Local governments have an opportunity to set an
example and to set the tone for citizens by addressing Y2K
issues in a proactive, deliberate, and consistent manner.
``Proactive'' means start addressing Y2K immediately.
``Deliberate'' means that we should integrate Y2K planning into
the existing framework for disaster preparedness, training and
response. ``Consistent'' means that we should test all
emergency response systems, verify and test again.
To the members of the chemical industry who are represented
here today, we recommend that you continue working with the
local emergency planning committees, as you are already
required to do under existing Federal laws such as Superfund
Amendments and Reauthorization Act and the U.S. Environmental
Protection Agency risk management rule. The Y2K readiness
status of your company should be on the agenda during regularly
scheduled planning meetings held with the emergency response
community.
In conclusion, our position--plan appropriately, prepare
responsibly--is consistent with our planning strategy for all
emergency disasters. We look forward to the continued
cooperation and support from the Federal Emergency Management
Agency and other Federal agencies. We are committed to working
in conjunction with all State agencies and private sector
organizations to enhance Y2K readiness for all New Jersey
citizens.
Thank you for your time and attention, sir.
Chairman Bennett. Thank you very much.
Let's end with Ms. Jane Nogaki.
STATEMENT OF JANE NOGAKI, BOARD MEMBER, NEW JERSEY WORK
ENVIRONMENT COUNCIL, AND PESTICIDE PROGRAM COORDINATOR, NEW
JERSEY ENVIRONMENTAL FEDERATION
Ms. Nogaki. Chairman Bennett, thank you for having this
hearing today in New Jersey, and thank you for extending to the
New Jersey Work Environment Council and the New Jersey
Environmental Federation the opportunity to testify today on
concerns that the citizens and workers of this State have
regarding potential Y2K problems in facilities using hazardous
chemicals.
My name is Jane Nogaki, and I have been involved in
community and environmental right-to-know issues for 20 years.
I am a board member of the New Jersey Work Environment Council,
a State-wide alliance of labor and environmental activists, and
I am the pesticide program coordinator for the New Jersey
Environmental Federation, a nonprofit coalition composed of 80
organizations and 90,000 members. I am also a resident of
Marlton, New Jersey and a public member of the Burlington
County Local Emergency Planning Committee, the county where you
were this morning when you were looking at Sybron Chemical.
The New Jersey Work Environment Council and the New Jersey
Environmental Federation are concerned about potential public
and occupational health risk posed by chemical releases
resulting from the Year 2000 computer problems. It is our
contention that, despite corporate and government efforts to
identify and remedy Y2K problems, the situation in New Jersey
remains perilous for workers and residents alike.
At the same time, if policies are properly designed and
implemented to address this potential health risk, New Jersey's
workers and residents may be able to seize opportunities to
increase awareness about toxics in our neighborhoods and
workplaces.
We can be proud of the effectiveness of New Jersey's Toxic
Catastrophe Prevention Act [TCPA], which covers 91 facilities
using extremely hazardous substances. We also look forward to
expansion of the program under the U.S. Environmental
Protection Agency's Clean Air Act Section 112(R), which will
extend to approximately 70 additional facilities. Together,
these laws authorize the State DEP to collect voluminous risk
information data about roughly 160 facilities using high-risk
toxics, and they are considered model laws for chemical
accident prevention.
Yet, State government efforts to address potential Y2K
problems in the chemical and related industries appear
inadequate. Last fall, for example, the DEP conducted an
informal survey of 20 New Jersey chemical facilities and
concluded that these manufacturers had few date-dependent
processing units. DEP simply accepted management's verbal
assertions and did not request independent verification and
validation data.
Thus, it appears that the New Jersey DEP, the agency
charged with preventing toxic disasters, has put its head in
the sand when faced with challenges posed by the millennium
bug. Moreover, it is also apparent that no other agency in New
Jersey is independently verifying even the most basic
assertions from chemical facilities.
Therefore, we have some proposals to remedy this situation.
To safeguard against preventable Y2K-related chemical releases,
and to assure New Jersey citizens that both the DEP and
facilities in the State that use hazardous substances are
taking adequate precautions, we propose the following:
That the New Jersey Department of Environmental Protection
should distribute a Y2K preparedness survey to the roughly 160
facilities covered by the Toxic Catastrophe Prevention Act and
the EPA Clean Air Act, Section 112. This survey should request
information about Y2K efforts, including their preparedness and
planning, to help the DEP determine whether each company is
Y2K-compliant. The survey should also include questions about
equipment suppliers and other contractors.
A reasonable deadline should be set to allow companies to
complete the survey, and copies of the survey and a list of the
companies receiving it and an introductory letter about the
importance of Y2K preparedness should be sent to the
appropriate mayors and local emergency planning committees in
municipalities throughout the State.
Second, for those companies that do not respond to the
survey by the deadline, the DEP should conduct follow-up
enforcement activities. They should conduct independent
validation and verification audits of a limited number of
facilities, and then they should generate a report detailing
the results of their findings, and make this information
available to the public.
And then we believe that the DEP should initiate a series
of local hearings on Y2K preparedness, in which a survey of
questions that people could ask in their own community, such
as, are chemicals being stockpiled onsite in anticipation of
the Year 2000? Have independent verifications taken place? Have
risk management programs been shared with the community? This
kind of survey and public outreach could go a long way toward
making sure that the outcome of this preparedness is to prevent
accidents.
We see this as a tremendous opportunity, but only if there
are some more teeth in a program, a State survey and prevention
program that heightens the awareness about this potential
problem. We don't think that there should be panic about the
situation, but I think we concur with your feelings and the
feelings of the Chemical Safety Board that the prevention
awareness has to be heightened at this point and not left to
chance.
So thank you very much for the chance to testify here.
[The prepared statement of Ms. Nogaki can be found in the
appendix.]
Chairman Bennett. Thank you.
Who wants to respond to Ms. Nogaki? Let me ask you. You run
an operation. How would you respond to a questionnaire of that
kind? You have the advantage of not being from New Jersey, so
that you can give us maybe, Mr. Martin, a reaction. How would
you respond if the State were to do the kinds of things she has
just described?
Mr. Martin. I think the forums, the forums as I understand
she is speaking of, would be quite great, and I am trying to
relate that to what we are already doing, and I think it has
made us a lot of money, and increased our understanding and
increased our awareness level within the community and within
our plant site.
Whereas to the specifics of all the things she is
requesting, maybe not knowing the logistics of everything that
goes on as far as New Jersey is concerned, it would be hard to
maybe address them specifically. Like I said, for our
particular area, we have had a great relationship with our
LEPC's, we have had a great relationship with the communities.
I don't know. We dispel, I guess, any type of outlandish fears,
if you will, of anything that could happen, because of that
relationship and that we work so closely together.
Chairman Bennett. Thank you.
Mr. Makris, you have a sort of a national view of these
kinds of things. Could you give us a reaction?
Mr. Makris. Several. First, I am glad that Jane is saying
they are going to do it in New Jersey, rather than saying it is
something that EPA Washington should do, because I think it is
consistent with the general view of the program as best run
closer to the people.
So my view would be that we would provide, I would provide,
my office would provide any support that we could to this kind
of an effort with DEP, and I suspect that it would be like
something that would catch on throughout the country and other
States might follow some of these models.
Along those lines, you know, several people mentioned the
importance, especially you, Senator Bennett, the importance of
trying to penetrate what is really going on out there. You
know, our folks in the Toxic Release Inventory Program have put
out a major letter to their constituents talking about
enforcement and reminding them of their obligations.
Similarly, we are planning an enforcement test in EPA
Region Six, which I guess we will regard as a pilot. And last,
I would like to mention that Dana Minerva, our deputy assistant
administrator for water, testified before you in Anaheim, and
one of the things that she has done is, she is initiating a
National Test Day for water systems.
So, you know, I think we are going to have several examples
and really do some testing and observe some specific instances.
So I think anything that gets that profile raised and that
provides an opportunity with a rifle instead of a shotgun to
see what goes on is helpful, and we will provide whatever help
Jane needs. Probably can't send money.
Chairman Bennett. OK. Mr. Fedorko, I have gone to two other
places first to give you a chance to collect your thoughts. Do
you have a response to----
Mr. Fedorko. Senator, we work with the local emergency
planning committees, and it is their responsibility to go out
and talk to the chemical industry, and we actually rely on them
to do that.
Chairman Bennett. The issue raised by several of you is the
issue of self-reporting, and that gives us some concern at the
Federal level. The only information we have is self-reported.
Ms. Nogaki, what agency would you think should go out and
do the audit? As far as Mr. Makris is concerned, he gets
audited by the General Accounting Office. When he says that all
of EPA's computers are going to work, we say, ``Thank you very
much,'' and then we turn to the General Accounting Office to
have them tell us whether he is right on or not, and sometimes
the GAO disagrees with some of the folks who self-report.
Colonel Fedorko or Ms. Nogaki, who should do some of the
independent auditing of people who self-report in New Jersey?
Ms. Nogaki. Well, we are suggesting--and understand, you
know, I do not represent the Department of Environmental
Protection, I represent----
Chairman Bennett. I understand. Sure.
Ms. Nogaki [continuing]. I believe that the Department of
Environmental Protection should be an enforcing and verifying
agency, that we shouldn't leave this to self-reporting.
And so who should do that auditing? I think the DEP is
probably able in a limited number of cases to verify and audit,
and I think that companies are sometimes hiring their own
auditors, third person auditors and verifiers, to do that
audit. And I think either one would be a method, but I think
that it is government's responsibility here to provide some
verification that this effort is going on.
The self-reporting, in the case of many companies, you
know, it is in their own interest to do this right, and many of
them will do it right, but I think that there is a public need
and a worker need for some kind of verifiable audit going on.
Even if it is in a limited number of facilities, I think it
should happen, and I think that the State branch of the
Environmental Protection Agency, which is in most places called
DEP or DNR, should be that agency.
Local emergency planning and local emergency responders,
they are the people that are left to pick up the pieces when
things go wrong. You know, God bless them, they are always
willing and ready to be there, and they have a communication
status, but they don't have any enforcement powers and they are
not enforcers of environmental laws, they are responders.
It is the Department of Environmental Protection's job to
enforce this law, and they are clearly--they have statutory
authority under the TCPA and the Clean Air Act, to inspect
facilities to ensure that they are operating safely.
Chairman Bennett. Yes, sir?
Mr. Makris. Senator, we did not include in the original
requirements for the risk management planning, Y2K. We put that
rule out in 1996, and it was before some of this flurry took
place and some of this great concern.
But what we have done is reminded, through that alert, that
it is their general duty, which is a very important part of the
112(R) program, risk management planning program. And in
addition, when people file electronically, one of the first
reminders is, ``Don't forget to include Y2K and include it in
your executive summary of your operation.'' Now, that is not
mandated by law but it is an encouragement that we have done to
the 69,000 facilities we expect to submit risk management
planning.
Chairman Bennett. Yes. I am interested, Ms. Nogaki, that
you are very complimentary of New Jersey's initiative, just
talking about the State government as a whole here, New
Jersey's initiative in the Toxic Catastrophe Prevention Act. I
don't know of any other State where they have done that with
State legislation. Do you, Mr. Makris, know of any?
Mr. Makris. Clearly New Jersey led the way.
Chairman Bennett. Yes.
Mr. Makris. New Jersey led the way. Louisiana, California,
several other States have very active programs. Georgia is
developing an active program. But I think it was the State of
New Jersey and Senator Lautenberg's powerful influence, and at
that time Congressman Florio's influence, that helped to drive
some of the programs in the first place. And the first thing we
do at EPA is ask New Jersey to come on in and give us some
advice.
Chairman Bennett. Well, coming from outside the State,
then, I come in for this hearing and I hear high praise for the
State's initiative in one area, and criticism for the State's
initiative in another area or the State's enforcement in
another area. I find a little bit of a disconnect, that a State
can lead out in the one regard and then is derelict in another
regard. Can any of you help me?
Ms. Nogaki. I would just like to respond. I don't
understand myself the dereliction of duty here. As I said, DEP
didn't even attend a national briefing on this issue, but we
think that by our raising this issue and bringing it to the
department or to the Governor of the State, to ask if some
enforcement mechanism can be instituted, that perhaps that can
be corrected.
Now I am going to say that while New Jersey was first in
writing a toxic catastrophe prevention law, it was Bhopal, the
disaster at Bhopal that triggered it. I mean, we do have the
third highest chemical production in the country. We have a
high volume of chemicals transported in the State and
manufactured here, and a very dense population. So our
awareness of toxic chemicals is probably higher than any other
State in the country.
And despite the institution of that law and the pollution
prevention that has occurred as a result of it, we still have
had more than 8,000 releases since 1986 that have been
responded to by emergency responders--transportation spills,
chemical accidents, very serious accidents.
Four years ago at NAPP Chemical, four workers were killed.
It is a batch operation plant. Just last year in Patterson, New
Jersey, Heterene Chemical released a chemical called creosol,
and two blocks away an elementary school had to be evacuated
and many people were sickened by it.
We continue to have accidents, and we will continue to have
them, but to the extent that we can prevent them, we need to do
that. And we think that enforcement, particularly in this kind
of scenario, should be stepped up.
Chairman Bennett. The witness from OSHA who appeared on the
first panel indicated that one of the reasons OSHA has not
spent more time than it has on Y2K is that the overall record
of the chemical industry has been very good, and that OSHA
spends its time with people who have records that are bad. Are
you challenging that comment on his part?
Ms. Nogaki. I can't really explain that. I think that in
New Jersey, that we have a high risk of chemical accidents
because of the joint nature of our high population density and
the proximity to----
Chairman Bennett. That is one of the reasons I am holding
the hearing in New Jersey, is because you have that
juxtaposition here that you don't have in a lot of other
States.
Ms. Nogaki. Right, so that the consequences of chemical
releases and accidents are felt immediately, because they often
happen right in the neighborhood. The plant that you visited
today, Sybron, is in a relatively rural area, but most----
Chairman Bennett. Yes. Not relatively. It is rural.
Ms. Nogaki. Well, yes, it is in a rural area, but many of
the manufacturing and chemical facilities in New Jersey are in
neighborhoods, you know, like a block away from here. They are
in residential neighborhoods, they are in light industrial
areas facing highways where there is heavy exposure, and we
have the New Jersey Turnpike, the route between Philadelphia
and New York where there is a high volume of transport going
on. So we are at higher risk than other places.
Chairman Bennett. Ms. Littles, we haven't heard from you
since your opening statement. Do you have a comment on some of
the issues we are discussing here?
Ms. Littles. Well, actually I think that Jane's suggestion
is a very good one, and I believe it could be beneficial in
more than just New Jersey, in other States also. There has got
to be some mechanism in place, I think, for the government to
be able to track what companies are or are not doing around
this issue, to enable to ensure that they can come up to a
level that would be acceptable for the end of this year.
Chairman Bennett. I agree with Mr. Makris, I am delighted
to have the suggestion made at a State level rather than a
Federal level, because we couldn't get the space rented and the
pencils bought for an agency in time to do this at any kind of
a Federal level.
Ms. Littles. Oh, I am certain, but there are other States
that are, as New Jersey is, that actually could also benefit
from having some system such as the one she suggested in place.
Chairman Bennett. Mr. Martin, just to go back to you for a
minute, where is Virginia on this? Just to get another view, do
you have the kind of State monitoring that is being asked for
here in New Jersey?
Mr. Martin. Well, as far as the different reports that need
to go to State agencies, those reports are quite naturally
submitted on time and by their request. Again, you know,
through the regular regulatory reporting systems, I think all
of our information is sent and everything is checked out and
verified. No other normal reporting that I think--that I know
of in Virginia that is required would have any kind of bearing
or any kind of impact, other than the ones we are already
submitting, the 112, the other reports, et cetera, that are
mandated by EPA.
Chairman Bennett. Thank you. Well, Governor Whitman's
office has been very cooperative with us in helping us set up
the hearing. We have a sense of very good communication, and we
will communicate to the Governor's office the suggestions and
comments that have been made here.
Anyone have any final comment you wish to make?
Mr. Fedorko. Senator, we can make that recommendation to
Commission Shenn with DEP, through the Office of Emergency
Management.
Chairman Bennett. I think that would help short-circuit the
communications loop, and I thank you for your willingness to do
that.
We thank you all. We thank the members of the first panel
and those who have attended. The hearing is adjourned.
[Whereupon, at 2 p.m., the hearing was adjourned.]
A P P E N D I X
ALPHABETICAL LISTING AND MATERIAL SUBMITTED
______
Prepared Statement of Chairman Robert F. Bennett
Good Morning and welcome to our hearing on the impact of the Year
2000 technology problem on the chemical industry. I am pleased to be
holding this hearing here in New Jersey, not only because of the
importance of this industry to your state, but also because it is nice
to go outside of Washington DC to meet the people on the front lines of
the battle against the Y2K computer problem.
I have just come from a tour of Sybron Chemicals in Birmingham and
was impressed with the level of automation in this plant, which I
understand is typical of other plants in the industry. While this
automation enables safe and efficient operation of the plant, it also
increased susceptibility to Y2K anomalies. I can only hope that the
other tens of thousands of chemical producers and users in America are
doing as well as Sybron in addressing this insidious problem.
We have an excellent group of witnesses here today who have taken
time out of their busy schedules to help us shed light on the Y2K
problem in the chemical industry. Before we begin let me talk about the
importance of the chemical industry.
The crude oil refining industry keeps American transportation
running. Our health--and sometimes our lives--are dependent on
pharmaceuticals produced by the chemical industries. And, the
manufacture of virtually every consumer product is in some way
dependent on vital chemical ingredients. As you can see on this chart,
(shaped like a house) chemical products are present in everything from
shampoo to floor polish.
On the economic side, the $392 billion chemical industry is the
largest in the manufacturing sector and employs over one million
workers. It is also our largest exporter accounting for $69.5 billion
or 10% of the total exports in 1997, easily out distancing the second
leading industry--agriculture--and generating a trade surplus on
average of more than $16 billion annually over the last ten years.
The chemical industry has set high standards for safety, and has a
very proactive program to preserve this record and to continuously
improve on health, safety, and environmental performance. This industry
is one that is already accustomed to dealing with risks, and I am
hopeful that we won't see any Y2K-related problems. Nevertheless, the
chemical industry warrants our attention because accidents can have
such devastating effects. Even though it happened over 15 years ago in
another country, most of us remember the Bhopal accident that killed
several thousand people and injured tens of thousands of others. We
have never seen a chemical release of that size in the United States,
but the potential for harm is great. An estimated 85 million
Americans--more than 30 percent of the U.S. population--live within 5
miles of one of the 66,000 sites that handle hazardous chemicals.
That's why any potential Y2K problems at chemical facilities cannot be
taken lightly.
In addition to safe ``on-site'' operations, chemical processing
plants must prepare to deal with external services which may be Y2K
vulnerable. Let me give you an example. On November 24, 1998, a power
outage caused the shutdown of an Anacortes, Washington refinery. As the
refinery was returning to operation after a cool-down period, an
accident occurred that took the lives of six workers. The power outage
may not have directly caused the accident, but it brought about the
circumstances that put six men in danger, and ultimately cost them
their lives. Accidents are more likely to occur at a chemical plant
during startups and shutdown--just as airlines face an increased risk
of accidents during takeoff and landing. This industry must be ready
for any sudden Y2K-induced shutdowns.
In this industry, with the many harmful and toxic substances that
are involved in chemical processes, there is very often little room for
error, and the potential for a Y2K impact must be determined and
planned for. Our Committee has been very concerned about the Y2K impact
on numerous government agencies and private sector organizations.
However, in few other areas have we have perceived a similar possible
public health risk associated with Y2K. That's why we're here today to
address the question, ``Will Y2K and chemicals be a volatile mix?''
* * * * *
Panel 1 Introduction: The witnesses for our first panel today are:
- The Honorable Dr. Jerry Poje (POE-GEE), member of the US Chemical
Safety and Hazards Investigation Board and principal author of the
March 1999 report on this topic.
- Mr. Francis Frodyma (FROE-DEE-MA), the Acting Director of Policy
at the Occupation Safety and Health Administration,
- Mr. Paul Couvillion (COE-VEE-ON), Global Director for DuPont's
Year 2000 Project, and
- Mr. Jamie Schleck, Executive Vice President of Jame Fine
Chemicals, a specialty chemical manufacturer here in New Jersey.
Panel 2 Introduction: We'll now start our second panel. Our
witnesses are:
- Mr. James Makris, director of the Chemical Emergency Preparedness
and Prevention Office at the EPA,
- Mr. Charlie Martin, Site Safety Coordinator for Hickson Danchem
Corporation in Danville, VA. We appreciate Mr. Martin's being here to
emphasize that this is a problem we must be concerned about across the
nation,
- Ms. Paula Littles, Citizenship & Legislative Director of the PACE
International Union,
- Lt. Col. Michael Fedorko, the State Director of the New Jersey
Office of Emergency Management, and
- Mrs. Jane Nagoki (NAH-GAWK-EE), representing the New Jersey Work
Environment Council and New Jersey Environmental Federation.
We appreciate the efforts of all of our witnesses today, and we
extend our gratitude for their preparation and contributions. As I said
when we began, this industry is very important to our standard of
living, our health, and our economy. We must all work together to
prevent the Y2K-problem from damaging any of these areas.
__________
Prepared Statement of Paul Couvillion
Introduction
Good afternoon, Mr. Chairman and members of the Senate special
committee. My name is Paul Couvillion, Global Director for DuPont's
Year 2000 Project. Thank you for inviting me to appear before you today
to discuss this very important issue.
DuPont has made formal disclosure statements to the U.S. Securities
and Exchange Commission regarding our Year 2000 Project. I'm not here
to restate those disclosures and disclaimers, but to give you a brief
update on our project and to answer any questions you may have when I
complete my statement.
I have worked for DuPont for 35 years and was appointed to lead
this global effort almost two years ago. I was selected to lead this
work because of my experiences in leading people and in managing
manufacturing processes in a number of DuPont businesses.
The remediation of Year 2000 issues in our plant process control
systems, computer hardware, applications software, embedded chip
equipment and our suppliers and customers are very important to DuPont.
Our goal is to achieve safe, continuous business operation through the
Millennium. Based on our current plan, we should have more than 98% of
our critical and significant computer systems Year 2000-capable by the
end of June 1999, with the remainder completed by year-end.
I am excited about what our teams have accomplished and am
confident we will be internally ready for the Year 2000. We are
developing contingency plans where we have assessed potential
interruptions in supplies or product flow to customers.
Who Are We?
DuPont has been in business for almost 200 years. We are a world
leader in science and technology with a range of disciplines and
products including high performance materials, specialty chemicals,
pharmaceuticals and biotechnology. Our portfolio of 2,000 trademarks
and brands includes Lycra(R) elastane, Teflon(R) fluoroproducts,
Stainmaster(R) residential carpeting, Kevlar(R) aramid fiber and
Corian(R) solid surface materials. We operate in 65 countries worldwide
and have a long-established presence in North America and Europe and
strong and growing market positions in South America and Asia Pacific.
DuPont's 93,000 employees are dedicated to bringing science to the
marketplace in ways that benefit people and generate value for our
stockholders.
DuPont and Y2K
The goal of our global Year 2000 team is to be certain that
critical and significant information technology is capable. This
project is one of the top corporate initiatives identified by DuPont
President and Chief Executive Officer Chad Holliday.
DuPont has proactively addressed the Year 2000 issue on a global
basis since 1995. We established two key goals for the project. The
first, consistent with our commitment to continuously improve our
safety performance, is to prevent safety, health or environmental
incidents that could occur as a result of the Year 2000 Problem.
Secondly, we want to maintain the continuity of our businesses in
service to customers, employees, stockholders and communities.
This task has required mobilizing employees around the globe. The
DuPont Year 2000 Project consists of more than 40 teams and about 2,000
people from businesses, regions and functions that comprise the company
worldwide. These teams work together with our Information Technology
(IT) Alliance Partners--Computer Sciences Corporation (CSC) and
Anderson Consulting--who operate the majority of DuPont's global
information systems and technology infrastructure.
The company's approach to the Year 2000 challenge involves the use
of a multi-phase process being used by many companies worldwide:
Assign qualified people to the project,
Find and Inventory systems, hardware, and software
(objects),
Assess object capability (Capable, not capable, unknown),
Define safety or business criticality of objects (Mission
critical, significant, negligible),
Strategies to remediate/test non-capable objects
(remediate, replace, retire, validate),
Create plans to define the work, the schedule and
resources needed,
Prepare and Remediate objects,
Test objects/systems individually or as an integrated system,
Redeploy into production, and
Contingency planning and Event management.
This process is applied to a diverse range and number of systems
connected in complex and extensive networks across businesses and
regions.
6 regions--US, Mexico, Canada, Asia Pacific, Europe
(includes Middle East, Africa), South America,
3 global data centers in 2 countries,
2,000 medium range computer platforms, each with--100
software applications,
12,000 telecommunications, wide area and local area
network devices, switches or servers,
60,000 personal computers and applications,
500 globally shared, centrally managed, applications used to manage
our global businesses,
8,500 business specific applications among 17 global business units
and 10 functions,
200,000 objects or embedded chips at 320 production units at 135
sites around the globe, and
2,000 non-manufacturing sites, warehouses, sales offices, with bar
code readers, faxes, etc.
Our Year 2000 Project is managed centrally with a small, diverse
team of experienced people. The work is executed locally within each
business unit, function and region. Corporate direction is provided by
our Operating Group who receive project updates biweekly. My team
reports to an Executive Steering Committee every month. This steering
group is made up of senior corporate officers, including the CIO, CFO,
and the V.P.'s of Sourcing, Engineering and two global businesses. The
role of my team has been to develop and provide common technology and
processes for the Year 2000 project, monitor business unit progress
versus plans, collect metrics, hold periodic reviews and provide
support to unit projects.
Costs
We estimate total expenditures to become internally Year 2000
capable to be in the range of $350 to $400 million. Through March 1999,
we have expended $225 million or about two-thirds of our 4-year
estimated expenditures.
Readiness of Parties Upstream and Downstream from DuPont
DuPont has more than 80,000 suppliers, 20,000 customers and 150
joint ventures around the globe. A Business Partner workstream was
established to develop an informed view of the readiness of more than
5,000 critical suppliers, 2,000 key customers and the joint ventures.
