[Federal Register Volume 71, Number 249 (Thursday, December 28, 2006)]
[Proposed Rules]
[Pages 78276-78332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9903]



[[Page 78275]]

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Part II





Department of Homeland Security





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6 CFR Part 27



Chemical Facility Anti-Terrorism Standards; Proposed Rule

Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / 
Proposed Rules

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DEPARTMENT OF HOMELAND SECURITY

6 CFR Part 27

[DHS-2006-0073]
RIN 1601-AA41


Chemical Facility Anti-Terrorism Standards

AGENCY: Department of Homeland Security.

ACTION: Advance Notice of Rulemaking.

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SUMMARY: Section 550 of the Homeland Security Appropriations Act of 
2007 (``Section 550'') provided the Department of Homeland Security 
with authority to promulgate ``interim final regulations'' for the 
security of certain chemical facilities in the United States. This 
notice seeks comment both on proposed text for such interim final 
regulations and on several practical and policy issues integral to the 
development of a chemical facility security program.

DATES: Written comments must be submitted on or before February 7, 
2007.

ADDRESSES: Comments, identified by docket number or RIN number, may be 
submitted by one of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Mail: Comments by mail are to be addressed to IP/CNPPD/
Dennis Deziel, Mail Stop 8610, Department of Homeland Security, 
Washington DC 20528-8610.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Information Number (RIN) for this 
rulemaking. All comments will be posted without change to http://www.regulations.gov, including any personal information sent with each 
comment. For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the ``Public 
Participation in Rulemaking Process'' heading of the SUPPLEMENTARY 
INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
submitted comments, go to http://www.regulations.gov. Submitted 
comments by mail may also be inspected. To inspect comments, please 
call Dennis Deziel, 703-235-5263, to arrange for an appointment.
    Comments that include trade secrets, confidential commercial or 
financial information, or sensitive security information (SSI) should 
not be submitted to the public regulatory docket. Please submit such 
comments separately from other comments on the rule. Comments 
containing trade secrets, confidential commercial or financial 
information, or SSI should be appropriately marked as containing such 
information and submitted by mail to the individual(s) listed in the 
FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Dennis Deziel, Chief Program Analyst, 
Chemical Security Regulatory Task Force, Department of Homeland 
Security, 703-235-5263.

SUPPLEMENTARY INFORMATION:

Introduction

    Since 2003, the Department of Homeland Security (DHS) has been 
working with its private sector partners in the chemical industry, 
state and local governmental entities and other interested parties on 
chemical facility security issues. Although many companies in the 
chemical industry have initiated voluntary security programs and have 
made significant capital investments in responsible security measures, 
the Secretary of Homeland Security has concluded that voluntary efforts 
alone will not provide sufficient security for the nation.
    Beginning in 2005, through 2006, and most explicitly on September 
8, 2006, the Secretary requested that Congress provide the Department 
of Homeland Security with regulatory authority to establish and require 
implementation of risk-based performance standards for the security of 
our nation's high-risk chemical facilities. Congress took action on 
those requests, and on October 4, 2006, the President signed the 
Department of Homeland Security Appropriations Act of 2007 (the Act), 
which provides the Department of Homeland Security with the authority 
to regulate the security of high-risk chemical facilities. See Pub. L. 
109-295, sec. 550. The Department now intends to implement an 
appropriate regulatory program under Section 550 of that Act as quickly 
and responsibly as possible, focusing its resources first on those 
facilities in our nation that present the highest levels of security 
risk.
    This notice discusses a range of regulatory and implementation 
issues. The program proposed by this notice would be implemented in 
phases, and DHS would address chemical facilities with the most 
significant risk profiles as early in the program as possible. For each 
phase, the program would contain several basic steps:
    <bullet> Chemical facilities fitting certain risk profiles would 
complete a ``Top-screen'' risk assessment methodology accessible 
through a secure Department website. The Department would use this 
methodology to determine if a chemical facility ``present[s] a high 
level of security risk'' and should be covered by this program.
    <bullet> If the Department determines that a chemical facility 
qualifies as ``high risk,'' the Department would require the facility 
to prepare and submit a Vulnerability Assessment and Site Security 
Plan, and would provide technical assistance to the facility as 
appropriate.
    <bullet> Following a facility's submission of these materials, the 
Department would review the submissions for compliance with risk-based 
performance standards. The Department (or when appropriate, a DHS-
certified third-party auditor) would follow up with a site inspection 
and audit.
    <bullet> If the facility's Vulnerability Assessment or Site 
Security Plan is found deficient or if other problems arise, the 
facility could seek further technical assistance from the Department, 
and could consult, object, or appeal depending on the stage of the 
process. If the Vulnerability Assessment and/or Site Security Plan are 
ultimately disapproved, the covered facility would be required to 
revise its plan and resubmit the materials to meet the Department's 
performance standards, or face the penalties and other remedies set 
forth in the statute.
    <bullet> If the covered facility's submissions are approved, the 
security plan is fully implemented and the facility is otherwise in 
compliance, the Department would issue a Letter of Approval to document 
the determination. The Department would also then notify the facility 
of its continuing obligations--based on its level of risk--to maintain 
and periodically update its Vulnerability Assessment and Site Security 
Plan.
    This advance notice describes the details of these steps along with 
a number of policy and implementation issues. We seek comment on all 
aspects of this new regulatory program, including the many policy and 
practical questions integral to the successful implementation of the 
program.

Solicitation of Comment

    Section 550 requires the Secretary of Homeland Security to 
promulgate ``interim final regulations establishing risk-based 
performance standards for security of chemical facilities * * *.'' He 
must do so ``[n]o later than six months'' from the date of enactment of 
this new authority, i.e. by April 4, 2007. The Executive Branch has 
implemented rules under other, similar regulatory

[[Page 78277]]

authorities over the course of years rather than months. See, e.g., 42 
U.S.C. 7412(r)(3) (requiring the promulgation of an initial list of 
chemicals within two years); 42 U.S.C. 7412(r)(7)(B)(i) (requiring 
promulgation of regulation within three years). By directing the 
Secretary to issue ``interim final regulations,'' Congress authorized 
the Secretary to proceed without the traditional notice-and-comment 
required by the Administrative Procedure Act. See, e.g., Jeffrey S. 
Lubbers, A Guide to Federal Agency Rulemaking 114 (4th ed. 2006) 
(citing Omnibus Budget Reconciliation Act of 1987, and stating that 
notice and comment is not required where statute specifically permits a 
regulation to be issued in the interim final form); see also 65 FR 
34,983 (Jun. 1, 2000) (interim final rule for Medicare program issued 
under that authority). Although ``interim final regulations'' may be 
(and often are) issued without prior notice and comment (and the Act 
requires no prior notice or comment period), the Department believes it 
would nevertheless be prudent to seek comment on many of the 
significant issues that will be addressed by such regulations while 
maintaining the aggressive timeline for implementation. An advance 
notice of proposed rulemaking is the typical route to seek comment in 
advance of an NPRM. Here, because Section 550 requires the Secretary to 
issue an interim final rule rather than an NPRM followed by a final 
rule, our advance notice seeks comment on text for an upcoming interim 
final rule. In this respect, this notice serves the purposes usually 
achieved by both an ANPRM and an NPRM. In addition, it is our intention 
to seek further comment with the interim final on additional 
implementation issues, and on any agency guidance that may follow.
    The Department seeks public comment from all interested parties by 
February 7, 2007, on the questions, issues and proposed regulatory 
language identified in this notice. Given the 6-month deadline under 
Section 550 to promulgate an interim final rule, it will be necessary 
to complete that rule and reach conclusions on many of the issues 
raised herein early in 2007. Thus, this February 7, 2007, deadline 
cannot reasonably be postponed.
    This notice is organized as follows: Section I provides a brief 
summary of relevant pre-existing Federal initiatives and regulatory 
authorities; Section II discusses the structure and requirements of the 
statute; Section III describes a proposed ``phased'' implementation 
with an immediate priority on the highest risk chemical facilities; and 
Section IV addresses a range of other legal and programmatic issues.

Table of Contents

I. Brief History of Federal Pre-Existing Chemical Security Tools and 
Programs
    A. DHS Risk Assessment Methodology (RAMCAP), Chemical Buffer 
Zone Protection Program, and Site Assistance Visits
    1. Risk Assessment Methodology (RAMCAP)
    2. Chemical Buffer Zone Protection Program
    3. Site Assistance Visits
    B. U.S. Coast Guard Maritime Security Regulations
    C. Rail Security
    D. Environmental Protection Agency Risk Management Program
    E. Occupational Safety and Health Administration
    F. Chemical Weapons Convention
    G.The Explosives Authority of the Bureau of Alcohol, Tobacco, 
Firearms, and Explosives
II. Structure and Requirements of Section 550
    A. The Mandate to Promulgate Interim Final Regulations ``No 
later than six months after the date of enactment * * *''
    B. Authority to Regulate ``Chemical Facilities'' that Present a 
``High Level of Security Risk''
    C. Determining which Facilities Present a High Level of Security 
Risk
    D. Risk-Based Performance Standards for Security of Chemical 
Facilities
    E. Vulnerability Assessments and the Development and 
Implementation of Site Security Plans for Chemical Facilities
    1. Vulnerability Assessments
    2. Site Security Plans
    3. Alternative Security Programs
    4. Guidance Regarding Site Security Plans
    F. Audits and Inspections
    G. Background Checks
    H. Approval and Disapproval of Vulnerability Assessments and 
Site Security Plans
    I. Remedies
    J. Objections and Appeals
    K. Chemical-terrorism Vulnerability Information
    1. Protection from Public Disclosure
    2. Protection from Disclosure in Litigation
    L. Statutory Exemptions
III. Implementation
    A. Immediate Priority on Highest Risk Facilities
    B. Consultations and Technical Assistance
IV. Other Issues
    A. Third-Party Lawsuits
    B. Regulatory Requirements/Matters
    1. Executive Order 12,866
    2. Regulatory Flexibility Act
    3. Executive Order 13,132: Federalism
    4. Unfunded Mandates Reform Act Assessment
    5. National Environmental Policy Act
V. Proposed Text for Interim Final Rule

I. Brief History of Federal Pre-Existing Chemical Security and Safety 
Programs

    Prior to the enactment of Section 550, the Federal government did 
not have authority to regulate the security of most chemical 
facilities. Over the past three years, the Department has urged 
voluntary enhancement of security at these facilities and provided both 
technical assistance and grant funding for security. In addition, 
through the Coast Guard's Maritime Security regulations, the Department 
has addressed security at certain maritime-related chemical facilities. 
Recently, the Departments of Homeland Security and Transportation have 
cooperated in addressing the security of rail transportation of 
hazardous chemicals.
    Other Federal programs have addressed chemical facility safety, but 
not security: the Environmental Protection Agency (``EPA''), for 
instance, regulates chemical process safety through its Risk Management 
Plan (RMP) program; the Occupational Safety and Health Administration 
(``OSHA'') regulates workplace safety and health at chemical 
facilities; and the Department of Commerce oversees compliance with the 
Chemical Weapons Convention. Finally, the Department of Justice's 
Bureau of Alcohol, Tobacco, Firearms, and Explosives (``ATF'') 
regulates, through licenses and permits, the purchase, possession, 
storage, and transportation of explosives. Because Section 550 will 
build on pre-existing Federal security initiatives and chemical safety 
programs, a brief summary of these pre-existing initiatives and 
programs is appropriate here.

A. DHS Risk Assessment Methodology (RAMCAP), Chemical Buffer Zone 
Protection Program, and Site Assistance Visits

1. Risk Assessment Methodology (RAMCAP)
    For the past two years, the Department has worked with the American 
Society of Mechanical Engineers, with input from many other parties, to 
develop a risk assessment methodology for many elements of our nation's 
critical infrastructure. The methodology is composed of two separate 
parts and can be utilized to perform both a preliminary ``consequence'' 
analysis and a more thorough vulnerability assessment on chemical 
facilities.
    The first segment of the RAMCAP methodology is a screening tool 
known as the Top-screen, and is designed to be used through a secure 
Department Web site. For chemical facilities, the Top-

[[Page 78278]]

screen solicits answers to a series of questions intended to assess the 
level of damage that could result from a terrorist incident at the 
facility. The Top-screen process draws in part on preexisting data from 
the EPA's Risk Management chemical safety program (``RMP,'' discussed 
below). For example: Does the facility operate any RMP Program 2 or 3 
processes? If so, how many persons could be exposed by a toxic release 
worst case scenario? How many persons could be exposed by a flammable 
release worst case scenario? The Top-screen also includes queries 
regarding manufacture and storage of explosives materials, and seeks 
information on quantities of chemical substances and precursors 
addressed by the Chemical Weapons Convention. See 22 U.S.C. 6701. The 
Top-screen process is intended to gather information both to evaluate 
the consequences of a catastrophic explosion or release and to assess 
the possible danger if dangerous chemicals are stolen. A more detailed 
description of the Top-screen process is available as Appendix A.
    The second segment of RAMCAP provides the tools to conduct a 
thorough facility Vulnerability Assessment and could also be utilized 
via a secure website. It has three fundamental steps, each with 
detailed instructions:
    1. Identify the assets on the facility;
    2. Apply specified threat scenarios to each asset to quantify the 
resulting consequences if an attack succeeded; and
    3. Apply the threat scenarios to each asset in light of the 
security measures in place and evaluate the likelihood and the degree 
to which the attack could succeed.
    A detailed description of this process is set forth in Appendix B. 
Note that many responsible facilities have already conducted analyses 
of this type. Such analyses may be acceptable during the initial stages 
of the Section 550 program.
2. Chemical Buffer Zone Protection Program
    The Chemical Buffer Zone Protection Program (Chem-BZPP) is designed 
to identify and implement voluntary protective measures for the area 
outside of a chemical facility's fence, or the ``buffer zone,'' to make 
it more difficult for a potential attacker to plan or launch an attack. 
These plans are intended to develop effective preventive and protective 
measures within the immediate vicinity of high-priority chemical sector 
critical infrastructure targets. The plans also increase the security-
related capabilities of the jurisdictions responsible for the security 
and safety of the surrounding communities. DHS provides funds to 
localities to support the implementation of regional buffer zone plans 
and mitigate the identified vulnerabilities. In fiscal year (FY) 2006, 
the Department awarded $25,000,000 under this program.
    Part of this effort is the BZPP Webcam Pilot Program, a web-based 
program using cameras installed at a few high-consequence chemical 
facilities. These webcams enable local law enforcement and DHS to 
conduct remote surveillance of the buffer zone surrounding each 
facility during times of elevated threat to help identify any terrorist 
surveillance and planning activities and link incidents across 
facilities.
3. Site Assistance Visits
    Upon request, DHS conducts ``inside-the-fence'' site assistance 
visits to critical chemical facilities for a variety of reasons--a 
facility presents a high level of risk, the owner requests it, or the 
facility or sector is under threat. The site visits are conducted by 
DHS protective security professionals, subject-matter experts, and 
local law enforcement, along with the facility's owners and operators. 
These visits facilitate security vulnerability identification and 
mitigation discussions between government and industry. The visits also 
provide facilities and localities with valuable information on how to 
better protect the facility from a terrorist attack. After a visit, DHS 
suggests protective measures and issues a report to the facility to 
bolster its protective measures.

B. U.S. Coast Guard Maritime Security Regulations

    The Maritime Transportation Security Act of 2002 (MTSA) (Pub. L. 
107-295, Nov. 25, 2002) enacted chapter 701 of Title 46, U.S. Code and 
required the Secretary of Homeland Security to issue regulations to 
strengthen the security of American ports and waterways and the ships 
that use them. This authority, in addition to other grants of 
authority, served as the basis for a comprehensive maritime security 
regime. Through these rules, the Coast Guard issued regulations to 
ensure the security of vessels, facilities, and other elements of the 
maritime transportation system. Part 105 of title 33 of the Code of 
Federal Regulations imposed requirements on a range of maritime 
facilities, including hazardous material and petroleum facilities and 
those fleeting facilities that receive barges carrying, in bulk, 
cargoes regulated by Subchapters D and O of Chapter I, Title 46, Code 
of Federal Regulations or Certain Dangerous Cargoes.
    Under the Coast Guard's maritime security regulations, these 
facilities are required to perform security assessments, and then, 
based on these assessments, develop security plans, and implement 
security measures and procedures in order to reduce the risk of and to 
mitigate the results of any security incident that threatens the 
facility, its personnel, the public, the environment, and the economy.

C. Rail Security

    The Departments of Transportation (DOT) and Homeland Security both 
have authority to regulate rail transportation. The Federal hazardous 
materials transportation law authorizes the Secretary of Transportation 
to establish regulations for the safe transportation, including 
security, of hazardous materials in intrastate, interstate, and foreign 
commerce. See 49 U.S.C. 5101 et seq., as amended by section 1711 of the 
Homeland Security Act of 2002 (Pub. L. 107-296, Nov. 25, 2002) and 
Title VII of the Safe, Accountable, Flexible and Efficient 
Transportation Equity Act: Legacy for Users (SAFETEA-LU) (Pub. L. 109-
59, Aug. 10, 2005). DHS, through TSA, has authority to ``oversee the 
implementation, and ensure the adequacy, of security measures at 
airports and other transportation facilities.'' 49 U.S.C. 114(f)(11).
    Pursuant to DOT's authority, the Pipelines and Hazardous Materials 
Safety Administration (PHMSA) has issued, and the Federal Railroad 
Administration (FRA) enforces, various regulations that impact rail 
security. HM-232 requires covered persons--those who offer certain 
hazardous materials for transportation in commerce and those who 
transport certain hazardous materials in commerce--to develop and 
implement security plans. At a minimum, these security plans for 
transportation must address personnel security, unauthorized access for 
the transportation-related areas of facilities, and en route security 
for shipments of the covered hazardous materials. See 49 CFR 172.800, 
172.802, and 172.804. In addition, PHMSA has issued regulations to 
reduce the risks to safety and security of leaving loaded rail cars 
unattended for periods of time. Pursuant to 49 CFR 174.14 and 174.16, a 
carrier must forward each shipment of hazardous materials ``promptly 
and within 48 hours (Saturdays, Sundays, and holidays excluded)'' after 
the carrier accepts the shipment at the originating point or the 
carrier receives the

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shipment at any yard, transfer station, or interchange point.
    Together with the Department of Transportation, DHS has recently 
taken many steps regarding security in the transportation of hazardous 
materials by rail. On June 23, 2006, DOT and DHS jointly issued a set 
of twenty-four ``security action items'' for the freight rail carriers 
of materials that are ``toxic by inhalation'' (TIH) (these materials 
are also referred to as ``poisonous by inhalation'' (PIH)). DOT and 
DHS, in consultation with the industry, developed these action items by 
observing and assessing the security-related practices that rail 
carriers use. The action items addressed three phases of security: (1) 
System Security, (2) En-route Security, and (3) Access Control.
    In August 2006, the Federal government and the industry agreed upon 
``supplemental'' security action items including measures to address 
four critical areas: (1) The establishment of secure storage areas for 
rail cars carrying TIH materials, (2) the expedited movement of trains 
transporting rail cars carrying TIH, (3) the positive and secure 
handoff of TIH rail cars at point of interchange and at points of 
origin and delivery, and (4) the minimization of unattended loaded tank 
cars carrying TIH materials. The rail carriers will submit these plans 
to TSA for review, and TSA will subsequently monitor and evaluate the 
success of the plans in reducing the standstill (dwell) time of TIH 
shipments in high threat urban areas.
    On December 21, 2006, DOT and TSA issued notices of proposed 
rulemaking that would impose additional obligations, including new 
requirements regarding transportation of PIH materials. See DOT's 
notice of proposed rulemaking titled ``Enhancing Rail Transportation 
Safety and Security for Hazardous Materials Shipments'' at 71 FR 76834 
and TSA's notice of proposed rulemaking titled ``Rail Transportation 
Security'' at 71 FR 76851. The proposed regulations would cover 
railroad carriers that transport certain hazardous materials, including 
bulk shipments of PIH materials. Among other measures, the proposed DOT 
rule would require railroad carriers to analyze the safety and security 
risks of the routes used. It would also require clarifications of the 
current security plan requirements to address en route storage, delays 
in transit, and delivery notification. In addition, it would require 
rail carriers to conduct pre-trip visual inspections at the ground 
level of rail cars containing PIH materials to detect improvised 
explosive devices (IEDs) or other evidence of tampering.
    The proposed TSA rule would require those rail hazardous materials 
shippers and receivers, along with freight and passenger railroad 
carriers and rail transit systems, to (1) Designate a rail security 
coordinator to serve as the primary contact for the receipt of 
intelligence information and for other security-related activities; (2) 
allow TSA and other authorized DHS officials to enter and inspect 
property, facilities, equipment, and operations; and (3) report 
incidents, potential threats, and significant security concerns to DHS. 
In addition, TSA proposes to impose two additional requirements on PIH 
rail hazardous materials shippers and receivers, as well as freight 
railroad carriers that transport PIH: to (1) Provide to TSA, upon 
request the location and shipping information of rail cars within their 
physical custody or control that contain PIH materials, and (2) provide 
for a secure chain of custody and control of rail cars that contain PIH 
materials.