About three-fourths of the suppliers surveyed responded; of those
we have assessed 15% as potentially creating interruptions to the
continuity of supplies or services. Key reasons for our concerns are
``no response,'' ``no program in place,'' ``late completion,'' or ``non
supplier assessment in place.'' We initiated and have almost completed
four special emphasis surveys among these key supplier groups to become
better informed about potential disruptions to our operations:
Global telecommunications,
Logistics suppliers (air, truck, rail, ocean and freight
forwarders),
Electrical utilities generation and distribution, and
Natural gas providers.
Initial conclusions indicate we will likely experience a ``low''
probability of failure among these groups of infrastructure suppliers.
However, we have found some specific regional or area exceptions where
these services could be interrupted and where contingency plans will be
required.
About half of the customers we surveyed responded; of those
responding we have assessed 33% as potentially creating interruptions
to our business processes. Key concerns include the late remediation of
order placement systems, receipt of product by customers and accounts
payable systems.
Contingency Plans, Crisis Management and Event Management
Each of the company's business units has formulated contingency
plans to address potential disruptions to their business operations
from both internal and external sources. DuPont is reviewing a number
of options including sourcing raw materials from alternate vendors or
arranging for back-up or alternate transportation carriers. We have
completed summary plans and expect to complete detailed contingency
plans by June 1999. We will continue to update these plans during the
remainder of the year. They will be executed in time to assure
continued operations.
Information about DuPont's Year 2000 project including a completed
CMA survey and our most recent SEC disclosure statement are available
on our internet home page at www.dupont.com.
Summary
This project is critical to DuPont's success and we have committed
the necessary resources to get the work done on time. From this work we
have learned and gained much about how to do a large global project
including:
Using teams and networks globally,
Leveraging knowledge and solutions globally across businesses and
regions,
Partnering with our IT Alliance for maximum business benefit,
Better insights and understanding about how our IT systems work,
Helping us to create a new, future IT strategy, and
Closer working relationship and understanding of our value chain.
We intend to meet our goal of safe, continuous operation through
the Millennium.
At midnight on December 31, 1999, the world--companies,
governments, institutions--will be given a test. I don't know about
you, but each time I take a test I get a little anxious and nervous. We
have done our homework and I believe we have prepared ourselves well
for this final exam and expect to get an ``A'' for both effort and
results.
Thank you for the opportunity to appear before the committee this
afternoon. I will be happy to answer any questions you may have.
__________
Responses of Lt. Colonel Michael A. Fedorko to Questions Submitted by
Chairman Bennett
Question 1. Do you have specific concerns regarding the Y2K-
vulnerability of the chemical industry, and has the Office of Emergency
Management responded to those concerns?
Answer. From the perspective of an organization concerned primarily
with consequence management, let me assure you that we take this issue
seriously. While regulatory authority for this segment of industry
resides with the NJDEP, the NJSPOEM is responsible for coordinating
emergency management by assuring that States agencies, counties and
municipalities maintain current and viable all-hazard emergency
operations plans to deal with a full range of emergency situations.
With the onset of the Y2K issue, we recognized the unique challenges
inherent with Y2K and felt it prudent to hold three regional public
officials conferences to provide local planners and responders with
information and advice on addressing Y2K concerns in their
jurisdictions. These workshops were extremely well received. In
conjunction with the State's Chief Information Officer and the 18
respective State Department Y2K coordinators, we continue to monitor
progress toward achieving Y2K readiness.
The NJDEP does not have specific concerns because of the
significant outreach effort by the USEPA and the various chemical
industry trade association. Assessments indicate that the larger
facilities are aware of the problem, have allocated appropriate
resources and should be ready. Additional effort is being made by the
USEPA and these trade associations to target the small and medium sized
enterprises to facilitate their rate of progress to that of the larger
facilities. The NJDEP's general concerns (i.e., how do we handle
problems that occur in spite of the foregoing) are being addressed by
the Local Emergency Planning Committee activities described in response
to question 3.
Question 2. What is being done to plan for response to multiple
system failures within a single plant, or simultaneous failures in
neighboring facilities?
Answer. Community Emergency Managers have been trained using the
Guide for State and Local Emergency Managers. This Contingency and
Consequence Management Planning for Year 2000 Conversion manual
developed by FEMA is being used to prepare plans that address these
worst case scenarios. Consequence management plans will then be
developed, coordinated and tested. These actions will occur in the time
line shown in the response to question 3, below.
In addition, risk management plans, as required under both TCPA and
Section 112(r) of the Clean Air Act do require worse case scenario
development and the corresponding emergency procedures. Training
programs conducted by the NJSPOEM, NJDEP and USEPA have always included
consequence management and multiple system failures as part of their
classroom and hands-on curricula. This is a standard practice under
hazard and risk assessment for emergency response teams.
Question 3. Can you describe specific initiatives undertaken by the
Local Emergency Planning Committees (LEPCs), and what impact have they
had on Y2K readiness in the chemical industry?
Answer. LEPCs have been advised to convene a special session to
occur not later than September 30, 1999 to address potential impact of
Y2K. Please refer to the enclosed letter, which was sent on May 27,
1999 to all 566 municipal and 21 county emergency management
coordinators. They are to insure active participation of local
government officials, private industry, businesses and community
organizations in the analysis and problem-solving process of
confronting potential Y2K challenges. Municipal emergency management
coordinators are to schedule the meetings no later than June 30, 1999.
NJSPOEM regional staff will work closely with the county coordinators
to assist in the planning and conduct of these meetings, placing
emphasis on municipalities hosting TCPA and/or SARA chemical handling
facilities.
An annex by annex review of their respective emergency operations
plans and worst case analyses will be the basis for coordinated plan
development, testing and implementation. These activities are designed
to minimize the adverse impact to human health and the environment if
releases occur in spite of the best Y2K readiness preparations by the
chemical facilities.
Question 4. Would you describe the training and outreach programs
your office has developed to support the Local Emergency Planning
Committees?
Answer. The NJSPOEM's Training and Program Support Bureau offers a
variety of interrelated courses designed specifically to improve the
professional, managerial and technical skills of LEPCs. The curriculum
includes over 50 offerings which cover emergency management, planning,
community disaster education, leadership, hazardous materials planning
and emergency response, incident command and other emergency management
programs designed for targeted audiences, such as school administrators
and persons with disabilities.
During the past year, the NJSPOEM has also been able to focus on
specific projects related to the implementation of the USEPA Risk
Management (RMP) Rule. Activities include the development and delivery
of the NJSPOEM Risk Management and Communication Course, over 15 RMP
outreach presentations, development and distribution of RMP print
materials aimed at LEPCs, and three pass-through grants which were
awarded to county LEPCs for demonstration projects related to the USEPA
Rule. During this time, The New Jersey Chapters of the American
Institute of Chemical Engineers and the Academy of Certified Hazardous
Materials Managers also approached the NJSPOEM regarding the
development of an RMP volunteer match program, where trained volunteer
chemical engineers from either association would be matched with county
and municipal LEPCs to assist them in interpreting industry RMPs, and
integrating RMP data into their community's emergency operations plan.
To date, three county LEPC matches have been made.
Finally, the New Jersey Department of Community Affairs, Division
of Local Government Services distributes a quarterly publication
entitled ``Y2K? OK!'' to all municipalities and counties in the State.
This publication was targeted specifically at local government
officials by providing them with current technology and advice on
addressing Y2K concerns in their communities, and encouraging public
education and awareness. A copy of Volume 2 of this publication is
enclosed for your review. In addition, the State Y2K Coordinator and
his staff have been conducting a vigorous outreach campaign to the
public and private sectors to deliver the Y2K compliance message and
reinforce the need for emergency planning.
Question 5. What are the Department's [NJSPOEM] plans to provide an
increased response capability (to address problems which might occur in
the time period immediately before and after the date change)? Will
there be any increase in emergency response capability to deal
specifically with chemical plant incidents?
Answer. Emergency response capability probably will not be altered
significantly from normal procedures. Y2K preparation has enhanced the
quality of contingency plans by encouraging local planners and
responders to consider direct and secondary impacts of this hazard. It
is hoped that each of New Jersey's 566 municipalities will have
developed a Y2K appendix to their EOP before the end of this year.
Question 6. What has been the level of involvement of your
Department [NJSPOEM] with the New Jersey Department of Environmental
Protection in addressing the allegation that the NJDEP is not
sufficiently aware of status of Y2K readiness in the chemical industry?
Answer. These criticisms were communicated in a letter from the
witness (co-signed by others) to Governor Whitman on May 7, 1999. The
response by Robert C. Shinn, NJDEP Commissioner, dated May 26, 1999,
(also enclosed) outlined actions that the NJDEP considers necessary and
sufficient for effective accomplishment of its mission. The NJSPOEM has
no direct role in these issues, however, as discussed earlier in this
letter, we do have significant interaction in coordination, development
and implementation of emergency response planning. At the three public
officials conferences, LEPCs were encouraged to place special emphasis
in encouraging participation from their chemical industry in addressing
Y2K issues in their community and reporting their progress to the
public through local media and community group meetings. In addition,
the State's Y2K Coordinator holds monthly Y2K coordinating meetings
with all 18 State Department Information Officers to share information
and monitor progress towards Y2K compliance.
Again, thank you for the opportunity to respond to your concerns.
The NJSPOEM and NJDEP are making every effort to take a pro-active
stance on the Y2K issue. We believe that we have the mechanisms in
place to expediently address the known and potential challenges of Y2K.
Should your office or members of the Special Committee on the Year 2000
Problem have additional concerns, please do not hesitate to contact
this office.
__________
Responses of Francis J. Frodyma to Questions Submitted by
Chairman Bennett
Question 1. You mentioned in your statement that the Standard on
Process Safety Management of Highly Hazardous Chemicals (PSM) does not
cover many facilities considered to be at risk due to Y2K. Can you
elaborate on this, and explain what has been done to reach those
facilities not covered by PSM?
Answer. OSHA's PSM standard only applies to establishments that
have more than a threshold quantity of certain highly hazardous
substances on site. This list of highly hazardous substances, which was
promulgated separately through a notice-and-comment rulemaking, is
limited to approximately 135 hazardous substances and does not include
all flammable, toxic and reactive substances that could potentially
create a Y2K-related safety hazard. Therefore, many facilities that one
might assume are covered by PSM, such as chemical plants processing
substances not covered by PSM, or gas stations, are not covered. A
facility's coverage status can vary as hazardous substances are moved
on to or off of the worksite. OSHA is aware that there are many
facilities that store large quantities of flammable and reactive
substances and are at potential risk from Y2K-related problems, but
there is no requirement for such facilities to identify themselves to
OSHA. There is no ``master list'' of PSM-covered facilities for OSHA to
target. Therefore OSHA has initiated a general outreach program to all
industries, including the development of a concise Y2K fact sheet to
alert employers to the potential for Y2K-related problems at their
worksites. This fact sheet has been posted on OSHA's Internet web site,
is handed out to employers during OSHA inspections and consultation
visits, and was recently sent out to 12,500 employers in a mass
mailing.
Question 2. It is clear from your statement that OSHA believes that
PSM inspections are not an effective tool to be utilized in assuring
Y2K compliance due to resource limitations and the existing focus of
the PSM program. What has OSHA done, as an alternative to using PSM
inspections, to assure that Y2K safety related hazards have been
properly addressed?
Answer. There is no way for OSHA to ``assure'' that Y2K-related
safety hazards have been properly addressed by every employer in every
industry. Even if OSHA devoted all of its resources entirely to the Y2K
issue, and had airtight legal authority to cite employers for failure
to properly address Y2K-related safety hazards, the agency could not
inspect all of the workplaces that are at risk. Therefore, OSHA has
chosen to address Y2K through outreach and education, by disseminating
information to as many employers as possible.
Question 3. You mention in your statement that OSHA concentrates
its efforts on those industries having the worst safety records and
higher-than-average injury and illness rates, and that the chemical
industry actually has one of the best records in this regard. However,
experts in the chemical industry, including the Chemical Safety Board,
recognize the great vulnerability of the chemical industry to Y2K
related safety problems. Do you mean to state through your remarks that
OSHA has intentionally ignored an area in which there is great
potential for health and safety risks, simply because statistics on
past incidents don't support it? Shouldn't OSHA be as concerned about
the potential risk areas, as they are with demonstrated risks?
Answer. OSHA has not ignored the potential for Y2K-related safety
problems in the chemical industry. On the contrary, we have developed a
Y2K fact sheet, publicized its availability, posted it on our Internet
web site, instructed our inspectors to hand it out at each inspection,
asked the Consultation Programs to distribute it during their visits,
and included it in a mass mailing to 12,500 businesses. We worked with
the Environmental Protection Agency on the development of their Y2K
fact sheet, and have included a link to EPA's fact sheet on our web
site. We also participated in the Y2K workshop organized by the
Chemical Safety Board in December, 1998.
As for concern about potential risks versus demonstrated risks,
OSHA believes we have found an appropriate balance between the two. In
the case of Y2K, we have chosen to address this potential risk through
outreach and education.
Question 4. Would you explain in more detail what a ``Special
Emphasis Program'' is and why that would not help greatly raising
awareness on Y2K? It sounds like that is just the sort of program OSHA
needs. Just the creation of a program and the associated publicity
would generate a lot of positive activity in the short time remaining.
Answer. Special Emphasis Programs (SEPs) give OSHA a mechanism to
conduct programmed compliance inspections in high potential injury or
illness rate situations which are not covered by normal inspection
scheduling systems. SEPs can be targeted based on a number of different
factors, including specific industry, substance or other hazard, type
of workplace operation, type or kind of equipment, etc.
As I stated in my written testimony, OSHA does not have a standard,
other than the Process Safety Management Standard (PSM), under which
employers could be cited for failure to assess their Y2K readiness and
address any areas of vulnerability that are discovered. Only about
25,000 establishments, out of the more than 6 million workplaces in the
nation, are covered by the PSM standard. Assuming that OSHA enforcement
could compel Y2K safety, it must be noted that stringent legal tests
must be satisfied for OSHA to successfully cite an employer under the
General Duty Clause. Therefore, the General Duty Clause is not an
appropriate foundation for a Special Emphasis Program. Further, SEPs in
the chemical industries have proven to be resource-intensive, and an
SEP on Y2K would divert resources from other, equally important agency
functions.
Question 5. You cite several problems which seem to have
handicapped OSHA in its ability to play a more direct role in
mitigating potential Y2K related hazards in the chemical industry, such
as the applicability of the General Duty Clause. What has OSHA done to
overcome these impediments? Both Congress and the White House have been
asking the agencies for quite some time now about what additional
legislation or authority they needed in regard to Y2K. Why weren't
these issues raised earlier?
Answer. Even if the legal impediments to OSHA citation were
removed, OSHA does not believe that a massive program of inspection and
citation is the appropriate method for dealing with Y2K. There is no
``one-size-fits-all'' solution when it comes to Y2K, as each workplace
is different. We believe that education and outreach is the better
approach. It is in employers' own self-interest to find and fix Y2K-
related safety hazards. We think that if employers are made aware of
and given information about the Y2K problem, they will take the
initiative to address it.
__________
Prepared Statement of Paula R. Littles
Good morning, Mr. Chairman, Members of the Committee, my name is
Paula Littles. I am the Citizenship-Legislative Director for the Paper,
Allied-Industrial, Chemical and Energy Workers International Union,
AFL-CIO (PACE). Our union represents 320,000 workers employed
nationwide in the paper, allied-industrial, chemical, oil refining, and
nuclear industries. It is my pleasure to appear before this Committee
today to address the issue of Y2K and the chemical sector. According to
the U.S. Environmental Protection Agency (EPA), 85 million Americans
live, work, and play within a five-mile radius of 66,000 facilities
handling regulated amounts of highly hazardous chemicals. Workers at
these facilities are responsible for critical plant operations. They
implement the contingency measures used during emergencies, from
inclement weather to system failures to fires and/or explosions.
The Chemical Safety Board (CSB) Report released in March 1999
explained that ``The Year 2000 technology problem is significant in the
chemical manufacturing and handling sector, posing unique risks in
business continuity, and worker and public health and safety.'' Small
and medium-sized businesses are ``of major concern'' the report states
because ``efforts on the Y2K problem appear to be less than
appropriate.''
Y2K problems may be found in computer systems and machinery
containing embedded chips. These chips are far too numerous and
dispersed throughout our primary industrial sectors to be adequately
assessed, remediated and tested before the Y2K rollover. Because of the
lack of adequate planning for reaching Y2K compliance, contingency
planning and worker training should be initiated immediately to build
an emergency response infrastructure to respond to environmental
disruptions, chemical releases, and worker and public health and
safety.
Chemical workers, emergency responders, and local government
agencies that focus on environmental and emergency response should be
provided with training and tools to adequately address Y2K issues.
Workers are currently provided training on contingency plans for
single device failures, however multiple device failure possibilities
are not normally considered in the current process hazard analyses. It
is unclear what the outcome might be due to such failures--possibly
multiple control system failures, multiple utility failures, or a
combination of both.
Contingency planning for Y2K-related emergencies has to be designed
and implemented with worker involvement and should also be designed to
include safe operations, safe shutdown, and emergency response. Any
such planning must also take into account human factors such as
appropriate staffing, hours of continuous work/rest intervals, and
worker stress levels.
We have discussed this issue with the companies that employ our
members at their facilities, and it is believed that the larger
companies are taking the Y2K problem seriously and are expending large
amounts of resources to correct the problem. A number of these
facilities have shared their concern regarding the reliability of their
utility suppliers. Petrochemical facilities have a great dependency on
purchased utilities for their day-to-day operations. We strongly urge
greater communication between the utility providers and the facilities
they serve, to ensure that each entity is doing their part in
addressing this issue.
We are concerned about the small and mid-sized facilities that we
represent. Unfortunately, we do not believe these facilities have the
capability to expend the necessary resources to test the design and Y2K
contingency measures for all their systems, and provide the necessary
training for their employees.
As a labor organization, we have been encouraging the companies
that operate the facilities that we represent and are ahead of the
curve on their Y2K efforts to provide assistance to those that are not
proportionately comparable. In the short period of time remaining
before Y2K, we feel this is one viable option to assist these employers
that have been unable to adequately address this issue. No matter what
size the company, the Y2K issue could threaten worker and public health
and safety. We would urge companies to follow the proposed emergency
response planning as specified in the Chemical Safety Board Report
through Y2K contingency planning on three levels:
Level 1 should address continued safe operations that
include pre-planning of actions that will allow the facility to
continue to run in a safe and environmentally sound manner;
Level 2 should address safe shutdown. This level of
planning ensures the availability of personnel, equipment, utilities,
services and other resources needed to ensure safe shutdown; and
Level 3 is activated when Contingency Level 1 fails to
ensure continued safe operations and Level 2 fails to ensure safe
shutdown. This will likely initiate a process safety incident (See
Attachment I).
PACE believes that both employers and government agencies should
designate worker representatives and include them in discussions
regarding Y2K contingency planning, because ultimately workers will be
the ones responsible for implementing these plans.
Thank you for allowing me the opportunity to speak on behalf of
PACE today to present our position on this important issue.
__________
Responses of Paula R. Littles to Questions Submitted by
Chairman Bennett
Question 1. In your statement, you point out that lack of resources
is a problem for small and medium size companies. We hear this often,
yet we have never been provided with any hard data. Can you quantify
this for us in any way? Also, what do you think could be done to
financially aid such companies in the short time remaining?
Answer. In March of 1999 the PACE International Union requested
their local union officers to request that their represented companies
address the following areas:
a) Identification of any Y2K problem;
b) Inventory of what chips are affected and the location of the
chips;
c) Testing to see if the chips work and correcting them if they do
not;
d) Testing of corrected systems and certification that all systems
are viable; and
e) Contingency plans and training to work around problems that the
facilities can not correct in a timely manner, or problems at utility
sites or other industrial facilities (upstream or downstream).
Based on the responses received, we concluded that there was a
greater problem with the small to medium-sized companies that we
represent. In the short time remaining, training funds should be
provided to assist in the training of workers in these facilities to
better equip them to handle Y2K-related incidents.
Question 2. You mentioned that PACE is encouraging its better-
prepared members to lend assistance to those members who are less
prepared. Has a formal program been established in PACE, or any
chemical industry association to provide such assistance?
Answer. No, we plan to offer training to our members to better
prepare them for what to expect. Unfortunately a formal program would
have to be developed, with the collaboration of management or an
industry association to really have value to these companies that are
less prepared.
Question 3. You represent a large number of workers in a number of
industries that may be vulnerable to Y2K problems in manufacturing
process automation. What is the general level of concern about worker
safety among your membership regarding the Y2K issue?
Answer. We currently have three general levels of concern regarding
worker safety and Y2K:
1) Are the workers and the workplace being accurately prepared for
Y2K? For example, if a company decides to staff-up for manual
operations/shutdown, would everyone know what their roles would be?
Will everyone have sufficient training in their assigned roles to
perform necessary tasks in a timely, safe, and proficient manner?
2) In the event of a Y2K-related action, has a discussion and plan
been developed for worker interaction with community responders from
surrounding communities and tested for its effectiveness?
3) Have companies and their utility suppliers had sufficient
interaction to work together towards limiting the problems that could
surface due to Y2K? Overall, the concern among our membership, like the
general public varies from extreme concern to those who feel the
problem will not be that great.
Question 4. You raised many important issues in your discussion of
the three levels of contingency planning in your statement. What formal
activities has PACE engaged in to spread this information across the
industry?
Answer. Unfortunately PACE has limited influence in disseminating
information across the industry. In order to facilitate this, there
would have to be better collaboration with management. Regrettably all
of our represented companies are not willing to work with the union in
some areas. What we have done is to provide all of the union's
International Representatives with a copy of the Chemical Safety Board
Report that gives an in-depth overview of the three levels of
contingency planning. Our Representatives were asked to share this
information with local union officers and representative companies.
Question 5. PACE represents a diverse cross section of the chemical
processing industry. Is there any one sector in which your concerns are
greater than they are in others?
Answer. No. With the diverse cross section of the chemical
processing industry, if a facility manufactures chemicals or just uses
chemicals in its process, their work-site could still be subject to
Y2K-related failure. Depending on related circumstances, the facility
that you would least expect to experience major problems could be the
worst case for the type of process they use.
Question 6. Are there any issues regarding union membership rights,
contract restrictions, or other worker protection issues that might
somehow complicate planned Y2K responses and contingency plans in the
industry? (Overtime restrictions, holiday pay considerations, and
hourly work restrictions).
Answer. The majority of our contracts are not restrictive as it
relates to business emergencies. We expect our representative companies
to provide a safe work environment, and we would be willing to work
with them on their planned Y2K responses and their contingency planning
and training. We are concerned about rate retention in the event of a
Y2K problem. The employer has a responsibility to keep all workers
whole, meaning no loss of pay and benefits. Discussions between
represented companies and the union should start sooner rather than
later on this subject.
Question 7. Would you say more about the worker training and tools
you believe are needed? Is there time to develop such tools and
training programs?
Answer. The development of training and educational materials for
front-line workers in chemical dependent industries, local community
residents, and the emergency response community should be developed to
specifically focus resources on the unique hazmat response challenges
of Y2K-related chemical and hazardous materials, related incidents and
scenarios. These scenarios should include:
an individual worker's or responder's role in a process
shutdown;
how an emergency plan should change if there is no
outside response;
the possibility of creating a dangerously confined space
if doors don't automatically open; and
what to do if there is lack of power or air to re-supply
breathing apparatus.
The NIEHS Worker Education and Training Program (WETP) has included
Year 2000 conversion and chemical safety awareness and response in all
of their planned safety and health activities. We feel that with the
time remaining for training, we should utilize training programs that
are well established and proven such as the NIEHS's WETP.
__________
Prepared Statement of James L. Makris
Mr. Chairman and Members of the Committee:
I am Jim Makris, Director of the Environmental Protection Agency's
Chemical Emergency Preparedness and Prevention Office. I am accompanied
today by Oscar Morales, Associate Director of the Information
Management Division, Office of Prevention, Pesticides, and Toxic
Substances, and Don Flattery, EPA's Year 2000 Sector Outreach
Coordinator. It is a pleasure to be here today to discuss the
implications of the Year 2000 (Y2K) technology problem for chemical
safety. We appreciate the Committee's efforts in both educating and
alerting government, industry, and the public at large to our potential
vulnerability to the Y2K problem. We welcome the Committee's invitation
to appear here today to discuss the chemical safety aspects of Y2K
which we all agree is an important topic for this hearing.
Just to bring the Committee up to date since our appearance at your
field hearing in Anaheim in December, EPA has continued to make
substantial progress in putting our own house in order by ensuring that
our internal systems are Y2K compliant. I am pleased to report that we
have evaluated all of our mission-critical systems for vulnerability
and have completed the appropriate conversion steps. This success was
recognized by the Subcommittee on Government Management, Information,
and Technology of the House Committee on Government Reform, and we
remain in OMB's top tier ranking of Federal agencies making very
satisfactory progress. My ensuring the readiness of these systems, we
expect to be prepared to continue to protect public health and the
environment on January 1, 2000, and beyond.
Now let me turn specifically to the subject of the impact of Y2K
disruptions on chemical safety. As you know, EPA is the Federal agency
with primary responsibility for ensuring that the environment and the
public are protected from the unreasonable risks of toxic chemicals and
other dangerous substances. We identify chemical hazards in the
environment, regulate the use of pesticides, protect the public from
existing and proposed new toxic chemicals in the marketplace, prevent
and respond to the accidental release of hazardous chemicals, and
assess the risks of such releases to public health and the environment.
In doing all this, EPA operates under four major legislative mandates:
the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the
Toxic Substances Control Act (TSCA), the Emergency Planning and
Community Right-To-Know Act (EPCRA), and Section 112(r) of the Clean
Air Act Amendments of 1990.
EPA's Relationship With the Chemical Industry
Under TSCA and FIFRA, the Agency evaluates pesticide and chemical
products entering commerce to safeguard against public health hazards
and environmental harm. Under FIFRA, this is accomplished by
registering and reregistering new and older pesticide active
ingredients and by establishing maximum levels for pesticide residues
in food. EPA also promotes the use of safer chemicals and manufacturing
processes and technologies. Through our pollution prevention programs
under TSCA, we encourage the chemical industry to test chemicals in
advance of introducing them into the marketplace, to design them at the
molecular level to be less toxic to humans and the environment, and to
re-engineer chemical processes to make them safer and less wasteful so
as to minimize their environmental impact at the time of manufacture.
Following the world's largest chemical accident in Bhopal, India,
Congress enacted the Emergency Planning and Community Right-To-Know Act
in October 1986, as Title III of the Superfund Amendments and
Reauthorization Act. EPCRA helps communities prepare for chemical
emergencies and grants citizens and government officials access to
information about potential chemical hazards. The law requires
industries to participate in emergency planning and to notify their
communities of the existence and/or releases of hazardous chemicals.
EPCRA's goal is to help citizens, officials, and community leaders to
be better informed and understand the risks associated with toxic and
hazardous materials in their communities through emergency planning,
hazardous chemical inventory reporting, public access to chemical
information, hazardous substance release reporting, and the Toxic
Release Inventory (TRI) database.
By its enactment of Section 112(r) of the Clean Air Act Amendments
of 1990, the Congress recognized the need for facilities to develop or
improve their planning and accident prevention programs to reduce the
risk of chemical accidents and to allow local communities to enhance
emergency preparedness and accident prevention. The law also affirms
the rights of citizens to have access to information about the hazards
these facilities present. Under the chemical accident provisions of
section 112(r), facilities must conduct hazard assessments, establish
accident prevention programs, and bolster emergency response planning.
EPA implements these requirements through the Agency's Risk Management
Program (RMP) regulations which are aimed at reducing the likelihood
and severity of chemical releases.
The Risk Management Plan regulations require facility hazard
assessments from over 69,000 facilities nationwide which use or store
any of 140 specified chemicals. These assessments address off-site
disaster risks caused by chemical releases, fires, explosions, or other
natural events. Covered facilities must submit to EPA a Risk Management
Plan in 1999, have an accident prevention program in place, and have
developed an emergency response plan.
EPA also addresses chemical safety through the Emergency Response
Program, a coordinated effort among five EPA headquarters offices and
our ten Regional Offices using legislative authority derived from
EPCRA, the Comprehensive, Environmental Response, Compensation and
Liability Act (CERCLA)--also known as Superfund--the Clean Water Act
(CWA), and the Oil Pollution Act. Under this program, EPA coordinates
and implements a wide range of activities to ensure that adequate and
timely response measures are taken in communities affected by chemical
releases. The program's primary objectives are to take reasonable steps
to prevent such emergencies; to prepare emergency response personnel at
the Federal, State, and local levels for such emergencies; and, to
respond quickly and decisively to such emergencies wherever and
whenever they occur within our national borders. EPA and a network of
Federal, State, and local responders stand ready twenty-four hours a
day to contain and clean up released chemicals.
Y2K Chemical Sector Outreach
Based on our legislative authorities in this area and our long-
standing relationship with the chemical industry, EPA was asked by the
President's Council on Year 2000 Conversion to take responsibility for
outreach to three of the more than twenty-five sectors of economic
activity identified as high priority. They are water, waste, and
chemicals. As the chemical sector lead, we have been working with
chemical industry trade associations to help them address Y2K chemical
safety concerns, implement plans to assess and repair potential
problems, make contingency plans, and keep the public and Federal,
State, and local governments informed of progress.
EPA's goal in our outreach to the chemical industry is to encourage
and complement industry efforts to the best of our ability. We believe
that we can most effectively address potential Y2K-related chemical
risks and accidents by building upon our relationships with the
industry through our existing statutory and voluntary programs.
In this regard, we have undertaken a broad array of outreach
activities with the chemical industry. EPA speakers have addressed
numerous fora. We have distributed specific ``tool kit'' materials
including brochures, handouts, articles, and guidance documents. We
have coordinated extensively with chemical industry trade associations.
One of the larger trade associations, the Chemical Manufacturers
Association (CMA), representing over 190 chemical companies, has
initiated programs to share solutions and information with its member
companies through the development of a comprehensive Internet website,
Y2K contingency planning workshops, and a Y2K workgroup with an
extensive industry-wide membership.
The chemical industry and its trade associations are our primary
and best source of information related to plant operations, process
management, and equipment and systems. In our chemical sector outreach,
we will continue to provide additional helpful information regarding
Y2K impacts on chemical company operations. We recognize, however, that
chemical plant managers possess the knowledge, experience, and
expertise on which we must rely. To this end, we have strongly
encouraged the trade associations to develop additional information-
sharing opportunities as they continue Y2K planning activities in the
balance of 1999. CMA has positively responded to this challenge by
agreeing to use its Responsible Care program to share Y2K information
among members. In addition, the Chemicals Information Technology
Association (CITA), a sub-group of CMA member companies participating
in the CMA Y2K Workgroup, has developed a Y2K contingency planning
guide for use by Association members.
Raising Y2K Awareness
EPA has chosen a coordinated approach of direct outreach to
relevant stakeholders, data submitters, and pesticide registrants to
ensure that no environmental programs are compromised and that every
effort is taken to minimize the potential deleterious effects of
computer problems on the regulated community. EPA's Office of
Prevention, Pesticides, and Toxic Substances has directly contacted its
primary group of data respondents--including Toxic Release Inventory
(TRI) facilities--and pesticide registrants to remind them of their
obligation to ensure the integrity of data reported to the Agency.
Companies were also encouraged to work closely with testing
laboratories and field sites to ensure that the data, which the Agency
must act upon, is valid and reliable.
To further increase Y2K awareness among chemical companies, EPA's
Chemical Emergency Preparedness and Prevention Office (CEPPO) developed
a Year 2000 Chemical Safety Alert for the chemical industry. The Alert,
a copy of which I am submitting with my statement, summarizes the steps
that facilities need to take to address Y2K problems and lists the
technical resources available on the Internet to help them, such as
guidelines, planning documents, testing tools, solutions, services, and
product status databases. The Alert urges facilities to prioritize
critical systems for Y2K remediation and testing and emphasizes Y2K
contingency planning in coordination with emergency planning and
response partners.
Assessment of Chemical Industry Readiness
As is the case in other sectors, assessments of readiness are
largely based on Y2K industry surveys. A number of these surveys have
been conducted throughout the chemical industry. The most complete
survey work has been done by CMA. As of March 1999, nearly 40% of CMA's
respondents--those who provided dates--expect to be Y2K ready by the
end of March 1999; 90% say they will be ready by the end of September
1999; and, all respondents indicate they will be Y2K ready by December
1999. The survey results also indicate that as of February 1999, all of
the respondents have action plans in place to address their potential
Y2K problems. Of the respondents, 99% have plan elements that include
prioritization of the company's hardware, software, and embedded
systems according to their mission-critical functions; 96% of the plans
include elements to assess supporting infrastructure systems such as
communications, power, and other building systems; 98% have addressed
the readiness of key suppliers, customers, and organizations that make
up the supply chain; and 97% address safety, environmental, and health
systems. Testing of mission-critical systems is a plan element for 98%
of the respondents; 89% have plans to communicate Y2K readiness
internally; 81% plan to communicate externally; and, 92% of the
respondents have contingency planning elements for all business
systems.
In addition to the CMA survey, which serves as an indicator of
sector readiness, many CMA members are members of other trade
organizations currently working with the President's Council on Y2K
issues. The most notable trade association with strong ties to and
shared membership with CMA is the American Petroleum Institute (API).
API surveys have reported high states of readiness among member
companies.
Based on these surveys and others conducted by the Chlorine
Institute and the Pharmaceutical Research and Manufacturers of America,
we fell confident that large companies with sufficient awareness,
leadership, planning, and resources are unlikely to experience Y2K
failures. We are not as confident, however, about the readiness of
small and medium-sized plants. Our participation in the U.S. Chemical
Safety and Hazard Investigation Board's December 18, 1998 workshop,
convened to discuss Y2K and chemical safety issues, bears out this
finding. As highlighted in the Board's report, we simply do not have
adequate information about the readiness of smaller companies.
Small and Medium-Sized Company Preparedness
To address the issue of preparedness among small and medium-sized
companies, EPA's Office of Chemical Emergency Preparedness and
Prevention (CEPPO) and our Office of Prevention, Pesticides, and Toxic
Substances (OPPTS) have initiated a number of recent activities. In
cooperation with CMA and the U.S. Chemical Safety and Hazard
Investigation Board, EPA organized a trade group meeting of smaller or
specialty chemical companies with a membership of approximately 7,000-
10,000 chemical manufacturers, formulators, retailers, and
distributors. This group has undertaken an additional survey to
determine the extent of the Y2K problem among smaller companies and of
the Y2K remediation efforts which may still be needed. We expect the
results of this survey in late spring. Using these results, we hope to
formulate more targeted plans for those companies identified as
vulnerable.
EPA implemented an outreach campaign aimed at distributing the Y2K
Safety Alert to small and medium-sized companies during the Spring of
1999. CEPPO also sent an electronic copy of the Alert to a group of
small business trade associations and State Small Business Assistance
Centers with which we maintain regular contact. EPA also made the Alert
available to the 69 district offices that participated in the recent
Small Business Administrator's ``National Small Business Y2K Action
Week.''
In addition, we are encouraging the development of a new guidance
document based on expertise drawn from this group for use by small and
medium-sized chemical companies. This document will be jointly
developed and distributed by EPA, the Board, CMA, the Center for
Chemical Process Safety (CCPS), and the consortium of smaller and
specialty chemical associations. In order to help us determine the most
useful Y2K information needed by the smaller companies, the trade
associations will be soliciting recommendations from their membership.
Preparedness to Respond to Potential Chemical Industry Y2K Failures
EPA's approach is to build upon--not create anew--the existing
Federal emergency planning network to address Y2K risks in a number of
ways. EPA's Office of Chemical Emergency Preparedness and Prevention
(CEPPO) and Office of Emergency and Remedial Response (OERR) actively
manage EPA's national level program for preparedness, planning and
coordinating response to chemical releases. EPA is involved in a
network of contingency plans, representing different levels of
geographical scope, which forms the backbone of our country's efforts
to prepare for and coordinate responses to emergency incidents,
including those resulting from Y2K malfunctions. This network is called
the National Response System.
The National Contingency Plan is the Federal government's primary
plan to prepare for chemical emergencies and to coordinate with other
emergency responders. The Federal government also prepares Regional and
Area Contingency Plans that coordinate effective responses within each
of the ten standard Federal Regions and other designated Areas covering
Alaska, the Caribbean, and several islands in the Pacific. At the local
level, Local Contingency Plans are developed to prepare and organize
local resources in the event of the accidental release of hazardous
substances.
Under the Emergency Planning and Community Right-to-Know Act of
1986 (EPCRA), State governors establish State Emergency Response
Commissions (SERCs), which, in, turn establish Local Emergency Planning
Committees (LEPCs) for districts within each State. These emergency
planning organizations are responsible for developing local contingency
plans using chemical inventory information collected as part of the
law's community right-to-know provisions. EPA has urged the SERCs and
the LEPCs to encourage their local industrial facilities to address Y2K
problems and to coordinate Y2K emergency response plans with the LEPCs.
We are working directly with the Federal Emergency Management
Agency (FEMA) and the National Response Team (NRT) to carry out a full
range of Y2K contingency planning activities across all Federal
agencies. Recently, EPA served as a key participant in FEMA-organized
Y2K contingency planning workshops. These workshops were designed to
allow Federal planners to exchange readiness and planning information
with emergency responders at the State and local level. Approximately
2,000 emergency management specialists, with representatives from every
State, attended these workshops. EPA has been vigorously participating
in many planning efforts as a Federal Response Plan lead agency with a
particular emphasis on carrying out our responsibilities as the Chair
for the Emergency Support Functions for Hazardous Materials. As a
result of the Emergency Planning and Community Right-to-Know Act, Local
Emergency Planning Committees (with participation from State and local
planners and other community officials and representatives) already
have contingency plans in place for emergency response. These
contingency plans are designed for many types of hazardous materials
emergencies, including those caused by potential Y2K disruptions.
Y2K Planning Linked to the Risk Management Program
Mindful of the potential for process shutdowns and accidental
releases, EPA has encouraged facility managers to think about their Y2K
readiness as they prepare their Risk Management Plans (RMPs). EPA's
previously described Y2K Chemical Safety Alert reminds managers that
addressing Y2K risks is part of their responsibility to prevent
accidents under the General Duty Clause of Section 112(r) of the 1990
Clean Air Act Amendments and Risk Management Program requirements. We
also have placed Y2K reminders in the RMP reporting instructions and on
our Website. RMP plans submitted to EPA must describe how facilities
prevent or minimize chemical accidents and how they will promptly
respond to accidents that do occur. EPA is encouraging facilities to
address their Y2K readiness in an RMP executive summary. Linking sound
Y2K planning to the Risk Management Program is consistent with our
approach of utilizing existing regulatory and voluntary programs to
address Y2K readiness.
Y2K Enforcement and Compliance Assurance Program
EPA expects the chemical sector, like every other sector, to be in
compliance with environmental regulations before, during, and after the
Year 2000. Regulated entities will not be allowed to use computer-based
failure as a shield for not discharging their environmental compliance
obligations. At the same time, EPA's Office of Enforcement and
Compliance Assurance is actively working in several ways to promote the
timely assessment and correction of Y2K problems.
EPA issued its Y2K enforcement policy on November 30, 1998. The
policy is designed to encourage prompt testing among all sectors of
computer-related equipment to ensure that environmental compliance is
not impaired by the Y2K computer bug. Under the policy (published on
the Internet at www.epa.gov/year2000 and in the March 10, 1999 Federal
Register), EPA states its intention to waive 100% of the civil
penalties that might otherwise apply, and to recommend against criminal
prosecution for environmental violations caused during specific tests
that are designed to identify and eliminate Y2K-related malfunctions.
The civil penalty waiver and recommendation against criminal
prosecution are limited to testing-related violations disclosed to EPA
by February 1, 2000, and are subject to certain conditions, such as the
need to design and conduct the tests well in advance of the dates in
questions, the need to conduct the tests for the shortest possible
period of time necessary, the need to correct any testing-related
violations immediately, and other conditions to ensure that protection
of human health and the environment are not compromised.
EPA's recent publication of the policy in the Federal Register
incorporated numerous clarifications suggested by commenters, some of
which are directly relevant to chemical industry safety. For example,
the policy now clarifies that Y2K testing protocols should be designed
to prevent or limit violations that may result from such testing (e.g.,
through adoption or revision of appropriate contingency plans). This
will help to ensure that all prudent steps are taken to ensure that
such testing is as safe as possible. For violations occurring after
January 1, 2000, EPA's long-standing enforcement response and penalty
policies will continue to recognize a chemical facility's good faith
efforts to test and remediate Y2K problems and other potentially
mitigating factors in determining an appropriate enforcement response.
The enforcement and compliance assurance program is also reaching
out to educate the chemical industry about Y2K problems. ChemAlliance,
the Internet-based compliance assistance center for the chemical
industry, posts a Y2K notice on its front page. (ChemAlliance is the
product of a partnership between the chemical industry through various
industry organizations, EPA's Office of Enforcement and Compliance
Assurance, academia, and others.) The website (www.chemalliance.org)
highlights the six-step action plan, described in EPA's Y2K Fact Sheet,
``The Millennium Bug,'' and provides real life examples of equipment
failure at chemical plants caused by confusion over leap year and Y2K
testing, and offers links to EPA, other Federal, and trade and industry
resources for Y2K. We believe these actions will help to motivate
chemical companies to proactively meet their Y2K responsibilities.
Summary
In closing, we believe the chemical industry is making good
progress in its efforts to identify and fix potential Y2K problems. EPA
intends to continue working with chemical industry associations,
private groups, and the U.S. Chemical Safety and Hazard Investigation
Board to assess readiness, to promote effective planning, and to
encourage the sharing of preparedness information with chemical
customers, the general public, and local, State, and Federal officials.
In doing so, we will utilize the many existing mechanisms available
which are designed to allow us to perform our statutory
responsibilities in this area as well as to effectively address
potential Y2K problems in the chemical sector. We intend to continue to
make this effort a priority with the help of this Committee.
Again, thank you for the opportunity to appear here today. I would
be pleased to answer any questions you may have.
__________
Responses of James L. Makris to Questions Submitted by
Chairman Bennett
Question 1. The recent GAO study on the Y2K activities of state
regulatory agencies in the water and wastewater industry revealed a
lack of engagement on the Y2K issue on the part of many state
regulatory agencies. One of our other witnesses here today has
criticized the New Jersey Department of Environmental Protection's for
being inactive on Y2K. What is EPA's assessment of the activity level
of state environmental protection agencies across the country on the
Y2K issue in the area of chemical safety? What effort has EPA made to
engage the state environmental protection agencies on the Y2K issue?
Answer. To date, Year 2000 issues at the State level have typically
been centrally managed by State Chief Information Officers. The
President's Council has been coordinating very closely with the State
CIO community directly and through the National Association of State
Information Resource Executives (NASIRE) which represents State CIOs to
address readiness internally and externally within each of the States.
Surveys conducted by NASIRE have included questions on State outreach
to key industries. Information from the NASIRE surveys do not provide
enough information to reach reliable conclusions for environmentally-
related sectors.
In an additional attempt to obtain Y2K sector readiness information
at the State level, EPA encouraged the Environmental Council of States
(ECOS), an organization representing State environmental officals to
conduct a survey of their members which addressed internal and external
readiness. While this survey, completed in April, indicated substantial
progress in addressing state environmentally-related systems, the
amount of data on sector progress collected by the State environmental
agencies confirmed that the State CIO organizations remain the primary
responsible organization for determining State readiness.
Despite an apparent lack of State sector information available
through formal surveys, EPA believes progress in being made based upon
on-going staff to staff discussions. We believe that the State
environmental agencies are engaging businesses and municipalities on
Y2K issues. EPA has been widely sharing fact sheets, guidance documents
and reference materials which we have been encouraging the States to
use and disseminate. One of the more widely distributed of these
documents, ``Prevent Year 2000 Chemical Emergencies'', has been
distributed to State emergency planners and enviornmental program
administrators. In some instances, we have assisted the States in
preparing mailings of such material.
In March, EPA's Deputy Administrator asked our Regional offices to
engage directly State environmental administrators to discuss readiness
in sectors which have a potential affect on the environment and public
health. This request was followed up with a letter from EPA's Assistant
Administrator for Water to the EPA Regional offices asking that Y2K
readiness of drinking water and wastewater treatment facilities be
included in regularly scheduled annual State program reviews. In the
coming months, we expect Y2K issues and readiness at the State level to
be an important topic in meetings and discussions.
Finally, EPA is currently involved in the implementation of the
Risk Management Program established as a result of Section 112(r) clean
Air Act Amendments. The Risk Management Program requires chemical
facilities to submit plans which describe how facilities prevent or
minimize chemical accidents. EPA has issued a specific reminder that
each facility has a general duty to address Y2K vulnerabilities in
their plans. State environmental agencies are active participants in
the RMP process.
Question 2. The EPA has taken a very positive step in its amendment
of its enforcement policy in regard to violations occurring during Y2K
testing. Has EPA been able to analyze the effectiveness of the policy
change yet? Do we have any firm evidence that it has in fact encouraged
more testing? Has EPA received any reports of testing related problems
or violations?
Answer. EPA has not conducted analyses concerning the effectiveness
of the policy or obtained empirical evidence demonstrating that its Y2K
Enforcement Policy has encouraged more testing. Anecdotal reports,
however, suggests that the policy is contributing to the momentum
towards early testing. The public comments on EPA's policy have been
very positive, and comments at conferences and in other contexts since
then also have been very favorable. In addition, other Federal agencies
and several States recently have adopted identical or very similar
policies to encourage testing, and EPA has heard that other States are
in the process of following suit. Given the dual State/federal nature
of environmental regulation, we believe that regulated entities will
feel even more comfortable doing Y2K testing as more and more States
follow EPA's lead in adopting this type of enforcement policy.
On June 17, 1999, the Associated Press (AP) reported that a water
reclamation plant malfunctioned during a test of the facility's
contingency plan and spilled four million gallons of sewage into a San
Fernando Valley park near Los Angeles, California. The AP report stated
that the sewage welled up out of a manhole near the plant in Van Nuys,
California, on the night of June 16th and flowed about 100 yards into
the park, according to Linda Aparicio, a spokeswoman for the city
Public Works Department. Crews reportedly worked to vacuum up the
spill, but health officials recommended that a portion of the park
remain closed for two days as a precaution. The AP report further
stated that Y2K test simulated a scenario in which the power failed.
The emergency generator reportedly kicked in as expected, but a gate
failed to reopen, Ms. Aparicio said. ``Our computers did not tell us
that gate was closed,'' she said. ``No one knew that sewage was backing
up.'' She said it was unclear weather the problem was related to the
test or was coincidental. The AP reported that the sewage system was
back in operation by Thursday morning, June 17. On June 18, 1999, the
Los Angeles Times carried an expanded report on the spill. EPA is doing
some further investigation of this incident.
Question 3. Does EPA have any evidence to suggest that funding has
been an impediment for small or medium size companies? If so, what has
been done to alleviate this impediment?
Answer. EPA regularly engages the small business community in a
variety of fora to discuss regulatory and administrative issues. We
have addressed Y2K readiness with small business representatives on a
number of occasions. We have not heard from participants in these
discussions that lack of financial resources will impair Y2K readiness
nor do we have any evidence to suggest that funding has been an
impediment for small and medium sized companies.
Recognizing that technical and financial resources may be an issue
with some businesses, EPA has developed a ``Tool Kit'' for small
business distributed by the Agency's Small Business Ombudsman. This
tool kit contains fact sheets, guidance documents, check lists and
other reference materials to conduct an in-house assessment and
remediation effort. In addition, information about SBA loan and
technical assistance efforts has also been shared with the small
business representatives with whom the Agency meets regularly.
In the Chemical sector, EPA has been working closely with a cluster
of small and specialty chemical trade associations to develop a survey
of readiness among the smaller chemical companies. This survey,
completed in May, indicates high levels of readiness by the end of the
calendar year. In addition, we are assisting this group of trade
associations with a guidance documents, ``Addressing Year 2000 Issues
in Chemical Facilities: Guidance for Small and Medium Sized
Companies''. This document will be available this summer.
Question 4. How will EPA fit into the overall federal government
strategy of monitoring events occurring around the date change? Will
there be any mechanisms established to provide real time monitoring of
Y2K related incidents in the chemical industry?
Answer. EPA is working within the existing framework established by
the Catastrophic Disaster Working Group (CDRG), which is composed of
Federal agencies and departments to collect information on significant
Y2K incidents. The CDRG will be following a Federal Response Plan
Operation Supplement for Y2K Consequence Management, which will be
finalized next month. Reporting for Y2K incidents will follow a local-
to-state-to-region-to-FEMA headquarters scheme. The information
collected will allow the CDRG to identify and respond to those
incidents of a magnitude that would require notification of and
assistance from other Federal Agencies. In addition, EPA will have its
own Emergency Operations Center activated to collect information on
chemical accidents for which EPA Regions normally receive notification
from the National Response Center. EPA and the CDRG are currently
working with the newly established Y2K Information Coordination Center
(ICC), which will be collecting information about system operations
during the date rollover period and providing this information to
decision-makers and the public. The ICC will collect information from
all of the existing government emergency operation centers as well as
from industry information centers.
Question 5. What are EPA's greatest concerns regarding the
potential for hazardous material releases due to Y2K problems?
Answer. Our greatest concerns are those accidents which could
seriously threaten the safety or health of workers, the local community
and the environment. However, it is unlikely that a single Y2K failure
could by itself cause a catastrophic chemical accident. It is difficult
to predict what the outcome might be from multiple failures or
combination of control and utility failures. We are optimistic that
industrial facilities that manufacture or use chemicals are making
reasonable efforts to address potential Y2K problems as well as
preparing contingency plans. However, the ability to respond to a
chemical accident could be hampered by Y2K disruptions in electricity,
water supply, and communications. Therefore, it is necessary that
response agencies have contingency plans in place to work around these
problems as well as fix their internal Y2K problems. Response agencies
should also be prepared to handle a larger number of incidents over the
transition period if Y2K problems cause industrial accidents.
Question 6. How has EPA engaged State Emergency Response Committees
or Local Emergency Response Committees in preparing for Y2K incidents
in the chemical industries?
Answer. SERCs establish LEPCs, which in turn are responsible for
developing local contingency plans using chemical inventory information
collected as part of community right-to-know regulations. Thus, these
organizations should be prepared to handle chemical incidents
regardless of whether they are caused by Y2K or some other problem.
Approximately 2,000 emergency management specialists attended ten FEMA-
organized Y2K contingency planning workshop where EPA was a key
participant. EPA's Y2K Chemical Emergency Alert (posted on our Web
site) encourages facilities to communicate and coordinate Y2K
contingency plans with their LEPCs. EPA has distributed the Alert to
LEPCs and SERCs. In addition, EPA has urged SERCs and LEPCs to
encourage state and local emergency service providers to conduct
internal Y2K audits to ensure that they are able to carry out their
emergency response functions. The SERCs and LEPCs were also asked to
encourage their industry contacts to conduct Y2K audits of systems that
protect against releases of hazardous chemicals to the environment.
LEPCs may also conduct their own follow up of Y2K readiness of
facilities that use chemicals. For example, the City of Ann Arbor and
Washtenaw County LEPCs are requiring a Y2K compliance plan for all
facilities in their county that use, produce or store more than 55
gallons of chemicals.
Finally, FEMA has provided a guide for State and Local Emergency
Managers, Contingency and Consequence Management Planning for Year 2000
Conversion, to help them protect public safety and health if Y2K
incidents (not limited to chemical incidents) occur. EPA has developed
and made available on its Web site, a paper with Y2K planning ideas
that can be used by emergency response organizations.
Question 7. Hazardous chemicals must be treated with a ``cradle to
grave'' approach in today's world. The proper treatment of the waste is
just as important as the care of the raw material and manufactured
products. Does EPA have concerns about the machines that produce date
information that goes with labels or manifests for chemical waste
products?