D. Environmental Protection Agency Risk Management Program

    Pursuant to the Clean Air Act (CAA), EPA's Risk Management Program 
requires chemical facilities with listed chemicals in amounts exceeding 
prescribed threshold limits to implement an accident prevention 
program, an emergency response program, prepare a five-year accident 
history, and submit to EPA a risk management plan (RMP). See 42 U.S.C. 
7412(r). These requirements are intended to prevent accidental releases 
and minimize the consequences of such releases by focusing on chemicals 
that in the event of an accidental release, could reasonably be 
expected to cause death, injury, or serious adverse effects to human 
health and the environment. On January 31, 1994, EPA promulgated a list 
of regulated substances and thresholds that identify stationary sources 
subject to the accidental release prevention regulations. 59 FR 4,478. 
Two years later, EPA issued a rule requiring the owners of these 
sources to develop accidental release programs and summaries of these 
plans. 61 FR 31,668 (Jun. 20, 1996).
    An RMP contains information on the regulated substances handled at 
the facility, an analysis of the potential consequences of hypothetical 
accidental chemical releases (i.e., ``worst-case'' and ``alternative 
release'' scenarios), a five-year accident history, and information 
about the chemical accident prevention and emergency response programs 
at the facility. In 1999, more than 15,000 U.S. facilities submitted 
RMP information to EPA. Regulated facilities are required to update 
their RMPs at least every five years, and more frequently if specified 
changes occur.
    As the RMP chemical list and threshold limits were established by 
EPA based on a chemical's potential for acute offsite health impacts in 
the event of a large air release, the Department believes that a number 
of the facilities regulated under this program may also qualify as 
``high-risk'' facilities covered under Section 550. Although the RMP 
data are extremely useful, the Department is mindful of the fact that 
they contain information related only to a specified list of industrial 
chemicals that present air release hazards. The RMP data do not provide 
information relating to other potentially ``high-risk'' facilities, 
such as certain facilities covered by the Chemical Weapons Convention 
or certain other facilities that might be targeted for chemical theft 
or diversion.

E. Occupational Safety and Health Administration

    The Occupational Safety and Health Administration (OSHA), an agency 
within the U.S. Department of Labor, regulates conditions and hazards 
affecting the health and safety of employees in the workplace. OSHA's 
mission is to prevent work-related injuries, illnesses, and deaths. 
OSHA regulates employers through specific enumerated safety standards 
(see, e.g., 29 CFR part 1910) and through a ``general duty clause'' 
(see 29 U.S.C. 654(a)(1)), which requires a safe workplace even in the 
absence of specific standards. OSHA enforces these standards by 
inspecting workplaces and by issuing citations for violations.
    OSHA has developed and enforces several standards that ensure 
chemical safety in the workplace. The Process Safety Management of 
Highly Hazardous Chemicals standard contains requirements for the 
management of hazards associated with processes using highly hazardous 
chemicals. See 29 CFR 1910.119. The Hazardous Waste Operations and 
Emergency Response Standard (HAZWOPER) covers emergency response 
operations for the release of, or substantial threats of releases of, 
hazardous substances without regard to the location of the hazard. See 
29 CFR 1910.120 and 1926.65.
    In addition, OSHA has several other regulations that protect 
employees who are exposed to chemicals in the course of their work. In 
Subpart Z to 29 CFR 1910, OSHA establishes permissible exposure limits 
(PELs) for toxic and hazardous substances. Employers must measure 
employee exposure to these

[[Page 78280]]

substances and must take measures to limit employee exposures when the 
exposures reach impermissible limits. In Subpart I to 29 CFR 1910, OSHA 
establishes requirements for personal protective equipment (PPE). 
Employers must conduct hazard assessments. Where employees are exposed 
to impermissible exposures (which may, in some cases, be chemical 
exposures), employers must provide employees with proper PPE to assist 
in controlling the hazard.
    Another standard related to chemical safety is OSHA's Hazard 
Communication Standard (HCS). The HCS was promulgated to provide 
workers with the right to know the hazards and identities of the 
chemicals they are exposed to while working, as well as the measures 
they can take to protect themselves. The HCS requires chemical 
manufacturers and importers to evaluate the hazards of the chemicals 
they produce and import. It also requires chemical manufacturers and 
importers to prepare labels and material safety data sheets (MSDSs) to 
convey the hazard information to their downstream customers. All 
employers with hazardous chemicals in their workplaces must have labels 
and MSDSs for their exposed workers and must train exposed workers to 
handle the chemicals appropriately. See 29 CFR 1910.1200.

F. Chemical Weapons Convention

    The United States is a party to the Chemical Weapons Convention 
(CWC), which prohibits the development, production, stockpiling, and 
use of chemical weapons. The Convention entered into force on April 29, 
1997, and was implemented in the United States by statute at 22 U.S.C. 
6701 et. seq., with regulations at 15 CFR 710 et. seq. The CWC does not 
prohibit production, processing, consumption, or trade of related 
chemicals for peaceful purposes, but it does establish a verification 
regime to ensure such activities are consistent with the object and 
purpose of the treaty. The CWC requires reporting and on-site 
inspections that are triggered when quantitative threshold activity 
levels are exceeded. The CWC monitors chemicals in three lists, or 
schedules, and certain ``unscheduled discrete organic chemicals.''
    Schedule 1 includes toxic chemicals with few or no legitimate uses 
that are developed or used primarily for military purposes. Examples of 
schedule 1 chemicals include nerve agents, such as Sarin, and blister 
agents, such as Mustard and Lewisite. Schedule 2 includes chemicals 
that can be used for chemical weapons production, but that also have 
certain legitimate uses. Schedule 2 chemicals are not produced in large 
commercial quantities, and these include certain chemicals used to 
manufacture fertilizers and pesticides. Schedule 3 chemicals are those 
that can be used for chemical weapons production, but also have 
significant legitimate uses. Schedule 3 chemicals are produced in large 
commercial quantities and include chemicals used to manufacture paint 
thinners, cleaners, and lubricants.
    As noted, the CWC imposes declaration and on-site inspections 
requirements upon industry when production, processing, or consumption 
exceeds certain thresholds. Inspections under the CWC are conducted to 
assess the risk and guide future routine inspections. In addition, 
inspections are conducted to verify the consistency with the 
declarations of the levels of production, processing, or consumption. 
These inspections also seek to confirm the absence of undeclared 
Schedule 1 chemicals.

G. The Explosives Authority of the Bureau of Alcohol, Tobacco, 
Firearms, and Explosives

    ATF is an enforcement and regulatory organization responsible for, 
among other things, the investigation and prevention of Federal 
offenses involving the unlawful use, manufacture, and possession of 
explosives. ATF regulates, through licenses and permits, the purchase, 
possession, storage, and transportation of explosives. See generally 27 
CFR Part 555. Specifically, ATF explosives regulations govern commerce; 
licensing of manufacturers, importers, and dealers; issuance of 
permits; business by licensees and operations by permittees; storage; 
and the records and reports required of licensees and permittees. 27 
CFR 555.1. Each year, ATF issues the List of Explosives subject to 
these explosives requirements. See, e.g., 70 FR 73,483 (Dec. 12, 2005).
    Facilities that possess or store explosives (including 
manufacturing facilities) must also be properly licensed by ATF. See 27 
CFR 555.41 et seq. For facilities that possess or store listed 
explosives, ATF requires certain safety precautions, including specific 
requirements governing the actual storage of the materials. See 27 CFR 
555.201 et seq. ATF also prohibits shipment, transport, or possession 
of any explosive material by ``prohibited persons,'' including a person 
under indictment or convicted of a crime punishable by imprisonment for 
a term exceeding one year; a fugitive from justice; an unlawful user of 
controlled substance; or ``has been adjudicated a mental defective.'' 
Id. at 555.26(c), 555.49. ATF may conduct an investigation to confirm 
that an applicant is entitled to a license. Id. ATF will also conduct a 
background check on all persons and employees who are authorized to 
possess explosive materials as part of their employment. See 27 CFR 
555.33.

II. Structure and Requirements of Section 550

    With the authority under Section 550, the Department can now fill a 
significant security gap in the country's anti-terrorism efforts. 
Section 550 of the Act is a compact two-page set of mandates 
establishing the parameters of the Federal government's first 
regulatory program to secure chemical facilities against possible 
terrorist attack. Each subsection and sentence of this provision has 
significant consequences for the structure and content of the 
regulatory program.

A. The Mandate to Promulgate Interim Final Regulations ``No later than 
six months after the date of enactment * * *''

    As discussed above, applicable statutes do not require the 
Department to seek comment prior to issuing these regulations, but we 
believe public comment will be very helpful in formulating the interim 
final rule and structuring the program. Cf. Administrative Conference 
of the United States Recommendation 76-5 (when it is necessary to make 
a rule effective immediately, agencies should give the public the 
opportunity to submit post-promulgation comments) (cited in Michael 
Asimow, Nonlegislative Rulemaking and Regulatory Reform, 1985 Duke L.J. 
381, 426). An interim final rule has the same legal effect as a final 
rule. See, e.g., Career College Ass'n v. Riley, 74 F.3d 1265, 1268 
(D.C. Cir. 1996) (stating that interim final rule is final for purposes 
of statute requiring adoption of final rule by statutory date). In this 
regard, this notice discusses a number of issues related to 
promulgating chemical facility security regulations and invites 
comments on these issues. This notice includes proposed regulatory text 
which represents the Department's initial preference unless otherwise 
identified, but the Department also seeks comment on proposals and 
ideas discussed in the preamble but not contained in the regulatory 
text because the Department is interested in comments on alternative 
approaches.

[[Page 78281]]

    The Department is currently considering a number of procedural 
questions that relate to the authority it has been granted. An initial 
question is whether the Department is required to finalize the interim 
regulations in light of the express language of 550(b), which provides 
that these interim regulations will apply until ``interim or final 
regulations promulgated under other laws'' are in effect. Pub. L. 109-
295, Oct. 4, 2006 (emphasis supplied). We believe that the answer to 
that question is no; Congress gave the Department the authority to 
issue regulations in the interim final rule only; it did not 
contemplate that such regulations be ``finalized'' under this 
authority. It is important to note that these ``interim'' regulations 
will nevertheless have the full effect of law as if they were final. 
See e.g., Career College Ass'n v. Riley, 74 F.3d 1265, 1268 (D.C. Cir. 
1996).
    A second issue is whether the Department can revise the interim 
final regulations issued under Section 550. Commentators have argued 
that the regulations cannot be revised since 550(a) and (b) indicate 
that the regulations must be issued ``no later than six months after 
the date of enactment'' and ``shall apply until'' the end date 
contemplated by Section 550(b). We believe the better view is that the 
regulations can be revised after the six month timeframe.
    A third issue is what type of future legislation is necessary to 
replace the interim final rule under Section 550(b). Certainly, Section 
550 could be superseded or extended in either an appropriations bill or 
in authorization legislation. If a future appropriations bill continued 
funding for the Section 550 program beyond that period, the Department 
could consider that future funding for the program as an extension of 
the ``authority provided by this section.''

B. Authority To Regulate ``Chemical Facilities'' that Present a ``High 
Level of Security Risk''

    A fundamental question posed by Section 550 is which facilities it 
covers. Section 550 specifies that the provision ``shall apply to 
chemical facilities that, in the discretion of the Secretary, present 
high levels of security risk.'' The terms ``chemical facilities'' and 
``high levels of security risk'' are not specifically defined in 
Section 550. Both terms have, however, been used in two prior 
legislative proposals with more explicit indications of their meaning. 
See H.R. 5695, 109th Cong. (2006), S. 2145, 109th Cong. (2006). 
Although the Department is not bound to interpret these terms in 
concert with language of prior unenacted legislative proposals, those 
prior proposals can provide helpful context on this specific 
definitional issue.
    In H.R. 5695, the term ``chemical facility'' refers to any facility 
that the Secretary has determined to possess more than a threshold 
amount of a potentially dangerous chemical. See H.R. 5695, 109th Cong. 
sec. 2 (2006) (adding section 1802(b)(2) and subsequent sections in the 
Homeland Security Act). ( S. 2145 uses different terms to a similar 
effect.). In neither instance is a ``chemical facility'' limited to a 
chemical manufacturing facility, a chemical distribution facility, or 
any other single specific type of facility that uses or stores 
potentially dangerous chemicals. Instead, the question of what 
constitutes a chemical facility turns not on the name or type of 
facility at issue, but instead on whether the facility uses, stores or 
otherwise possesses dangerous chemicals, and in what amount. The 
Department believes that a similar meaning of ``chemical facility'' is 
appropriate in implementing Section 550. Thus, subject to certain 
statutory exclusions which are discussed below in section II.L., the 
Department proposes to define ``chemical facility'' as ``any facility 
that possesses or plans to possess, at any relevant point in time, a 
quantity of a chemical substance determined by the Secretary to be 
potentially dangerous or that meets other risk-related criterion 
identified by the Department.'' See proposed 6 CFR 27.100. We invite 
comment specifically on this interpretation or any alternative 
definitions of the term ``chemical facility.''
    Of course, the term ``chemical facility'' is only significant in 
relation to other text in the statute. Section 550 also specifies that 
regulations promulgated under its authority are only applicable to a 
``chemical facility'' that, ``in the discretion of the Secretary, 
presents [a] high level[] of security risk.'' Not all chemical 
facilities present a high level of security risk. (Indeed, not all 
``chemical facilities'' on the RMP list are likely to present a high 
level of security risk.) Both H.R. 5695 and S. 2145 had specific 
provisions distinguishing the universe of all ``chemical facilities'' 
from the subset of ``high risk'' chemical facilities. H.R. 5695 would 
have required that ``at least one of the tiers established by the 
Secretary for the assignment of chemical facilities * * * shall be a 
tier designated for high-risk chemical facilities.'' 109th Cong. sec. 2 
(2006) (proposed 6 U.S.C. 1802(c)(4)). Similarly, although S. 2145 
identified the regulated chemical facilities as those with chemical 
substances of concern at sufficient threshold quantities, that bill 
also contained an instruction for the Secretary to identify separately 
a smaller subset of those facilities as high risk chemical facilities. 
S. 2145, 109th Cong. sec. 3(e) (2006). Thus, in both prior legislative 
proposals, Congress contemplated that only a subset of all facilities 
with threshold quantities of certain chemical substances would also 
qualify as ``high risk'' chemical facilities.
    The Department believes that the phrase ``high level of security 
risk'' in Section 550 was likewise intended to apply only to a subset 
of the total population of ``chemical facilities.'' Under Section 550, 
the Secretary is explicitly given discretion to determine which 
chemical facilities fall within this subset, and thus which chemical 
facilities the Department will regulate. See Pub. L. 109-295, sec. 
550(a) (2006) (``such regulations shall apply to chemical facilities 
that, in the discretion of the Secretary, present high levels of 
security risk''). See also 5 U.S.C. 701(a)(2) (precluding judicial 
review if ``agency action is committed to agency discretion by law''). 
See also Webster v. Doe, 486 U.S. 592 (1988); Heckler v. Chaney, 470 
U.S. 821, 830 (1985) (recognizing the exception to the presumption of 
agency reviewability in 5 U.S.C. 701(a)(2)); Steenholdt v. FAA, 314 
F.3d 633 (D.C. Cir. 2003); Baltimore Gas & Elec. Co. v. FERC, 252 F.3d 
456, 459 (D.C. Cir. 2001); Haig v. Agee, 453 U.S. 280 (1981); Merida 
Delgado v. Gonzales, 428 F.3d 916 (10th Cir. 2005) (finding that the 
Attorney General's national security determination was not reviewable 
under the APA, where the authorizing statute provided no meaningful 
standard against which to judge the agency's action, the court did not 
have the necessary expertise to make the determination, and the 
Executive Branch has broad discretion to protect national security).

C. Determining Which Facilities Present a High Level of Security Risk

    As a practical matter, the Department must utilize an appropriate 
process to determine which facilities present sufficient risk to be 
regulated. The Department may draw on many sources of available 
information, including existing Federal data and lists addressing 
particularly hazardous chemicals and particular chemical facilities. 
Such lists include the EPA RMP list (discussed above); the schedule of 
chemicals from the Convention on the Development, Production, 
Stockpiling and Use of Chemical Weapons and Their

[[Page 78282]]

Destruction, also known as the Chemical Weapons Convention or CWC 
(discussed above); the hazardous materials listed in Department of 
Transportation's Hazardous Materials Regulations (see e.g. 49 CFR 
172.101); and the TSA Select Hazardous Materials List. The Department 
may also seek and analyze information from many other sources, 
including from experts in the industry, from state or local governments 
or directly from facilities that may qualify as high-risk. The 
Department requests comment on appropriate sources of information or 
methodologies for evaluating chemical facility risks. The Department 
also requests comments on whether, to the extent it looks to the nature 
of particular chemicals to classify facilities, classifications should 
be based on a ``hazard-class'' approach rather than classifications 
based on particular chemicals.
    As discussed above, the Department has worked with the American 
Society of Mechanical Engineers (ASME) and others to design a RAMCAP 
``Top-screen'' process for determining the potential security risk 
posed by many types of critical infrastructure facilities, including 
chemical facilities. The Department proposes to employ a risk 
assessment methodology system very similar to this RAMCAP Top-screen 
process to determine whether a facility qualifies as high-risk under 
Section 550, and seeks comment on how such a process--as described 
above and in Appendix A--should be employed for that purpose.
    The proposed regulation would permit the Department to implement 
this type of Top-screen risk analysis process to screen facilities. The 
proposed language interprets the statutory phrase ``present[s] high 
levels of security risk'' to apply to a facility that, in the 
discretion of the Secretary, would present a high risk of significant 
adverse consequences for human life or health, national security or 
critical economic assets if subjected to a terrorist attack. See 
proposed 6 CFR 27.100, below. As noted, the statute gives the Secretary 
unreviewable discretion to make this determination. See Pub. L. 109-
295, secs. 550(a), (b), Oct. 4, 2006.
    A separate question is whether the Secretary can compel facilities 
that have not yet been deemed ``high risk'' to complete a risk 
assessment methodology such as the RAMCAP Top-screen, or punish them 
for failure to do so. In other words, can the Secretary mandate 
information submissions from a broad range of chemical facilities in 
order to screen facilities and determine which will qualify as high 
risk?
    There are two arguments that the Secretary has such authority under 
Section 550. First, the authority to determine which facilities qualify 
as ``high risk'' implies necessary authority to obtain information to 
make that determination. See, e.g., United States v. Construction 
Products Research, Inc., 73 F.3d 464, 470 (2d Cir. 1996) (``at the 
subpoena enforcement stage, courts need not determine whether the 
subpoenaed party is within the agency's jurisdiction or covered by the 
statute it administers''); Equal Employment Opportunity Commission v. 
Sidley Austin Brown & Wood, 315 F.3d 696, 699-701 (7th Cir. 2002). 
Second, Section 550 states explicitly that the Secretary ``shall audit 
and inspect chemical facilities for the purposes of determining 
compliance with the regulations issued pursuant to this section.'' 
Since this provision can be read to permit the Department physically to 
inspect ``chemical facilities'' regardless of whether they qualify as 
``high risk,'' the Department should impliedly have the less dramatic 
authority to obtain preliminary information for the same purpose. 
Indeed, the use of a Top-screen process will be a less onerous 
imposition for many facilities that may not, after due consideration, 
present high levels of security risk.
    The following approach to screening facilities is reflected below 
in the proposed rule text:
    <bullet> The Department could contact chemical facilities 
individually to request that they complete the process and could 
publish a notice requesting that all facilities fitting a certain 
profile (based on quantity of certain chemicals on site, hazard 
classification, or other criteria) complete an online Department risk 
assessment methodology (similar to the RAMCAP Top-screen) within a 
reasonable period.
    <bullet> If any facility fitting the profiles identified in the 
notice or individually contacted by the Department fails to complete 
the risk assessment methodology within a reasonable period of time 
after receiving notification from the Department, the Department may, 
after attempting to consult with the facility, reach a preliminary 
determination, based on the information then available (which may 
include the facility's failure to complete the Top-screen process), 
that the facility ``presumptively presents a high level of security 
risk.''
    <bullet> The Department would then issue a notice to the entity of 
this determination and, if necessary, order the facility to complete 
the Top-screen process. If the facility then fails to do so, it may be 
subject to penalties pursuant to Section 550(d), audit and inspection 
under Section 550(e) or, if appropriate, the remedy available under 
Section 550(g). See proposed Sec.  27.305, 245, 310.
    <bullet> If the facility completes the Top-screen process and is 
not then considered to present a high level of security risk, its 
status as ``presumptively high risk'' will terminate, and the 
Department will issue a notice to the facility to that effect.
    The Department requests comments on this proposed process and the 
draft regulation at Sec. Sec.  27.200 and 27.205 below.
    In order to carry out this approach, the Department will need to 
identify the types or classes of facilities that should complete Top-
Screen for screening purposes. To that end, the Department requests 
comments on whether the Department should request that:
    <bullet> RMP facilities complete the Top-screen;
    <bullet> Certain facilities subject to the Chemical Weapons 
Convention complete the Top-screen;
    <bullet> Any other type or description of facilities complete the 
Top-screen.