Answer. First a brief word about manifests. Hazardous waste
manifests only accompany hazardous waste shipped off-site by a
generator. Usually, a hazardous waste manifest is a multipart form,
which is created for each specific, individual shipment of waste.
Currently, the federal Uniform Hazardous Waste Manifest (EPA Form 8700-
22) includes the name of the designated receiving facility, the
shipper's EPA identification number, and a description of the waste
based on Department of Transportation (DOT) requirements. DOT's
requirements usually include information about the proper shipping name
and hazard class.
The only dates of concern regarding a hazardous waste manifests
are: (1) the date the transporter accepts the waste, and (2) the date
it's delivered to a treatment, storage, or disposal facility. All of
this information is specific to each waste shipment, and is manually
written on the manifest.
Question 8. Would you explain how the responsibilities for chemical
incidents involving waterways are divided between EPA and the Coast
Guard? Has EPA coordinated its emergency response plan with the Coast
Guard for chemical incidents on waterways that may occur with the
millennium rollover?
Answer. EPA and the USCG share responsibility for providing On
Scene Coordinators (OSCs) to respond to chemical or oil emergencies.
USCG has primary responsibility on land or water in the coastal zone.
EPA has primary responsibility on land or water in the inland zone.
Each EPA Region has a Memorandum of Understanding with USCG which
specifically delineates the line between inland and coastal zones; for
example, EPA Region III and the USCG (MSO Baltimore) might delineate
the break point along the Potomac River at the Key Bridge. In some
cases responsibility may be shared, or assumed by the first responder
able to arrive at the site.
EPA and USCG cooperate in standing Regional Response Teams and the
Area Committees to ensure coordinated and efficient emergency response
plans, including potential incidents that may occur with the millennium
rollover.
__________
Prepared Statement of Charlie B. Martin, Jr.
Introductory Comments
Chairman Bennett and members of the Committee, my name is Charlie
B. Martin and I am the Site Safety Coordinator at Hickson DanChem
Corporation. Thank you for inviting me to appear before you today on
this distinguished panel. Although our company is not physically
located in New Jersey, the issue we are addressing here today does not
vary across state lines. I am here today to present my industry's
perspective on Y2K contingency planning for both inside and outside the
company fence.
Hickson DanChem is engaged in the custom manufacturing of organic
and inorganic specialities for major chemical companies. It also
produces a comprehensive line of textile chemical auxiliaries and
specialty surfactants. In layman's terms, we make the chemicals that
are used for fabric conditioning, paint additive, and personal care
products. The company employs 132 persons at our plant in Danville, VA
and uses batch manufacturing processes.
My company is a member of the Synthetic Organic Chemical
Manufacturers Association (SOCMA). SOCMA is the leading trade
association representing the batch and custom chemical industry. This
industry produces over 90 percent of the 50,000 chemicals produced in
the U.S. while making a $60 billion annual contribution to the economy.
SOCMA's 300+ member companies are representative of the industry and
are typically small businesses with fewer than 75 employees and less
than $40 million in annual sales.
As the site safety coordinator, I serve on our Y2K compliance team.
Since the last panel addressed Y2K activities generally, I will focus
my comments on the last step of Y2K preparation--contingency planning.
It should be noted that our company will be Y2K compliant on June 30,
1999. In developing the final draft of our emergency contingency plan,
Hickson DanChem tried to foresee every possible situation, however
remote. Our plan covers safe process operations, emergency response
planning and community dialogue.
We are pleased to see that today's panel reflects those
stakeholders that should be involved with industry's community
awareness and emergency preparedness efforts. An effective and
successful plan must involve the collaborative participation of the
company, its workers, government, emergency responders and the
community. My testimony today will address Hickson DanChem's continued
dialogue with these groups and describe how many of the activities
related to Y2K contingency planning are a normal part of business for
the chemical industry as a result of voluntary initiatives such as
Responsible Care and federal and state regulations.
Employee Participation
As Hickson DanChem conducted its Y2K assessment, employees played a
critical role. In fact, employee involvement is not unique to Y2K
safety activities. Recognizing that the involvement of our employees is
paramount to a successful employee health and safety program, we have
always included our employees in developing safety plans and
procedures. This involvement complements our implementation of federal
regulations such as the Occupational Safety and Health Administration's
Process Safety Management Rule (PSM), company safety policies, and the
chemical industry's health, safety and environmental initiative,
Responsible Care. Specifically, SOCMA's guidance for the
Responsible Care Employee Health and Safety and Process
Safety Codes provides guidelines for company practices that complement
federal occupational safety regulations. Coupled with regulatory
requirements, these guidelines address many of the potential results of
Y2K technology problems.
Specific activities in place at Hickson DanChem include a formal
Site Safety and Health Committee comprised of eight task groups that
participate in various areas of our safety program. They also perform
housekeeping and hazard assessment audits throughout the site. We hold
monthly shift training sessions on related OSHA and home safety topics
as well as conduct training on regulatory topics using the computer.
Departmental safety meetings are also held monthly and five minute
supervisory safety talks are performed daily. Hazard/Operability
(HAZOP) studies are performed on new and existing processes and include
countermeasures for suspected failures. HAZOP action items result in
decisions such as installing emergency shut-down devices in conjunction
with process control systems for specific processes.
Regarding impacts specific to Y2K, our on-site Y2K assessment team
performed formal evaluations for Business Information Systems, Process
Control Systems, Fire and Security Systems, Field Control Units, and QC
Lab Equipment. During the roll over period of December 31, 1999-January
1, 2000, provisions were considered for a phased start-up of utilities,
system checkouts, and status verifications with Emergency Response
agencies before manufacturing processes are resumed.
With their assistance, we have integrated Y2K related activities
into our existing safety program.
Emergency Response
Another important aspect of an effective company safety program is
involvement with local emergency response teams. Hickson DanChem has an
Emergency Response Plan and has incorporated Y2K related activities
into it.
Under Title III of the Superfund Amendments and Reauthorization Act
(SARA), States are required to establish Local Emergency Planning
Committees, better known as LEPCs. Each LEPC is responsible for working
with industry to develop emergency response plans for its community
that take potential risks from a chemical related accident into
account; collecting and storing information provided by facilities; and
making it available to the public. Representatives to the LEPC include
individuals from the fire department, emergency management agencies,
local health agencies and hospitals, local officials, community groups,
media, and local businesses. Hickson DanChem participates in the
Pittsylvania County LEPC by providing technical expertise in the
planning process, assisting with the training of local responders in
handling hazardous chemicals, providing information about chemicals and
transportation routes, offering in-kind assistance in the planning
process and hosting regular plant tours and emergency response drills
for local responders. In fact, we held a major emergency response drill
on March 11, 1998, in which many Y2K related activities were addressed
such as internal and external alarm system notifications to both County
and City emergency response agencies. The drill was noted as being the
first of its magnitude in our area. Since that time, lessons learned
have enabled us to identify potential challenges and make continuous
improvements in our system.
Responsible Care also plays a significant role in Hickson
DanChem's interaction with local emergency responders. The Community
Awareness and Emergency Response Code, or CAER Code, encourages
facilities to take a leadership role in the LEPC and initiate
activities that go beyond the requirements of SARA. For example, The
CAER Code provides guidelines on participation in the community
emergency response planning process to develop and periodically test
the comprehensive community emergency response plan developed by the
LEPC. Because of our involvement with our County LEPC, I am proud to
say that I have just been named to serve on the City of Danville
Emergency Planning Committee.
As you can tell, handling chemicals has led the industry to develop
extensive plans to address potential incidents covering both on-site
and off-site consequences. However, Y2K presents a unique set of
potential consequences, such as potential multiple system failures. As
such, our emergency response plans designate actions to be accomplished
should these type situations arise.
Dialogue with Community
Communicating Y2K compliance with your local community establishes
public confidence and provides opportunities for open dialogue between
the community and the plant. Several of our customers, suppliers, and
business support agencies have requested and been provided information
on our Y2K progress. Our information systems manager participated in a
Y2K drill with our regional medical center. The drill proved beneficial
for both Danville Regional Medical Center and Hickson DanChem.
Participation in seminars as a member of the Pittsylvania County Safety
Roundtable provided information to local small industries on Risk
Management Plan (RMP) preparations. A symposium hosted by the Danville
LEPC was held on April 29, 1999 to further enhance their understanding.
Hickson DanChem has also sponsored programs, such as Educators in the
Workplace to provide awareness information to local area teachers and
counselors.
Conclusion
Hickson DanChem is committed to having an effective emergency
response plan that avoids the potential Y2K technology concerns. Many
of the contingency planning activities for Y2K readiness in the
chemical industry are being addressed through procedures and practices
that are already in place. However, Hickson DanChem has added
additional measures to ensure the safety of our employees, neighbors,
environment and equipment come December 31, 1999 and January 1, 2000.
The involvement of our employees and local emergency responders has led
us to develop an effective and open community dialogue and on and off
site contingency plan.
Though Y2K presents cause of concern, we have addressed these
issues in the same manner as we address all emergency response issues--
by assessing the potential problems carefully and thoroughly,
implementing preventative measures, and testing to ensure that
potential problems have been adequately addressed. Contingency planning
is an important part of doing business for our company. Hickson DanChem
can say with confidence that we are prepared for the safe transition to
the year 2000.
Mr. Chairman, we appreciate the opportunity to appear before you
today. The Y2K issue warrants the collaborative efforts of all of the
stakeholders before you today. We welcome your leadership and look
forward to a transition to a safe and prosperous new millennium.
__________
Responses of Charlie B. Martin, Jr. to Questions Submitted by
Chairman Bennett
Question 1. You indicated that your company has tried to anticipate
a wide range of contingency planning scenarios. Do you think the
industry has placed sufficient emphasis on the need for contingency
planning?
Answer. Risk management plays an important role in the daily
operations of chemical manufacturing facilities. My initial statement
for the committee referred to the Responsible Care program as
an example of risk management activities that take place at many
chemical facilities. The industry's commitment to this program shows
that contingency planning is, and has been, in place for many years.
Many Y2K-related activities and emergency planning are inherent,
although not expressly designed for Y2K, within the Responsible
Care program. Although Responsible Care is not
practiced at every chemical manufacturing facility in the United
States, participation in the program is a requirement of active
membership in the Synthetic Organic Chemical Manufacturers Association
(SOCMA). The Chemical Manufacturers Association and other chemical
industry trade associations.
In addition to programs such as Responsible Care members
of our industry are also subject to a number of federal regulatory
requirements that indirectly address the types of risks and necessary
planning that are implicated by Y2K issues. For example, most chemical
manufacturing facilities must submit facility-specific risk management
plans to the U.S. Environmental Protection Agency (EPA) by June 21,
1999, to comply with the Risk Management Planning Rule (RMP) under the
Clean Air Act Sec. 112(r). 40 CFR Sec. 68. Under the RMP, chemical
facilities must submit their facilities' plans to address potential
risks and hazards at the facility level. In the preparation of their
RMPs, most companies will be evaluating potential Y2K-related events
such as loss of power and chemical releases.
Similarly, Title III of the Superfund Amendments and
Reauthorization Act (SARA), requires states to establish Local
Emergency Planning Committees (LEPCs). Each LEPC is responsible for
working with industry to develop emergency response plans for its
community that take potential risks from a chemical-related accident
into account; collecting and storing information provided by
facilities; and making it available to the public. As I stated in my
testimony, our company has been very actively working with our LEPC on
Y2K-related issues. Although I believe this is true for other companies
in the industry, I do not have specific information in this regard.
Question 2. The Chemical Manufacturer's Association and its
associated Chemical Information Technology Association have developed
contingency planning guidance. Do you have a feeling for how widely
distributed and used these materials have been?
Answer. Hickson DanChem is not a member of the Chemical
Manufacturers Association and therefore, I cannot comment about the
distribution of the document. Members of the Chemical Manufacturers
Association or the association's staff would be better equipped to
respond to this question.
Question 3. You mentioned that it is very important that chemical
plants have a dialogue with their local communities. In your opinion,
is the majority of the chemical industry engaging its local community
(hospitals, emergency services and the general public) in a Y2K
dialogue?
Answer. My knowledge and experience of this issue involves specific
activities that have taken, or will take place at Hickson DanChem. As I
stated in my testimony, on March 11, 1998, Hickson DanChem participated
in one of the first Y2K-related emergency response drills in our area.
I am not in a position to answer this question on behalf of the
industry as a whole.
Question 4. You mentioned that the Pittsylvania County Safety
Roundtable provided many small industries with valuable Risk Management
Plan information. In your opinion, is an adequate job being done in
reaching out to the industry and the public to raise awareness on the
Y2K issue?
Answer. The chemical industry has been made aware of the Y2K
situation through various media including insurers and computer
providers. The chemical industry trade associations also have provided
information to their members about the Y2K situation. For example,
SOCMA has been actively involved with the Y2K issue for quite some
time. Specifically, the association has written numerous articles in
its magazine, has had technology experts give presentations at meetings
and has dedicated a page on its Internet Web site to address the issue
and link to numerous sources of information and guidance materials.
Additionally, SOCMA currently is working with EPA and other chemical
industry trade associations to develop a document intended to assist
small and medium-sized companies with their Y2K assessments and
contingency plans. All parties contributing to this effort are
committed to distributing the document beyond their respective
memberships and constituencies.
Generally speaking, I am not in a position to determine whether Y2K
awareness activities in general, or to the public at-large are
adequate.
Question 5. The Chemical Safety Board recommends that all chemical
processors continuing operations through the year 2000 transition
should have plans and trained staff who could manually assume control
of the plant. What do you think of these recommendations? In your
opinion, is the industry incorporating these suggestions into their
contingency and continuity plans?
Answer. The CSB's recommended procedures are part of our daily
operating schedule. As a batch processor, our company's manufacturing
processes require intermittent introduction of frequently changing raw
materials, and have varying process conditions. Therefore, equipment
often is idle while waiting for raw materials, waiting for quality
control checks, undergoing cleaning, etc. Due to the nature of batch
manufacturing, it rarely pays to automate a system. Additionally, batch
chemical processes start and shut down daily, if not multiple times
during any given day. Consequently, at our company, as at the most
batch operations, we depend upon by highly skilled operators who
manually control operations.
Although I would expect that most batch processors similarly would
in the normal course depend upon manual operation of their plants, I do
not have specific information in that regard.
__________
Prepared Statement of Jane Nogaki
Mr. Chairman and Members of the Committee:
Thank you for extending to the New Jersey Work Environment Council
and the New Jersey Environmental Federation the opportunity to testify
here today about concerns that citizens and workers of this state have
regarding potential Y2K problems in facilities using hazardous
chemicals. My name is Jane Nogaki and I have been involved in community
and environmental Right to Know issues for 20 years. I am a Board
Member of the New Jersey Work Environment Council, a statewide alliance
of labor and environmental activists, and I am the Pesticide Program
Coordinator for the New Jersey Environmental Federation, a nonprofit
coalition composed of 80 organizations and 90,000 members. I am also a
resident of Marlton and a public member of the Burlington County Local
Emergency Planning Committee.
The New Jersey Work Environment Council and the New Jersey
Environmental Federation are concerned about the potential public and
occupational health risk posed by chemical releases resulting from Year
2000 (``Y2K'') computer problems. It is our contention that, despite
corporate and government efforts to identify and remedy Y2K problems,
the situation in New Jersey remains perilous for workers and residents
alike. At the same time, if policies are properly designed and
implemented to address this potential health risk, New Jersey's workers
and residents--working in cooperation with facilities using hazardous
chemicals and the state's Department of Environmental Protection--may
be able to seize opportunities to increase awareness about toxics in
our neighborhoods and workplaces.
THE CURRENT Y2K PROBLEM
As you know, Y2K refers to computer programs and chips embedded in
millions of control devices worldwide that--unless fixed--may
incorrectly read the year 2000 as an entirely different date come the
start of next year. Despite assurances, no one knows how many glitches
may occur when the clock strikes midnight. The results could include
catastrophic chemical releases putting thousands of workers and
citizens at risk and damaging the environment.
On April 2, President Clinton said, ``We have made tremendous
progress in our efforts to address the Year 2000 (Y2K) computer
problem. In spite of this progress, however, too many businesses,
especially small and medium-sized firms, will not be ready unless they
act immediately.''
This is indeed true here in New Jersey. We are the most densely
populated state and, at the same time, we are a major chemical
producer. Not surprisingly, we have the highest concentration of toxic
air and water releases of any state in the nation. We have enacted our
own laws, such as the Toxic Catastrophe Prevention Act (TCPA), to
safeguard workers and the public. Yet there have been 8,247 reported
releases of extremely hazardous substances reported to the Department
of Environmental Protection (DEP) since 1986, when that law was
enacted.
Y2K presents a daunting challenge for the chemical, petroleum and
related industries. These sectors of our state's economy are
particularly vulnerable, because of their reliance on embedded chips
for process control and monitoring. Embedded chips are in alarm
systems, computer motherboards, utility and lighting controls, process
controllers, refrigeration devices, and pumps and valves. System
failures could include emissions sampling and related laboratory
analyses, pollution treatment systems, leak detection systems, safety
alarms, safety relief devices, security systems (which could lock out
critical personnel), and power and water surge detection systems.
Nonetheless, some chemical plants, according to one chemical
engineering consultant, ``. . . have not provided a manual means of
shutdown independent of the programmable logic controller.'' And
although many systems are designed to ``fail safe'' in response to
single incidents, experts agree that Y2K glitches may set in motion
multiple mechanical failures.
Complicating matters, most chemical facilities depend on thousands
of outside suppliers--and these vendors may not fix their own problems.
Outside vendors can affect plant operations through failure to deliver
essential data or chemical feedstocks, or utilities such as power and
water. Vendors may spread corrupted data which can infect the plants'
own repaired computer systems. Some larger companies are auditing the
facilities of their important suppliers to determine if they can count
on supplier efforts to remedy Y2K vulnerabilities.
To underscore the problem in the chemical industry, the U.S.
Environmental Protection Agency has issued a memo calling attention to
the possibility of chemical plant problems stemming from the Y2K issue.
The agency has urged state and local emergency planners to prepare and
to carry out the emergency response functions.
NEW JERSEY'S EFFORTS
We can be proud of the effectiveness of New Jersey's TCPA program,
which covers 911 facilities using extremely hazardous substances. We
also look forward to expansion of the program, under the U.S.
Environmental Protection Agency's Clean Air Act Section 112(R), to
approximately 70 additional facilities. Together, these laws authorize
the state DEP to collect voluminous risk information data about roughly
160 facilities using high-risk toxics, and they are considered a model
for chemical accident prevention.
Yet state government efforts to address potential Y2K problems in
the chemical and related industries appear inadequate. Last fall, for
example, the DEP conducted an informal survey of 20 New Jersey chemical
facilities, concluding that these manufacturers had few date-dependent
processing units. DEP simply accepted management's verbal assertions
and did not request independent verification and validation data. In
addition, DEP ignored invitations and chose not to send a
representative to the federal Chemical Safety and Hazard Investigation
Board's December, 1998 Y2K conference.
Thus it appears that the DEP, the agency charged with preventing
toxic disasters, has put its head in the sand when faced with
challenges posed by the ``millennium bug.'' Moreover, it is also
apparent that no other agency in New Jersey is independently verifying
even the most basic assertions from chemical facilities.
It is clear that Y2K safety issues will continue to be the subject
of considerable public discussion and media interests. It is worth
noting, therefore, that under Section 112(R) of the Clean Air Act
amendments of 1990, June 21 is the deadline for many chemical
manufacturers and other employers in New Jersey to make public detailed
Risk Management Plans RMPs). These plans include information about
``worst case scenarios'' such as fires, explosions and toxic gas
clouds. Needless to say, this looming deadline for legally-mandated
disclosure of information about potential chemical accidents makes all
the more important a strong government response to rising citizen
concerns about potential Y2K problems.
PROPOSALS
To safeguard against preventable Y2K-related chemical releases, and
to assure New Jersey's citizens that both the DEP and facilities in the
state that use hazardous substances are taking adequate precautions, we
propose the following:
1. The New Jersey Department of Environmental Protection (DEP)
should distribute a Y2K-Preparedness Survey to roughly 160 facilities
covered by the Toxic Catastrophe Prevention Act and the EPA Clean Air
Act Section 112(R). This survey should request information about Y2K
efforts, including preparedness and planning, to help the DEP determine
whether each company is Y2K-compliant. The survey should also include
questions about equipment suppliers and other contractors. In addition,
respondents should be asked to produce all Y2K-related documents, such
as 10(Q) forms filed with the Securities and Exchange Commission. A
reasonable deadline should be set to allow companies to complete the
survey. Copies of the survey, a list of the companies receiving it and
an introductory letter about the importance of Y2K-preparedness should
be sent to the appropriate mayors, and Local Emergency Planning
Committee members in municipalities throughout the state. The DEP
letter should briefly describe the potential human, environmental and
economic costs of non-compliance.
2. For those companies that do not respond to the survey by the
deadline, the DEP should conduct follow-up enforcement activities.
These activities should begin with a phone call to companies. If, after
telephone contact, companies still do not submit the survey, the DEP
should conduct a site visit of the facility or facilities. Note that,
according to the TCPA Section 8(a), the DEP has ``the right to enter
any facility at any time in order to verify compliance with the
provisions of this act.''
3. The DEP should conduct Independent Validation and Verification
(IVV) audits of a limited number of facilities. This auditing process
would involve spot checks of certain facilities--including review of
relevant documents and a possible site visit--to corroborate
disclosures made about Y2K preparedness. It would aim to provide some
assurance to citizens that assertions made by facilities are valid.
4. The DEP should generate a brief report detailing the results of
the survey and the IVV audits, and make this information available to
the public. This report should document the response--or lack of
response--by specific facilities. A summary should then be published in
newspapers throughout the state; and the full report should be posted
on the agency's Home Page on the World Wide Web and sent to Local
Emergency Planning Committees. Moreover, if DEP does not currently have
the staff or financial resources to conduct an audit and produce a
report, such resources should be made available immediately.
5. The DEP should initiate a series of local hearings on Y2K
preparedness in chemical facilities. These hearings would provide a
forum for citizens, workers and emergency responders to interact with
plant managers about Y2K preparedness.
QUESTIONS RESIDENTS AND WORKERS SHOULD BE ASKING CHEMICAL
FACILITIES
Among the questions we should be asking chemical facilities at such
public hearings are:
1. Have you completed Y2K-related remediation and testing of your
safety-related systems?
2. Have you consulted with employees, neighbors and emergency
responders in all phases of your Y2K remediation, testing, drills and
planning for high-risk periods?
3. Have you conducted or planned any facility-wide Y2K testing,
either independently or in coordination with outside utilities or
suppliers, that has or will shut down your facility?
4. From what sources has your facility's Y2K effort been
independently audited (sometimes called ``independent verification and
validation'' or ``IVV'')? Corporate headquarters? Major customers?
Local government?
5. Have you conducted IVV on your major suppliers?
6. Do you intend to employ a ``Safety Holiday'' strategy (i.e.,
temporarily shut down your facility during high-risk periods for Y2K
problems)? If yes, are you committed to maintaining pay and benefits
for employees during this period?
7. Have you stockpiled--or do you plan to stockpile--essential
chemical supplies for anticipated Y2K outages? If yes, do any of these
stockpiled chemicals add to the accident risk at your facility?
8. How much (approximate or range in dollars) is your total budget
for Y2K work?
9. Have you developed Y2K Risk Management Programs (RMPs) as part
of your ongoing work under OSHA's Process Safety Management and EPA's
Risk Management Planning regulations?\1\
---------------------------------------------------------------------------
\1\ Under the U.S. Environmental Protection Agency's Risk
Management Program and U.S. Occupational Safety and Health Act's
Process Safety Management program, certain facilities are required to
develop and implement risk management programs (RMPs) by June 1999.
Under the RMP initiative, regulated facilities are required to conduct
a hazard assessment, develop and implement a prevention program, and
implement an emergency response program. The hazard assessment includes
development of worst-case and alternative release scenarios for a
number of highly toxic chemicals as well as compilation of 5-year
accident history.
---------------------------------------------------------------------------
10. Under these laws, you must calculate toxics ``worst case
scenario'' releases.
How far is your calculated downwind distance?
How long (in minutes) would it take a facility to realize it
had such a release?
How long would it take for the facility to decide not to try
to handle it on its own?
How long would it take to notify the fire department?
How long would it take for the public to be notified?
11. Have you arranged to make RMP documents available in a public
library or other location with ready public access?
CONCLUSION
The NJ Work Environment Council and the NJ Environmental Federation
have worked for many years to strengthen right-to-know laws providing
citizens and workers access to information about hazardous chemicals
used at work and in the community. We have built a statewide coalition
of workers, citizens, scientists, and lawyers to monitor these
problems. We believe it is in the interest of everyone in New Jersey to
ensure that the facilities within the state that use extraordinarily
hazardous chemicals--especially those covered by the TCPA and the Clean
Air Act--are prepared for potential Y2K computer problems and make
every effort to provide information to the public. Given the complex
and costly nature of this preventive work, the DEP must also play a
more prominent role than it has to date. Y2K poses a daunting
challenge, but it also offers an important opportunity for government
and business to work in cooperation with citizens, workers and
emergency responders to avert potentially dangerous chemical releases
that can damage human health and our environment.
Thank you for the opportunity to testify.
__________
Responses of Jane Nogaki to Questions Submitted by
Chairman Bennett
Question 1. In your statement, you criticize the New Jersey
Department of Environmental Protection (DEP) for its failure to address
critical Y2K issues in the chemical industry. What factors do you
believe contributed to the DEP's lack of engagement on this issue? In
your opinion, what should be done to get the DEP more proactive in this
area?
Answer. Since the Committee's May 10 field hearing in Trenton, the
DEP itself has responded to our criticisms. It is clear from the
agency's response that it has defined its role in an extremely limited
manner. Specifically, DEP appears to see itself as an enforcement
agency that will inspect and cite employers after an incident occurs,
but with no responsibility for a preventive Y2K strategy beyond the
deterrent value of its inspection program. Our testimony maintained
that the DEP appears to have its ``head in the sand'' regarding Y2K
issues. It now appears the agency's heels are also dug in. Clearly,
Governor Whitman should step in and direct the agency to undertake a
more aggressive Y2K effort that would include:
a survey of Y2K compliance efforts of facilities using
extraordinarily hazardous chemicals;
inspections and penalties for facilities failing to
respond to such a survey;
independent audits of the Y2K compliance efforts of a
limited number of facilities;
production of a report on the results of the survey and
audits; and
a series of local hearings--involving workers, citizens
and facility managers--on the Y2K issue.