The Department also anticipates permitting any chemical facility to 
voluntarily complete the Top-screen risk assessment process if the 
facility has not been notified or contacted by DHS for such screening.

D. Risk-Based Performance Standards for Security of Chemical Facilities

    Among other things, Section 550 requires the Department to issue 
interim final regulations ``establishing risk-based performance 
standards for chemical facilities.'' The terms ``risk-based'' and 
``performance standards'' both carry significant meaning.
    The term ``performance standards'' has a long and well-known 
history. See Cary Coglianese et al., Performance-Based Regulation: 
Prospects and Limitations in Health, Safety, and Environmental 
Protection, 55 Admin. L. Rev. 705, 706-07 (2003). The term has 
repeatedly been defined: Performance standards

* * * state[] requirements in terms of required results with 
criteria for verifying compliance but without stating the methods 
for achieving required results. A performance standard may define 
functional requirements for the item, operational requirements, and/
or interface and interchangeability characteristics. A performance 
standard may be viewed in juxtaposition to a prescriptive standard 
which may specify design requirements, such as materials to be used,

[[Page 78283]]

how a requirement is to be achieved, or how an item is to be 
fabricated or constructed.

OMB Circular A-119 (Feb. 10, 1998); see also Coglianese, Performance-
Based Regulation, 55 Admin. L. Rev. at 709:

A performance standard specifies the outcome required, but leaves 
the specific measures to achieve that outcome up to the discretion 
of the regulated entity. In contrast to a design standard or a 
technology-based standard that specifies exactly how to achieve 
compliance, a performance standard sets a goal and lets each 
regulated entity decide how to meet it.

Note also that Executive Order 12,866 specifies the use of performance 
standards:

Each agency shall identify and assess alternative forms of 
regulation and shall, to the extent feasible, specify performance 
objectives, rather than specify the behavior or manner of compliance 
that regulated entities must adopt.

Exec. Order 12,866, 58 FR 51,735 (Oct. 4, 1993), as amended by Exec. 
Order 13258, 67 FR 9385 (Feb. 28, 2002).
    Here, Section 550 specifies that the required ``performance 
standards'' must be ``risk-based.'' Although the term ``risk-based'' is 
not specifically defined in Section 550, the language of Section 550 
along with other recent legislative activity yield an understanding of 
the ``risk-based'' standards. The term ``risk-based'' modifies 
``performance standard'' and indicates that the performance standards 
established under Section 550 will mandate the most rigorous levels of 
protection and regulatory scrutiny for facilities that present the 
greatest degrees of security risk. Prior legislative proposals on 
chemical security would have required this result expressly through 
risk-based tiering of facilities based on the potential affects on 
human health caused by a terrorist attack at a facility, potential 
impact on national security, or potentially critical economic 
consequences. See H.R. 5695, 109th Cong. sec. 2 (2006), S. 2145, 109th 
Cong. (2006). In many of those prior proposals, the Department would 
have been required to analyze relative risk first, sort facilities into 
appropriate risk-based tiers, then create standards requiring more 
robust levels of protection for higher risk tiers. In addition, prior 
legislative proposals specified more frequent regulatory reviews, 
inspections, and security plan updates for higher risk facilities.
    The Department believes that the ``risk-based performance 
standards'' and the Section 550 Program should indeed incorporate risk-
based tiering. As addressed above, Section 550 provides the Department 
with authority to regulate those chemical facilities ``that, in the 
discretion of the Secretary, present high levels of security risk.'' 
Thus, the risk-based tiers would differentiate and create tiers among 
those facilities that, as described above, qualify as presenting ``high 
levels of security risk'' and are thus ``covered facilities.'' The 
Department seeks comment on this notion of risk-based tiering among 
high-risk facilities. Specifically:
    <bullet> How many risk-based tiers should the Department create?
    <bullet> What should be the criteria for differentiating among the 
tiers?
    <bullet> What types of risk should be most critical in the tiering?
    <bullet> How should the performance standards differ among risk-
based tiers?
    <bullet> What additional levels of regulatory scrutiny (e.g. 
frequency of inspections, plan reviews, and updates) should apply to 
each tier?
    The Department would establish the risk-based performance standards 
through the regulatory language below and intends to issue guidance 
periodically regarding compliance with the standards. Please note that 
specific security performance variables in the standards among tiers 
for the covered facilities are likely to contain sensitive information 
regarding covered facility vulnerability or security. Thus, certain 
elements of guidance on the application of these standards by tier will 
be provided to covered facilities pursuant to the information 
protections provisions of Section 550.

E. Vulnerability Assessments and the Development and Implementation of 
Site Security Plans for Chemical Facilities

    The first sentence of Section 550 requires the Department to 
mandate that ``high risk'' chemical facilities, known here as ``covered 
facilities,'' perform Vulnerability Assessments and develop and 
implement Site Security Plans.
1. Vulnerability Assessments
    A Vulnerability Assessment is an examination of how a covered 
facility would address specific types of possible terrorist threats. 
The assessment also examines the aspects of the covered facility that 
pose the most significant vulnerabilities to terrorist attack. The 
Department has worked with its partners to develop a methodology for 
this purpose which may be refined to fit the needs of this program's 
Vulnerability Assessment program. The methodology is described in 
detail in Appendix B. The Department seeks comment on how this 
methodology should be refined to serve as a basis for Vulnerability 
Assessments under Section 550.
    Covered facilities, those that qualify as ``high risk'' under 
Section 550, will be required to complete and submit Vulnerability 
Assessments. DHS will review each Vulnerability Assessment, and the 
Department may also scrutinize the Vulnerability Assessments in the 
course of a facility audit (discussed infra). In addition, a covered 
facility Vulnerability Assessment will serve two other central 
purposes: (1) The Department will use the results of Vulnerability 
Assessments to confirm that covered facilities have been assigned to 
the appropriate risk-based tiers; and (2) Each covered facility's Site 
Security Plan (discussed below) will be required to address each of the 
vulnerabilities identified in the Vulnerability Assessment. See Pub. L. 
109-295, sec. 550(a), Oct. 4, 2006 (``Provided further, That such 
regulation shall permit each facility, in developing and implementing 
Site Security Plans, to select layered security measures that, in 
combination, appropriately address the Vulnerability Assessment and the 
risk-based performance standard for security for the facility.'') 
Covered facilities also have continuing obligations, which vary based 
on their risk-based tier, to maintain and periodically update their 
Vulnerability Assessment.
    As noted, the Department will sort the covered facilities into 
tiers, based on risk. The Department may have three or four tiers, with 
the highest risk facilities in tier one. The tiering decisions will be 
based on a number of factors, including information from the Top-
screen, intelligence information, and information from other 
appropriate sources. As discussed below in a section II. K., the 
Department considers the methods for determining these tiers to be 
sensitive anti-terrorism information that may be protected from further 
disclosure.
    Many chemical facilities have already performed Vulnerability 
Assessments under models that are similar in purpose and effect to the 
RAMCAP methodology identified above. For a number of covered 
facilities, particularly in the initial year of the program, these 
Vulnerability Assessments will be acceptable in lieu of completing the 
Department's vulnerability analysis. Through the Alternative Security 
Program (ASP) provisions described herein, the proposed regulation will 
permit the Assistant Secretary to accept existing chemical facility 
Vulnerability Assessments, subject to any necessary revisions or 
supplements, where the

[[Page 78284]]

assessments are sufficiently similar to the Department's process to be 
effective. The Department is considering accepting any Vulnerability 
Assessments methodologies that are certified by the Center for Chemical 
Process (CCPS) as equivalent to the CCPS Methodology; and will review 
other Vulnerability Assessments submitted as ASPs. See proposed 6 CFR 
27.215(a).
2. Site Security Plans
    Under Section 550, the Department must also require that ``high 
risk'' chemical facilities develop and implement ``Site Security 
Plans.'' The statute specifies that the Department ``shall permit each 
facility, in developing and implementing Site Security Plans, to select 
layered security measures that, in combination, appropriately address 
the Vulnerability Assessment [for the facility] and the risk-based 
performance standards for security for the facility.'' This sentence 
identifies two critical statutory mandates.
    First, as indicated, a Site Security Plan must address both the 
``Vulnerability Assessment'' for the covered facility and the 
applicable ``risk-based performance standards.'' To address the 
Vulnerability Assessment, the plan must identify and describe the 
function of the measures the covered facility will employ to address 
each of the facility's vulnerable areas. Focusing on those vulnerable 
areas, the Site Security Plan must then address specific modes of 
potential terrorist attack and how each would be deterred or otherwise 
addressed. For example, a facility must select, develop and describe 
security measures intended to address potential attacks involving: (1) 
A VBIED (vehicle borne improvised explosive device); (2) a water-borne 
explosive device (if applicable); (3) an assault team; (4) 
individual(s) on the premises with explosives or a firearm, or (5) 
theft of certain chemicals; and (6) the possibility of insider or cyber 
sabotage.
    In addition, a covered facility's Site Security Plan must identify 
how the layered security measures selected by the covered facility meet 
the Department's risk-based performance standards. Although this 
process can be different for each facility and will vary depending on 
the unique risks presented in each, the performance standards will 
typically require covered facilities to develop and explain security 
measures to:
    <bullet> Secure and monitor the perimeter of the facility;
    <bullet> Secure and monitor restricted areas or potentially 
critical targets within the facility;
    <bullet> Control access to the facility and to restricted areas 
within the facility by screening and/or inspecting individuals, 
deliveries, and vehicles as they enter; including,
    [cir] Measures to deter the unauthorized introduction of dangerous 
substances and devices that may facilitate an attack or actions having 
serious negative consequences for the population surrounding the 
facility; and
    [cir] Measures implementing a regularly updated identification 
system that checks the identification of facility personnel and other 
persons seeking access to the facility and that discourages abuse 
through established disciplinary measures;
    <bullet> Deter vehicles from penetrating the facility perimeter, 
gaining unauthorized access to restricted areas or otherwise presenting 
a hazard to potentially critical targets;
    <bullet> Secure and monitor the shipping and receipt of hazardous 
materials from the facility;
    <bullet> Deter theft or diversion of potentially dangerous 
chemicals;
    <bullet> Deter insider sabotage;
    <bullet> Deter cyber sabotage, including by preventing unauthorized 
onsite or remote access to critical process controls, Supervisory 
Control And Data Acquisition (SCADA) systems, and other sensitive 
computerized systems;
    <bullet> Develop and exercise an emergency plan to respond to 
security incidents internally and with assistance of local law 
enforcement and first responders;
    <bullet> Maintain effective monitoring, communications and warning 
systems, including,
    [cir] Measures designed to ensure that security systems and 
equipment are in good working order and inspected, tested, calibrated, 
and otherwise maintained;
    [cir] Measures designed to regularly test security systems, note 
deficiencies, correct for detected deficiencies, and record results so 
that they are available for inspection by the Department; and
    [cir] Measures to allow the facility to promptly identify and 
respond to security system and equipment failures or malfunctions;
    <bullet> Ensure proper security training, exercises, and drills of 
facility personnel;
    <bullet> Perform appropriate background checks on and ensure 
appropriate credentials for facility personnel, and as appropriate, for 
unescorted visitors with access to restricted areas or potentially 
critical targets;
    <bullet> Escalate the level of protective measures for periods of 
elevated threat;
    <bullet> Address specific threats, vulnerabilities, or risks 
identified by the Assistant Secretary for the particular facility at 
issue;
    <bullet> Report significant security incidents to the Department;
    <bullet> Identify, investigate, report, and maintain records of 
significant security incidents and suspicious activities in or near the 
site;
    <bullet> Establish official(s) and an organization responsible for 
security and for compliance with these standards;
    <bullet> Maintain appropriate records; and
    <bullet> Address any additional performance standards the Assistant 
Secretary may specify.
    The types and intensity of measures necessary to satisfy these 
standards will depend, of course, on the risk-based tier of the covered 
facility at issue. Covered facilities will also have a continuing 
obligation, which will vary based on their risk-based tier, to maintain 
and periodically update their Site Security Plan.
    Aside from the performance standards identified in proposed Sec.  
27.230, the Department will also consider adopting other performance 
standards from the following meriting security regulatory provisions: 
33 CFR 105.250 (Security systems and equipment maintenance); 33 CFR 
105.255 (Security measures for access control); 33 CFR 105.260 
(Security measures for restricted areas); 33 CFR 105.275 (Security 
measures for monitoring); 33 CFR 105.280 (Security incident 
procedures). The terms of these provisions, if adopted, would need 
modification. For example, the provisions related to security measures 
for restricted areas identifies such areas to include ``[s]hore areas 
immediately adjacent to each vessel moored at the facility.'' 33 CFR 
105.260. The Department requests comments on whether these or other 
MTSA regulatory provisions should be adopted in modified form. The 
Department also requests specific comments on how, if adopted, the 
Department should modify these provisions.
    Section 550 also strikes a careful balance between the Department's 
regulatory authority and a covered facility's discretion to select 
security measures. Three separate provisions are relevant to this 
balance. As noted above, the term ``performance standards'' has long 
been defined to ``specif[y] the outcome required, but leave[] the 
specific measures to achieve that outcome up to the discretion of the 
regulated entity.'' See above, Coglianese, Performance-Based 
Regulation, 55 Admin. L. Rev. at 709. The statute also mandates that 
the Department ``shall

[[Page 78285]]

permit each facility * * * to select layered security measures * * * '' 
to address its vulnerabilities and the performance standards. Pub. L. 
109-295, sec. 550(a), Oct. 4, 2006 (emphasis supplied). Further, the 
statute specifically prohibits the Department from rejecting a Site 
Security Plan, because it does not incorporate a specific type of 
security measure: ``[T]he Secretary may not disapprove a Site Security 
Plan submitted under this section based on the presence or absence of a 
particular security measure.'' Id. (emphasis supplied).
    The meaning of these three provisions was not in dispute at the 
time of Congress's Conference on the Appropriations Bill on September 
29, 2006. Indeed, as Representative Markey and others noted, ``the 
Department of Homeland Security is prohibited from disapproving of a 
facility's security plan because of the absence of any specific 
security measure.'' See 152 Cong. Rec. H7907 at H7913 (daily ed. Sept. 
29, 2006).
    Although the Department may not require that a covered facility 
select a specific measure to enhance its security, the Department may 
``disapprove a Site Security Plan if [the plan] fails to satisfy the 
risk-based performance standards established by this section.'' Pub. L. 
109-295, sec. 550(a), Oct. 4, 2006. The Department understands Section 
550 to require a fairly straightforward process: The Department may 
disapprove a Site Security Plan for failing to satisfy the risk-based 
performance standards, but may not mandate that the covered facility 
cure the deficiency by implementing one particular security solution. 
In other words, the Department cannot take the position that only one 
type of action or measure can meet the performance standards. Nor can 
the Department indirectly compel the covered facility to choose a 
particular measure preferred by the Department by ruling out all other 
possible alternatives. (Thus, the Department may not engineer the 
performance standards to permit only one actual security option for a 
covered facility.) In practical terms, this means that covered 
facilities will have the opportunity to determine how to remedy a 
deficient plan. Thus, following a Site Security Plan ``disapproval,'' 
the Department will permit the covered facility to select a different 
and more robust combination of security measures and present its plan 
again. The Department will then judge the revised resubmitted plan 
against the performance standards. The covered facility must meet the 
security outcome required in the performance standards, but shall be 
given appropriate latitude in how to reach that outcome.
    The proposed regulations create a system for review and approval or 
disapproval of Site Security Plans consistent with this language of 
Section 550. See proposed 27.240. The Department seeks comment on how 
this proposed process could be improved consistent with the statute.
3. Alternative Security Programs
    Section 550 expressly anticipates that covered facilities may 
prefer to submit Alternative Security Programs (ASP) established by 
private sector entities, state, or local governments. Pub. L. 109-295, 
Oct. 4, 2006. Section 550 gives the Secretary discretion to approve 
such Alternative Security Programs when the Secretary finds that the 
program meets the requirements of the interim final rule. In the rule 
text offered below, we define Alternative Security Program as ``a 
third-party or industry organization program, a state or Federal 
government program or any element of aspect thereof that the Assistant 
Secretary has determined provides an equivalent level of security to 
that established by this subchapter.''
    It is possible that an appropriate ASP could be used in part or in 
whole, including in the place of a Vulnerability Assessment or a Site 
Security Plan, or both, depending on the nature of the ASP. The 
Department may choose to approve or disapprove an ASP for a specific 
covered facility or on a broader scale by approving or disapproving an 
industry association or government program as an ASP for use in 
accordance with this rule.
    Under the Alternative Security Program provisions in proposed 
27.235, the Secretary may specifically designate existing programs, 
Vulnerability Assessments, and Site Security Plans completed thereunder 
as satisfactory under Section 550. The Department will begin accepting 
requests for approval of existing Alternative Security Programs on 
December 28, 2006. Such requests should be made to the Assistant 
Secretary. Guidance for such submissions will be made available on the 
Department's Web site.
4. Guidance Regarding Site Security Plans
    Although the Department may not mandate any particular security 
measure, it may issue guidance specifying what types of measures, if 
selected, would presumptively satisfy the performance standards. Such 
guidance would identify options for meeting the standards but would not 
mandate any particular choice of measures to meet the performance 
standards. A covered facility would always be permitted to select other 
measures (whether contemplated by the guidance or not) that could 
satisfy the performance standards. The Department intends to seek 
public comment prior to issuance of such guidance to the extent 
consistent the level of information protection contemplated by the 
statute.

F. Audits and Inspections

    Section 550(e) gives the Department the authority to audit and 
inspect chemical facilities in order to determine compliance with its 
requirements. This section imposes an affirmative duty on chemical 
facilities to cooperate with authorized DHS officials and allow 
inspections and audits. DHS expects that it will carry out this audit 
and inspection authority through the Assistant Secretary for 
Infrastructure Protection and his designees, or for certain lower risk 
tiers of facilities, through appropriate third party auditors. The 
Department is considering a program for certain tiers of facilities 
involving the certification and use of these Third-Party Auditors. See 
proposed Sec.  27.245.
    DHS (or, in appropriate cases, a DHS-certified Third-Party auditor) 
will conduct inspections of each covered facility before issuing final 
approval for a Site Security Plan. DHS could also conduct audits and 
inspections outside of the Site Security Plan approval cycle in exigent 
circumstances. By its terms, this inspection authority extends to all 
chemical facilities. Although it is possible that a facility could be 
inspected to determine whether it presents a high security risk under 
the statute, the proposed rule suggests a different protocol in most 
cases. See, e.g., proposed 6 CFR 27.200(c).
    Generally speaking, DHS will conduct inspections at reasonable 
times and in a reasonable manner given all of the circumstances 
surrounding the particular chemical facilities' operations and the 
threat information that is available to DHS at any given time. 
Following promulgation of the interim final rule, the Assistant 
Secretary will issue guidance to those officials and inspectors who 
will be conducting inspections and will closely monitor the results of 
such inspections. This ensures that there will be uniformity in 
inspection procedures and in Departmental enforcement of these 
regulations.
    During inspections of chemical facilities, authorized DHS officials 
(or third party auditors under certain circumstances) may inspect 
property or

[[Page 78286]]

equipment, view and/or copy records, and audit records and/or 
operations. DHS expects that it will conduct inspections during regular 
business hours of 9 a.m. to 5 p.m. DHS will provide facility owners 
with advance notice of inspections, except where the Under Secretary or 
Assistant Secretary determines that exigent circumstances preclude 
notice and personally approves such an inspection. The circumstances 
leading the Under Secretary or Assistant Secretary to approve an 
unannounced inspection might include threat information warranting 
immediate action.

G. Background Checks

    A proposed standard on personnel surety would require covered 
facilities to ``perform appropriate background checks on and ensure 
appropriate credentials for facility personnel, and as appropriate, for 
unescorted visitors with access to restricted areas or potentially 
critical targets.'' The Department believes that this component of the 
security standards will enhance security in what would otherwise be a 
significant potential vulnerability. In crafting and enforcing this 
standard, the Department understands that many facilities covered under 
these regulations already perform background checks on employees and 
those who have access to the facilities. The Department therefore 
encourages comment from industry, labor unions, and individuals on 
their experiences with this subject.
    The Department is considering several components of this issue, 
including the following: (1) The individuals for whom background checks 
would be conducted (whether that would include employees with access to 
restricted areas of the facility, all employees, unescorted visitors, 
all individuals with access to the facility or any combination of the 
above); (2) The timing of this requirement particularly as it applies 
to employees (i.e., whether a background check should be conducted in 
association with the hiring process and, if so, how to address this 
requirement for current employees); (3) The type of background check 
that should be conducted and therefore the type of personally 
identifiable information that would be required of these individuals, 
such as biometrics. Background checks might include a terrorism name 
check against the consolidated Terrorist Screening Database, a 
fingerprint-based check against terrorism and/or criminal history 
records, or a broader law enforcement or immigration status check; (4) 
Whether the government should conduct these checks or whether the 
industry could use authorized third parties to conduct the checks. The 
Department requests comments on these issues.
    In another context, the Department will require background checks 
for all individuals having access to ``secure areas'' of the maritime 
transportation system when those individuals are not accompanied by 
someone who already has a sufficient background check. See 46 U.S.C. 
70105(a); see also 71 FR 29,396 (May 22, 2006) (notice of proposed 
rulemaking to implement the Transportation Worker Identification 
Credential (``TWIC'') program in the maritime sector). Would an access 
restriction such as that in the proposed TWIC program be appropriate in 
the context of covered chemical facilities? Should any segment of 
chemical facility personnel participate in TWIC or a similarly 
structured program? The Department requests comments on these 
questions.
    Second, the Department will consider appropriate grounds for 
denying access or employment to individuals when their background check 
reveals an anomaly. In a different context, the Department has 
developed a list of ``disqualifying crimes,'' as part of a threat 
assessment process, that prevent individuals from gaining access to 
certain facilities or privileges. See 46 U.S.C. 70105(c); 71 FR 29396 
(May 22, 2006) (proposing a list of disqualifying crimes for Hazardous 
Materials Endorsements (HME) and the Transportation Worker 
Identification Credential (TWIC) program); see also 27 CFR 555.26(c) 
(ATF prohibited persons criteria). Should the background check 
standards used in the HME and TWIC contexts apply to chemical facility 
security programs? (Preliminarily, the Department believes that any 
person possessing a valid TWIC card would have undergone sufficient 
background checks for purposes of the Section 550 security standards.)
    The Department will consider, as one option, the background check 
process employed by ATF. See 27 CFR 555.33. In this process, licensees 
submit to ATF the names and identifying information for persons and 
employees authorized to possess explosive materials in the course of 
employment. ATF then conducts a background check and provides a 
``letter of clearance'' or a written determination that the individual 
should not hold a position requiring the possession of explosive 
materials. This process also includes an appeals process. See 27 CFR 
555.33(b). The Department requests comments on whether this type of 
process, along with an associated fee charged to facility owners and 
operators would be appropriate.

H. Approval and Disapproval of Vulnerability Assessments and Site 
Security Plans

    Section 550 states that ``the Secretary shall review and approve 
each vulnerability assessment and site security plan required under 
this section.'' See Pub. L. 109-295, sec. 550(a). To implement this 
provision of the statute, and consistent with the implementation plan 
discussed herein, the Department will require all covered facilities to 
submit Vulnerability Assessments and Site Security Plans to the 
Department. The Department will review and approve or disapprove each 
Vulnerability Assessments in accordance with proposed Sec.  27.215. If 
the Department approves the Vulnerability Assessment, the Department 
will issue a letter to the covered facility so stating.
    After a review of the Site Security Plan, the Department will 
preliminarily approve it or disapprove it. In the case of a preliminary 
approval, the Department will issue a Letter of Authorization to the 
covered facility. After preliminarily approving a Site Security Plan, 
the Department will inspect each facility in order to determine 
compliance with the requirements of this part. (The inspection 
provisions are discussed more fully above). After issuing a Letter of 
Authorization, the Department will schedule an inspection of the 
facility. After the inspection, if the Department concludes that the 
Site Security Plan addresses the vulnerabilities identified in the 
Vulnerability Assessment, satisfies the risk-based performance 
standards, and has been satisfactorily implemented, the Department will 
issue a Letter of Approval to the covered facility.
    If a Vulnerability Assessment or Site Security Plan fails to 
satisfy the specified, ``risk-based performance standards,'' the 
Department will disapprove the relevant document. See Pub. L. 109-295, 
Sec. 550(a) (``the Secretary may disapprove a site security plan if the 
plan fails to satisfy the risk-based performance standards established 
by this section''). If the Department concludes that the Site Security 
Plan has not been satisfactorily implemented, the Department will 
consult with the covered facility as provided in proposed 27.240(b) and 
schedule a second inspection.
    When disapproving the Vulnerability Assessment or Site Security 
Plan, the Department will provide the facility with a written 
explanation as to why the

[[Page 78287]]

Department disapproved the assessment or plan. Taking into account the 
nature of the facility and other relevant circumstances, the Department 
will also specify a date by which the facility must provide to the 
Department a modified Vulnerability Assessment or Site Security Plan. 
If a facility fails to provide an acceptable Vulnerability Assessment 
or Site Security Plan by the specified date, the Department may issue 
an Order Assessing Civil Penalty under proposed Sec.  27.305.
    As with other elements of implementing Section 550, however, the 
implementation of the receipt, review, and approval of Vulnerability 
Assessments and Site Security Plans will proceed in a phased approach 
based on the tiering of covered facilities. See proposed Sec.  27.230. 
The Department will provide covered facilities with a schedule 
identifying timing requirements for submitting and updating 
Vulnerability Assessments and Site Security Plans under proposed 
Sec. Sec.  27.215 and 27.225, as well as the timing, frequency, and 
nature of the inspections required under proposed Sec.  27.245.
    Facilities in Tier One must submit Vulnerability Assessments to the 
Department within 60 calendar days. These facilities must submit Site 
Security Plans within 120 calendar days.
    The Department will also require that covered facilities update or 
renew their Vulnerability Assessments and Site Security Plans on a 
regular basis or as needed basis. The timing for this requirement will 
also depend upon the tiering of covered facilities. In general, the 
Department believes that Tier One facilities should update and renew 
their Vulnerability Assessments and Site Security Plans each year; Tier 
two facilities should update and renew their Vulnerability Assessments 
and Site Security Plans on two-year cycles; and any additional tiers 
should update and renew their Vulnerability Assessments and Site 
Security Plans on three-year cycles. For individual facilities, and 
based on information concerning those particular facilities, the 
Department may determine that more or less frequent update and renewal 
cycles are appropriate. The Department seeks comment on this strategy 
for updating and renewing vulnerability assessments and site security 
plans.

I. Remedies

    The proposed regulation specifies the remedies that the Department 
can use to achieve compliance with the requirements of this part. At 
the most basic level, the Department can issue an Order for Compliance 
pursuant to proposed Sec.  27.300. The Assistant Secretary may issue 
such an Order for any instance of noncompliance, such as a chemical 
facility's refusal to complete a Top-screen, failure to allow DHS to 
conduct an inspection, or failure to update a Site Security Plan.
    Where the Department finds that there is a repeated pattern of 
noncompliance or egregious instances of noncompliance with the 
requirements of this part, the Department may issue civil penalties of 
not more than $25,000 for each day during which the violation continues 
(see 550(d) and 49 U.S.C. 70119(a)) and/or order chemical facilities to 
cease operations (see section 550(g)). The Department considers the 
cease operations order to be an extraordinary authority and would use 
it only so along as other remedial provisions hereunder could not 
achieve compliance.
    The proposed requirements in Sec.  27.305 and Sec.  27.310 specify 
the methods by which DHS will issue civil penalties and cease operation 
orders. Proposed Sec.  27.315 outlines general requirements that apply 
to all orders, including orders for compliance, assessing civil 
penalty, and to cease operations. Of note, the proposed regulation 
provides that all of these orders are inoperative while an appeal is 
pending under Sec.  27.320 and that an order issued under this subpart 
does not constitute final agency action until a chemical facility 
exhausts all appeals or the time for such appeals has lapsed. Chemical 
facilities must exhaust all appeals specified in this regulation before 
pursuing an action in Federal District Court. As noted, the Department 
recognizes that an Order to Cease Operations would likely be litigated 
immediately after issuance. This authority would be utilized when no 
other options will achieve the required result. At the same time, the 
Department recognizes the necessity and importance of these tools to 
foster incentives for compliance.
    Finally, as the Department indicates in the proposed regulation, 
DHS may issue appropriate guidance and necessary forms for the issuance 
of Orders under this subpart. Such guidance might include procedures 
for, notifications made, and meetings conducted pursuant to Sec. Sec.  
27.300, 27.305, 27.310, and 27.315.
    In using these administrative remedies, the Department has sought 
to include several opportunities for review of Departmental decisions, 
including opportunities for chemical facilities to consult with the 
Department, to present additional evidence, to defend against any 
alleged violations, and to explain its efforts to rectify alleged 
violations. The Department recognizes that these are powerful tools and 
accordingly wants to ensure that there are sufficient mechanisms in 
place for facilities to respond to the use of these tools. The 
Department seeks comment on its proposed requirements for the use of 
these administrative remedies.

J. Objections and Appeals

    This rule proposes to provide chemical facilities with various 
opportunities throughout the process to object to a Departmental 
decision. The Department intends for the process to be as simple and 
quick as possible but recognizes that the review needs to be 
meaningful. The proposed rule provides chemical facilities with two 
mechanisms with which to challenge a Departmental decision, an 
objection and an appeal.
    The basic mechanism is called an ``objection.'' A chemical facility 
may object to (1) a determination that the facility presents a high 
level of security risk, (2) its placement in a risk-based tier, and/or 
(3) a disapproval of its Site Security Plan. To do so, a chemical 
facility must file an objection according to the procedures specified 
in the pertinent section--either 6 CFR 27.205(c) ``Determination that a 
Chemical Facility Presents a High Level of Security Risk--Objection,'' 
6 CFR 27.220(b) ``Tiering--Objection,'' or 6 CFR 27.240(c) ``Review and 
Approval of Vulnerability Assessments and Site Security Plans--
Objection to Disapproval of Site Security Plan.'' Under the scheme for 
these proposed regulatory provisions, a chemical facility files an 
Objection and may request a meeting, and the objection could be 
addressed in as few as 20 days.
    The other review mechanism available to chemical facilities is an 
appeal. The Department recognizes that certain matters, such as a final 
determination disapproving a Site Security Plan or the issuance of an 
Order, can be of significant consequence. As a result, these matters 
require a more lengthy review. To that end, the Department is proposing 
to provide chemical facilities with an opportunity to appeal any Order 
issued under this regulation and any determination disapproving a Site 
Security Plan. Proposed Sec.  27.320(a)(1) and (2) allows chemical 
facilities to appeal to the Under Secretary and General Counsel for 
Site Security Plan disapprovals and all Orders except Orders to Cease 
Operations. Proposed Sec.  27.320(a)(3) allows chemical facilities to 
appeal to the Deputy Secretary for Orders to Cease Operations. The

[[Page 78288]]

adjudicating official may then affirm, revoke, or suspend a 
determination or Order.
    Also of note in this section, any decision made by an adjudicating 
official under Sec.  27.320(c) of this section constitutes final agency 
action. In addition, the failure of a chemical facility to file an 
appeal in accordance with the procedures and time limits contained in 
this section results in the Assistant Secretary's determination or 
issuance of an Order becoming final agency action. Finally, a chemical 
facility will need to exhaust the appeal processes specified in these 
regulatory provisions before pursuing an action in Federal District 
Court. The Department requests comment on the proposed process for 
objections specified in Sec.  27.205(c), Sec.  27.220(b), Sec.  
27.240(c), and Sec.  27.320, including comment on specific provisions 
in the process and the adequacy of these procedures generally.

K. Chemical-Terrorism Vulnerability Information

    Section 550(c) of the Homeland Security Appropriations Act of 2007 
provides the Department with the authority to protect from 
inappropriate public disclosure any information developed pursuant to 
Section 550, ``including vulnerability assessments, site security 
plans, and other security related information, records, and 
documents.'' In considering this issue, the Department recognized that 
there are strong reasons to avoid the unnecessary proliferation of new 
categories of sensitive but unclassified information, consistent with 
the President's Memorandum for the Heads of Executive Departments and 
Agencies of December 16, 2005, entitled ``Guidelines and Requirements 
in Support of the Information Sharing Environment.'' With Section 
550(c), however, Congress acknowledged the national security risks 
posed by releasing information relating to the security and/or 
vulnerability of high risk chemical facilities to the public generally. 
For all information generated under the chemical security program 
established under Section 550, Congress gave the Department broad 
discretion to employ its expertise in protecting sensitive security and 
vulnerability information. Accordingly, the Department proposes herein 
a category of information for certain chemical security information 
called Chemical-terrorism Security and Vulnerability Information (CVI).
    Congress also recognized that, to further the national security 
interests addressed by Section 550, the Department must be able to 
vigorously enforce the requirements of Section 550, and that these 
efforts may include the initiation of proceedings in federal district 
court. At the same time, it is essential that any such proceedings not 
be conducted in such a way as to compromise the Department's ability to 
safeguard CVI from public disclosure. For this reason, Congress 
provided that, in the context of litigation, the Department should 
protect CVI more like Classified National Security Information than 
like other sensitive unclassified information. This aspect of Section 
550(c) has no analog in other sensitive unclassified information 
regimes.
1. Protection From Public Disclosure
    In setting forth the minimum level of security the Department must 
provide to CVI, Section 550(c) refers to 46 U.S.C. 70103, which was 
enacted by the Maritime Transportation Security Act of 2002: 
``Notwithstanding any other provision of law and subsection (b), 
information developed under this section * * * shall be given 
protections from public disclosure consistent with similar information 
developed by chemical facilities subject to regulation under section 
70103 of title 46, United States Code.'' (Emphasis supplied.) Section 
70103(d) provides that ``information developed under this chapter 
[pertaining to Port Security] is not required to be disclosed to the 
public.'' As discussed below, by regulations existing at the time 
Congress enacted Section 550, security plans issued pursuant to 46 
U.S.C. 70103 constitute Sensitive Security Information (SSI), the 
public disclosure of which is heavily regulated. See 49 CFR 
1520.5(b)(2)(ii). It is the Department's view that by requiring the 
Department's handling of CVI to be ``consistent with'' information 
covered under 46 U.S.C. 70103, Congress intended CVI to receive a level 
of security not inconsistent with that provided to SSI. Yet the 
Department also believes that Section 550(c) provides the Department 
with broad discretion and maximum flexibility to employ more rigorous 
standards to protect CVI from inappropriate public disclosure as 
necessary. Furthermore, Section 550(c) provides specifically that ``in 
any proceeding to enforce this section, * * * information submitted to 
or obtained by the Secretary, and related vulnerability or security 
information, shall be treated as if the information were classified 
material.''
    Section 114(s) of title 49 of the U.S. Code requires TSA to 
promulgate regulations governing the protection of certain sensitive 
unclassified information, including information that would ``be 
detrimental to the security of transportation'' if publicly disclosed. 
49 U.S.C. 114(s). In response, TSA issued, 49 CFR part 1520, which 
establishes certain requirements for the recognition, identification, 
handling, and dissemination of Sensitive Security Information or 
``SSI,'' including restrictions on disclosure and civil penalties for 
violations of those restrictions. Under the regulations, SSI includes 
any security programs issued, established, required, received or 
approved by the Department of Transportation or the Department. These 
include any vessel, maritime facility or port area security plan 
required by Federal law and any national or area security plan prepared 
pursuant to 46 U.S.C. 70103. In addition, SSI includes selection 
criteria used in security screening processes, Security Directives and 
Information Circulars, threat information and vulnerability assessments 
concerning transportation facilities, and technical specifications of 
security screening and detection systems and devices.
    Access to SSI is strictly limited to those persons with a need to 
know, as defined in 49 CFR 1520.11, and to those persons to whom TSA 
makes a specific disclosure authorization under 49 CFR Sec.  1520.15. 
In general, a person has a need to know specific SSI when he or she 
requires access to the information: (1) To carry out transportation 
security activities that are government-approved, -accepted, -funded, -
recommended, or -directed, including for purposes of training on, and 
supervision of, such activities; (2) to provide legal or technical 
advice to airport operators, air carriers or their employees regarding 
security-related requirements; or (3) to represent covered persons in 
judicial or administrative proceedings regarding security-related 
requirements. Individuals with a need to know or to whom SSI is 
disclosed pursuant to Sec.  1520.15, including in the context of an 
administrative enforcement proceeding, may, at TSA or Coast Guard's 
discretion, be required to satisfactorily complete a security 
background check to gain access to SSI. Civil litigants do not have a 
regulatory need to know, unless they fall into the categories noted 
above.
    The SSI regulations also set forth restrictions on the disclosure 
of SSI. These restrictions apply to individuals and entities with a 
need to know as well as others deemed by 49 CFR 1520.7 to be ``covered 
persons.'' The restrictions, which are set forth in 49 CFR 1520.9, 
include a duty to protect information by, among other things, only 
disclosing or providing access to SSI to covered