As we made clear in our statement, resources should be allocated
for this effort, including additional DEP staff, if necessary.
It should be noted that since issuing our proposals to the Governor
and testifying before the Special Committee, WEC has conducted its own
34-question survey of 160 facilities using extraordinarily hazardous
chemicals. Responses are currently being analyzed.
Question 2. What specific concerns have your members voiced, from
the workers' perspective, regarding the safety hazards Y2K presents to
them as they carry out their duties each day?
Answer. Unfortunately, it appears that not enough workers on the
shop floor are aware of the increased accident risks related to Y2K
computer mishaps. The reasons for this are many, but include:
a lack of urgency on the part of our state government to
disseminate information regarding possible threats to workplace,
environmental and public safety or to initiate any preventive programs
beyond the deterrent impact of existing enforcement strategies;
a perception, promoted by many large chemical
corporations and bolstered by a variety of local, state and federal
government officials, that they are adequately and responsibly
addressing problems when, in fact, preparation by even the largest
companies (e.g. Occidental Chemical) appears to have a long way to go;
the grim reality that workers toiling in toxic jobs have
to endure an ongoing, everyday threat to their health and safety and
thus may be inured to any additional hazards posed by Y2K computer
problems.
That said, those workers aware of Y2K problems have raised a number
of concerns. For example, many are worried about re-starting operations
that have shut down safely and about multiple and simultaneous process
failures. Workers know that companies have ``fail safe'' systems in
place that will safely shut down a process if, for example, there is a
power interruption. But a real danger may emerge if a series of
failures occur simultaneously or when systems that have ``failed safe''
are starting up again. The Y2K issue; these workers say, raises the
following ``systems of safety'' questions:
Have companies conducted Process Hazard Analysis (PHA) as
required by OSHA's Process Safety Management Standard?
Have facilities conducted a specific Y2K PHA on all their
processes?
Do facilities have adequate staffing to not only run the
process but to handle emergency shutdowns?
Many safety committee members in chemical facilities are also aware
that PHA's are too often ignored, conducted inadequately, or conducted
but not utilized. Since downsizing is widespread in the chemical
industry, many facilities are also woefully understaffed. Informed
workers contend that these factors combine to create a prescription for
Y2K problems. Indeed, a recent example of a Y2K-like scenario is the
explosion that killed six workers in Anacortes Washington on November
25. A power failure caused the plant to shut down, which occurred
without incident. But management rushed to start up once the power came
on, did not fully safeguard systems, and six workers died. The Seattle
Times reported that the explosion occurred when a pocket of hot liquid
fuel was exposed to air after workers unsealed the bottom of a large
steel ``coker'' drum. ``Though workers followed safety precautions,''
the newspaper reported, ``the hot fuel was not detected by temperature
indicators because it had been insulated by a cool crust of residue
that formed after a power failure the day before.''
Question 3. You mention in your statement that New Jersey's Toxic
Catastrophe Prevention Act (TCPA) has been very effective, but at the
same time you are highly critical of the DEP regarding its Y2K efforts.
How do you rectify these seemingly contradictory viewpoints? To what
extent, if any, has the TCPA contributed to an effective response to
Y2K in the chemical industry?
Answer. TCPA has indeed been an effective enforcement program. But
the DEP has not extended the TCPA's reach to encompass broader
preventive efforts--such as public or worker education--regarding Y2K
or, for that matter, chemical safety in general. Thus, TCPA's ability
to push a facility to address specific problems related to Y2K--e.g.
disruptions among vendors--is negligible.
Question 4. How would you gauge the effectiveness of Environmental
Protection Agency and OSHA efforts on Y2K in the chemical industry?
Answer. OSHA's effort, as noted by Senator Bennett at the May 10
hearing in Trenton, has been meager at best. The EPA has provided more
information, but, according to our members, has yet to have any real
impact either with workers inside facilities or with neighbors outside.
Question 5. In the list of questions for chemical facilities that
you provided in your statement, you alluded to the fact that Risk
Management Plans should be readily available to the general public. The
EPA initially wanted to make these available on the Internet, but
decided not to do so because of security concerns expressed by the FBI
in regard to the increased vulnerability to terrorism such widespread
dissemination of this information might cause. What is your opinion
about this?
Answer. Worst case scenarios included in the Risk Management Plans
were intended for use by the public to help communities prepare for and
prevent chemical accidents. We feel that denying or limiting access to
this information based on purported threats of terrorism would be ill-
conceived. The public's right to know would be reduced by these
measures, but chemical facilities would not be required to take steps
to improve site security, to establish buffer zones, or to make
chemical plants safer. We see no reason to pit community right to know
against chemical industry complacency in reducing risks to New Jersey
communities. Moreover, we see a great value in establishing a national,
public RMP data system that would enable citizens to access and analyze
RMP information.
__________
Prepared Statement of Gerald V. Poje
Good afternoon, Mr. Chairman and Senator Lautenberg. I am Gerald V.
Poje, Ph.D., one of four members nominated by the President and
confirmed by the U.S. Senate to the U.S. Chemical Safety and Hazard
Investigation Board (CSB). Our chairman, Dr. Paul L. Hill, the other
board members and I thank you for inviting the CSB to testify
regarding:
1. The critical findings and recommendations from the CSB's
Year 2000 (Y2K) Technology report,
2. Significant activities that have occurred within the
chemical industry to address areas with the greatest Y2K risk,
3. Assessment of the chemical industry's ability to continue
uninterrupted operations in spite of Y2K, and
4. Actions that Congress and others should take to reduce the
risks of Y2K failures.
The Chemical Safety Board is an independent federal agency with the
mission of ensuring the safety of workers and the public by preventing
or minimizing the effects of industrial and commercial chemical
incidents. Congress modeled it after the National Transportation Safety
Board (NTSB), which investigates aircraft and other transportation
accidents for the purpose of improving safety. Like the NTSB, the CSB
is a scientific investigatory organization. The CSB is responsible for
finding ways to prevent or minimize the effects of chemical accidents
at commercial and industrial facilities and in transport. The CSB is
not an enforcement or regulatory body. Additionally, the CSB conducts
research, advise Congress, industry and labor on actions they should
take to improve safety, and makes regulatory recommendations to the
U.S. Environmental Protection Agency and the U.S. Department of Labor.
I am trained in toxicology and specialize in policies dealing with
chemical hazards. I oversee the board's efforts on reducing risks of
accidents associated with Year 2000 computer problems. Let me state
clearly, that the CSB views the Y2K issue within the larger
evolutionary trend of expanding automation and information technologies
in the chemical handling sectors. New technology will continue to
penetrate the workplace, affecting management, workers, equipment and
interrelationships with suppliers, customers, regulators and the
surrounding community. How our nation and businesses manage the Y2K
problem will provide important lessons for other new technology issues.
Currently, I work with the Intergovernmental Forum on Chemical
Safety and the Organization for Economic Cooperation and Development to
promote global remediation and contingency planning around Y2K
problems.
In February 1999 I also testified before the Senate Environment and
Public Works Committee's Subcommittee on Clean Air, Wetlands, Private
Property and Nuclear Safety on the Year 2000 Computer Technology
Problem And Chemical Safety Issues.
BACKGROUND
The U.S. Chemical Safety and Hazard Investigation Board, at the
request of Senators Bennett and Dodd of the U.S. Senate Special
Committee on the Year 2000 Technology Problem, has investigaged the
issues of chemical safety and the year 2000 computer technology
problem. In December 1998, the board convened an expert workshop on Y2K
and Chemical Safety involving leaders from industries, equipment
vendors, insurance companies, regulatory agencies, research agencies,
universities, labor organizations, environmental organizations, trade
associations, professional engineering associations, and health and
safety organizations. The process of our safety board's efforts could
prove to be a useful model for other critical issues associated with
the year 2000 technology problem and for further elaboration of the
chemical safety issues at hearings and workshops organized at the
national, state and local levels.
The board members have reviewed and approved the report which is
available via Adobe Acrobat at the Chemical Safety Board's website:
http://www.csb.gov/y2k/y2k01.pdf.
In developing the report, the Chemical Safety Board was guided by
the request of the Senate Special Committee to evaluate:
the extent of the Year 2000 Problem as it pertains to the
automation systems and embedded systems that monitor or control the
manufacture of toxic and hazardous chemicals, or safety systems that
protect processes,
the awareness of large, medium, and small companies
within the industry of the Year 2000 threat,
their progress to date in addressing the Year 2000
problem,
the impact of the Risk Management Plans required in June
1999, and
the role federal agencies are playing in preventing
disasters due to the Year 2000 problem.
In synoposis, the Year 2000 Problem is a significant problem in the
chemical manufacturing and handling sector. All enterprises with
sufficient awareness, leadership, planning, lead time, financial and
human resources are unlikely to experience catastrophic failures and
business continuity problems unless their current progress is
interrupted or there are massive failures of utilities. Many larger
corporate entities fit this profile. The overall situation with small
and mid-sized enterprises is indeterminate, but efforts on the Y2K
problem appears to be less than appropriate based upon inputs from many
experts. While the impact of the Risk Management Plans should be
positive, there are no special emphases or even specific mention of
Year 2000 technology hazards in either U.S. Environmental Protection
Agency (EPA) or Occupational Safety and Health Administration (OSHA)
regulations regarding process safety. Federal agencies are aware of and
involved in Year 2000 technology and chemical safety issues. However,
significant gaps exist, and there do not appear to be specific plans to
address these gaps.
Scope of Issues
The Expert Workshop, as well as the research conducted for our
report, concluded that the Year 2000 problem is one of major
proportions and has the potential for causing disruption of normal
operations and maintenance at the nation's chemical and petroleum
facilities. Compliance activities reported to the Chemical Safety Board
to date have not found a single failure (embedded microchips or
software) which by itself could cause a catastrophic chemical accident.
However, it is unclear what the outcome might be from multiple
failures, e.g., multiple control system failures, multiple utility
failures, or a combination of multiple utility and control system
failures. Surveillance of the industrial sector that handles high
hazard chemicals is insufficient to draw detailed conclusions
applicable to all localities.
One theme upon which experts agree is that failures from Y2K non-
compliance at small and mid-sized enterprises is more likely. The
reason is a lack of awareness regarding process safety in general and
the Y2K impact in particular, lack of resources, and technical know-how
for fixing the problems. Given the time constraints, altering this
situation would require a massive effort. The Board has concluded that
this effort should focus on: 1. providing easy-to-use tools, 2.
promoting accessible resources, and 3. providing attractive incentives
for Y2K compliance efforts. Additioinal efforts should be the focus of
an urgent meeting of agencies convened by the Administration.
Facility Issues
The potential for catastrophic events, at US chemical process
plants, stemming from Year 2000 non-compliance, can be divided into
three categories: failures in software or embedded microchips within
the process plants, external Y2K-related problems (e.g., power
outages), and multiple Y2K-related incidents that may strain emergency
response organizations. A check list of devices to be assessed for Year
2000 compliance at a chemical plant is identified in Appendix A.
The limited scope of the Y2K Expert Workshop and the research
conducted for this study concluded that large multinational companies
are, in general, following a well-thought out and well-managed path
towards Y2K compliance. These multinational enterprises have, in
addition to their Y2K compliance efforts, made contingency plans,
including, in some cases, plans to shutdown batch operations for
limited periods at the turn of the century.
Particularly in the contingency planning area, the CSB's efforts
benefited from the specific presentations by the Occidental Chemical
Corporation and the Rohm and Haas Company. The efforts of the Chemical
Information Technology Association have culminated in contingency
planning guidelines, available at the Chemical Manufacturers
Association website http://www.cmahq.com/cmawebsite.nsf/pages/
newsinfo). I have appended the PowerPoint presentations regarding
approaches to managing this issue from two major chemical
manufacturers: Appendix B from the OxyChem corporation and Appendix C
from the Rohm and Haas company.
While existing disaster recovery plans focus on loss of data
centers, facilities, or communications circuits, Year 2000 contingency
planning must focus on loss of external services and multiple
simultaneous occurrences. With Y2K issues, problems will be more
complex and they will happen simultaneously. Unpredictable human
behavior will make them worse. The same problem may occur in multiple
places, and some problems will ripple into other areas threatening
health and safety, individual business continuity and supply chain
failures.
The CSB conclusions vis-a-vis large and multinational companies
should not be construed to mean that there is no potential for Y2K-
related catastrophic events at these facilities. It is possible that
some Y2K-impacted components may not have been identified, compliance
programs may not achieve 100% completion before critical dates, or
multiple failures that may not have been considered may result in
accidents.
In addition, the erosion of commodity pricing, merger and
acquisition activity and loss of critical Y2K staff through 1999 may
create unique threats to successful completion of Y2K projects.
The major control and instrumentation vendors canvassed in our
study are involved in an extensive program to provide Y2K compliance
for their products. There is, however, reason to believe that some
independent control systems integrators may have developed and
implemented control systems for which there is little or no
documentation of Y2K-related vulnerabilities. In addition, some vendors
are no longer in business or not as cooperative as the major control
and instrumentation vendors.
Regulations
EPA's Risk Management Program and OSHA's Process Safety Management
program mandated by the Clean Air Act Amendments of 1990 may provide
significant benefit in terms of improving overall safety programs,
reliability of chemical process plants, emergency response plans, and
other programs at regulated and compliant facilities. As a result, the
overall capability and readiness of the chemical process industry to
deal with and effectively overcome the Y2K threat is likely to be very
high. However, it must be pointed out that none of these regulatory
programs or activities have any direct relationship with Y2K
compliance.
Instituting new regulations to standardize testing or certification
is not a reasonable approach for three reasons. First, in the remaining
time, it is not possible to develop the mechanism and logistics needed
for rulemaking, standard development, and establishment of reporting
procedures. Second, implementation of any standardized method or
regulation may create penalties and unnecessary complications for many
companies that do not fit the selected standard but have already
expended an extensive amount of effort on Y2K compliance. Third, it is
critical to minimize overall administrative efforts in order to focus
available resources on the remedial efforts within this limited time
frame.
Other Issues
The existing chemical sector and its system of safety will be
tested by Y2K problems. Some aspects are worth noting.
1. The chemical sector and its surveillance systems are quite
heterogeneous. For example, the Chemical Manufacturers Association
(CMA) has approximately 190 members who represent nearly 90% of the
chemical producing capacity in the United States.
CMA developed and implemented a Y2K survey beginning in July 1998
(see, the CMA website (http://www.cmahq.com/cmawebsite.nfs/pages/
newsinfo). Several associations within the larger Council of Chemical
Associations have recently adopted and applied the CMA surveillance
tool to their members. Other associations may lack resources to survey
their members and/or power to assure their compliance. Many more
facilities handling significant amounts of high hazard chemicals may
not belong to industrial associations.
The two major regulatory agencies, EPA and OSHA, have not
undertaken a surveillance of the Y2K compliance efforts of their
regulated community, nor have they funded other entities to do such.
Therefore the chemical sector has much less of a coordinated approach
than other sectors (see, for example, the North American Electric
Reliability Council 3rd report to the Department of Energy, ftp://
ftp.nerc.com/pub/sys/all updl/docs/y2k/4-30-y2k-report-to-doe.pdf).
2. Independent validation and verification also is heterogeneous in
the chemical sector. Many larger corporate chemical companies employ
rigorous independent auditing of their facilities for a variety of
performance measures, including risk management and Y2K compliance
efforts. Many companies are auditing suppliers and customers for Y2K
compliance and allowing themselves to become subject to similar audits.
Such practices have proven highly valuable in improving quality,
promoting confidence in management and business continuity and building
trust among the key stakeholders. However, the percentage of facilities
handlling significant amounts of high hazard chemicals that employ this
approach is not known.
Other sectors managing hazardous materials are employing public
oversight. The Nuclear Regulatory Commission recently has developed an
inspection manual and checklist guidelines for power plant inspectors
(see Final NRC Inspection for Review of Year 2000 (Y2K) Readiness of
Computer Systems at Nuclear Power Plants http://www.nrc.gov/NRC/Y2K/
Audit/TI2515-141.pdf and a Y2K Review Checklist http://www.nrc.gov/NRC/
Y2K/Audit/TI2515-141A.pdf). Similarly, the Connecticut Department of
Public Utility Control is employing a independent auditing firm to
oversee Y2K compliance at public utilities (see http://
www.dpuc.state.ct.us/DPUCinfo.nsf/6388afa2e804605f852565f7 004e9e87/
a66dc559a4ee99b385256705006be862?Oopen Document).
The role for federal, state, local agencies and private third party
auditing of Y2K compliance, through either comprehensive or special
emphasis programs, is not specified within the chemical sector.
3. Policymakers likely will become involved if the existing system
of surveillance, auditing and technical assistance is proven
insufficient to prevent extraordinarily manifest Y2K failures. After
the Bhopal, India disaster in December 1984, Congress enacted Title III
of the Superfund Amendments and Reauthorization Act (SARA) in 1986.
SARA Title III required states to establish state and local emergency
planning committees (LEPCs), mandated that facilities must make
information on harzardous chemicals available to the public, created
basic research programs at universities, and established training
programs for workers and emergency responders. Additional catastrophic
failures in the United States during 1988 and 1989 prompted the 1990
Clean Air Act Amendments which established: a general duty obligation
in regard to process safety, OSHA Process Safety Management (PSM) rule,
the EPA Risk Management Program (RMP) Rule, and the formation of the
Chemical Safety and Hazard Investigation Board.
If Y2K failures become sufficiently apparent in 1999-2000, policy
makers likely will need to consider three major issues: 1. The absence
of adequate data regarding Y2K compliance, despite widespread
recognition of the problem, deadlines for compliance and consequences,
2. Inadequate application of established principles for managing
process safety in facilities, particularly as it relates to automation
and information technologies, and 3. Gaps in process safety training,
technical assistance, and research, particularly as it applies to small
to medium sized facilities and those in low income and minority
communities.
Priority Issues and Findings
Special Expert Workshop attendees reached consensus on the
importance of four issue areas related to Y2K problems and chemical
safety. First, small and medium-size enterprises (SMEs) risks and needs
are greater than those of larger corporate entities. Second, existing
risk management programs provide a more substantial framework for
addressing Y2K related problems. Third, the discontinuity of utilities
threatens all chemical handling entities. And fourth, managing Y2K
problems will require responsive communication among the stakeholders.
Recommendations
The following recommendations were developed based on input from
the workshop attendees and research conducted during the CSB Y2K study.
Executive Administrative Agencies
The Administration should promote the development of an
informatioin clearing-house. Information such as checklists and lists
of devices or equipment susceptible to Y2K failures should be provided
specific to industry sectors. A Federal government agency should be a
focal point for the clearing-house in coordination with other public
and private entities, and thereby shielding organizations that provide
Y2K-related information from the threat of lawsuits.
The President's Council on the Year 2000 should
coordinate a contingency planning phase to build public awareness and
promote the ability of emergency response infrastructure at the
federal, state, and local levels. The U.S. Environmental Protection
Agency (EPA) should promote the development of contingency plans to
assure capable emergency response and promote communications among
facilities, local governmental agencies and the nearby communities
should problems arise. Federal initiatives should include the
organization of regional conferences focusing on ways to assess risks
appropriately and how to prioritize which systems and facilities pose
greater risks.
EPA and the Occupational Safety and Health Administration
(OSHA) and other safety organizations should increase Y2K awareness in
small and mid-sized enterprises (SMEs).
Facilities
All processors that will run through the transition
should have plans and sufficient and trained staff on hand to manually
take control of the process. Facility managers should be prepared to
shut down the process quickly and safely should control problems occur.
Manual operations, especially over extended periods of time, may
require significant changes in staffing and comprehensive training of
managers, operators and other workers.
Batch processors should consider delaying batches
involving hazardous materials that will be in the process as the clocks
turn to 2000, and at other sensitive dates, for processes where testing
was not done or testing results were inconclusive.
Chemical workers, emergency responders and local
governmental agencies that focus on environmental health and emergency
response should be provided with training and tools (e.g., guidelines,
checklists, and software) to address Y2K issues.
Facility managers should phase-in and coordinate shut
downs, resulting either intentionally as a safeguard against Y2K-
related failures or as a direct result of Y2K failures, and startups
with local utilities and agencies, including emergency response
agencies and Local Emergency Planning Committees.
Other Sectors
Power outages and other utility failures could constitute
as much of a threat, or even more so, than internal process plant Y2K-
related failures. Thus, utilities and oversight agencies should expend
every effort to preserve the integrity of the national power grid
system, local power supplies and other appropriate utilities. Chemical
facilities individually and aggregately can exacerbate unusual loading
patterns and minimum generation condition on the electrical grid.
Therefore, contingency plans for utilities and chemical facilities
should incorporate specific elements for cross sector communication.
All Stakeholders
Communication tools should be developed to improve the
status of SMEs and to aid worker and public understanding. While it is
critical to develop and implement Y2K compliance programs, it is
equally important to inform workers and the public about the extensive
work being done, in order to allay fears, avoid panic and promote
community contingency planning. This communication can be made through
federal agencies, such as EPA, OSHA, and the Chemical Safety and Hazard
Investigation Board (CSB), state and local agencies. Other important
venues for outreach include: unions, trade and professional
organizations, such as the American Institute of Chemical Engineers
(AIChE), American Petroleum Institute (API), American Society of Safety
Engineers (ASSE), Chemical Manufacturers Association (CMA), Chlorine
Institute, and International Society for Measurement and Control (ISA),
and research organizations such as the Mary Kay O'Connor Process Safety
Center at Texas A&M University.
Summary
In summary, the Year 2000 technology problem is a significant
problem in the chemical manufacturing and handling sector, posing
unique risks to business continuity and worker and public health and
safety. All enterprises with sufficient awareness, leadership,
planning, financial and human resources are unlikely to experience
catastrophic failures and business continuity problems unless their
current progress is interrupted or there are massive failures of
utilities. Many larger corporate entities fit this profile. The overall
situation with small and mid-sized enterprises is indeterminate, but
efforts on the Y2K problem appears to be less than appropriate based
upon inputs from many experts. Federal agencies are aware of and
involved in Year 2000 technology and chemical safety issues. However,
significant gaps exist, and there do not appear to be specific plans to
address these gaps.
__________
Responses of Gerald V. Poje to Questions Submitted by
Chairman Bennett
Question 1. Your testimony and the CSB report of March has called
for the urgent meeting of Federal agencies convened by the
Administration on this topic. Would you tell us what you believe the
goals and desired outcomes of this meeting should be? Which Federal
agencies should be present at a meeting such as this?
Answer. When the CSB convened the expert meeting in December, 1998,
the majority of expert participants valued the involvement of a broad
diversity of stakeholders, including six Federal agencies representing
regulatory, research, training, toxicology, emergency response and
investigatory functions. The Federal government commands an important
role in providing leadership coordination, and direction on the Y2K
issue. Government needs to get pertinent and candid information out to
the public, demonstrate that organizations are managing against the
problem, establish that normal emergency response mechanisms have been
reviewed and updated, and share technical information with those that
need it.
No individual agency represents the total mandate of the Federal
government, nor engages all relevant stakeholders. While the
President's Council has assigned responsibility for the chemical sector
to the Environmental Protection Agency, to the best of my knowledge
with less than 200 days remaining there is no plan to convene a Federal
agency summit meeting on chemical safety.
A Federal Summit on Y2K and chemical safety would:
a. delineate the extent and depth of surveillance efforts of the
chemical handling industry in the private and public sectors;
b. identify best practice and application of independent validation
and verification procedures for assuring compliance efforts;
c. compile individual agency resources and actions devoted towards
assessing and improving Y2K compliance for the chemical handling
industry;
d. identify needs and opportunities for cross-sectoral
coordination, training and investigation;
e. identify best practice for emergency planning and response,
including ways of identifying facilities with Y2K failure potential
prior to sensitive dates;
f. discuss the feasibility of the executive branch of the federal
government requesting Y2K compliance from high hazard chemical handling
facilities;
g. delineate coordination needs and opportunities with state and
local agencies on chemical safety.
The outcome of a Federal Summit would be a more coordinated Federal
plan of action and communication on chemical safety.
The Federal agencies should include
1. the major regulatory agencies--EPA (OIRM, OSWER, OPPTS, OECA)
and OSHA (Office of Compliance, Office of Policy),
2. research, training, and public health agencies--NIOSH, NIEHS,
ATSDR,
3. Emergency management--FEMA,
4. agencies with facility management functions that include the
management of chemical hazards--DOE, DOD, and
5. independent investigatory and safety agencies--CSB, NTSB.
Question 2. Your testimony is guardedly optimistic about the larger
firms in this industry. However, the Chemical Manufacturer's
Association has been running a Y2K-survey on their almost 200 member
firms since December last year and as of the end of April, has only
gotten a 63% response rate. Searching the web for information, CMA has
gotten data on another 7% or so. Should we not be concerned about the
30% (almost 70 companies) that have not participated in their own
association's survey on this important matter? Could you recommend
incentives that parties in the government or elsewhere could take to
improve the response rate?
Answer. Recognizing the need for greater transparency on safety and
environmental programs, more than a decade ago, the Chemical
Manufacturers Association told the public, ``Don't trust us, track
us!'' and implemented the Responsible Care \1\ code of practices to
guide its members. Every participating company's chief officer signs
the Responsible Care Guiding Principles--the foundation of
Responsible Care--as a symbol of his or her commitment to continuous
health, safety and environmental performance improvement. Responsible
Care is an obligation of membership in CMA. In the Y2K
technology problem arena, I urge all to be guided by former President
Ronald Reagan who is famous for his international safety aphorism:
``Trust but verify.''
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\1\ http://www.cmahq.com/cmawebsite.nsf/pages/responsiblecare
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Yes, we should be concerned about the status of non-reporting
companies. Recent surveillance efforts by seven associations of smaller
and mid-sized enterprises (SMEs) gathered responses from 300 entities
from a total population of more than 3000. Obviously, stated
commitments among these companies that they will be 100% Y2K ready by
the end of the year is important, and their public disclosure efforts
are laudatory although individually anonymous even to their trade
association. However, the 10% responders from this SME community does
not constitute a random sample of the larger population. Therefore, it
is unacceptable to project similar commitments of Y2K compliance before
the end of the year for the 90% who did not respond. Furthermore, many
other chemical handling entities belong to other associations which
have not initiated any surveillance program, and other facilities do
not belong to a trade association.
In addition, it is also important to recognize the time sensitivity
of information in surveys. At a recent meeting organized by the CMA,
one Y2K leader critiqued the accuracy of the CMA aggregate data since
his company's current status (which was more complete than originally
projected) would not be accurately reflected in their data submitted
several months ago. While another company representative anticipating
imminent completion of a major merger could not project that the
current status would reflect the ultimate status of the company 6
months from now. CMA leaders recently expressed uncertainty that the
association would be able to commit resources or garner membership
support towards a survey update of their members as has been
accomplished in other sectors.
Trade associations which have organized surveillance efforts are to
be commended for their voluntary efforts which have increased public
awareness and prepared their members for communicating their Y2K
compliance status. Hopefully such actions enhance the Y2K compliance of
their member. None-the-less, it is important to recognize these
associations have limited leverage with their due-paying members to
extract Y2K data and maintain its currency. When the survey protocol
relies upon voluntary submissions it cannot be expected that all will
comply, nor can the compliance results from the responders be projected
to the non-responders, such as the 30% of the CMA members and the 90%
of the associations of SME chemical specialty producers and
distributors.
Legitimate interests of concerned media, investors, workforce and
communities will continue to seek information regarding the compliance
status and future direction of every company and their specific
facilities. The capacity to effectively participate in contingency
planning requires that all participants have timely access to relevant
information, sufficient technical understanding and expertise, and the
resources to participate.
With approximately 6 months remaining before the end of the year
there are limited opportunities to provide incentives. The Federal
regulatory agencies should issue a joint communication regarding the
applicability of the general duty clauses to Y2K failures affecting
health, safety and environmental protection. The CSB has urged
organizations with greater technical and financial resources to partner
with less resourced entities to improve their compliance status and
strengthen their contingency planning efforts. In the private sector
this includes large corporations working with smaller suppliers and
their customers, such as through an enhanced total product stewardship
program. In the public sector this includes federal agencies with
facility management competencies, such as DOD and DOE, working with
smaller municipalities and businesses in their nearby vicinity. These
efforts could increase public awareness of the need for expanding Y2K
compliance efforts, contingency planning, and communication of
progress, vulnerabilities, uncertainty and management strategies.
The CSB has already stated that instituting new regulations to
standardize testing or certification is not a reasonable approach. In
the remaining time, it is not possible to develop the mechanism and
logistics needed for rulemaking, standard development, establishment of
reporting procedures and assuring uniform awareness and compliance.
Conversely, there is also little benefit in promoting incentives
towards compliance by providing relief from existing regulations
because of the same logistical constraints.
Question 3. You site lack of knowledge and resources as a potential
cause of failures among small and medium sized enterprises, and you say
that it would take a ``massive'' effort to alter this situation. Given
the limited amount of time that's left and the dangerous scenario
surrounding the fact that literally thousands of these smaller
companies are located in the middle of residential communities, what
recommendation does the CSB make given this volatile combination? Is
there time for a ``massive'' effort?
Answer. No single entity could be assigned the sole responsibility
for assuring SME compliance. Local, state and federal agencies,
managers, workers, trade associations, professional associations,
community organizations, and others have important roles in promoting
health, safety and environmental protection. For example, the Washtenaw
County and Ann Arbor, MI Local Emergency Planning Committees (LEPCs)
have initiated a laudatory effort to increase awareness and
accountability for Y2K compliance among more than 800 businesses
handling even small amounts of chemicals in their jurisdiction, and
will be organizing community conversations regarding chemical safety
concerns. The National Institute of Environmental Health Sciences has
increased the Y2K awareness of training experts in the HAZWOPER program
and will be providing grant supplements to prepare many more workers
and emergency responders (see question 2). The EPA, trade associations
representing some chemical SMEs and the CSB have worked together to
prepare guidance for SMEs. Industrial unions have sent letters to their
locals and employers requesting attention to and information regarding
Y2K compliance and contingency planning. Each of these examples should
serve as models for others to emulate and thereby reduce the risks.
Question 4. My understanding of the chemical manufacturing process
is that start-up and shut-down are two very critical and sometimes
hazardous points of operation. You indicate in your testimony that
power outages and other utility failures could be as threatening as
internal system failures. Could you describe for us the risks
associated with power outage where normal operations are disrupted, and
give us your estimate of the existence of alternative power sources or
other contingencies that may be in place within the chemical industry
in the event of an electrical or power outage?
Answer. No effort was made in the CSB study to assess the potential
of power outages from Y2K-related failures. However, potential Y2K-
related power outages represent another set of problems for chemical
and petroleum facilities. While many chemical and petroleum
manufacturing facilities have backup power generators, Y2K failures may
include concurrent loss of power, cooling water and other system
malfunctions. High demand processes, such as chloralkali or smelting
operations would not be able to operate processes on back-up power
generators. Plants without auxiliary power backup systems face a threat
to parts of their processes that may not shutdown in a fail-safe mode.
Batch chemical processes are especially susceptible because the safety
of the process is quite often dependent on time-dependent factors such
as precisely timed mixing, heating or cooling requirements.
A potential scenario is that widespread power outages may cause
shutdowns of many plants, which in turn will require simultaneous
startups. Startups of continuously producing chemical plants are
infrequent and their durations are short compared with the life cycle
of a plant. Marsh and McLennan in their evaluation of large property
damages in the petrochemical industry found that process safety
incidents occur five times as often during startup as they do during
normal operations. Thus, a large number of simultaneous startups may
increase the potential of incidents in one or more process plants. In
addition, the simultaneous restarts of large power-consuming facilities
will impose large demands on the electrical grid.
While occasional power outages are dangerous and difficult to
manage, they are not unusual problems for facility managers and workers
to confront. With Y2K power outages, problems will be more complex and
they will happen simultaneously such as loss of crucial data, facility
subsystems, or communications circuits, as well as loss of other
external services and multiple simultaneous occurrences. Unpredictable
human behavior will make them worse. The same problem may occur in
multiple places, and some problems will ripple into other areas
threatening health and safety, individual business continuity and
supply chain failures.
Consequently the CSB report recognized that many members of the
chemical process industry are concerned about the reliability of power
supply and are seeking ways to assess the vulnerability of their
specific utility. Individual companies and local associations are
encouraged to engage in dialogue with their individual power suppliers
to find out what they are doing regarding Y2K. Accurate and pertinent
information about utility status is essential for contingency planning
purposes.
For some managers of facilities that draw high power loads prudent
safety practice may determine that the plant be shut down during
critical time periods and restarted at a later date. However, such
decisions should not be made without communicating these planned
actions with their utilities in order to prevent problems on the power
grid. As a further complication, cumulatively, small power consumers
can impact on power distribution through the nearly simultaneous shut
down of many facilities without coordinating with their utility.
Utilities can bring up or shutdown generators as demands vary, but they
have trouble responding to unexpected changes in load or demand.
Insufficient electrical demand coupled with increased numbers of
generators supplying the electric grid could overload the power
distribution system, threaten the integrity of equipment, and/or trip
breakers. If that happened, then there could be power outages for all
the customers on the affected distribution line. The January 11, 1999
report, ``Preparing the Electric Power Systems of North America for
Transition to the Year 2000--A Status Report and Work Plan--Fourth
Quarter 1998'', issued a specific recommendation that would affect any
advice given for facilities considering shutting down during rollover
to Year 2000.\2\
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\2\ See with access though Adobe Acrobat Reader, ftp://
ftp.nerc.com/pub/sys/all--updl/docs/y2k/secondfinalreporttodoe.pdf
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``Unusual Loading Patterns and Minimum Generation Conditions.
Another priority concern that is emerging from the contingency
planning process stems from the need to have additional
generating units on line as a precaution against Y2K events.
With additional generators on line and the possibility of
customer demand being low through the extended holiday period,
utilities must consider what is called a *minimum generation*
condition. When there is too much generation on line in
relation to demand, system voltages and frequency can rise.
Planning for the rollover into the Year 2000 must trade off the
need to have additional reserves to respond to possible
generator contingencies with the potential for excessive
voltages. Customers should be encouraged during the period not
to take unusual steps such as shutting down facilities that
would normally operate through the holiday weekend. Extremely
low demand or unusual pattern demand can present additional
challenges for operation of the electric system.''
The response to the utility problem has to be two-pronged,
governmental leadership and corporate accountability. The federal
government should ensure the integrity of the nation's electrical grid.
In addition, state and local governments should make every effort to
ensure the integrity of other utilities within their purview. The
chemical process facilities should on the other hand design their Y2K
compliance activities, particularly the contingency planning activities
with the assumption that most utilities will fail, or at the best be
under maximum strain.
The CSB recommends that utilities, individually and through their
associations, should take the lead in regards to 1. Informing their
customers of possible power supply problems, and 2. Ascertaining
whether their customers plan to alter their power demands such that
utilities might be unable to maintain power distribution. Where
utilities find significant planned shutdowns, they should take the
initiative to coordinate shutdowns and subsequent start ups.
Question 5. Besides your Board, OSHA, and EPA, are there other
Federal agencies in your opinion that should be active in reaching out
to the chemical industries on the Y2K problem? If so can you tell us
what their activities have been?
Answer. The CSB has not undertaken a comprehensive surveillance of
all Federal agency efforts, and recommends that this activity occur
through a Federal summit on chemical safety and Y2K. On a more informal
basis, many agencies have shared information with the CSB and have
engaged in outreach efforts. For example, the National Institute of
Occupational Safety and Health (NIOSH) has developed a website devoted
to Y2K. I have reviewed technical papers and informational brochures
that NIOSH has prepared to educate occupational health professionals,
and the academic centers supported in part through NIOSH have provided
a forum for me to address the Y2K issue.
In particular I would like to mention and commend the National
Institute of Environmental Health Sciences (NIEHS). NIEHS was given
major responsibility for initiating a training grants program under the
Superfund Amendments and Reauthorization Act of 1986 (SARA). The
primary objective of this program is to fund non-profit organizations
with a demonstrated track record of providing occupational safety and
health education in developing and delivering high quality training to
workers who are involved in handling hazardous waste or in responding
to emergency releases of hazardous materials. Since the initiation of
the Hazardous Waste Worker Training Program in 1987, the NIEHS has
developed a strong network of non-profit organizations that are
committed to protecting workers and their communities by delivering
high-quality, peer-reviewed safety and health curriculum to target
populations of hazardous waste workers and emergency responders.
Since last October NIEHS has organized several major discussions of
the Y2K risks in hazardous material management and emergency response.
Last month they announced the availability of $100K competitive,
supplemental training grants to their existing grantee community.
Applications are due in July and awards will be announced in August.
Their clearinghouse, which supports informational exchanges among the
grantees and others, will be providing key support for curriculum
development in order to accelerate the delivery of training programs.
This effort is funded through existing resources, and has not benefited
from federal Y2K supplemental funding.
Question 6. I understand that the purpose of the Chemical Safety
Board is generally to improve the safe production, storage and use of
chemicals. I also understand that the CSB is neither a regulatory or
compliance organization. I applaud the CSB for proactively taking on
the Y2K issue before there are Y2K caused accidents to investigate. Are
there any specific actions the CSB can take to assist state and local
government organizations obtain information about the Y2K readiness of
chemical facilities in their jurisdiction for the purpose of assessing
the risk to their communities? Are there realistic actions the
Executive Branch or Congress can take to facilitate this happening?
Answer. The CSB views the Y2K issue within the larger evolutionary
trend of expanding automation and information technologies in the
chemical handling sectors. New technology will continue to penetrate
the workplace, affecting staffing, management, workers, equipment and
interrelationships with suppliers, customers, regulators and the
surrounding community. How our nation and businesses manage the Y2K
problem will provide important lessons for other new technology issues.
The Year 2000 technology problem threatens to increase the risks of
chemical accidents. The potential for catastrophic events, at US
chemical process plants, stemming from Year 2000 non-compliance, can be
divided into three categories: failures in software or embedded
microchips within the process plants, external Y2K-related problems
(e.g., power outages), and multiple Y2K-related incidents that may
strain emergency response organizations. Therefore, CSB has been
motivated to promote a preventative approach by our research,
recommendations and outreach efforts.
The CSB currently is staffed with fewer than 30 people, including
administrative and support personnel, and funded for FY 1999 at $6.5M,
much of which has been committed to investigating tragic incidents
involving chemicals. None-the-less, the CSB will be mailing copies of
our Y2K report to governors, heads of territories, protectorates and
the District of Columbia and other leaders with suggestions for
distributing to relevant agencies and localities. In addition we will
continue to work with EPA and trade associations to develop, promote
and distribute guidance document for SMEs. The board will continue to
address major audiences, communicate with the press, and work with
state and local agencies, trade associations, technical organizations,
foundations, organized labor and environmental organizations to promote
the highest level of vigilance on safety and the year 2000 technology
problem.
The CSB reiterates our request that the executive branch should
organize high level summit of executive branch agencies and other
agencies (See response to question 1.). Additional activities could
include training OSHA and EPA compliance officers to understand, assess
and communicate the importance of Y2K compliance, and assure a common
investigative protocol for assessing Y2K technology problems in the
etiology of health, safety and environmental failures.
Congress continues to have an important role through its oversight
functions which can promote the mobilization and coordination of
appropriate Federal agencies. Congress can enhance occupational and
environmental health by assuring that liability avoidance for Y2K
failures do not include avoidance of responsibility for health, safety
and environmental protection.
As stated in the field hearing testimony, if Y2K failures become
sufficiently apparent in 1999-2000, policy makers likely will need to
consider three major issues: 1. The absence of adequate data regarding
Y2K compliance, despite widespread recognition of the problem,
deadlines for compliance and consequences, 2. Inadequate application of
established principles for managing process safety in facilities,
particularly as it relates to automation and information technologies,
and 3. Gaps in process safety training, technical assistance, and
research, particularly as it applies to small to medium sized
facilities and those in low income and minority communities.
__________
Prepared Statement of Jamie Schleck
Introductory Comments
Chairman Bennett and members of the Committee, my name is Jaime
Schleck and I am the Executive Vice President of Jame Fine Chemicals
Inc. Thank you for inviting me to appear before you today to discuss an
issue important to both industry and the public at large. My role here
today is to present the impact of the Y2K computer problem on small
business chemical manufacturers, and how these companies can prepare
for the millennium change. In my testimony I will explain the unique
nature of small chemical companies and how this affects Y2K
preparations and contingency planning. I will also describe how Jame
Fine Chemicals is preparing for the millennium change and identify
existing initiatives that assisted us in our Y2K assessment. Finally, I
will address what my trade association, the Synthetic Organic Chemical
Manufacturers Association, or ``SOCMA,'' is doing to assist its members
with Y2K preparation.
Jame Fine Chemicals is a family owned company comprised of 44
employees. The company manufactures various specialty chemicals for use
in five distinct industries: pharmaceuticals, cosmetics, dietary
supplements, chemiluminescent products and disinfectants.
Jame Fine Chemicals utilizes batch manufacturing techniques. This
manufacturing technique is not exclusive to Jame Fine Chemical, as most
small chemical manufacturers use batch techniques.
Batch Manufacturing
Batch manufacturing provides an efficient, and frequently the only,
method to make small quantities of chemicals to meet specific needs and
consumer demands for specialized products. Batch processes are distinct
from continuous operations in that a continuous operation has a
constant raw material feed to each unit operation and continual product
withdrawal from each unit operation. A batch process has an
intermittent introduction of frequently changing raw materials into the
process, varying process conditions imposed on the process within the
same vessel and, consequently, an intermittent release of air
emissions. Vessels are often idle while waiting for raw materials,
waiting for quality control checks, undergoing cleaning, etc.
Due to the unique characteristics of batch manufacturing, the Y2K
issue presents a different rubric of automation assessment and
contingency planning. The steps and procedures exercised at Jame Fine
Chemicals for Y2K compliance are demonstrative of what I believe most
small chemical companies have done or are currently doing.
As a general rule, specialty chemicals are much more expensive than
traditional commodity chemicals. One can easily make the analogy that
specialty chemicals are to commodity chemicals what diamonds are to
coal. On a per kilogram basis, the average specialty chemical
manufactured by Jame Fine Chemical could be as much as several hundred
times more expensive than the most costly commodity chemical. These
economics are common throughout the industry. Consequently, the
industry is made up of many smaller companies that focus on specific
niche products.
Because of the aforementioned economic factors, it rarely pays to
automate a process. In terms of profit optimization, the reduction of
labor cost and cycle time through automation has a clearly second order
effect when compared to yield management and flexibility. Consequently,
the cost structure justifies the need for highly skilled labor and a
de-centralized manufacturing process (batch processing). These economic
factors also provide a strong incentive for companies such as ours to
take the necessary measures to ensure that the Y2K issues do not
disrupt production.
Jame Fine Chemicals' Y2K Activities
My company began its Y2K activity in 1997. Our goal was to be
completely aware of any Y2K compliance issues by the beginning of 1999,
thus providing us a year to make any necessary changes or refinements.
Our plan consisted of several steps including assessment, remediation,
validation and contingency planning.
Assessment
Assessment for Jame Fine Chemicals involved the identification of
all potentially affected software, hardware, embedded systems,
environmental control systems, and other essential systems.
Manufacturing controls at most batch plants are quite different than at
continuous flow plants. Unlike continuous systems, most batch
operations do not rely on computers for manufacturing. Virtually all of
the critical inputs and product flows of batch systems are controlled
by a trained process operator--a person--not a computer. Process
operators are highly skilled laborers who have responsibility for
turning valves, making blends, beginning processes, adding and handling
of product and--should the situation arise--activating emergency power
shut off switches. As a result, there is no risk of chemical overflow
due to automation failures.
Computer automation at Jame Fine Chemicals is used for reaction
monitoring systems and quality assurance. These systems ensure that the
instruments are functioning properly. It is important to distinguish
between production automation and monitoring. At Jame Fine Chemicals,
there are no process steps that are taken without the input from a
human being. We do use several automated monitoring devices to gather
data about a particular process, but we do not have batches that run on
autopilot.
The process systems at Jame are typical of most batch
manufacturers. There are, however, some companies that may have a
higher degree of automation in their manufacturing processes. As a
general rule, these companies tend to be more sophisticated and have
installed their systems within the last several years. Because the
batch control systems that have been programmed and subsequently
installed within the last five years are amenable to the millennium
change, these systems should not pose Y2K related problems. Of course I
can not speak to specific programs and companies other than my own.
One area that firms, such as Jame Fine Chemical, must carefully
examine is the delivery of raw materials and in utilities, particularly
on dates that have been identified as potentially problematic for
computer systems that may have Y2K problems (1/1/00; 2/29/00; 10/10/00;
9/9/99). We have identified those processes that could be adversely
effected and have taken steps to ensure that they are not active during
critical dates.
Implementation
Once we identified all of our potential Y2K affected systems, we
began contacting our vendors and partners for clarification on their
Y2K status. We also began physically testing those systems where
possible. In cases where data is gathered by automated machinery, we
tried changing the dates to see how the systems would react.
Additionally, as part of our Hazard Operation Procedures (HAZOP),
we routinely reviewed all of the possible ``what if'' scenarios for a
given process. Whenever a process is introduced or modified, we have a
HAZOP meeting to discuss all of the possible scenarios, and we lay out
the plan for addressing each circumstance. This process has identified
several Y2K scenarios that are now guarded against.
Contingency Planning
The last step in Jame Fine Chemicals' review of potential Y2K issue
was contingency planning. Our contingency plan includes Y2K specific
initiatives as well as emergency preparedness plans drawn from other
programs and statutes.
Our Y2K specific efforts include the purchase of extra materials
from our suppliers. We feel that it will be important for us to
increase our raw material ``safety stock'' by at least 20 percent for
the end of the year. This will give us approximately one month of
protection for all possible delays. Our purchase orders for most of
these materials have already been placed.
The second part of our Y2K specific contingency plan is to have
staff on site and on call for December 31, 1999 and January 1, 2000.
Rather than shut down, as we normally do, we are committing the
resources to ensure that all of our planning and implementation was
done appropriately, and to further prevent or respond to any incidents
resulting from on or off site Y2K problems.
The third part of our Y2K specific contingency plan is to ensure
that no ``utility dependent'' or ``raw material'' dependent processes
are effected. For example, no utility dependent processes will be
running during any of the critical dates (1/1/00; 9/9/99; 2/29/00; 10/
10/00). Additionally, no ``raw material'' dependent processes will be
started unless we are sure that we have the proper materials on hand to
prevent the process from being interrupted at a critical phase.
The remaining portions of our contingency plan pertain to emergency
preparation and community outreach. Since many of the potential, or
feared, impacts of Y2K related problems are potentially catastrophic in
nature, efforts to prevent, and planning to enable fast response to
remediate such events, are already in place. For example, our company
has prepared a Risk Management Plan to comply with the Clean Air Act's
soon to be implemented RMP regulation. 40 CFR Sec. 68. In this plan, we
cover such events as loss of power from our utility provider.
Community Outreach Efforts
Community outreach efforts are also in place through other programs
not specific to Y2K. For example, we have always had a good working
relationship with our local fire department, Local Emergency Planning
Committee (LEPC) and our community. In fact, on April 20, 1999, we
conducted an exercise with our on site emergency response team and
local fire department. The borough of Bound Brook, NJ has implemented
an information system that provides emergency workers with site
diagrams and hazard information for local businesses.
In addition, every manufacturing company that belongs to SOCMA
participates in Responsible Care, and one of the obligations
of that program is for companies to have an extensive dialogue with
their local communities and rescue personnel. Our company has had open
houses and regular meetings with our community where safety issues have
been addressed. Our Y2K efforts will be addressed at our next community
outreach meeting. Because of Y2K, Jame Fine Chemicals is taking extra
steps to ensure the safety of our workers and communities as well as
the integrity of our systems and products. Through voluntary
initiatives like Responsible Care, and federal regulations
like RMP, the chemical industry is prepared to prevent and/or respond
to both on and off site chemical related incidents.
Awareness
Of course, the first step in implementing a Y2K compatibility plan
is awareness. As I stated earlier, Jame Fine Chemicals has been aware
of the Y2K issue for several years. Like many other small companies, we
received material on the Y2K issue and its potential impact on
manufacturing systems from our insurers. The insurance industry has
done a great job in spreading the word about potential Y2K challenges
to their client companies.
Assistance from Voluntary Programs
As a chemical manufacturer of pharmaceutical intermediates, we are
subject to a wide array of federal and state regulations to ensure
safety and environmental protection. In addition to regulation, the
chemical industry is also committed to volunteer initiatives that go
above and beyond what is required by the government. At Jame Fine
Chemical, we found two such initiatives to be quite beneficial to our
Y2K efforts. The first is our commitment to the aforementioned
Responsible Care program, Responsible Care is the
industry's self regulating code of management practices that ensure
employee health and safety, process safety, community dialogue and
other activities. We found that there was a synergy between the
operating procedures we regularly perform for Responsible
Care and the systems assessment and community outreach for
Y2K compliance. I have included a summary of the Responsible
Care program with my written statement.
In addition to Responsible Care, Jame Fine Chemical is
also cGMP compliant, or more specifically, uses the Food and Drug
Administration's (FDA) recommended current Good Manufacturing
practices. 21 CFR Sec. 210. The purpose of cGMP is to ensure purity and
quality of the product manufactured. cGMP calls for controls in every
step of the manufacturing process and includes stringent standards of
system quality assurance and validation of such systems. If a company
is not cGMP compliant, it can not sell chemicals in the U.S. As we
progressed in our Y2K activities, we found that our cGMP status was
beneficial.
Assistance from Trade Associations
A great resource for many small companies in the chemical industry
is trade association membership. Jame Fine Chemicals is a member of the
Synthetic Organic Chemical Manufacturers Association (SOCMA). SOCMA is
the leading trade association representing the batch and custom
chemical industry. This industry produces over 90 percent of the 50,000
chemicals produced in the U.S. while making a $60 billion annual
contribution to the economy. SOCMA's 300+ member companies are
representative of the industry and are typically small businesses with
fewer than 75 employees and less than $40 million in annual sales.
SOCMA has been actively involved with the Y2K issue for quite some
time. Over the last couple of years, SOCMA has conducted extensive
outreach to apprise its members of the potential ramifications of Y2K
computer issues. Specifically, the association has written numerous
articles in its magazine, has had technology experts give presentations
at meetings and has dedicated a page on its Internet web site to
address the issue and link to numerous sources of information and
guidance materials. Most recently, SOCMA has volunteered to work with
the Environmental Protection Agency (EPA) to develop a document
intended to assist small and medium sized companies with their Y2K
assessments and contingency plans.
SOCMA has also participated in a Y2K Readiness Survey in
collaboration with six other industry trade groups. The results of the
survey show a general awareness and dedication to ensuring Y2K
compliance. Eighty-one percent of SOCMA member companies that responded
to the survey have Y2K testing initiatives that address health, safety
and environmental systems, mission critical functions, and include
contingency plans. Of smaller-size companies responding, 84 percent
confirmed that they have been working to ensure that their supply
chains, which include suppliers, transporters and customers, are Y2K
ready. While we cannot say that this is representative of all small
companies, we believe that these results demonstrate that many small
companies are aware of the Y2K issues and are taking them very
seriously.
Conclusion
Jame Fine Chemicals has dedicated time and resources to ensuring
Y2K compliance, thus ensuring the safety of its employees and community
neighbors. Our contingency plan involves on site and off site
activities and protects our customers from potential shortcomings in
the supply chain.
Due to the unique nature of batch manufacturing, the Y2K technology
problem does not pose as great a risk in small companies as has been
feared. Most batch operations are manually controlled by trained
process operators and, as such, do not rely exclusively on automation
for manufacturing. Those that are fully automated tend to be newer
systems that are already Y2K compliant. In addition, ensuring safety
and environmental protection is inherent in the chemical industry
through both regulatory and voluntary initiatives. In fact, many of the
Y2K related emergency plans have already been implemented as a result
of OSHA's Process Safety Management, EPA's upcoming implementation of
the Risk Management Planning Rule, and Responsible Care. Our
trade association, SOCMA, has done a great job in making companies
aware of Y2K and assisting them in their assessments and contingency
plans.