[[Page 78289]]

persons with a need to know and storing SSI in a secured container. 
Section 1520.9 also requires any covered person to promptly report to 
TSA or other applicable agency any unauthorized disclosure of SSI. As 
part of the Homeland Security Appropriations Act of 2007, Congress gave 
TSA the authority to assess a civil penalty of up to $50,000 for each 
violation of 49 CFR part 1520 by a person provided access to SSI under 
Section 525(d).
    Congress has long authorized the protection of sensitive 
unclassified information in the context of nuclear facilities. See 42 
U.S.C. 2167, 2168 (authorizing Nuclear Regulatory Commission (NRC) to 
issue regulations and civil and criminal penalties, protecting 
safeguards information or ``SGI'' from inadvertent release and 
unauthorized disclosure that might compromise security of nuclear 
facilities or materials); see also 10 CFR 73.21 (defining SGI to 
include ``security measures for the physical protection and location of 
certain plant equipment vital to the safety of production or 
utilization facilities''); Sec.  73.21(c) (authorizing access to SGI 
where both valid ``need to know'' information and authorization based 
on an appropriate background investigation under 10 CFR part 73); Sec.  
73.21(d) (setting forth physical protection requirements). And Congress 
authorized a similar regime more recently to protect voluntarily 
submitted critical infrastructure information as part of the Homeland 
Security Act of 2002. See 6 U.S.C. 131 et seq.; see also 6 CFR 29.4 
(describing Protected Critical Infrastructure Information (PCII) 
program); Sec.  29.7 (requiring background checks for access to PCII 
and setting forth protection guidelines for handling of PCII); Sec.  
29.8 (prohibiting disclosure of PCII except in limited circumstances).
    In designing a regulatory scheme to govern disclosure of CVI, the 
Department has considered the laws regulating SSI, SGI, and PCII. The 
Department believes that by specifying 46 U.S.C. 70103, Congress 
provided an avenue to embrace many of the fundamental elements of SSI, 
except that Congress was more explicit as to the use of information in 
legal proceedings. Accordingly, the Department proposes that, except as 
provided below in connection with administrative and judicial 
proceedings, CVI should be treated in a manner similar to SSI. The 
Secretary shall administer this Section consistent with section 550, 
including appropriate sharing with State and local officials, law 
enforcement officials, and first responders.
2. Protection From Disclosure in Litigation
    Section 550(c) provides that ``in any proceeding to enforce this 
section, * * * information submitted to or obtained by the Secretary, 
and related vulnerability or security information, shall be treated as 
if the information were classified material.'' By segregating this 
information for separate treatment under the statute, Congress sought 
to provide significant protection for CVI in the course of enforcement 
proceedings.
    Classified information is disclosed in litigation only under 
extraordinary circumstances. Executive Order 13292, Further Amendment 
of Executive Order 12958, as Amended, Classified National Security 
Information, defines ``classified national security information'' or 
``classified information'' as ``information that has been determined 
pursuant to this order or any predecessor order to require protection 
against unauthorized disclosure and is marked to indicate its 
classified statutes when in documentary form.'' E.O. 12958 Sec.  
6.1(h). More specifically, information may be classified if, among 
other things, the original classification authority determines that 
``the unauthorized disclosure of the information reasonably could be 
expected to result in damage to national security, which include 
defense against transnational terrorism, and the original 
classification authority is able to identify and describe the damage.'' 
E.O. 13292 Sec.  1.1(a)(4).
    By statute, Congress has defined classified information more 
broadly in certain contexts. The Classified Information Procedures Act 
(CIPA), which sets forth the proper handling for disclosure of 
classified information in criminal proceedings, defines classified 
information as ``any information or material that has been determined 
by the United States Government pursuant to an Executive order, 
statute, or regulation, to require protection against unauthorized 
disclosure for reasons of national security and any restricted data, as 
defined in paragraph r. of section 11 of the Atomic Energy Act of 
1954.'' 18 U.S.C. App. 3 sec. 1(a). The same definition is used in 
civil proceedings involving charges of providing material support or 
resources to designated foreign terrorist organizations. 18 U.S.C. 
2339B(g)(1) (``the term `classified information' has the meaning given 
that term in section 1(a) of [CIPA]'').
    Under section 2339B, where a party seeks classified information in 
discovery, the court may authorize one of the following as a substitute 
upon a sufficient ex parte showing by the Government: (1) A redacted 
version of the classified documents; (2) a summary of the information 
contained in the classified documents; or (3) a statement admitting 
relevant facts that the classified documents would tend to prove. 18 
U.S.C. 2339B(f)(1)(A). Section 2339B also provides protections against 
the disclosure of classified information through witness testimony. 
Upon a Government objection, the court will consider an ex parte 
proffer by the Government on what the witness is likely to say and a 
proffer from the defendant of the nature of the information the 
defendant seeks to elicit. Id. at 2339B(f)(3). If the court denies any 
such requests by the Government, the Government can take an immediate, 
expedited interlocutory appeal. Id. at 2339B(f)(1)(C), (5). Notably, 
section 2339B states that it does not prevent the Government from 
seeking protective orders or asserting privileges ordinarily available 
to the United States to protect against the disclosure of classified 
information, including the invocation of the military and State secrets 
privilege. Id. at 2339B(f)(6).
    The procedures set forth in CIPA are substantially similar to those 
in section 2339B. One notable difference is that the Government may 
submit to the court an affidavit of the Attorney General certifying 
that disclosure of classified information would cause identifiable 
damage to the national security of the United States and explaining the 
basis for the classification of such information. 18 U.S.C. App. sec. 
6(c)(2). Where the Government has filed such an affidavit but the court 
concludes that there is no adequate substitute for the classified 
information sought by the defendant, the court may dismiss the 
Government's indictment or information, or order something in lieu of 
complete dismissal such as dismissing or finding for the defendant only 
with respect to certain counts. Id. at 6(e).
    As stated above, Section 550(c) provides only that, in the course 
of proceedings under section 550, CVI ``shall be treated as if the 
information were classified material.'' Section 550(c) does not specify 
to which procedure/s governing the handling of classified material the 
Department should look--i.e., ordinary civil litigation procedures, 
civil procedures under section 2339B, criminal procedures under CIPA, 
or some other regime. The Department is considering alternatives and 
proposes here that in the context of judicial or administrative 
enforcement proceedings, the disclosure of CVI shall be governed by the 
procedures set forth

[[Page 78290]]

in section 2339B. Furthermore, to accommodate the possible presence of 
a jury or any other individuals that are deemed necessary to such 
proceedings, the Department will retain discretion to authorize access 
to CVI for persons necessary for the conduct of enforcement 
proceedings, provided that no one that the Department has not so 
authorized shall have access to or be present for the disclosure of 
such information. This has the effect of requiring a court to close the 
courtroom where CVI is to be revealed, which the Department believes is 
consistent with Congress's intent that CVI be treated as classified 
information. Because the Department believes that Section 550(c) cannot 
reasonably be read to prohibit a chemical facility and its counsel or 
other relevant employees from gaining access to CVI concerning their 
own facility for use in enforcement proceedings, the proposed 
provisions do not apply to such individuals.
    For civil litigation unrelated to the enforcement of Section 550, 
except as provided otherwise at the sole discretion of the Secretary, 
access to CVI shall not be available. The Department believes that by 
carefully drafting Section 550(c), Congress did not envision providing 
access to CVI to third-parties in civil litigation or in any civil 
litigation not involving enforcement of Section 550. As discussed 
above, Section 550(c) requires very restrictive handling of CVI in 
enforcement proceedings, i.e., handling at least consistent with the 
handling of classified information. We believe that Congress could not 
have intended the Department to afford CVI lesser protection in the 
context of civil litigation, especially where the litigation is 
unrelated to the enforcement of Section 550. The level of protection 
for CVI in civil litigation proposed herein is not inconsistent with 
the regime governing SSI prior to the Homeland Security Appropriations 
Act of 2007. The Department believes, however, that, in light of 
amendments to the SSI regime contained in section 525(d) of the 
Homeland Security Appropriations Act of 2007, to give full effect to 
Section 550(c), the Department must provide expressly for the 
prohibition on disclosure of CVI in civil litigation. Among other 
things, section 525(d) granted civil litigants who do not have a 
regulatory need to know access to specific SSI in federal district 
court proceedings, if certain requirements are met. Moreover, the 
Department believes that the proposed prohibition is consistent with 
the ordinary handling of classified information in civil proceedings, 
access to which may be ordered only in a narrow class of cases and 
under extraordinary circumstances.
    The Department seeks comment on whether an alterative to the 
approach described herein is more desirable. Other alternatives may 
include handling CVI in proceedings in the same manner as SSI or some 
other category of sensitive unclassified information, or as classified 
information under CIPA.

L. Statutory Exemptions

    Section 550 exempts from its coverage several categories of 
facilities. According to the statutory exemptions, the regulations 
issued under Section 550 will not apply to public water systems (as 
defined by section 1401 of the Safe Drinking Water Act); water 
treatment works facilities (as defined by section 212 of the Federal 
Water Pollution Control Act); any facilities owned or operated by the 
Departments of Defense and Energy; and any facilities subject to 
regulation by the Nuclear Regulatory Commission. The regulations 
promulgated under Section 550 also will not apply to maritime 
facilities regulated by the Coast Guard pursuant to the Maritime 
Transportation Security Act of 2002. These facilities will not need to 
submit information to the Department under the Section 550 regulations. 
The Department, however, is considering how to apply this rule to those 
facilities that are not subject to the security standards of part 105 
of the maritime security regulations but may be covered by other 
maritime security regulations pursuant to the Maritime Transportation 
Security Act of 2002. The Department seeks comment on the applicability 
of this rule to such facilities.
    Section 550 also provides that ``[n]othing in this section shall be 
construed to supersede, amend, alter, or affect any Federal law that 
regulates the manufacture, distribution in commerce, use, sale, other 
treatment, or disposal of chemical substances or mixtures.'' ATF 
regulates the purchase, possession, storage, and transportation of 
explosives. The Department does not intend for the regulations issued 
under Section 550 to impede ATF's current authorities. Where there is 
concurrent jurisdiction, the Department will work closely with ATF to 
ensure that the regulated entities can comply with the applicable 
regulations while minimizing any duplicative efforts by such entities.

III. Implementation

A. Immediate Priority on Highest Risk Facilities

    The Department is considering a ``phased'' implementation of its 
Section 550 program. Phase I would begin immediately following 
promulgation of the interim final rule in April 2007 and would focus on 
a selected number of chemical facilities identified from data in the 
RMP program and other sources as potentially posing the most 
significant risk to neighboring populations. The Assistant Secretary 
would contact each of these chemical facilities directly and request 
that each complete the Top-screen process within a reasonable but 
relatively brief period. Technical assistance with the Top-screen 
Process would be provided immediately to any chemical facility in this 
group so that progress could be achieved on an accelerated schedule. 
Shortly after receipt of the completed Top-screen information, the 
Assistant Secretary would notify each of these facilities pursuant to 
proposed Sec.  27.205 (regarding whether it qualifies as ``high risk'' 
and its initial placement in a risk-based tier). For each high risk, or 
``covered,'' facility, the Assistant Secretary would provide a schedule 
for submission of its Vulnerability Assessment and Site Security Plans 
under Sec.  27.210 of the proposed regulations. The Department's 
initial emphasis would be on the highest risk facilities in this group 
and the Department would prioritize reviews of those chemical 
facilities by risk, and it would schedule submissions accordingly. 
Again, the chemical facilities in this Phase 1 group could request and 
receive technical assistance in completing these processes.
    Upon receipt, submissions of Vulnerability Assessments and Site 
Security Plans for Phase 1 covered facilities would be subject 
immediately to review under Sec.  27.240 of the proposed regulations, 
and notified as soon as possible if additional submissions or revisions 
are necessary and, if not, of the results of such reviews. Again, where 
consultation or revisions would be necessary to bring the submissions 
into compliance, the process under Sec. Sec.  27.215 and 27.225 would 
be available for that purpose. Following approval of the Vulnerability 
Assessment and Site Security Plan, the Department would contact the 
covered facility to arrange for an appropriate schedule for a 
compliance review inspection and audit.
    While Phase 1 is underway, the Assistant Secretary would also 
initiate a broader Phase 2 process. For Phase 2,

[[Page 78291]]

the Assistant Secretary would, under Sec.  27.200 of the proposed 
regulations, publish criteria identifying an additional group or type 
of facilities that should complete the Top-screen process. The 
Assistant Secretary could also contact facilities directly and request 
completion of the Top-screen under Sec.  27.200 of the proposed 
regulations as appropriate. Phase 2 would then progress under the 
proposed regulations under the standard timeframes contemplated by 
those regulations. When appropriate, the Assistant Secretary would 
prioritize and could expedite review for a particular covered facility 
based on risk.
    Finally, as Phase 2 is underway, the Assistant Secretary could, as 
soon as appropriate, initiate a Phase 3 process for other high risk 
facilities not addressed in Phases 1 and 2. We contemplate that Phase 1 
would be completed as soon as possible, and certainly during the first 
year of the program. Phase 2 would be well underway during year one, 
but could be completed during the second year. Phase 3 could begin some 
time later. Of course, every covered facility in each of these 3 
proposed program phases would be subject to requirements of Sec. Sec.  
27.215, 27.225, and 27.245 for continuing obligations for plan updates, 
audits and inspections. Pursuant to Sec.  27.215 and Sec.  27.225 of 
the proposed rules, the frequency and nature of these continuing 
requirements would vary for covered facilities based on placement in 
the risk-based tiers.
    If such a phased system is implemented, the Department would issue 
guidance further describing each phase in additional detail.
    The Department requests comment on the viability and practicality 
of this phasing proposal for the Section 550 program.

B. Consultations and Technical Assistance

    As with any new regulatory program, it is very important that the 
Department ensure a uniform and fair approach in each of the 
programmatic phases to the many activities described in these 
regulations. Uniformity could be particularly difficult to achieve as 
the program matures, as new officers are trained and begin the process 
of reviewing Vulnerability Assessments and Site Security Plans, and as 
audits and inspections are conducted. The Department has several 
structural means to address its concerns about uniformity and fairness. 
First, at each step of the process, a facility may seek to ``consult'' 
with Department officials on procedural or policy matters or on the 
application of the performance standards. Such consultations are 
addressed in section Sec.  27.115 of the proposed regulations. Second, 
the Assistant Secretary and a designated Coordinating Official will 
have a specific responsibility under these regulations to ensure 
uniformity and fairness by program officials. Third, to the extent that 
resources permit, the Department will provide technical assistance to 
covered facilities. As the program matures and further guidance is 
issued, the level of necessary technical assistance may decline. But in 
the initial stages of the program, this type of assistance may be very 
important. The Department recognizes that the initial period of the 
program implementation will be the most challenging for covered 
facilities. The Department requests comment on these and other 
activities that may improve the implementation process. Note also that 
the proposed regulations also contemplate more formal processes for 
administrative Objections and Appeals in sections 27.205(c); 27.220(b); 
27.240(b), (c); 27.310(c); and 27.320.

IV. Other Issues

A. Third-Party Lawsuits

    Section 550 provides that ``nothing in [that] section confers upon 
any person except the Secretary a right of action against an owner or 
operator of a chemical facility to enforce any provision of this 
section.'' Pub. L. 109-295, Sec. 550. Proposed Sec.  27.410 codifies 
that provision in the regulations. The Department believes that this 
statutory and regulatory language prohibits any effort by a State or 
local government or other third party litigant to enforce the 
provisions of Section 550, or to compel the Department to take a 
specific action to enforce Section 550. Thus, the Department has 
discretion to determine when and how to enforce. Note also that Section 
550 has strict information protection provisions for the type of 
security information that would be critical to any enforcement matter: 
``That in any proceeding to enforce this section, vulnerability 
assessments, site security plans, and other information submitted to or 
obtained by the Secretary under this Section, shall be treated as if 
the information were classified material.'' Pub. L. 109-295, Sec. 
550(c).

B. Application to Facilities Manufacturing and/or Storing Ammonium 
Nitrate

    Section 550 provides authority for the Department to regulate 
``chemical facilities'' without restricting that authority to 
facilities manufacturing or storing any particular type of chemical 
substance. The Department is aware, however, that some legislative 
proposals not yet enacted into law contain specific provisions 
regarding the security measures associated with ammonium nitrate. See 
H.R. 3197, 109th Cong. (2006), S. 2145, 109th Cong. (2006). The 
Department currently plans to treat ammonium nitrate chemical 
facilities in the same manner that it treats facilities with other 
chemicals: whether the regulations govern a particular ammonium nitrate 
chemical facility will depend upon the nature of the facility and the 
risk assessment results. The Department seeks comments, however, on the 
application of the proposed regulations to ammonium nitrate chemical 
facilities.

C. Regulatory Requirements/Matters

1. Executive Order 12,866
    Executive Order 12,866, Regulatory Planning and Review, requires an 
assessment of the potential costs and benefits of regulatory actions. 
When the Department publishes the interim final rule, we will include 
our analysis of the expected costs of the regulation and an assessment 
of the benefits of the regulation. Interested persons are invited to 
provide comment on all aspects of the potential costs and benefits in 
order to assist the Department with its analysis. Comments containing 
trade secrets, confidential commercial or financial information, or SSI 
should be appropriately marked and submitted in accordance with the 
procedures explained above in the ADDRESSES section. Comments that will 
provide the most assistance to the Department with this rulemaking 
include, but are not limited to:
    <bullet> The economic impact (both long-term and short-term, 
quantifiable and qualitative) of the implementation of Section 550.
    <bullet> The monetary and other costs anticipated to be incurred by 
facility owners and/or operators and any distributional effects on U.S. 
citizens.
    <bullet> The benefits of the rulemaking.
    In order to help facilitate meaningful public comment, the 
Department would like to set forth a potential methodology for 
analyzing the costs of the interim final rule. We have reviewed the 
methodology used by the Coast Guard to analyze the economic impact of 
the 33 CFR part 105 Facility Security final rule, and, due to the 
similarities between the two rules, believe that this methodology has 
merit and should be considered for application in this rulemaking. The 
MTSA Facility Security final rule, at 68

[[Page 78292]]

FR 60536 (Oct. 22, 2003), estimated the cost of performance standards 
on several thousand unique facilities. Similarly, the interim final 
rule will estimate the costs of risk-based performance standards to 
possibly several thousand unique facilities. The Coast Guard found it 
impractical to attempt to estimate compliance costs for each individual 
facility and instead developed costs based on 16 ``model facilities.'' 
Each of the several thousand facilities was placed into one of the 16 
different subgroups for which compliance costs were then estimated. 
Once the compliance costs for the 16 ``model facilities'' were 
calculated, estimating the cost of the regulation was relatively 
straightforward.
    For the cost assessment which will accompany the interim final 
rule, the Department may estimate compliance costs based on the ``model 
facility'' concept explained above. Even though the interim final rule 
will utilize risk based performance standards and facilities will have 
discretion on how to meet the performance objectives, the cost 
assessment will need to make broad assumptions regarding the percentage 
of facilities that will choose to implement or continue certain 
security measures for the purposes of estimating compliance costs. For 
example, many facility owners and/or operators will choose to build or 
improve fences, enhance perimeter lighting, and hire additional 
security guards and we may need to make assumptions on how facilities 
will choose to implement the security measure in order to calculate an 
estimated cost. The Department is requesting public comment on how best 
to group facilities that will need to comply with this interim final 
rule into ``model facilities'' for cost estimating purposes, and we are 
especially interested in public comment on the criteria presented 
below:
    <bullet> Should the ``model facility'' criteria incorporate risk-
based tiering? Compliance costs may differ for a facility according to 
its risk-based tier.
    <bullet> Should the ``model facility'' criteria consider the size 
of the facility? Larger facilities may face higher compliance costs 
than smaller facilities as larger facilities may need to construct 
longer fences or hire more guards. For the purpose of facilitating 
comment, we will assume that facilities with six or more chemical 
processes or chemicals being stored or used would be considered to be 
``larger.''
    <bullet> Should facilities that are enclosed (i.e., warehouses, 
enclosed manufacturing sites) be treated as a ``model facility'' for 
cost estimating purposes?
    <bullet> Should facilities that might be targeted by criminals for 
chemical theft or diversion be treated as a ``model facility'' for cost 
estimating purposes?
    <bullet> The ``model facility'' estimates are expected to include 
current market prices of possible security enhancements that facilities 
may choose to undertake. Possible enhancements include, but are not 
limited to: Primary and secondary fences, barriers at the gate, 
perimeter vehicle barrier, perimeter lighting, inside lighting, CCTV 
system, guards, guards houses, fence line intrusion detection system, 
handheld radios, staging area for vehicle screenings and enhanced 
communication systems. The Department is requesting information that 
will assist with the estimation of these and any other security 
enhancements. We have placed an estimate of the capital costs of 
specific security enhancements in the docket in order to facilitate 
public comment.
2. Regulatory Flexibility Act
    DHS has not assessed whether this rule will have a significant 
economic impact on a substantial number of small entities, as defined 
in the Regulatory Flexibility Act (5 U.S.C. 601-612). The term ``small 
entities'' comprises small businesses, not-for-profit organizations 
that are independently owned and operated and are not dominant in their 
fields, and governmental jurisdictions with populations of less than 
50,000. Under Executive Order 13,272 and the Regulatory Flexibility 
Act, when an agency publishes a rulemaking without prior notice and 
opportunity for comment, the Regulatory Flexibility Act requirements do 
not apply. This rule does not require a general notice of proposed 
rulemaking and, therefore, is exempt from the requirements of the 
Regulatory Flexibility Act. Although this rule is exempt, we request 
comment on the economic impact of this rule on small entities.
3. Executive Order 13,132: Federalism
    The regulations issued under Section 550 have the potential to 
affect current or future State laws and regulations. Although few 
States currently regulate chemical facilities as a means to prevent or 
mitigate terrorist attacks, the Department plans to consult with State 
officials, to the extent practicable, prior to promulgating the interim 
final rule. See Exec. Order No. 13,132, 64 FR 43255 (Aug. 10, 1999). 
The Department also encourages State and local officials to provide 
comments in response to this advance notice. The Department 
specifically seeks comment on the interaction of the proposed 
regulations with existing State and local laws and regulations. As 
discussed in more detail below, the Department has particular interest 
in considering the effects of State and local laws and regulations on 
the security-related purposes of Section 550 and the proposed 
regulations.
    The security of the Nation's chemical facilities is a matter of 
national and homeland security. Remarks of Secretary Michael Chertoff, 
March 21, 2006, and Sept. 8, 2006. As such, it is the Federal 
government, and specifically the Department of Homeland Security, that 
takes on the lead and coordinating role. Among the primary missions of 
the Department are the prevention of terrorist attacks within the 
United States; the reduction of the vulnerability of the United States 
to terrorism; and the responsibility to ensure that the overall 
economic security of the United States is not diminished by efforts, 
activities, and programs aimed at securing the homeland. 6 U.S.C. 111. 
These aims are necessarily national in scope, and the regulations 
designed to enhance the security of chemical facilities against 
terrorist attack reflect a considered judgment concerning the 
Department's core mission. State and local governments may also take on 
a vital role, particularly as first responders and in other response 
capacities, but the threat of terrorist attacks, which often involve 
interstate and international activities, remains a significant national 
threat.
    Federal preemption doctrines are founded on the Supremacy Clause of 
the U.S. Constitution. U.S. Const. art. VI, cl. 2. The law of 
preemption recognizes that state laws must give way to Federal statutes 
and regulatory programs to ensure a unified and coherent national 
approach in areas where the Federal interests prevail--such as national 
security. See Crosby v. National Foreign Trade Council, 530 U.S. 363, 
375-76 (2000).
    Preemption can be expressly set forth in a statute or regulation, 
or implied by law. The nature of express preemption depends on the 
language of the statute or regulation that preempts state law. Express 
preemption language in prior legislative proposals on chemical security 
was controversial. Preemption language in certain legislative proposals 
was criticized as far too narrow, expressly allowing a patchwork of 
inconsistent or contradictory state or local security regulations that 
would compromise a uniform effective Federal program. Language in other 
legislative proposals was criticized as too broad, potentially 
preempting state regulatory efforts at chemical facilities for