In concluding my statement, I would like to make one recommendation
to the Committee. We all need to work together and communicate what the
Y2K technology problem is and how to address it. In our industry, SOCMA
and other chemical trade associations have done a great job in getting
the word out to their members and providing assistance. In addition,
word has spread to many companies through their insurers, trade press,
the general press and from their customers and suppliers. We agree that
Y2K issues deserve serious attention and we believe that if we all work
together to identify and address potential issues, we will all benefit.
This concludes my statement.
Mr. Chairman, thank you for your invitation to appear before you
today. I appreciate yours and the Committee's dedication to this
important issue.
I would be glad to entertain questions at this time.
__________
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
------
American Crop Protection Association
Chemical Producers & Distributors Association
Chemical Specialties Manufacturers Association
International Sanitary Supply Association
National Association of Chemical Distributors
RISE (Responsible Industry for a Sound Environment)
SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION
Y2K READINESS DISCLOSURE SURVEY OF
SMALL AND MID-SIZED CHEMICAL COMPANIES
FOR INCLUSION IN THE COMMITTEE RECORD
SPECIAL COMMITTEE ON THE YEAR 2000 TECHNOLOGY PROBLEM
UNITED STATES SENATE
JUNE 9, 1999
The American Crop Protection Association (ACPA), Chemical Producers
& Distributors Association (CPDA), Chemical Specialties Manufacturers
Association (CSMA), International Sanitary Supply Association (ISSA),
National Association of Chemical Distributors (NACD), RISE (Responsible
Industry for a Sound Environment), and Synthetic Organic Chemical
Manufacturers Association (SOCMA) commissioned an independent survey of
small and medium-sized entities in the chemical industry to determine
their readiness for the Y2K phenomenon. The survey was conducted by
Fetzer-Kraus, Inc. of Washington, D.C., to obtain a ``snapshot'' of
where this specialized segment of the chemical industry stands in
preparation for Y2K. The survey also was launched to assist the
committee, Congress, the administration, and the U.S. Chemical Safety
and Hazard Investigation Board (CSB) with obtaining timely and accurate
information about the preparedness of this specific segment of chemical
manufacturers, formulators, and distributors for the turn of the
century and the new millennium. The results of the survey, included in
this statement, are based on U.S. companies with individual gross sales
of $75 million or less. In all, more than 300 companies that are mostly
small batch chemical manufacturers, formulators, distributors,
retailers, or combinations of the above, responded. The survey was
conducted from March through May of 1999. The results of this survey of
small to medium-sized chemical companies illustrates that they have
given and continue to give serious regard for the potential problems of
the Y2K issue. These companies have investigated the potential for
problems, identified and implemented corrective measures, communicated
with communities, and coordinated contingency plans with local
emergency response authorities to manage the possibility of single and
multiple safeguard failures. The companies were asked to disclose
whether or not they had Year 2000 action plans with specific elements.
The planning elements and responses are as follows:
In addition to co-sponsoring this survey, the associations have
continued outreach to member companies and provided requested
assistance to solve Y2K problems. Many of the associations' Internet
sites provide significant amounts of information about compliance and
contingency planning for memberships. Additionally, the trade
associations currently are working with the U.S. Environmental
Protection Agency (EPA) to develop a document to assist small and
medium-sized companies with Y2K assessments and contingency plans.
In March of this year, the committee received a report from the
U.S. Chemical Safety and Hazard Investigation Board (CSB). The survey
indicated that the CSB report lacked appropriate information from any
small and mid-sized enterprises (SMEs). While CSB's report might have
proved useful two years ago, its conclusions regarding the readiness of
SMEs last March now appear to be based on supposition and not fact. The
data from the survey clearly indicates that the small and medium
chemical producers have placed considerable emphasis on preparing for
Y2K concerns for some time. Additionally, the management of small to
medium=sized chemical companies is serious and well-organized with Y2K
mitigation and contingency plans.
We believe the Y2K issue should not be given short shrift. It is a
concern to our members and we have been responding with due diligence
along with them during the past several months. It is our hope and
desire that no circumstance will exist that places any member company,
community, or persons at a significant risk due to a Y2K-related
phenomenon. That is precisely why we have taken prudent and timely
steps to avert any possibility of such risks to safety, health, and the
environment.
We commend the committee for its work and oversight during the
approach of the new millennium. Furthermore, we pledge our support of
efforts to maintain productive and accurate communications among
government and industry entities to ensure a safe and smooth transition
from 1999 to the year 2000.
Organized in 1933, the American Crop Protection Association (ACPA)
is the not-for-profit trade organization representing the major
manufacturers, formulators and distributors of crop protection and pest
control products, including bio-engineered products with crop
production and protection characteristics. ACPA member companies
produce, sell and distribute virtually all the active compounds used in
crop protection chemicals registered for use in the United States.
The Chemical Producers and Distributors Association (CPDA) is a
voluntary, non-profit national trade association consisting of nearly
100 member companies engaged in the manufacture, formulation and
distribution of agricultural, lawn and garden pesticides as well as
their adjuvant and inert ingredients. CPDA's membership accounts for
more than $6 billion worth of chemical-related sales each year.
The Chemical Specialties Manufacturers Association (CSMA)
represents several hundred companies--about one-third of which are
small businesses--primarily engaged in the formulation and packaging of
chemical specialty products. These products include: automotive care
products; cleaners and detergents; disinfectants and sanitizers;
nonagricultural pesticides; and polishes and floor maintenance
products.
With more than 4,400 distributor, wholesaler, manufacturer,
manufacturer representative, publisher, and associate member companies,
the International Sanitary Supply Association (ISSA) is the leading
international trade association for the cleaning and maintenance
industry.
The National Association of Chemical Distributors (NACD) is an
international association of chemical distributor companies that exists
to enhance and communicate the professionalism of the chemical
distribution industry. NACD's more than 300 members purchase and take
title to chemical products from manufacturers. Member companies
process, formulate, blend, repackage, warehouse, transport, and market
these chemical products exclusively for an industrial customer base of
approximately 750,000. All member companies are committed to product
stewardship and responsible distribution in every phase of chemical
storage, handling, transportation, and disposal through implementation
of the Responsible Distribution Process (RDP), a condition of
membership since 1991.
RISE (Responsible Industry for a Sound Economy) is the
national association representing the manufacturers,
formulators, distributors and other industry leaders involved
with pesticide products used in turf, ornamental, pest control,
aquatic and terrestrial vegetation management and other non-
food/fiber applications.
Synthetic Organic Chemical Manufacturers Association (SOCMA)
is the leading trade association representing the batch and
custom chemical industry. SOCMA's more than 300 member
companies make the products and refine the raw materials that
make our standard of living possible. From pharmaceuticals to
cosmetics, soaps to plastics and all types of industrial and
construction products, SOCMA members make materials that save
lives, make our food supply safe and abundant, and enable the
manufacture of literally thousands of other products.
__________
Prepared Statement of the Chemical Manufacturers Association
The Chemical Manufacturers Association (CMA) is pleased to update
you on our efforts to assist members of the association and allied
trade associations in preparing for a wide range of Y2K challenges. CMA
is a nonprofit trade association whose member companies represent more
than 90% of the productive capacity of basic industrial chemicals in
the United States.
CMA has undertaken an aggressive plan to assist our members. This
plan includes:
Development of a customer survey instrument that our members are
using to gauge the readiness of their customers and suppliers.
Sponsor workshops and meetings of members and allied trade groups
to discuss readiness, contingency plans and community assistance. At
our May, 1999 Responsible Care conference we discussed the
need for plants to work with their local communities to share
contingency plans and assist the communities in developing local Y2K
contingency plans. An additional workshop on Y2K readiness is scheduled
for June 10, 1999. This workshop is open to members of allied trade
associations.
We sponsor a list server and web site location on Y2K where members
and the public can share information and benchmark against other
member's practices.
We have conducted a readiness survey of our members to determine
their readiness for Y2K. We have provided summaries of the results as
information is collected. The latest summary, dated May 12, 1999 is
included in these comments for the record.
The readiness survey looks at four areas:
Business Information Technology Systems
Manufacturing, Inventory & Distribution IT Systems
Embedded Systems
Supply Chain Issues
According to the survey of CMA members, nearly 72% of the
respondents who provided dates will be ready by the end of June 1999
and an additional 20% by the end of September 1999. All respondents
indicated they would be Y2K ready before the end of the year.
The survey results also indicated the readiness of member companies
based on size. The results are similar for the four different size
categories in the survey. Based on this information we conclude that
the small to medium sized firms in our membership are no less Y2K ready
than the large firms.
__________
Prepared Statement of the Chlorine Institute, Inc.
The Chlorine Institute, Inc. is pleased to provide these comments
for the record of the Committee's hearing on the Y2K readiness of the
chemical industry in Trenton, New Jersey on May 10, 1999.
The Chlorine Institute, Inc., founded in 1924, is a 235-member,
not-for-profit trade association of chlor-alkali producers worldwide,
as well as packages, distributors, users, and suppliers. The
Institute's mission is the promotion of safety and the protection of
human health and the environment in the manufacture, distribution and
use of chlorine, sodium hydroxide, potassium hydroxide and sodium
hypochlorite, plus the distribution and use of hydrogen chloride. The
Institute's North American Producer members account for more than 98
percent of the total chlorine production capacity of the U.S., Canada,
and Mexico.
The Institute has been conducting a readiness survey of its members
that produce, repackage and distribute, and use chlorine. (Repackaging
chlorine most often involves the transfer of liquified chlorine gas
from a 90-ton rail car or pipeline to either 100 lb. or 150 lb.
cylinders or one-ton containers.) The survey form is attached to these
comments. Earlier results were presented verbally to the staff of the
committee. The following data and assessments are based on the survey
results to date. The information received is very encouraging as to the
Y2K readiness of the members of the Institute.
North American Chlor-Alkali Producers
The Institute's membership includes 24 North American companies
that produce chlorine and its co-products sodium hydroxide or potassium
hydroxide (alkalis). Information has been received from 23 companies.
Of those, twenty companies responded directly to the Institute and
three to the CMA survey. All companies responding indicated they were
fully engaged in addressing the Y2K concerns and would be Y2K ready by
the end of the year. The results indicate the majority will be Y2K
ready in the third-quarter of 1999.
Chlor-alkali production at the vast majority of plants is dependent
on electricity supplied by local utilities. Plants have contingency
plans to deal with an interruption of power without the loss of
containment of the product.
U.S. and Canadian Repackagers of Chlorine
The Institute's membership includes 21 repackagers of chlorine (19
U.S. and 2 Canadian). Nineteen companies responded to the Institute's
survey. All of these members would be considered small (the majority)
to medium size companies.
All of the companies responding indicated they would be Y2K ready
by year-end. The majority indicated they would be Y2K ready by October
1999.
These companies are the source of chlorine for the vast majority of
water and waste water treating facilities using liquified chlorine gas
as a disinfectant. Some water utilities receive their chlorine by rail
tank cars or tank trucks. The repackaging of liquified chlorine gas
does not depend on computer driven or dependent systems. Therefore,
there would not be accidental releases of chlorine due to a Y2K
problem. Also, as long as the repackaging companies have a source of
liquified chlorine gas and electrical power, they will be able to keep
the water utilities supplied. Several members have volunteered that
they have back up generators to maintain operations should there be an
electrical failure. Others are planning to keep their inventories
higher than usual so they can supply customer requests for increased
quantities of chlorine prior to year-end 1999. Inventory buildup is
limited by the number of containers available to fill. The Institute
believes that many local or state authorities require utilities to have
sufficient chlorine in inventory in case of a disruption of supply.
Chlorine Users
The Institute has chlorine user members in four categories (by
use): general chemical processes, bleach makers, swimming pool
applicators, and water utilities. The following are the survey results
from general chemical processes and bleach makers.
General Chemical Processes
Of the 15 Chlorine Institute members in the general chemical
processes category, responses were received from nine companies, six
directly to the Chlorine Institute and three to CMA. All responders
indicated they would be Y2K ready by year end. All the direct
responders to the Chlorine Institute indicated they would be Y2K ready
by September 1999. The nine responders represent a mix of large
(mostly), medium and small companies.
Bleach (Sodium Hypochlorite) Makers
There are nine Chlorine Institute members in the category of bleach
makers. Five companies responded to the survey and all will be Y2K
ready by July 1, 1999. These companies receive chlorine and sodium
hydroxide and combine the two in a process that results in a water
solution of sodium hypochlorite, i.e., bleach. Bleach has many
applications, most of which fall into disinfection processes, including
water and waste water treatment. With one exception, these members are
small (mostly) or medium size companies. Some of the repackaging
companies also produce bleach.
As an additional input to the questions of readiness of U.S. bleach
makers, a major manufacturer of sodium hypochlorite continuous
processing systems was contacted (a member of the Institute) to
determine the readiness of their equipment in the field. The company
has informed its customers that their equipment is Y2K compliant.
Bleach manufacturers not using continuous processing equipment
produce their product in a batch process which involves little or no
dependence on computer based process control.
As with the other members mentioned thus far, bleach makers are
dependent on an electrical supply for operating their processes. It is
anticipated that an interruption of the electrical supply will not
result in chlorine or sodium hypochlorite releases. The process of
making bleach essentially is one of the methods used to deal with
chlorine during a disruption in the chlorine production process.
The Institute does not have sufficient information to generalize on
what steps are being taken by bleach makers to ensure a supply of
sodium hypochlorite to water utilities, beyond the inventory
capabilities of both production sites and user sites. Some producers
have indicated that they have stand-by electrical generating
capabilities.
__________
Prepared Statement of Audrey R. Gotsch, DrPH
The New Jersey/New York Hazardous Materials Worker Training Center
has been conducting training for personnel responding to hazardous
materials incidents since 1987. The Center based at the Environmental
and Occupational Health Sciences Institute, UMDNJ/Rutgers University,
has trained over 165,000 people, including over 135,000 directly
responsible for reacting to chemical emergencies. This training has
enabled emergency personnel to respond appropriately and effectively
when faced with a hazardous materials incident. Preparation, both in
the classroom and during simulated emergency situations, is how
emergency responders learn to protect the people that live in our
communities. They are the essential personnel needed to abate the
hazards when faced with catastrophic incidents. As Y2K approaches,
communities should be concerned about how much and what types of
training are suitable for emergency response personnel.
The significance of Y2K comes as a result of computer chips being
designed with only two digits rather than four to specify the year.
Time sensitive processing may result in systems shutting down or
incorrect calculations being generated in year 2000. Nationally,
numerous areas may be affected. Utilities, banks, public hospitals,
municipal transit systems and communications systems that link police,
fire, and other emergency and security operations are just some of the
areas that could be affected. Many of them are evaluating their
contingency plans taking into consideration safety, utility continuity,
supply reliability and customer needs. However, in the event of
emergency situations that may arise from power outages and utility
failures, emergency response personnel will be needed to quickly
respond.
Y2K issues may effect emergency responders in several ways. They
may be limited by power outages, reduced ability to communicate due to
failures in telephone, radio, computer systems, and multiple incidents.
Failures in public utilities or communications systems will reduce or
eliminate ways to call for emergency assistance. However, maybe more
importantly, multiple incidents will put enormous pressure on emergency
responders, and their resources. Emergency responders will be over
extended, mutual aid may not be available, and response to an incident
will not occur in a timely manner.
Planning for the potential catastrophic incidents related to the
issue of Y2K requires emergency planning and responsive
intercommunication. These skills are enhanced through training and
education efforts developed to address the challenges of Y2K related
issues. Knowledge is key for the emergency response community in order
to deal with any casualties that may come. Public agencies and the
private sector already support training and education for chemical
workers and Hazardous Materials (HAZMAT) emergency responders through
programs which can tailor training modules to specific targeted groups
of responders at the operations, awareness, technician and specialist
levels.
In the chemical and manufacturing industries, the potential exists
for a number of disastrous events to stem from Y2K Non-Compliance.
First, failures in software or embedded microchips within the process
plants may cause process excursions or control problems resulting in
accidents. Second, external Y2K-related problems, such as power outages
may lead to a variety of problems. For example, rapid shutdowns may
result in the triggering of fire suppression systems, causing loss of
water pressure for actual fires, and disarming such systems. Third,
multiple Y2K-related incidents may exceed the capacity of emergency
response organizations to respond.
A fact sheet distributed by the Superfund Labor Health and Safety
Task Force, reported that during the five year period between January
1993 through December 1997, OSHA inspected 2,852 facilities with 1,580
citations written for no emergency response plan being available. There
were 1,305 citations written for plans not containing all necessary
elements and 1,229 citations written for training not addressing
emergency planning and coordination. There were 70 inspections at
Treatment Storage and Disposal facilities in the last five years
resulting in 122 citations being written, 80% involved emergency
response training and planning. Consequently, proper training and
strategies to implement various guidelines, checklists and software
must be provided for emergency responders, local governmental agencies,
chemical and manufacturing industries that focus on environmental
health and emergency response.
Training issues must be addressed, not just as a one-time effort.
We must insure that our emergency response and operations personnel are
fully oriented and qualified to implement alternative strategies and
operational activities. Only with preparation through comprehensive
training will all emergency personnel obtain the critical skills
necessary to take appropriate action and prevent an incident before it
occurs.
Thank you for the opportunity to share our concern with you.
__________
Overview of Responsible Care
Responsible Care is the chemical industry's initiative
for continuously improving health, safety, and environmental quality.
Conceived in 1984 by the Canadian Chemical Producers' Association, the
initiative was brought to the United States by the Chemical
Manufacturers Association (CMA) in 1988 and by SOCMA in 1990. With more
than twenty U.S. Responsible Care Partner Associations and
the spread of Responsible Care to over 40 countries, it has
truly become an industry-wide global initiative.
The following provides an overview of SOCMA's Responsible
Care initiative.
The Responsible Care Initiative
Responsible Care is a continuous improvement initiative
built around a set of ten Guiding Principles (see page 2.5) and six
Codes of Management Practices (see page 2.6) that put the Guiding
Principles into action. The six codes, in order of their implementation
are: 1) Community Awareness and Emergency Response (CAER), 2) Process
Safety, 3) Employee Health and Safety, 4) Pollution Prevention, 5)
Distribution, and 6) Product Stewardship.
Other elements of Responsible Care include: 1) a self-
evaluation process that determines how well companies are applying the
Codes which helps evaluate industry performance, 2) mutual assistance,
and 3) performance improvement measurements.
Responsible Care establishes the following value-added
goals: 1) improved chemical processes, 2) improved customer relations
and service, 3) waste reduction, 4) minimization of accident and
incidents, 5) safety handling, transportation, and storage, and 6)
increased internal communications and heightened public awareness.
Benefits of Implementing Responsible Care
Enhanced environmental, health, and safety performance is the most
obvious benefit of implementing Responsible Care. However,
there are other outcomes to the process. Enhanced operating performance
is another very beneficial result of implementing the program: it is a
value-added investment program.
There is a real input of time, effort, and funds into the start of
the process--however, there are measurable financial, as well as
operating benefits that can be gained by fully implementing the
program. The following are just some of the potential value-added
benefits:
building ties with the local community, government
agencies, and other manufacturers,
reducing the frequency and consequences of worker
incidents,
increasing customer service and satisfaction,
minimizing disruptions and shutdowns from accidents and
worker incidents,
reducing in worker compensation costs,
increasing emergency response preparedness, both on and
off-site,
reducing emissions and waste disposal costs, and
efficient use of labor and equipment resources due to an
integrated approach to process design, construction, operation and
maintenance.
SOCMA's Participation
Helping its members to achieve enhanced performance is one of
SOCMA's primary goals. The Association has adopted the chemical
industry's Responsible Care initiative as its primary
performance improvement program. Using this approach, SOCMA's members
have been able to formalize their ongoing, continuous performance
improvement efforts.
Since becoming a Partner in Responsible Care in 1990,
SOCMA members have been dedicated to environmental, health, and safety
performance improvement. SOCMA's members have voted to require a
commitment to the Responsible Care Guiding Principles and
implementation of the six Codes of Management Practices as a condition
of Active Membership. (SOCMA's membership category for U.S. chemical
manufacturers).
Implementation of the six Codes has been on a phased-in basis
according to the following schedule:
CAER........................1990
Process Safety..............1993
Employee Health & Safety....1996
Pollution Prevention........1997
Distribution................1998
Product Stewardship.........1999
Preparing and submitting annual self-evaluations for each Code is a
requirement for Active Membership in SOCMA. Copies of each Code self-
evaluation are included in this manual for your convenience. The
initial self-evaluation for each Code is due in the year following Code
activation, and annually thereafter.
Responsible Care Guiding Principles
1. To recognize and respond to community concerns about chemicals
and our operations.
2. To develop and produce chemicals that can be manufactured,
transported, used and disposed of safely.
3. To make health, safety, and environmental considerations a
priority in our planning for all existing and new products and
processes.
4. To report promptly to officials, employees, customers and the
public, information on chemical-related health or environmental hazards
and to recommend protective measures.
5. To counsel customers on the safe use, transportation and
disposal of chemical products.
6. To operate our plants and facilities in a manner that protects
the environment and the health and safety of our employees and the
public.
7. To extend knowledge by conducting or supporting research on
health, safety, and environmental effects of our products, processes
and waste materials.
8. To work with others to resolve problems created by past handling
and disposal of hazardous substances.
9. To participate with government and others in creating
responsible laws, regulations, and standards to safeguard the
community, workplace and environment.
10. To promote the principles and practices of Responsible
Care by sharing experiences and offering assistance to others
who produce, handle, use, transport or dispose of chemicals.
The Codes of Management Practices
Community Awareness and Emergency Response (CAER)
The CAER Code is intended to foster community awareness and to
reduce potential harm to employees and the public in an emergency.
Meeting the CAER Code requires a continuing dialogue among facility
managers and their plant neighbors, employees, emergency responders,
interested groups, teachers, and other individuals and organizations in
the community. The Code calls for a continual assessment of public
attitudes toward facilities and requires each facility to evaluate its
outreach program regularly. Further, companies must share all relevant
information with emergency management agencies and other public
facilities so that all planning is coordinated. These plans must be
tested annually. Companies must also plan to help communities recover
from any environmental, health, or safety incidents.
Process Safety
The Process Safety Code is designed to help prevent fires,
explosions, and accidental chemical releases. Companies must conduct
safety reviews of all new and modified facilities before start-up,
maintenance and inspection programs must be documented, and layered
protection systems must be put in place to prevent equipment failures
or human errors from becoming incidents. The Code calls for all
employees to be trained in safety practices, and plants are required to
share their safety knowledge with other facilities, as well as with the
government and the community. It requires input from community
officials and organizations, and requires that safety programs include
contractor employees.
Employee Health and Safety
The goal of the Employee Health and Safety Code is to protect and
promote the health and safety of people working at or visiting member
company work sites. The Code addresses management of occupational
health and safety programs, identifying and assessing hazards,
maintaining employee health, preventing unsafe acts and conditions, and
communicating safe work practices and hazards to employees,
contractors, and visitors.
Pollution Prevention
The Pollution Prevention Code is designed to improve the industry's
performance by seeking 1) ongoing, long-term reductions of all
pollutants released to the environment; 2) steady reduction in the
amount of wastes generated by member companies; and 3) proper
management of remaining wastes. There is a high priority given to
employee and community input in these processes, using the mechanisms
established in the CAER Code. The Code also calls for companies to
promote the pollution prevention concepts with customers, suppliers,
other companies, and the government.
Distribution
The objective of the Distribution Code is to reduce employee,
environmental, and public risks from the shipment of chemicals. This
applies to the storage, handling, transfer, and repackaging of
chemicals in transit. The Distribution Code fosters greater cooperation
among manufacturers, suppliers, carriers, and customers to prevent
incidents and to respond quickly in the case of a transportation
emergency. The Code calls for companies to evaluate the risks in the
chemical distribution systems and the methods they have in place to
minimize those risks; meet or exceed all regulations and industry
standards for chemical distribution; and review the performance of
employees, distributors, carriers, and contractors to ensure they meet
requirements.
Product Stewardship
The purpose of the Product Stewardship Code is to make health,
safety, and environmental protection an integral part of designing,
manufacturing, distributing, and using products, and of recycling and
disposing waste materials. Implementing the Code will affect nearly
every segment of a company, including research and development,
manufacturing, distribution, and sales and marketing. The Code mandates
the sharing of health, safety, and environmental information about the
use, storage, and disposal of products with customers, suppliers,
distributors, and contractors.
__________
Prepared Statement of Geary W. Sikich
ABOUT THE AUTHOR:
Geary W. Sikich is the author of, ``It Can't Happen Here: All
Hazards Crisis Management Planning'', published by PennWell Books. His
second book, ``Emergency Management Planning Handbook'', is published
by McGraw Hill. He is a Principal with Logical Management Systems,
Corp. (LMS) based in Munster, Indiana. Mr. Sikich has over 20 years
experience in management consulting in a variety of fields. He consults
on a regular basis with companies worldwide on crisis management
issues. As a Senior Executive, Mr. Sikich is experienced in human
resource development, strategic planning, competitive intelligence and
crisis management planning in diverse industries. A key player in
developing business solutions for clients worldwide.
Designed world class training system; acclaimed, duplicated
worldwide.
Developed & conducted workshops, seminars & conferences
worldwide.
Directed critical infrastructure vulnerability assessments.
Designed competitive intelligence systems for executive
decision-makers.
Created business continuity management systems for public/
private sector clients.
Guided combined teams to validate numerous clients crisis
management programs.
Internationally recognized speaker, writer and conference leader.
Publications include two books on crisis management and numerous
articles appearing in various print media. Symposium leader for
international conferences and workshops; frequently interviewed for
television and other media. Results oriented leader adept at increasing
revenue, identifying problems, defining solutions and implementing new
processes and procedures. A skillful negotiator, communicator,
motivator.
M.A.-Management, Central Michigan University (completed
courses toward degree)
M.Ed.-Counseling and Guidance, University of Texas; 1981
B.S.-Criminology, Indiana State University; 1973
Who's Who in Executives and Professionals 1997-1998
Life Member, Association of Former Intelligence Officers
Member, American Society for Industrial Security
Member, Union League Club of Chicago
Statement of: Geary w. Sikich
Principal
Logical Management Systems, Corp.