[[Page 78293]]

environmental, workplace safety and other non-security purposes.
    Ultimately, Section 550 was silent on preemption. Cong. Rec. H7968-
69 (daily ed. Sept. 29, 2006) (statement of Chmn. Barton) (``During 
negotiations it was discussed and consciously decided among the 
authorizing committee negotiators to not include a provision exempting 
this section from Federal preemption because we do not want a patchwork 
of chemical facilities that are trying to secure themselves against 
threats of terrorism caught in a bind of wondering whether their site 
security complies with all law.''). Thus, the question of Federal 
preemption will turn either on the application of implied preemption, 
or on the nature of any express preemption in the Department's 
regulations.
    The application of implied preemption usually turns on the 
principle that no state or local authority can frustrate the purposes 
of a Federal law or regulatory program. In reviewing implied preemption 
questions, Federal courts typically ask whether the state measure poses 
an ``obstacle'' to the federal law or regulatory regime, or would 
``frustrate the purposes'' of the Federal regulatory program. See 
Geier, 529 U.S. at 873; Hines v. Davidowitz, 312 U.S. 52, 67 (1941); 
cf. United States v. Locke, 529 U.S. 89 (2000).
    Federal preemption questions can arise both in the courts' 
application of state common law--often state tort law--or in the 
application of a state statute or state or local regulation, ordinance 
or similar measure. In a state tort suit, the question may be whether 
imposing liability for particular activities would be consistent or 
inconsistent with Federal law or a Federal regulatory program. For 
instance, how could state tort law impose liability for actions 
specifically approved under a Federal program? See Geier v. American 
Honda Motor Co., 529 U.S. 861, 882 (2000); Colacicco v. Apotex, Inc., 
432 F. Supp. 2d 514 (E.D. Pa. 2006). For a state or local regulation, 
the question will often be whether the state measure would require 
activity that could interfere with, hinder or frustrate the Federal 
program. Jones v. Rath Packing Co., 430 U.S. 519, 525-26 (1977); Geier, 
529 U.S. at 873. A state or local regulation may be preempted, for 
example, where that regulation conflicts with an activity or plan 
specifically approved under Federal law.
    Section 550 preempts State laws and laws of their political 
subdivisions that conflict with the regulations promulgated thereunder. 
See, e.g., Fidelity Fed. Sav. & Loan Ass'n v. De la Cuesta, 458 U.S. 
141, 153 (1982) (``Federal regulations have no less pre-emptive effect 
than federal statutes.''); id. at 154 (a ``pre-emptive regulation's 
force does not depend on express congressional authorization to 
displace state law'').
    In Section 550, Congress created a carefully balanced regulatory 
relationship between the Federal government and chemical facilities. 
Section 550 instructs the Department to establish risk-based 
performance standards for facility security and the statute allows the 
Department to disapprove any site security plan that does not meet 
those standards. Pub. L. 109-295, Sec. 550 (``the Secretary may 
disapprove a site security plan if the plan fails to satisfy the risk-
based performance standards established by this section''). But Section 
550 also compels the Department to preserve chemical facilities' 
flexibility to choose security measures to reach the appropriate 
security outcome. Id. (``regulations [issued under this statute] shall 
permit each such facility, in developing and implementing site security 
plans, to select layered security measures that, in combination, 
appropriately address the vulnerability assessment and the risk-based 
performance standards for security for the facility''). A state measure 
frustrating this balance will be preempted.
    The proposed regulatory text in section 27.405(a) below recognizes 
this balance and provides that: ``No law or regulation of a State or 
political subdivision thereof, nor any decision rendered by a court 
under state law, shall have any effect if such law, regulation, or 
decision conflicts with, hinders, poses an obstacle to or frustrates 
the purposes of these regulations or of any approval, disapproval or 
order issued thereunder.'' The Department is particularly concerned 
that a conflict or potential conflict between an approved Site Security 
Plan and state regulatory efforts could create ambiguity that would 
delay or compromise implementation of security measures at a facility. 
To avoid any such delays, there may be an immediate need to address 
potential preemption and clarify application of the law. To meet this 
need, the proposed regulations, at Sec.  27.405, would permit State or 
local governments, and/or covered facilities, to seek opinions on 
preemption from the Department. Such a process has been used by 
Congress in other contexts, see, e.g., 49 U.S.C. 31141 (review and 
preemption of State laws and regulations addressing motor vehicle 
safety). In most cases, the Department would utilize the process to 
address quickly a specific conflict between a particular application of 
state law or local law and an approved site security plan or other 
elements of the Section 550 program. Note that the Department has the 
authority to make preemption determinations as it administers the 
chemical security program under Section 550. See Brief of the United 
States as Amicus Curiae at 26, Watters v. Wachovia Bank, N.A., 2006 WL 
3203255, 126 S.Ct. 2900 (2006) (No. 05-1342) (filed Nov. 3, 2006) 
(``When an agency concludes, in an exercise of delegated policymaking 
authority, that displacement of state law is warranted in furtherance 
of a federal statute that it is entrusted to administer, the agency is 
acting within the core of its expertise.'')
4. Unfunded Mandates Reform Act Assessment
    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 
enacted as Pub. L. 104-4 on March 22, 1995, requires each Federal 
agency, to the extent permitted by law, to prepare a written assessment 
of the effects of any Federal mandate in a proposed or final agency 
rule that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year. 
Section 204(a) of UMRA, 2 U.S.C. 1534(a), requires the Federal agency 
to develop an effective process to permit timely input by elected 
officers (or their designees) of State, local, and tribal governments 
on a proposed ``significant intergovernmental mandate.'' A 
``significant intergovernmental mandate'' under the UMRA is any 
provision in a Federal agency regulation that will impose an 
enforceable duty upon State, local, and tribal governments, in the 
aggregate, of $100 million (adjusted annually for inflation) in any one 
year. Section 203 of UMRA, 2 U.S.C. 1533, which supplements section 
204(a), provides that before establishing any regulatory requirements 
that might significantly or uniquely affect small governments, the 
agency shall have developed a plan that, among other things, provides 
for notice to potentially affected small governments, if any, and for a 
meaningful and timely opportunity to provide input in the development 
of regulatory proposals. The Department is currently preparing a 
regulatory impact analysis, and the Department will seek input from 
state and local governments that may be impacted by the regulations 
under Section 550.

[[Page 78294]]

5. National Environmental Policy Act
    Congress directed the Secretary to issue these interim final 
regulations no later than six months after the date of enactment of the 
Fiscal Year 2007 Homeland Security Appropriations Act. Congress also 
directed that each chemical facility develop and implement site 
security plans, with the proviso that the facility could select layered 
security measures to appropriately address the vulnerability assessment 
and the risk-based performance standards for security of the facility. 
Additionally, Congress mandated that the Secretary could not disapprove 
a site security plan based on the presence or absence of a particular 
security measure, but only on the failure to satisfy a risk-based 
performance standard. With that statutory direction in mind, the 
Department reviewed the rulemaking process with regard to the National 
Environmental Policy Act (NEPA). First and foremost, the Department is 
not funding or directing a specific action under these regulations, but 
issuing performance standards. Chemical facilities are of a wide 
variety of designs and sizes, and are located in a wide range of 
geographic settings, communities, and natural environments. 
Consequently, the Department would have no way to determine the action 
the chemical facility would take in meeting the standard, and what 
effect that action might have on the environment. Second, even if the 
Department could predict the actions the facilities would take in 
response to the standards, it is likely facilities would take widely 
varying actions to comply, based upon type of facility, geographic 
location, existing infrastructure, etc. The Department determined that 
even if appropriate, it could not reasonably accomplish an 
Environmental Impact Statement within the six months time allotted for 
issuance of the interim final regulations.

List of Subjects in 6 CFR Part 27

    Chemical security, Facilities, Reporting and recordkeeping, 
Security measures.

Advance Notice

    For the reasons set forth in the preamble, the Department of 
Homeland Security proposes to add Part 27 to Title 6, Code of Federal 
Regulations, to read as follows:

PART 27--CHEMICAL FACILITY ANTI-TERRORISM STANDARDS

Subpart A--General
Sec.
27.100 Definitions.
27.105 Applicability.
27.110 Implementation.
27.115 Designation of a coordination official; Consultations and 
technical assistance.
27.120 Severability.
Subpart B--Chemical Facility Security Program
27.200 Information regarding security risk for a chemical facility.
27.205 Determination that a chemical facility ``Presents A High 
Level Of Security Risk''.
27.210 Submissions schedule.
27.215 Vulnerability assessments.
27.220 Tiering.
27.225 Site security plans.
27.230 Risk-based performance standards.
27.235 Alternative security program.
27.240 Review and approval of vulnerability assessments and site 
security plans.
27.245 Inspections and audits.
27.250 Recordkeeping requirements.
Subpart C--Remedies
27.300 Order for compliance.
27.305 Order assessing civil penalty.
27.310 Order to cease operations.
27.315 Orders generally.
27.320 Appeals.
Subpart D--Other
27.400 Chemical-terrorism vulnerability information.
27.405 Review and preemption of State laws and regulations.
27.410 Third party actions.

    Authority: Pub. L. 109-295, sec. 550.

Subpart A--General


Sec.  27.100  Definitions.

    Alternative Security Program or ASP shall mean a third-party or 
industry organization program, a local authority, state or Federal 
government program or any element or aspect thereof, that the Assistant 
Secretary has determined is sufficient to serve the purposes of this 
subchapter.
    Assistant Secretary shall mean the Assistant Secretary for 
Infrastructure Protection, Department of Homeland Security, or any 
other official identified by the Under Secretary as having authority 
for a specific action or activity under these regulations.
    Chemical Facility or facility shall mean any facility that 
possesses or plans to possess, at any relevant point in time, a 
quantity of a chemical substance determined by the Secretary to be 
potentially dangerous or that meets other risk-related criterion 
identified by the Department. As used herein, the term chemical 
facility or facility shall also refer to the owner or operator of the 
chemical facility. Where multiple owners and/or operators function 
within a common infrastructure or within a single fenced area, the 
Assistant Secretary may determine that such owners and/or operators 
constitute a single chemical facility or multiple chemical facilities 
depending on the circumstances.
    Coordinating Official shall mean the person selected by the 
Assistant Secretary to ensure that the regulations are implemented in a 
uniform, impartial, and fair manner.
    Covered Facility shall mean a chemical facility determined by the 
Assistant Secretary to present high levels of security risk, or a 
facility that the Assistant Secretary has determined is presumptively 
high risk under Sec.  27.200.
    Department shall mean the Department of Homeland Security.
    General Counsel shall mean the General Counsel of the Department of 
Homeland Security or his designee.
    Operator shall mean a person who has responsibility for the daily 
operations of a facility or facilities subject to this part.
    Owner of a chemical facility shall mean the person or entity that 
owns any facility subject to this part.
    Present high levels of security risk and high risk shall refer to a 
chemical facility that, in the discretion of the Secretary of Homeland 
Security, presents a high risk of significant adverse consequences for 
human life or health, national security and/or critical economic assets 
if subjected to terrorist attack, compromise, infiltration, or 
exploitation.
    Risk-based tier shall mean a system of ``tiers'' differentiating 
among covered facilities by risk.
    Risk profiles shall mean criteria identified by the Assistant 
Secretary for determining which chemical facilities will complete the 
``Top-screen'' process or provide other risk assessment information.
    Secretary, or Secretary of Homeland Security shall mean the 
Secretary of the Department of Homeland Security or any person, officer 
or entity within the Department to whom the Secretary's authority under 
Section 550 is delegated.
    Terrorist attack or terrorist incident shall mean any incident or 
attempt that constitutes terrorism or terrorist activity under 6 U.S.C. 
101(15) or 18 U.S.C. 2331(5) or 8 U.S.C. 1182(a)(3)(B)(iii), including 
any incident or attempt that involves or would involve sabotage of 
chemical facilities or theft, misappropriation or misuse of a dangerous 
quantity of chemicals.
    Top-screen process shall mean an initial computerized or other 
screening process identified by the Assistant Secretary through which 
chemical facilities provide information to the

[[Page 78295]]

Department for use pursuant to Sec.  27.200 of these regulations.
    Undersecretary shall mean the Undersecretary for Preparedness or 
any successors to that position within the Department.


Sec.  27.105  Applicability.

    (a) This part applies to chemical facilities and to covered 
facilities as set out herein.
    (b) This part does not apply facilities regulated pursuant to the 
Maritime Transportation Security Act of 2002, Pub. L. 107-295, as 
amended; Public Water Systems, as defined by section 1401 of the Safe 
Drinking Water Act, Pub. L. 93-523, as amended; Treatment Works as 
defined in section 212 of the Federal Water Pollution Control Act, Pub. 
L. 92-500, as amended; any facility owned or operated by the Department 
of Defense or the Department of Energy, or any facility subject to 
regulation by the Nuclear Regulatory Commission.


Sec.  27.110  Implementation.

    The Assistant Secretary may implement the Section 550 program in a 
phased manner, selecting certain chemical facilities for expedited 
initial processes under these regulations and identifying other 
chemical facilities or types or classes of chemical facilities for 
other phases of program implementation. The Assistant Secretary has 
flexibility to designate particular chemical facilities for specific 
phases of program implementation based on potential risk or any other 
factor consistent with these rules.


Sec.  27.115  Designation of a coordinating official; Consultations and 
technical assistance.

    (a) The Assistant Secretary will have responsibility for ensuring 
that these regulations are implemented in a uniform, impartial and fair 
manner, and will designate a Coordinating Official for that purpose.
    (b) The Coordinating Official and his staff shall be available to 
consult at any stage in the processes hereunder with a covered facility 
regarding compliance with this Part and shall, as necessary and to the 
extent that resources permit, provide technical assistance to an owner 
or operator who seeks such assistance.
    (c) In order to initiate consultations or seek technical 
assistance, a covered facility may contact the Coordinating Official.


Sec.  27.120  Severability.

    If a court finds this part, or any portion thereof, to have been 
promulgated without proper authority, the remainder of this Part will 
remain in full effect.

Subpart B--Chemical Facility Security Program


Sec.  27.200  Information regarding security risk for a chemical 
facility.

    (a) In order to determine the security risk posed by chemical 
facilities, the Secretary may, at any time, request information from 
chemical facilities that may reflect potential vulnerabilities to a 
terrorist attack or incident, including questions specifically related 
to the nature of the business and activities conducted at the facility; 
the names, nature, conditions of storage, quantities, volumes, 
properties, major customers, major uses, and other pertinent 
information about specific chemicals or chemicals meeting a specific 
criteria; the security, safety, and emergency response practices, 
operations, procedures; information regarding incidents, history, 
funding, and other information bearing on the effectiveness of the 
security, safety and emergency response programs, and other information 
as necessary. The Assistant Secretary may seek such information by 
contacting chemical facilities individually or by publishing a notice 
in the Federal Register seeking information from chemical facilities 
who meet specified risk profiles. The Assistant Secretary may request 
that such facilities complete a Top-screen process through a secure 
Department Web site or through other means.
    (b) If a chemical facility subject to paragraph (a) of this section 
fails to provide information requested or complete the Top-screen 
process within a reasonable period, the Assistant Secretary may, after 
attempting to consult with the facility, reach a preliminary 
determination, based on the information then available, that the 
facility presumptively presents a high level of security risk. The 
Assistant Secretary shall then issue a notice to the entity of this 
determination and, if necessary, order the facility to provide 
information or complete the Top-screen process pursuant to these rules. 
If the facility then fails to do so, it may be subject to penalties 
pursuant to Sec.  27.305, audit and inspection under Sec.  27.245 or, 
if appropriate, an order to cease operations under Sec.  27.310.
    (c) If the facility completes the Top-screen process and the 
Department determines that it does not present a high level of security 
risk under Sec.  27.205, its status as ``presumptively high risk'' will 
terminate, and the Department will issue a notice to the facility to 
that effect.


Sec.  27.205  Determination that a chemical facility ``Presents A High 
Level Of Security Risk''.

    (a) Initial Determination. The Assistant Secretary may determine at 
any time that a chemical facility presents a high level of security 
risk based on any information available (including any information 
submitted to the Department under Sec.  27.205(b) of these regulations) 
that, in the Secretary's discretion, indicates the potential that a 
terrorist attack involving the facility could result in significant 
adverse consequences for human life or health, national security or 
critical economic assets. Upon determining that a facility presents a 
high level of security risk, the Department shall notify the facility 
in writing of such determination and may also notify the facility of 
the Department's preliminary determination of the facility's placement 
in a risk-based tier.
    (b) Redetermination. If a covered facility previously determined to 
present a high level of security risk has materially altered its 
operations, it may seek a redetermination by filing a Request for 
Redetermination with the Assistant Secretary, and may request a meeting 
regarding the Request. Within 45 calendar days of receipt of such a 
Request, or within 45 calendar days of a meeting under this paragraph, 
the Assistant Secretary shall notify the covered facility in writing of 
the Department's decision on the Request for Redetermination.
    (c) Objection.
    (1) Within 20 calendar days of an Initial Determination or within 
20 calendar days of a denial of a Request for Redetermination, the 
covered facility may file an Objection to an initial determination 
under paragraph (a) of this section or a redetermination under 
paragraph (b) of this section with the Assistant Secretary. The 
Objection should include the name, mailing address, phone number, and 
email address of the owner/operator of the facility who is filing the 
Objection and the address of the covered facility which has been deemed 
to present a high level of security risk. The Objection should indicate 
the reasons that the covered facility does not present a high level of 
security risk. The covered facility may request a meeting with the 
Assistant Secretary, which shall be scheduled within 20 calendar days 
of the date that the Assistant Secretary receives the Objection. Within 
20 calendar days of the filing of an Objection, or if a meeting is 
requested under this subsection within 20 calendar days of such 
meeting, the Assistant Secretary shall notify the covered facility in 
writing of

[[Page 78296]]

a final determination whether the facility presents a high level of 
security risk.
    (2) The Assistant Secretary shall issue appropriate guidance and 
any necessary forms for an Objection or Request for Redetermination 
covered by this subsection and procedures for notifications made or 
meetings conducted under this subsection. If additional information 
from a covered facility is necessary for the Department to address an 
Objection or Request for Redetermination, the Assistant Secretary may 
request such information and, in his discretion, toll the running of 
the timeframes hereunder pending receipt of such information.
    (3) Neither an Objection nor a Request for Redetermination shall 
toll any applicable timeline for a facility to file a Vulnerability 
Assessment or Site Security Plan, but the Assistant Secretary may 
extend applicable deadlines pending resolution of an Objection or 
Request whenever he deems such an extension appropriate.
    (4) Failure to file an Objection in accordance with the procedures 
and time limits contained in this section results in the determination 
in paragraph (a) of this section or the redetermination in paragraph 
(b) of this section becoming final agency action.
    (5) Any decision made by the Assistant Secretary under paragraph 
(c)(1) of this section constitutes final agency action for determining 
whether a chemical facility presents a high level of risk.


Sec.  27.210  Submissions schedule.

    (a) Vulnerability Assessment and Site Security Plan. At the time a 
covered facility is notified of a determination that it is a high risk 
chemical facility under Sec.  27.205, the Assistant Secretary shall 
notify the covered facility of its deadlines for completion and 
submission of a Vulnerability Assessment and Site Security Plan. The 
presumptive period for filing a Vulnerability Assessment with the 
Department shall be 60 calendar days from the date of such 
notification, and 120 calendar days for development and submission of a 
Site Security Plan. Upon request of the covered facility, the Assistant 
Secretary may shorten or extend these time periods based on the 
complexity of the facility, the nature of the covered facility 
vulnerabilities, the level and immediacy of security risk or for other 
reasons.
    (b) Alternative Schedules. For covered facilities under an ASP or 
for whom the Assistant Secretary accepts, in whole or part, a 
preexisting assessment of vulnerabilities, or which present other 
special circumstances, the Assistant Secretary may set an alternative 
schedule for submissions.
    (c) The Assistant Secretary may provide technical assistance to any 
covered facility in completing the Vulnerability Assessment or Site 
Security Plan.


Sec.  27.215  Vulnerability assessments.