To: US Senate Special Committee on the Year 2000 Technology Problem
Background
At the request of members of the US Senate Special Committee on the
Year 2000 Technology Problem, I have prepared the following statement.
I specialize in crisis management, business continuity management
planning, training and issues analysis for companies and organizations.
I have become involved in the assessment of Year 2000 related issues
for clients, the preparation of Year 2000 contingency plans and
providing advisory services regarding the adequacy of Year 2000
preparedness activities for clients and Year 2000 workshop attendees at
conferences that I have been engaged to speak at.
The following is a brief synopsis of recent speaking engagements
concerning the Year 2000 issue:
Critical Elements: Year 2000...; East West Corporate Corridor
Association, 1998.
How to Prepare Your Year 2000 Crisis Management Team,
International Quality & Productivity Center, 1999.
Integrating Contingency Planning into Your Y2K Business
Continuity Strategy, Institute for Gas Technology, 1999.
Year 2000 Background and Critical Issues, Institute of Gas
Technology, 1999.
Year 2000 Contingency Planning, Institute of Gas Technology,
1999.
Understanding the Y2K Business Continuity Planning Process,
International Quality & Productivity Center, 1999.
Business Continuity Plans: Crisis Management for a Smooth
Transition into the Next Millennium, International Quality &
Productivity Center, 1999.
Auditing Your Year 2000 Contingency Plan, International
Quality & Productivity Center, 1999.
Managing the Rollover Weekend, Drilling Your Year 2000
Emergency Management Plan, International Quality & Productivity
Center, 1999.
Year 2000 How Will It Work, East West Corporate Corridor
Association, 1999.
Managing Crisis at the Speed of Light, Disaster Recovery
Journal Conference, 1999.
Critical Elements, Year 2000, The 21st Century... Are You
Prepared, The Airport Mobility Network Group, Resource Library,
1999.
All Hazards Crisis Management Planning, Airport Professional,
Issue 8, 1999, The Airport Mobility Network Group.
Y2K Expert Testimony: Who will be the Experts, Institute of
Gas Technology, 1999.
Crisis Management Planning Guidelines: Y2K, American Society
for Industrial Security, 1999.
I have authored ``It Can't Happen Here: All Hazards Crisis
Management Planning'', published by PennWell Books in 1993, ``Emergency
Management Planning Handbook'', published by McGraw Hill in 1995, and
now available in a Spanish Language edition, published by McGraw Hill
in 1997.
Logical Management Systems, Corp. provides consulting services to
clients in the Financial, Energy, Telecommunications, Security,
Healthcare, Chemical, Manufacturing, Utilities, Public and Private
Sector.
Objective
The objective of this Statement for Record is to heighten the
awareness of individuals, communities and industries regarding the
potential vulnerabilities facing the Chemical industry sector as a
result of potential Year 2000 systems failures.
Statement
I am pleased to present the following statement regarding Year 2000
contingency preparedness issues facing the chemical industry. Portions
of this statement have been discussed verbally with members of the
Senate Year 2000 Technology Problem Committee staff. This statement
summarizes my experiences in dealing with the potential issues faced by
the industry in preparing for the Year 2000 transition.
The Chemical Industry has recognized the potential for significant
disruption of operations as a result of the Year 2000 date change. Many
companies have sought to develop contingency plans and reduce
vulnerability to the Year 2000 issues. The plans that have been
developed have focused on critical areas such as, potentially affected
operations, management/response organization, plan validation, training
and documentation.
Having conducted evaluations for clients focusing on regulatory
issues, such as, Risk Management Planning, Hazardous Waste Operations
and Emergency Response, Oil Pollution Act and other regulatory driven
initiatives, I have found that six (6) areas of analysis are of concern
with regard to the Year 2000 issue:
1. Organizational Readiness
2. Threat Assessment Review
3. Year Contingency Plan Analysis
4. Documentation and Record-keeping
5. Training and Plan Validation
6. Critical Infrastructure Dependencies
Organizational Readiness
The involvement of the all levels of management within a company in
the Year 2000 contingency planning and emergency preparedness program
is essential to its success. To this end many companies are achieving
their goal of organizational awareness. Such involvement includes
leadership in the development of the program and the direction of
program activities.
The methods of demonstrating leadership in Year 2000 contingency
planning and emergency preparedness program include, but should not be
limited to:
setting priorities
developing policy statements
setting standards
determining program objectives and direction
ensuring that safety related issues are a part of the audit
and appraisals process
establishing reporting relationships at the senior
management/officer level for the Year 2000 contingency planning
and emergency management/response staff
conducting assessment tours and inspections
participation in special Year 2000 contingency planning
meetings
reviewing program Year 2000 contingency planning audits
ensuring that proper involvement and response to
recommendations, at all levels within the company
presenting and attending Year 2000 awareness meetings with
all employees to ensure their level of understanding, concerns
are heard, addressed and demonstrate commitment to a successful
program.
Specific Leadership and Administration issues include:
Year 2000 Contingency Preparedness Policy Development
A corporate policy statement addressing Year 2000 contingency
planning should be developed by all affected entities. This
policy should provide a statement of policy regarding Year 2000
contingency planning and the limits of the contingency planning
effort. The following is an example of a policy statement that
could be used for Year 2000 Contingency Planning.
[COMPANY NAME] Year 2000 Contingency Planning
and Management philosophy is based on three
precepts: Prevention, Preparedness and
Proactive Response. Effective response and
management of incidents are essential to
[COMPANY NAME]'s business philosophy because we
want to minimize the impact of any event on
shareholder value. We are committed to this
goal through a proactive incident management
effort focused on protecting our people,
operations and assets.
Response to incidents affecting [COMPANY
NAME] operations will be coordinated by the
Year 2000 Contingency Management Team supported
by Business Continuity Plans, Staff and
Technology applications. We will comply with
applicable laws and regulations in the
implementation of our crisis response and
management effort.
Senior and Middle Management Participation
The level of participation by Senior and Middle Management, is
essential for the success of any Year 2000 Contingency preparedness
program. One critical aspect to assure the involvement by senior and
middle management will be the development of the Year 2000 policy
statement and the development and presentation of Year 2000 contingency
plan training and awareness materials. It is important to get the
``word out'' to all levels of management within companies. To this end,
the Year 2000 contingency plans and the plan validation programs
established by many companies will provide the basis for integrating
awareness throughout the companies. Information flyers should also be
developed to educate the employees, suppliers and customers on the Year
2000 issues and the activities the company has undertaken to address
Year 2000 contingencies.
Management Guidelines
Management guidelines (protocols) should be developed to assist
management implement the Year 2000 contingency plans. In addition,
guidelines and protocols for answering customer concerns, media
requests and SEC disclosure requirements should also be considered for
development.
Management Audits
Review and approval of the Year 2000 contingency plans and
supporting materials is of critical importance to the assuring the
ability to respond to Year 2000 identified contingencies. Once the Year
2000 contingency plans have been developed and validated they must be
assessed for commitments, evaluated for appropriateness and kept up-to-
date. This can be accomplished by reviewing actual responses, through
the training and plan validation process (drills and exercises) and by
preparing and conducting a detailed audit of the Year 2000 contingency
planning system. A suggested evaluation program, outlined below, should
be designed to assess the Year 2000 contingency plans and the ability
of personnel to complete sequences of critical tasks, under emergency
conditions, using available resources as outlined in the Year 2000
contingency plans and associated materials. The audit approach should
be based on analysis and evaluation of:
1. Program Administration (Plans and Supporting Materials)
2. Year 2000 Contingency Management/Response Organization
3. Year 2000 Contingency Management/Response Training and
Retraining
4. Emergency Facilities and Equipment
5. Plan Implementing Procedures
6. Coordination with External Entities
7. Plan Validation: Drills and Exercises
8. Communications
9. Hazard, Vulnerability, Risk and Issues Evaluation
The ultimate benefits to be gained from implementing the evaluation
program are in terms of integrating the Year 2000 contingency planning
effort into the day to day operations, related programs (internal/
external) and the assurance of adequate management planning and
preparedness for the employees and the general public. In order to
accomplish this task, a periodic evaluation of all operations should be
undertaken. An approach for the audit should generally be to conduct:
1. Personnel Interviews:
The personnel interviews should consist of answering Year
2000 awareness questions related to the operational area they
represent, interviews regarding the knowledge of the extent of
potential hazards, general information on emergency
preparedness, identification of potentially hazardous
situations, record keeping and training.
2. Overview of Written Plans, Policies, Procedures, etc.:
The overview should consist of a comparison of any written
plans, policies, procedures, etc. for consistency with
applicable regulatory and non-regulatory guidance.
3. Site/Facility Analysis:
Site/facility analysis should consist of a periodic walk
through assessments of operating locations to accomplish the
following:
A. Identify equipment and processes that could be affected by
Year 2000 failures.
B. Identify potential areas of vulnerability (internal/
external).
C. Familiarization with the general area conditions.
The ultimate benefits to be gained from this type of evaluation are
in terms of identifying areas in need of attention, establishing a list
of commitments that have to be met and documenting current efforts. The
questions developed for this evaluation program should be assessed on a
periodic basis to ensure they are kept up-to-date.
In planning the Year 2000 contingency plan audit, four elements
should be taken into consideration:
1. What goals did the Year 2000 contingency program set?
2. What goals did company set for emergency management and
response activities?
3. What goals does the Year 2000 contingency audit have?
4. What actions will be taken to resolve Year 2000
contingency audit identified deficiencies?
Year 2000 Reference Library
Companies should establish a Year 2000 reference library should by
formal protocol if necessary. The protocol should define the accepted
and approved sources of information for Year 2000 information. A
clearinghouse should be established to disseminate Year 2000
information throughout the company. This will reduce the amount of
potentially conflicting sources of information and establish a basis
for the Year 2000 contingency planning effort. Suggested sources are
the Securities and Exchange Commission (SEC). Other sources should be
reviewed by management and legal advisors to determine the
acceptability and adequacy of the information presented.
Assignment of Responsibility and Planning Efforts
Responsibility for Year 2000 contingency planning should be
assigned to a designated department and/or specific individual. In this
way accountability for coordinating the planning effort, continuity of
plans and consistency within an organization's planning effort and
resultant plans can be assured. This can serve to reduce the potential
confusion resulting from the simultaneity of events occurring during
the Year 2000 transition period. Year 2000 Contingency Plan operating
procedures and emergency related mutual aid agreements should be
considered for development to support internal plans.
Threat Assessment Review
Many companies have developed risk assessment methodologies based
upon identification of threats, estimation of the probability of the
threat occurring, establishment of forewarning of threat occurrence,
determination of the duration of the effect, impact and establishment
of preventative measures that can be planned and implemented. This
methodology has produced many databases replete with information
regarding functions that may be affected, key contacts within the
companies and the determination of steps to be taken to diminish the
potential impact of the identified threat.
While many companies have produced a valuable tool for assessing
internal risk and the determination of potential threats to operations,
consideration should be given to developing an assessment of potential
scenarios that involve external situations that can impact on the
company and its ability to conduct normal business operations.
One threat that has been considered by many companies from an
internal perspective is embedded systems. However, the failure of
external embedded systems, for example at a wellhead or within a
pipeline distribution system, while not controlled by the company could
have a significant impact on operations. External factors, that present
a potential cascading effect, should be taken into consideration as the
Year 2000 contingency plans are developed.
Embedded systems failures can trigger technological disasters which
can impede and immobilize efforts to address critical infrastructure
disruptions. Infrastructure disruptions in and of themselves be
expected to tax emergency response capabilities to the limit. It is
estimated that there may be from 10 to 25 billion embedded systems in
existence. It is known that some small percentage of these are data
sensitive. Of these, a small but significant percentage are not Year
2000 compliant. Estimates range from 0.2% to over 1%. That could mean
that from 20 million to 250 million embedded systems failures could
occur owing to the Year 2000 related non-compliance problems (source:
The Gartner Group).
These include small failures that could have major impacts.
Malfunctions could occur in all manner of equipment, devices,
appliances and systems found in homes, hospitals, buildings, plants,
facilities and systems. Malfunctions could occur as well in everything
from subway systems to water purification plants, waste water disposal
plants, oil and gas pipelines, oil refineries, oil tankers, off-shore
platforms, chemical plants, manufacturing plans, coal-fired plants,
nuclear power plants, hazardous materials storage facilities,
laboratories, defense facilities (biological & chemical warfare
facilities) and weapons systems of all kinds.
Under Executive Order 13010, certain national infrastructures have
been identified and designated as so vital, that their incapacity or
destruction would have a debilitating impact on the defense or economic
security of the United States. A report by the President's Commission
on Critical Infrastructure Protection (PCCIP), indicates a significant
dilemma facing the United States today is the growin interdependence of
critical infrastructures. For example, water, sewage and public
utilities are commonly found linked together within a city's control
system. The report of the PCCIP states in its introduction:
``The United States is in the midst of a tremendous cultural
change--a change that affects every aspect of our lives. The
cyber dimension promotes accelerating reliance on our
infrastructures and offers access to them from all over the
world, blurring traditional boundaries and jurisdictions.
National defense is not just about government anymore, and
economic security is not just about business. The critical
infrastructures are central to our national defense and our
economic power, and we must lay the foundations for their
future security on a new form of cooperation between the
private sector and the federal government.''
The Critical Infrastructures studied consist of:
Electric and Gas Power Supplies
Gas and Oil
Telecommunications
Banking and Finance
Transportation
Water Supply Systems
Emergency Services
Continuity of Government
The Commission divided its work into five ``sectors'' based on the
common characteristics of the included industries. The sectors are:
Information and Communications
Banking and Finance
Energy (Including Electrical Power, Oil and Gas)
Physical Distribution
Vital Human Services
Of concern in the assessment of threat issues for companies should
be the potential for a government intervention, based on a threat to
national security. Under this scenario, a company could have its assets
commandeered by the government and be dictated to regarding the
distribution of products to users. While this issue is of concern, a
strong effort on the industry's part to establish coordination,
information exchange and an understanding of expectations, agenda and
focus of various entities may serve to assist the industry in the
management of this Year 2000 issue.
In addition to the above threat analysis activities companies
should determine the time critical, time sensitive and time dependent
issues that will affect them during the Year 2000 transition period.
Examples are:
Further investigation of external issues relating to Year 2000
threats, risks and issues on the part of the industry is warranted in
order to evaluate exposures to external factors that pose a threat to
disrupt operations. This can be accomplished through various government
organizations and other Year 2000 working groups sponsored by industry.
Year 2000 Contingency Plan Analysis
An evaluation of Year 2000 contingency plans should be conducted to
determine the viability of the documents and the ability of the
companies to implement the plans. Assessment should focus on:
levels of planning for incident response
integration of incident management and response activities
life safety issues
systematic shutdown of facilities
continuation of vital operations
identification of emergency use equipment needs
identification and protection of vital records
establishment and coordination with organizations and
agencies that would provide assistance in the event of an
incident
programs for reentry and recovery of operations
Assess should also consider:
Administration
How is the Year 2000 contingency preparedness program
administered and who is responsible for coordinating the
planning efforts.
Year 2000 Contingency Plans and Supporting Information
What plans have been prepared and how will they be validated.
Are the Year 2000 contingency plans integrated with the
existing plans established under regulatory agencies
guidelines. Plans should establish a standard format so as to
ensure the integration of departmental efforts.
Year 2000 Contingency Plan Implementing Procedures
Year 2000 Contingency Plans should be augmented by the
development of supporting procedures to aid in the
implementation of the plans. Contingency Plan Implementing
Procedures (CPIPs) should contain specific detailed instruction
and guidance for response to Year 2000 related contingencies.
The CPIPs should assign responsibilities to personnel, and
include flowcharts and checklists where appropriate to improve
contingency management and response.
A suggested format and definition of terms is provided below:
1.0 PURPOSE - A statement that defines the basic purpose of
the procedures, such as: ``This Management Practice provides
guidance and instruction for personnel assigned to plant site
locations''.
2.0 SCOPE - This section describes the specific issues
addressed in the procedure and lists the individuals, by
position description, who generally will implement the
procedure.
3.0 REFERENCES - References to other supporting documents,
technical information and other sources of information are
listed in this section of the procedure.
4.0 DEFINITIONS - With the paucity of acronyms, abbreviations
and foreshortened wordings it is advisable to define any new or
unusual terminology. This section of the procedure also
clarifies any terms as to their meaning.
5.0 RESPONSIBILITIES - A listing of responsibilities, general
information, initial actions and subsequent actions is provided
to assist the individual implement the procedure.
6.0 PROCEDURE - This section contains information pertinent
to the accomplishment of the function or task prescribed in the
procedure.
7.0 FLOWCHART - Any supporting flowcharts, diagrams or other
pictorial representation of steps in the procedure.
8.0 APPROVAL - This section contains the signatures of
approval authorities for the procedure.
The Year 2000 Contingency Plans should introduce concepts which are
expanded upon and supported by Appendices and Contingency Plan
Implementing Procedures. CPIPs, however, will be the tools used to
implement the plans. They can be grouped into four general categories,
as discussed below.
ADMINISTRATIVE CATEGORY
Administrative procedures consist of management guidelines.
These procedures provide guidance and prescribe the manner in
which plan maintenance activities such as, monthly calibration
tests or communications tests are to be accomplished.
INCIDENT CLASSIFICATION CATEGORY
Incident Classification CPIPs provide step-by-step immediate
action procedures for the identification and classification of
the severity of an incident, they should:
Determine the severity of the incident
Determine the extent of activation of the
Emergency Organization
Determine the notification requirements
Determine the protective action
recommendations to be given to the offsite
authorities
INCIDENT MANAGEMENT/RESPONSE ORGANIZATION
Duties of the individuals assigned to the Incident
Management/Response Organization are described in these
procedures. Duties of various personnel who play management or
response roles in during an incident are delineated in these
procedures.
INCIDENT OPERATIONS
Incident Operations procedures provide guidelines for
conducting operations focused on incident mitigation. Step-by-
step instructions to direct specific personnel activities
during an emergency are presented.
REENTRY & RECOVERY
Reentry and Recovery procedures include step-by-step task oriented
sequences for personnel responsible for business recovery and
resumption activities. These procedures assure that appropriate
Recovery Organization personnel and equipment are available when
reentry and recovery operations commence.
Training and Proficiency Demonstrations (Drills and Exercises)
Validation of the Year 2000 contingency plans is of critical
importance. To this end a program for the training of personnel should
be developed, as should a program of plan validation (drills &
exercises). The details for the training and validation program should
be documented in a separate section of the Year 2000 contingency plans.
Communications
Communication protocols should be developed in support of the Year
2000 contingency plans. An assessment of communications interfaces
(technology and human) should be accomplished. The critical nature of
communications to a company's operations, is readily apparent. The
dependency on the telecommunications system to provide operational and
administrative support has been recognized by many companies and
evaluations of communications dependencies are being undertaken. Backup
systems, such as radio and cellular telephones are under investigation.
It should be noted that the general proliferation of telephones in the
United States for the home, office, voice and data have had an impact
on available telephone numbers, that could cause the system to run out
of numbers. This remains one of the critical nodes in the Year 2000
contingency planning process. Protocols should be developed for
communication activities, such as: incident notification (for internal
and external resources), communicating during incidents and alternate
communication methods and equipment.
Emergency Facilities and Equipment
Many companies maintain a Command Center for incident related
operations. An analysis of the adequacy of Command Centers should be
accomplished to determine the vulnerability of equipment to Year 2000
failure/degradation. In addition, it is strongly recommended that the
Year 2000 contingency plans include options for alternate Command
Center locations should the primary Command Center become unusable.
Coordination with External Groups and Agencies
It is highly recommended that the companies in the chemical
industry become involved in coordination with external groups,
companies and governmental agencies to facilitate the Year 2000
expectations of these entities, as well as, determine what support will
be available to them in the transition period should Year 2000
incidents cause a degradation of infrastructures critical to the safe
operation of the company.
Public Information
A critical element of the Year 2000 contingency preparedness
program is the education of the public as to the potential impacts of
Year 2000 on company operations. Consideration should be given to
preparing a public information flyer describing the company's efforts
to address the Year 2000 issue.
Record Keeping
In order to facilitate Year 2000 contingency planning requirements,
a record of all initiatives should be retained. These records will
serve to document the accomplishments, requirements, commitments and
reports relating to various Year 2000 contingency planning program
requirements. The identification of commitments in the areas of Year
2000 compliance requirements, incident preparedness, training and plan
validation is important. The establishment of a defined information
management and commitment tracking system structure will ensure that
documentation will be available when needed.
Senior management must be kept well informed about Year 2000
initiatives. Information must be shared and managed effectively.
Information management is also critical during an incident. The need
for an interactive system to provide information on materials,
personnel, capabilities and processes is essential.
It is advisable to have a system (and adequate back-up systems) in
place that serves to identify, catalog, set priorities and track issues
and commitments relating to Year 2000 contingency planning commitments,
incident management and response activities.
Comprehensive evaluations or audits to verify that the incident
management capability, as well as, physical facilities are in
compliance with standards prescribed in codes, industry or consensus
standards and regulations is necessary. Year 2000 contingency planning
activities can be grouped into eleven categories representing the
contingency management and response program. A database can be prepared
that identifies, tracks and documents commitments within these eleven
categories. The following subsections provide a discussion of each of
the eleven subject categories in greater detail.
PLANS:
All commitments stated in the Year 2000 contingency plans
would be listed under this subject category. Commitments that
have been identified from project files should also be cited as
they apply under this subject category.
FACILITIES:
All commitments relating to the Emergency Facilities (Command
Center, News Center, etc.) should be cited under this category.
Generally, these commitments should be focused upon the design,
construction and habitability aspects as well as the incident
response functions of each facility.
EQUIPMENT:
All commitments regarding emergency use equipment have been
input under this subject category. Equipment commitments
primarily deal with the stocking, inventory, operability,
operability checks, manufacturer information, and the
replenishment of expended or expired equipment and supplies.
COMMUNICATIONS:
Commitments concerned with communications hardware, lines of
communications, notification systems, communications systems
tests and system availability are cited in this subject
category.
TRAINING:
All commitments to provide training for the Incident
Management/Response Organization, other identified emergency
responders and various offsite response organizations are
listed under this heading.
PROFICIENCY DEMONSTRATIONS: DRILLS/EXERCISES:
All commitments for drills, exercises, tabeltop, scenario
development and critiques are presented under this subject
heading.
ORGANIZATION:
Commitments concerned with the Incident Management/Response
Organization, its composition, personnel qualifications and
staffing are cited in this category. Additionally, non-company
emergency organizations may be represented in this category as
well as commitments by the operating subsidiaries that impact
these organizations.
ADMINISTRATION:
Commitments focusing on the continuity operations and
maintenance of the incident management/response capability is
provided under this heading.
PUBLIC INFORMATION:
The focus of the Public Information category is on the prompt
notification, public awareness, public education and news media
commitments.
OFFSITE COORDINATION:
Commitments made to interface and/or support various response
organizations (State, County, Local, Federal and Private) are
cited when it was determined that they had a direct impact on
emergency management/response capability.
A computerized commitment tracking and information management
system, can be designed to monitor the status of Year 2000 contingency
planning commitments. The computerized system can provide a user
friendly structure which allows the company the ability to track
commitments, perform data entry and perform routine database
maintenance. Additionally, the commitment tracking system provides a
``tickler'' that allows for the prompt scheduling and completion of
Year 2000 requirements and other periodic commitments.
A suggested database structure would consist of a categorical
breakdown of commitments as follows:
Item No: A chronological numeric listing of the commitments is
maintained in the database file. In this manner, the number of records
contained in the database is easily ascertained by the user.
Additionally, recurring items have been provided a unique identifier to
assist in identification and sorting.
Responsibility: Identification of the specific individual
responsible for completion of the action item/commitment or the
individual with overall authority for ensuring completion of the
commitment.
Com-Date: Lists the Month, Day, Year that the commitment is
anticipated to be completed.
Status: Open, Closed or Recurring are used to identify the status
of a commitment/action item.
Training and Plan Validation
Effective management of an incident requires a high degree of
competence in the areas of emergency management and response
activities. For the experienced manager, this learning involves the
application of fundamental management principals to the recognition,
evaluation and control of all incident exposures. For the less
experienced manager, it requires reinforcing and expanding their
knowledge of basic management techniques and integrating incident
management practices into those techniques. Year 2000 incident
management training should provide the knowledge each manager needs to
be effective in dealing with the response to Year 2000 related issues,
as well as, business resumption issues.
The establishment of a comprehensive Year 2000 contingency plan
training program can ensure that all staff receive the requisite
training. All personnel and visitors, including those individuals
working on a temporary basis or in a training status, should receive an
orientation on the Year 2000 Contingency Plans, to orient them of their
expected actions and to ensure their safety in the event of an
incident.
Suggested training modules may include, but are not limited to:
Year 2000 Contingency Plan Overview
This training should be provided to all personnel. The
objectives of the training include familiarization of the
student with the background for Year 2000 contingency planning,
the specific Year 2000 contingency plan, Year 2000 contingency
plan activation and implementation; emergency communications
skills, record-keeping requirements and an overview of the
concept of operations.
Incident Management/Response Organization
As appropriate personnel assigned to the Incident Management/
Response Organization should be provided training in their
assigned functions.
In order to fully assess the effectiveness of the training provided
to personnel a program of periodic drills and exercises should be
designed and implemented in accordance with the aforementioned Year
2000 policy guidance. The establishment of a comprehensive drill and
exercise program can provide a system to effectively evaluate the
ability of personnel to implement the Year 2000 contingency plans.
Conclusion
The structure of the Year 2000 contingency plan should provide a
flexible framework, addressing a variety of situations. It is important
that companies in the chemical industry strive to ensure consistency in
the development of their plans.
This statement and the recommendations contained herein are
provided based on my experience in addressing crisis management,
emergency response and business continuity planning issues for a
variety of industries. I feel that the observations and recommendations
presented herein, serve to summarize my perceptions regarding the
current efforts to address contingency planning for the Year 2000. It
is the option of industry management to avail themselves of the
observations and implement these recommendations as they feel
necessary.
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