    (a) Initial Assessment. If the Assistant Secretary determines that 
a chemical facility is high-risk, the facility must complete a 
Vulnerability Assessment. A Vulnerability Assessment shall include:
    (1) Asset Characterization, including identification of potential 
critical assets; identification of hazards and consequences of concern 
for the facility and its surroundings and supporting infrastructure, 
and identification of existing layers of protection;
    (2) Threat Assessment, including a description of possible internal 
threats, external threats, and internally-assisted threats;
    (3) Vulnerability Analysis, including the identification of 
potential vulnerabilities and the identification of existing 
countermeasures and their level of effectiveness in reducing those 
vulnerabilities;
    (4) Risk Assessment, including a determination of the relative 
degree of risk to the facility in terms of the expected effect on each 
critical asset and the likelihood of a successful attack; and
    (5) Countermeasures Analysis, including strategies that reduce the 
probability of a successful attack, strategies that enhance the degree 
of risk reduction, the reliability and maintainability of the options, 
the capabilities and effectiveness of mitigation options, and the 
feasibility of the options.
    (b) The Assistant Secretary may require such a covered facility to 
complete the assessment using an appropriate methodology identified or 
issued by the Assistant Secretary or through other means and may issue 
guidance and provide technical assistance regarding such process or 
methodology. The Assistant Secretary may accept Vulnerability 
Assessments, in whole or in part, in any sufficient form or format 
(either pursuant to a general ASP approval or for a particular 
facility) so long as the vulnerabilities of the covered facility are, 
in the Assistant Secretary's discretion, sufficiently assessed. The 
Assistant Secretary may, at his discretion, accept an existing covered 
facility's Vulnerability Assessment, subject to any necessary revisions 
or supplements.
    (c) Updates and Revisions. (1) A covered facility must update, 
revise or otherwise alter its Vulnerability Assessment to account for 
new or differing modes of potential terrorist attack or for other 
security-related reasons, if requested by the Assistant Secretary.
    (2) The Assistant Secretary may require that covered facilities 
periodically review and update risk assessments in accordance with a 
risk assessment methodology specified or developed by the Department. 
The Assistant Secretary shall set, and covered facilities shall comply 
with, a schedule for any such reviews or updates taking into account 
the dates of the original submissions of Vulnerability Assessments, the 
risk-based tier(s) of the covered facilities at issue, and other 
factors bearing on covered facilities' vulnerabilities. These schedules 
will be mailed either to individual facilities or published as a Notice 
in the Federal Register.
    (3) If not otherwise addressed in a schedule for updates, the 
covered facility must notify the Department of material modifications 
to the Vulnerability Assessment by submitting a copy of the revised 
Vulnerability Assessment. If the revision will result in a disapproval 
of the Vulnerability Assessment, the Department will notify the 
facility within 30 days of receipt of the revised assessment. It is 
presumed that material modifications will not result in a disapproval 
of the Vulnerability Assessment.


Sec.  27.220  Tiering.

    (a) Confirmation or Alteration of Risk-Based Tiering: Following 
review of a covered facility's Vulnerability Assessment, the Assistant 
Secretary shall notify the covered facility of its placement within a 
risk-based tier, or for covered facilities previously notified of a 
preliminary tiering, confirm or alter such tiering. The Assistant 
Secretary may provide the facility with guidance regarding the risk-
based performance standards and any other necessary guidance materials 
applicable to its assigned tier.
    (b) Objection to Risk-Based Tiering:
    (1) A covered facility may contest its placement in a risk-based 
tier by submitting an Objection to the Assistant Secretary within 20 
days of notification under paragraph (a) of this section. The Objection 
should include the name, mailing address, phone number, and e-mail 
address of the owner/operator of the covered facility who is filing the 
Objection and the address of the chemical facility which has been 
placed in a risk-based tier. The Objection

[[Page 78297]]

should indicate the reasons that the covered facility is not in the 
appropriate risk-based tier. The covered facility may request a meeting 
with the Assistant Secretary, which shall be scheduled within 20 
calendar days of the date that the Assistant Secretary receives the 
Objection. Within 20 calendar days of the filing of an Objection, or if 
a meeting is requested under this paragraph within 20 calendar days of 
such meeting, the Assistant Secretary shall notify the covered facility 
in writing of a final determination as to the appropriate tier.
    (2) The Assistant Secretary may issue appropriate guidance and any 
necessary forms for such an Objection and procedures for notifications 
made or meetings conducted under this subsection. If additional 
information from a covered facility is necessary for the Department to 
address an Objection, the Assistant Secretary may request such 
information and toll the running of the timeframes hereunder pending 
receipt of such information.
    (3) An Objection shall not toll any applicable timeline for a 
covered facility to file a Vulnerability Assessment or Site Security 
Plan, but the Assistant Secretary may extend applicable deadlines 
pending resolution of the Objection whenever he deems such an extension 
appropriate.
    (4) Failure to file an Objection in accordance with the procedures 
and time limits contained in this section results in the determination 
in paragraph (a) of this section becoming final agency action.
    (5) Any decision made by the Assistant Secretary under paragraph 
(b)(1) of this section constitutes final agency action for tiering.


Sec.  27.225  Site security plans.

    (a) Covered facilities shall submit a Site Security Plan as 
directed by the Assistant Secretary. The Site Security Plan must meet 
the following standards:
    (1) Address each vulnerability identified in the facility's 
Vulnerability Assessment and identify and describe the security 
measures to address each such vulnerability;
    (2) Identify and describe how security measures selected by the 
facility will address the applicable risk-based performance standards 
and potential modes of terrorist attack including, as applicable, 
vehicle-borne explosive devices, water borne explosive devices, ground 
assault, or other modes of potential modes identified by the 
Department;
    (3) Identify and describe how security measures selected and 
utilized by the facility will address each applicable performance 
standard for the appropriate risk-based tier for the facility; and
    (4) Specify other information the Assistant Secretary deems 
necessary regarding chemical facility security.
    (b) Updates and Revisions.
    (1) When a covered facility updates, revises or otherwise alters 
its Vulnerability Assessment pursuant to Sec.  27.215(b), the covered 
facility shall make corresponding changes to its Site Security Plan.
    (2) The Assistant Secretary may also require that covered 
facilities periodically review and update Site Security Plans taking 
into account the dates of the original submission of the Site Security 
Plan, the risk-based tier(s) of the covered facility at issue, and 
other factors as determined by the Assistant Secretary. The Assistant 
Secretary shall set, and covered facilities shall comply with, a 
schedule for any such reviews or updates. These schedules will be 
mailed either to individual facilities or published as a Notice in the 
Federal Register.
    (3) If not otherwise addressed in a schedule for updates, the 
covered facility must notify the Department of material modifications 
to the Site Security Plan by submitting a copy of the revised Site 
Security Plan. If the revision will result in a disapproval of the Site 
Security Plan, the Department will notify the facility within 30 days 
of receipt of the revised plan. It is presumed that material 
modifications will not result in a disapproval of the Site Security 
Plan.


Sec.  27.230  Risk-based performance standards.

    (a) Covered facilities must satisfy the performance standards 
identified in this section. The Assistant Secretary will issue guidance 
on the application of these standards to risk-based tiers of covered 
facilities. Each covered facility must select, develop, and implement 
measures designed to:
    (1) Secure and monitor the perimeter of the facility;
    (2) Secure and monitor restricted areas or potentially critical 
targets within the facility;
    (3) Control access to the facility and to restricted areas within 
the facility by screening and/or inspecting individuals and vehicles as 
they enter, including,
    (i) Measures to deter the unauthorized introduction of dangerous 
substances and devices that may facilitate an attack or actions having 
serious negative consequences for the population surrounding the 
facility; and
    (ii) Measures implementing a regularly updated identification 
system that checks the identification of facility personnel and other 
persons seeking access to the facility and that discourages abuse 
through established disciplinary measures;
    (4) Deter vehicles from penetrating the facility perimeter, gaining 
unauthorized access to restricted areas or otherwise presenting a 
hazard to potentially critical targets;
    (5) Secure and monitor the shipping and receipt of hazardous 
materials for the facility;
    (6) Deter theft or diversion of potentially dangerous chemicals;
    (7) Deter insider sabotage;
    (8) Deter cyber sabotage, including by preventing unauthorized 
onsite or remote access to critical process controls, Supervisory 
Control And Data Acquisition (SCADA) systems, and other sensitive 
computerized systems;
    (9) Develop and exercise an emergency plan to respond to security 
incidents internally and with assistance of local law enforcement and 
first responders;
    (10) Maintain effective monitoring, communications and warning 
systems, including
    (i) Measures designed to ensure that security systems and equipment 
are in good working order and inspected, tested, calibrated, and 
otherwise maintained;
    (ii) Measures designed to regularly test security systems, note 
deficiencies, correct for detected deficiencies, and record results so 
that they are available for inspection by the Department; and
    (iii) Measures to allow the facility to promptly identify and 
respond to security system and equipment failures or malfunctions;
    (11) Ensure proper security training, exercises, and drills of 
facility personnel;
    (12) Perform appropriate background checks on and ensure 
appropriate credentials for facility personnel, and as appropriate, for 
unescorted visitors with access to restricted areas or potentially 
critical targets;
    (13) Escalate the level of protective measures for periods of 
elevated threat;
    (14) Address specific threats, vulnerabilities or risks identified 
by the Assistant Secretary for the particular facility at issue;
    (15) Report significant security incidents to the Department;
    (16) Identify, investigate, report, and maintain records of 
significant security incidents and suspicious activities in or near the 
site;
    (17) Establish official(s) and an organization responsible for 
security and for compliance with these standards;

[[Page 78298]]

    (18) Maintain appropriate records; and
    (19) Address specific threats, vulnerabilities or risks identified 
by the Assistant Secretary for the particular facility at issue;
    (20) Address any additional performance standards the Assistant 
Secretary may specify.


Sec.  27.235  Alternative security program.

    The Assistant Secretary may approve in whole, in part, or subject 
to revisions or supplements, an Alternative Security Program (ASP) for 
covered facilities required to have Vulnerability Assessments and Site 
Security Plans under this part upon a determination by the Assistant 
Secretary that the Alternative Security Program meets the requirements 
of this part.


Sec.  27.240  Review and approval of vulnerability assessments and site 
security plans.

    (a) Review and Approval.
    (1) Covered facilities must provide Vulnerability Assessments and 
Site Security Plans to the Department:
    (i) Within the time period that the Department specifies in 
schedule that it provides to the facility, or
    (ii) If no schedule is provided to a particular facility, within 
the time period specified by Notice in the Federal Register.
    (2) The Department will review and approve or disapprove all 
Vulnerability Assessments and Site Security Plans, including 
Alternative Security Plans pursuant to Sec.  27.235, submitted to the 
Department.
    (i) Vulnerability Assessments. The Department will approve all 
Vulnerability Assessments that satisfy the requirements of Sec.  
27.215.
    (ii) Site Security Plans. The Department will review Site Security 
Plans through a two-step process. Upon receipt of Site Security Plan 
from the covered facility, the Department will review the documentation 
and make a preliminary determination as to whether it satisfies the 
requirements of Sec.  27.225. If the Department finds that the 
requirements are satisfied, the Department will issue a Letter of 
Authorization to the covered facility. Following issuance of the Letter 
of Authorization, the Department will inspect the covered facility in 
accordance with Sec.  27.245 for purposes of determining compliance 
with the requirements of this part.
    (3) The Department will not disapprove a Site Security Plan 
submitted under this Part based on the presence or absence of a 
particular security measure. The Department may disapprove a Site 
Security Plan that fails to satisfy the risk-based performance 
standards established in Sec.  27.230.
    (b) When the Department disapproves a Vulnerability Assessment, a 
preliminary Site Security Plan issued prior to inspection, or a Site 
Security Plan following inspection, the Department will provide the 
facility with a written notification that includes a clear explanation 
of deficiencies in the Vulnerability Assessment or Site Security Plan. 
The facility shall then enter further consultations with the Department 
and resubmit a sufficient Vulnerability Assessment or Site Security 
Plan by the time specified in the written notification provided by the 
Department under this section. Alternatively, the facility may file an 
objection under paragraph (c) of this section.
    (c) Objection to Disapproval of Site Security Plan.
    (1) A covered facility may contest the disapproval of its Site 
Security Plan by submitting an Objection to Assistant Secretary within 
20 days of notification under paragraph (b) of this section. The 
Objection should include the name, mailing address, phone number, and 
email address of the owner/operator of the facility who is filing the 
Objection and the address of the chemical facility which has had its 
Site Security Plan disapproved. The Objection should indicate the 
reasons why the facility's Site Security Plan should be approved. The 
covered facility may request a meeting with the Assistant Secretary, 
which shall be scheduled within 20 calendar days of the date that the 
Assistant Secretary receives the Objection. Within 20 calendar days of 
the filing of an Objection, or if a meeting is requested under this 
subsection within 20 calendar days of such meeting, the Assistant 
Secretary shall notify the covered facility in writing of a final 
determination as to approval of its Site Security Plan.
    (2) The Assistant Secretary may issue appropriate guidance and any 
necessary forms for such an Objection and procedures for notifications 
made or meetings conducted under this subsection. If additional 
information from a covered facility is necessary for the Department to 
address an Objection, the Assistant Secretary may request such 
information and toll the running of the timeframes hereunder pending 
receipt of such information.
    (3) A covered facility may contest a final determination made under 
paragraph (c)(1) of this section by filing an appeal pursuant to Sec.  
27.320.


Sec.  27.245  Inspections and audits.

    (a) Authority. In order to assess compliance with the requirements 
of this part, authorized DHS officials may enter, inspect, and audit 
the property, equipment, operations, and records of covered facilities. 
Except for the higher-risk tiers of covered facilities, the Department 
may certify third-party auditors to perform audits and inspections.
    (b) Following preliminary approval of a Site Security Plan in 
accordance with Sec.  27.225, the Department or a certified third-party 
auditor will inspect the covered facility for purposes of determining 
compliance with the requirements of this part.
    (1) If after the inspection, the Department determines that the 
requirements of Sec.  27.225 have been met, the Department will issue a 
Letter of Approval to the covered facility.
    (2) If after the inspection, the Department determines that the 
requirements of Sec.  27.225 have not been met, the Department will 
proceed as directed by Sec.  27.240(b).
    (c) Time and Manner. Authorized DHS officials will conduct audits 
and inspections at reasonable times and in a reasonable manner. DHS 
will provide covered facility owners and/or operators with 24-hour 
advance notice before inspections, except where the Under Secretary or 
Assistant Secretary determines that an inspection without such notice 
is warranted by exigent circumstances and approves such inspection.
    (d) The Assistant Secretary shall issue guidance identifying 
appropriate processes for such inspections, and specifying the type and 
nature of documentation that must be available on site.


Sec.  27.250  Recordkeeping requirements.

    (a) Except as provided in Sec.  27.250(b), the covered facility 
must keep records of the activities as set out below for at least 3 
years and make them available to DHS upon request. The following 
records must be kept:
    (1) Training. For training, the date and location of each session, 
time of day and duration of session, a description of the training, the 
name and qualifications of the instructor, and a clear, legible list of 
attendees to include the attendee signature;
    (2) Drills and exercises. For each drill or exercise, the date 
held, a description of the drill or exercise, a list of participants, a 
list of equipment (other than personal equipment) tested or employed in 
the exercise, the name(s) and qualifications of the exercise director, 
and any best practices or

[[Page 78299]]

lessons learned which may improve the Site Security Plan;
    (3) Incidents and breaches of security. Date and time of 
occurrence, location within the facility, a description of the incident 
or breach, the identity of the individual to whom it was reported, and 
a description of the response;
    (4) Maintenance, calibration, and testing of security equipment. 
For each occurrence of maintenance, calibration, and testing, record 
the date and time, name and qualifications of the technician(s) doing 
the work, and the specific security equipment involved;
    (5) Security threats. Date and time of occurrence, how the threat 
was communicated, who received or identified the threat, a description 
of the threat, to whom it was reported, and a description of the 
response;
    (6) For each audit of the Site Security Plan or a Vulnerability 
Assessment, a letter certified by the covered facility stating the date 
the audit was conducted.
    (7) All Letters of Authorization and Approval from the Department, 
and documentation identifying the results of audits and inspections 
hereunder.
    (b) Vulnerability Assessments, Site Security Plans, and all related 
correspondence with the Department must be retained for at least 6 
years.
    (c) Records required by this section may be kept in electronic 
format. If kept in an electronic format, they must be protected against 
unauthorized access, deletion, destruction, amendment, and disclosure.

Subpart C--Remedies


Sec.  27.300  Order for compliance.

    (a) Where the Department determines that a chemical facility is in 
violation of any of the requirements of this part, the Department may 
issue an Order for Compliance, directing the chemical facility to 
remedy any instances of noncompliance.
    (b) The Order for Compliance shall be signed by the Assistant 
Secretary, shall be dated, and shall include, at a minimum:
    (1) The address of the chemical facility in question;
    (2) A listing of the provision(s) that the chemical facility is 
alleged to have violated;
    (3) A statement of facts upon which the alleged violation(s) are 
based;
    (4) A statement, indicating what actions the chemical facility must 
take to bring its operations into compliance;
    (5) The date by which the chemical facility must bring its 
operations into compliance,
    (6) A statement of the chemical facility's right to present written 
explanations, information, or any materials in answer to the alleged 
violation(s).
    (c) By the compliance date specified in the Order, a representative 
of the chemical facility shall submit a written response to the 
Department, explaining how the facility has remedied any instances of 
noncompliance. A chemical facility may request a consultation meeting 
with the Assistant Secretary.


Sec.  27.305  Order assessing civil penalty.

    (a) A chemical facility that violates an order issued under Sec.  
27.305 is liable to the United States for a civil penalty of not more 
than $25,000 for each day during which the violation continues.
    (b) Where the Department has issued an Order for Compliance under 
Sec.  27.305, and the chemical facility fails to bring its operations 
into compliance by the date specified in the Order, the Department may 
issue an Order Assessing Civil Penalty.
    (c) The Order Assessing Civil Penalty shall be signed by the 
Assistant Secretary, shall be dated, and shall include:
    (1) The address of the chemical facility in question;
    (2) A listing of the provisions that the chemical facility has 
violated;
    (3) A statement of facts upon which the violation(s) are based;
    (4) The amount of civil penalties being assessed against the 
chemical facility; and
    (5) A statement, indicating what actions the chemical facility must 
take to bring its operations into compliance.
    (d) Within 30 calendar days of the date of the Order Assessing 
Civil Penalty, the chemical facility shall pay the penalty in full or 
file an Appeal as provided under Sec.  27.320.


Sec.  27.310  Order to cease operations.

    (a) Generally. Where the Department has issued an Order for 
Compliance under Sec.  27.305, and the chemical facility fails to bring 
its operations into compliance by the date specified in the Order, the 
Department may initiate proceedings to cease operations at a chemical 
facility.
    (b) Notice of Intent to Order the Cessation of Operations. If DHS 
determines that a chemical facility is not in compliance with the 
requirements of this part, the Assistant Secretary may issue a Notice 
of Intent to Order the Cessation of Operations. The Notice shall be 
signed by the Assistant Secretary, shall be dated, and shall include:
    (1) The address of the chemical facility in question;
    (2) A clear explanation of the deficiencies in the chemical 
facility's chemical security program, including, if applicable, any 
deficiencies in the chemical facility's Vulnerability Assessment and/or 
Site Security Plan; and
    (3) The date, as determined to be appropriate by the Under 
Secretary under the circumstances, by which the chemical facility must 
be brought into compliance.
    (c) Response to Notice of Intent to Order the Cessation of 
Operations. By the compliance deadline specified in the Notice of 
Intent to Order the Cessation of Operations, the chemical facility must 
submit to the Assistant Secretary a written response, which shall 
include evidence showing that the chemical facility has brought its 
operations into compliance and an explanation of how the chemical 
facility has satisfied the deficiencies in its Vulnerability Assessment 
and Site Security Plan. The chemical facility may request a 
consultation meeting with the Assistant Secretary.
    (d) Order to Cease Operations. Where a chemical facility fails to 
bring its operations into compliance by the date specified in the 
Notice of Intent to Cease Operations, the Assistant Secretary may issue 
an Order to Cease Operations. The Order shall be signed by the 
Assistant Secretary, shall be dated, shall provide a clear explanation 
of the deficiencies in the chemical facility's chemical security plan, 
and shall identify a date on which operations must cease. In the 
absence of an appeal under Sec.  27.320, the Order to Cease Operations 
will remain in effect until the chemical facility brings its operations 
into compliance.


Sec.  27.315  Orders generally.

    (a) An Order issued under this subpart shall not constitute final 
agency action until a chemical facility exhausts all appeals under this 
subpart or the time for such appeals has lapsed.
    (b) An Order issued under this subpart shall be stayed while an 
appeal under Sec.  27.320 is pending.
    (c) The Department may issue appropriate guidance and any necessary 
forms for the issuance of Orders under this subpart.


Sec.  27.320  Appeals.

    (a) A chemical facility may appeal:
    (1) A final determination under Sec.  27.240(c)(1) by submitting an 
appeal to the Under Secretary;
    (2) The decision of the Assistant Secretary to issue an Order For 
Compliance under Sec.  27.305 or an Order Assessing Civil Penalty under 
Sec.  27.310 by submitting an appeal to the Under Secretary; and

[[Page 78300]]

    (3) The decision of the Assistant Secretary to issue an Order to 
Cease Operations under Sec.  27.315 by submitting an appeal to the 
Deputy Secretary.
    (b) The chemical facility shall file an appeal with the 
adjudicating official within 30 calendar days of the date the 
Department makes its final determination or issues an Order. The appeal 
shall include, at a minimum: the name, mailing address, and contact 
information of the owner/operator of the chemical facility that is 
filing the appeal; the address of the chemical facility for which the 
Department disapproved a Site Security Plan or to which the Department 
issued an Order; and the reasons why the chemical facility believes the 
Assistant Secretary's determination made pursuant to Sec.  27.240(c) or 
order issued pursuant to Sec. Sec.  27.300, 27.305, or 27.310 should be 
set aside.
    (c) The covered facility may request a consultation meeting with 
the adjudicating official(s). If requested, the meeting will be 
scheduled within 30 calendar days of the date that the Department 
receives the request.
    (d) Within 30 calendar days of the filing of an appeal, or if a 
meeting is requested under this subsection, within 30 days of such a 
meeting, the adjudicating official shall notify the chemical facility 
in writing of his decision.
    (1) For determinations made pursuant to Sec.  27.240(c), the Under 
Secretary and General Counsel will be the adjudicating officials and 
will make a finding that the determination should either be sustained 
or set aside.
    (2) For orders issued pursuant to Sec. Sec.  27.300 and 27.305, the 
Under Secretary and General Counsel will be the adjudicating officials, 
and for orders issued under Sec.  27.310, the Deputy Secretary will be 
the adjudicating official. The adjudicating official(s) may affirm the 
order, revoke the order, or suspend the order for a specified period of 
time, after which the terms of the Order go into effect.
    (e) In reviewing the Assistant Secretary's decision to issue an 
Order under Sec.  27.305, the adjudicating official(s) may, in his 
discretion, mitigate the civil penalty amount based on the following 
circumstances: the nature and circumstances of the violation(s); the 
extent and gravity of the situation; the degree of the facility's 
culpability; respondent's prior history of offenses; the effect of the 
penalty on respondent's ability to continue in business; and such other 
matters as justice may require.
    (f) Any decision made by an adjudicating official under paragraph 
(c) of this section constitutes final agency action.
    (g) Failure to file an appeal in accordance with the procedures and 
time limits contained in this section results in the Assistant 
Secretary's determination or issuance of an Order becoming final agency 
action.
    (h) The Department may issue appropriate guidance and any necessary 
forms for appeals and procedures for notifications made or meetings 
conducted under this paragraph and may, notwithstanding the provisions 
of this subsection, provide for an immediate or an expedited review 
appeal with accelerated timeframes for appropriate cause.
    (i) If additional information from a covered facility is necessary 
for the Department to address an appeal, the Under Secretary may 
request such information and toll the running of the timeframes 
hereunder pending receipt of such information.

Subpart D--Other


Sec.  27.400  Chemical-terrorism vulnerability information.

    (a) Applicability. This section governs the maintenance, 
safeguarding, and disclosure of information and records that constitute 
Chemical-terrorism Security and Vulnerability Information (CVI), as 
defined in paragraph (b) of this section. The Secretary shall 
administer this Section consistent with section 550, including 
appropriate sharing with State and local officials, law enforcement 
officials, and first responders.
    (b) Chemical-terrorism Vulnerability Information. In accordance 
with section 550(c) of the Homeland Security Appropriations Act of 
2007, the following information shall constitute CVI:
    (1) Vulnerability assessments under Sec.  27.215;
    (2) Site security plans under Sec.  27.225;
    (3) Any documents developed pursuant to Sec.  27.240, relating to 
the Department's review and approval of vulnerability assessments and 
security plans;
    (4) Alternate security plans under Sec.  27.235;
    (5) Documents relating to inspection or audits under Sec.  27.245;
    (6) Any records required to be created or retained under Sec.  
27.250;
    (7) Sensitive portions of orders, notices or letters under 
Sec. Sec.  27.300, 27.305, 27.310, and 27.315; and
    (8) Information developed pursuant to Sec. Sec.  27.200 and 27.205.
    (9) Any other information that the Secretary, in his discretion, 
determines warrants the protections set forth in this part.
    (c) Covered Persons. Persons subject to the requirements of this 
section are:
    (1) Each person who has access to CVI, as specified in section 5 of 
this part;
    (2) Each person receiving CVI in the course of proceedings or 
litigation under paragraphs (g), (h), and (i) of this section; and
    (3) Each person who otherwise receives or gains access to what they 
know or should reasonably know constitutes CVI.
    (d) Duty to protect information. A covered person must--
    (1) Take reasonable steps to safeguard CVI in that person's 
possession or control from unauthorized disclosure. When a person is 
not in physical possession of CVI, the person must store it a secure 
container, such as a safe;
    (2) Disclose, or otherwise provide access to, CVI only to covered 
persons who have a need to know, unless otherwise authorized in writing 
by the Secretary of DHS;
    (3) Refer requests by other persons for CVI to DHS;
    (4) Mark CVI as specified in paragraph (f) of this section;
    (5) Dispose of CVI as specified in paragraph (k) of this section;
    (6) If a covered person receives a record containing CVI that is 
not marked as specified in paragraph (f) of this section, the covered 
person must--
    (i) Mark the record as specified in paragraph (f) of this section; 
and
    (ii) Inform the sender of the record that the record must be marked 
as specified in paragraph (f) of this section.
    (7) When a covered person becomes aware that CVI has been released 
to unauthorized persons, the covered person must promptly inform DHS.
    (8) In the case of information that is both CVI and has been 
designated as critical infrastructure information under section 214 of 
the Homeland Security Act, any covered person who is a Federal employee 
in possession of such information must comply with the disclosure 
restrictions and other requirements applicable to such information 
under section 214 and any implementing regulations.
    (e) Need to know--In general.
    (1) A person has a need to know CVI in each of the following 
circumstances:
    (i) When the person requires access to specific CVI to carry out 
chemical facility security activities approved, accepted, funded, 
recommended, or directed by DHS.
    (ii) When the person is in training to carry out chemical facility 
security activities approved, accepted, funded, recommended, or 
directed by DHS.

[[Page 78301]]

    (iii) When the information is necessary for the person to supervise 
or otherwise manage individuals carrying out chemical facility security 
activities approved, accepted, funded, recommended, or directed by the 
DHS.
    (iv) When the person needs the information to provide technical or 
legal advice to a covered person regarding chemical facility security 
requirements of Federal law.
    (v) When the person needs the information to represent a covered 
person in connection with any judicial or administrative enforcement 
proceeding regarding those requirements;
    (vi) When DHS determines that access is required under sections 
27.400(h) or 27.400(i) in the course of a judicial or administrative 
enforcement proceeding.
    (2) Federal employees, contractors, and grantees.
    (i) A Federal employee has a need to know CVI if access to the 
information is necessary for performance of the employee's official 
duties.
    (ii) A person acting in the performance of a contract with or grant 
from DHS has a need to know CVI if access to the information is 
necessary to performance of the contract or grant.
    (3) Background check. DHS may make an individual's access to the 
CVI contingent upon satisfactory completion of a security background 
check or other procedures and requirements for safeguarding CVI that 
are satisfactory to DHS.
    (i) Need to know further limited by the DHS. For some specific CVI, 
DHS may make a finding that only specific persons or classes of persons 
have a need to know.
    (ii) [Reserved].
    (f) Marking of paper records.
    (1) In the case of paper records containing CVI, a covered person 
must mark the record by placing the protective marking conspicuously on 
the top, and the distribution limitation statement on the bottom, of--
    (i) The outside of any front and back cover, including a binder 
cover or folder, if the document has a front and back cover;
    (ii) Any title page; and
    (iii) Each page of the document.
    (2) Protective marking. The protective marking is: CHEMICAL-
TERRORISM VULNERABILITY INFORMATION.
    (3) Distribution limitation statement. The distribution limitation 
statement is:
    WARNING: This record contains Chemical-terrorism Vulnerability 
Information that is controlled under 6 CFR 27.400. No part of this 
record may be disclosed to persons without a ``need to know,'' as 
defined in 6 CFR 27.400(e), except with the written permission of the 
Secretary of Homeland Security. Unauthorized release may result in 
civil penalty or other action. For DHS, public disclosure is governed 
by 6 CFR 27.400(g).
    (4) Other types of records. In the case of non-paper records that 
contain CVI, including motion picture films, videotape recordings, 
audio recording, and electronic and magnetic records, a covered person 
must clearly and conspicuously mark the records with the protective 
marking and the distribution limitation statement such that the viewer 
or listener is reasonably likely to see or hear them when obtaining 
access to the contents of the record.
    (g) Disclosure by DHS--In general.
    (1) Except as otherwise provided in this section, and 
notwithstanding the Freedom of Information Act (5 U.S.C. 552), the 
Privacy Act (5 U.S.C. 552a), and other laws, records containing CVI are 
not available for public inspection or copying, nor does DHS release 
such records to persons without a need to know.
    (2) Disclosure under the Freedom of Information Act and the Privacy 
Act. If a record contains both CVI and information that is not CVI, 
DHS, on a proper Freedom of Information Act or Privacy Act request, may 
disclose the record with the CVI redacted, provided the record is not 
otherwise exempt from disclosure under the Freedom of Information Act 
or Privacy Act.
    (h) Disclosure in administrative enforcement proceedings.
    (1) DHS may provide CVI to a person governed by section 550 in the 
context of an administrative enforcement proceeding when, in the sole 
discretion of DHS, as appropriate, access to the CVI is necessary for 
the person to prepare a response to allegations contained in a legal 
enforcement action document issued by DHS.
    (2) Security background check. Prior to providing CVI to a person 
under section 27.400(h)(1), DHS may require the individual or, in the 
case of an entity, the individuals representing the entity, and their 
counsel, to undergo and satisfy, in the judgment of DHS, a security 
background check.
    (i) Disclosure in civil or criminal litigation.
    (1) In any judicial enforcement proceeding, whether civil or 
criminal, the Secretary, in his sole discretion, may, subject to 
section 27.400(i)(1)(A), authorize access to CVI for persons necessary 
for the conduct of such proceedings, provided that no other persons not 
so authorized shall have access to or be present for the disclosure of 
such information.
    (i) Security background check. Prior to providing CVI to a person 
under paragraph (a) of this section, DHS may require the individual to 
undergo and satisfy, in the judgment of DHS, a security background 
check.
    (ii) [Reserved].
    (2) In any judicial enforcement proceeding, whether civil or 
criminal, where a person seeks to disclose CVI to a person not 
authorized to receive it under this part, or where a person not 
authorized to receive CVI under this part seeks to compel its 
disclosure through discovery, the United States may make an ex parte 
application in writing to the court seeking authorization to--
    (i) Redact specified items of CVI from documents to be introduced 
into evidence or made available to the defendant through discovery 
under the Federal Rules of Civil Procedure;
    (ii) Substitute a summary of the information for such CVI; or
    (iii) Substitute a statement admitting relevant facts that the CVI 
would tend to prove.
    (3) The court shall grant a request under paragraph (i)(2) of this 
section if, after in camera review, the court finds that the redacted 
item, stipulation, or summary is sufficient to allow the defendant to 
prepare a defense.
    (4) If the court enters an order granting a request under paragraph 
(i)(2) of this section, the entire text of the documents to which the 
request relates shall be sealed and preserved in the records of the 
court to be made available to the appellate court in the event of an 
appeal.
    (5) If the court enters an order denying a request of the United 
States under paragraph (b) of this section, the United States may take 
an immediate, interlocutory appeal of the court's order in accordance 
with 18 U.S.C. 2339B(f)(4), (5). For purposes of such an appeal, the 
entire text of the documents to which the request relates, together 
with any transcripts of arguments made ex parte to the court in 
connection therewith, shall be maintained under seal and delivered to 
the appellate court.
    (6) Except as provided otherwise at the sole discretion of the 
Secretary, access to CVI shall not be available in any civil litigation 
unrelated to the enforcement of section 550.
    (7) Taking of trial testimony--
    (i) Objection--During the examination of a witness in any judicial 
proceeding, the United States may object to any question or line of 
inquiry that may

[[Page 78302]]

require the witness to disclose CVI not previously found to be 
admissible.
    (ii) Action by court--In determining whether a response is 
admissible, the court shall take precautions to guard against the 
compromise of any CVI, including--
    (A) Permitting the United States to provide the court, ex parte, 
with a proffer of the witness's response to the question or line of 
inquiry; and
    (B) Requiring the defendant to provide the court with a proffer of 
the nature of the information that the defendant seeks to elicit.
    (iii) Obligation of defendant--In any judicial proceeding, it shall 
be the defendant's obligation to establish the relevance and 
materiality of any CVI sought to be introduced.
    (8) Construction. Nothing in this subsection shall prevent the 
United States from seeking protective orders or asserting privileges 
ordinarily available to the United States to protect against the 
disclosure of classified information, including the invocation of the 
military and State secrets privilege.
    (j) Consequences of Violation. Violation of this section is grounds 
for a civil penalty and other enforcement or corrective action by DHS, 
and appropriate personnel actions for Federal employees. Corrective 
action may include issuance of an order requiring retrieval of CVI to 
remedy unauthorized disclosure or an order to cease future unauthorized 
disclosure.
    (k) Destruction of CVI.
    (1) DHS. Subject to the requirements of the Federal Records Act (5 
U.S.C. 105), including the duty to preserve records containing 
documentation of a Federal agency's policies, decisions, and essential 
transactions, DHS destroys CVI when no longer needed to carry out the 
agency's function.
    (2) Other covered persons.
    (A) In general. A covered person must destroy CVI completely to 
preclude recognition or reconstruction of the information when the 
covered person no longer needs the CVI to carry out security measures.
    (B) Exception. Section 27.400(k)(2) does not require a State or 
local government agency to destroy information that the agency is 
required to preserve under State or local law.


Sec.  27.405  Review and preemption of State laws and regulations.

    (a) No law, regulation, or administrative action of a State or 
political subdivision thereof, nor any decision or order rendered by a 
court under state law, shall have any effect if such law, regulation, 
or decision conflicts with, hinders, poses an obstacle to or frustrates 
the purposes of these regulations or of any approval, disapproval or 
order issued thereunder.
    (b) State law, regulation or administrative action defined.--For 
purposes of this section, the phrase ``State law, regulation or 
administrative action'' means any enacted law, promulgated regulation, 
ordinance, administrative action, order or decision, or common law 
standard of a State or any of its political subdivisions.
    (c) Submission for review.--Any chemical facility covered by these 
regulations and any State may petition the Department by submitting a 
copy of a State law, regulation, or administrative action, or decision 
or order of a court for decision under this section.
    (d) Review and decision.
    (1) Review. The Department will review State laws, administrative 
actions, or decisions or orders of a court under State law and 
regulations submitted under this section, and will opine whether--
    (i) Complying with the State law or regulation and a requirement of 
this Part is not possible; or
    (ii) The application or enforcement of the State law or regulation 
would present an obstacle to or frustrate the purposes of this Part.
    (2) Decision. The Department may issue a written opinion on any 
question regarding preemption. If the Department determines that a 
State law or regulation should not be preempted, he may issue a written 
decision explaining the decision. The Assistant Secretary will notify 
the petitioner and the Attorney General of the subject State (if such 
State has not petitioned the Department under this section) of any 
decision under this section.


Sec.  27.410  Third party actions.

    (a) Nothing in this Part shall confer upon any person except the 
Secretary a right of action, in law or equity, for any remedy 
including, but not limited to, injunctions or damages to enforce any 
provision of this section.
    (b) An owner or operator of a chemical facility may petition the 
Assistant Secretary to provide the Department's view in any litigation 
involving any issues or matters regarding this Part.

    Dated: December 21, 2006.
Michael Chertoff,
Secretary of Homeland Security, Department of Homeland Security.

    Note: The following appendices will not appear in the Code of 
Federal Regulations.

Appendix A

    The Department believes that ``risk'' in the context of 
terrorism is a function of three variables: consequence (or 
criticality), vulnerability (or the likelihood that an attack will 
succeed if launched), and threat (or the likelihood that an attack 
would be launched in the first place). The Department also believes 
that ``consequence'' is the initial qualifying factor--that is, if a 
thing is not critical, then there will not be a significant level of 
risk associated with it. Accordingly, the Department intends to 
employ a consequence-only ``Top-screen.''

I. Purpose of the Top-Screen Tool

    The Top-screen is a basic questionnaire that facilities will be 
required to complete. It will provide the Department with 
information to make a preliminary determination as to the level of 
risk associated with any given facility. The Department will use it 
to screen facilities in order to eliminate as many as is appropriate 
from further activity under the regulation, and to prioritize those 
facilities that are, on preliminary assessment, ``high risk.'' The 
Department will make the Top-screen available as an on-line tool.

II. Categories of Top-Screen Users

    There will be two categories of Top-screen users: providers and 
submitters. A provider is a qualified individual familiar with the 
facility in question. This person will complete the screening tool. 
A submitter is an officer of the corporation (or equivalent) 
responsible for the facility in question. The submitter will send 
the completed Top-screen(s) to DHS, and in so doing, will attest to 
the accuracy of the information provided.
    The provider and the submitter may be the same person should a 
facility owner/operator so choose. The provider will therefore have 
the option of ``submitting'' the completed Top-screen to DHS or 
forwarding it to the provider within his or her own organization.
    DHS is considering the imposition of a requirement whereby the 
submitter must satisfy all of the following requirements: be an 
officer of the corporation, be a citizen of the United States, and 
be domiciled in the United States. The Department requests comment 
on this proposed requirement.

III. Top-Screen Questions

    The first segment of the Top-screen will focus on gathering 
identifying information from the facility, such as its name, 
address, identification numbers, corporate affiliation, and geo-
location. During this segment, DHS will obtain essential contact 
information and will learn of the exact location of facilities.
    The first segment of the Top-screen will also seek to gather 
information on criticality issues. It will ask questions directed at 
identifying criticality related to the:
    <bullet> Potential loss of life (and life-changing injuries) on 
or near the facility;
    <bullet> Potential loss of the capability to execute a critical 
mission, not only in defense, but also in governance and in the 
provision of essential services and utilities.
    The second segment of the Top-screen will ask a series of 
exclusionary questions. For example, DHS will ask whether a facility 
is

[[Page 78303]]

a public water system or a water treatment works facility, covered 
under MTSA, owned or operated by the Department of Defense or the 
Department of Energy, and/or licensed by the Nuclear Regulatory 
Commission. By asking these questions, DHS will be able to quickly 
``screen out'' those facilities that are excluded by law from this 
regulation, yet will still be able to account for those facilities 
and to know why they are excluded from the regulation.
    To address risk to human life, the third segment of the Top-
screen will focus on identifying which chemicals are present at 
facilities. As part of the Top-screen tool, DHS will provide a list 
of chemicals and threshold quantities (TQ) for each listed chemical. 
A provider would be able to select (possibly through the use of a 
pull-down menu) those chemicals that are present (at any time or in 
the course of a year, depending on the chemical) in quantities equal 
to or above the stated TQ. Where the facility does not contain any 
such chemicals, the facility will be presumptively screened out of 
coverage from the regulation.
    This segment will be broken down into several ``pages,'' each of 
which addresses the security issues associated with specific 
chemicals and the TQs of those chemicals. In most (but not all) 
cases, these security issues will parallel the Department of 
Transportation's classes of hazards.
    To address human health and safety consequences, the tool would 
ask the facility the following types of questions:
    <bullet> Whether a toxic release worst-case scenario (as 
identified by the facility under the EPA Risk Management Program) 
might expose a residential population greater than or equal to 
200,000 persons, and if so, whether the distance in such a scenario 
might exceed 25 miles;
    <bullet> Whether a flammable release worst-case scenario (as 
identified by the facility under the EPA Risk Management Program) 
might expose a residential population greater than or equal to 1,000 
persons;
    <bullet> Whether the facility manufactures or stores explosive 
materials in sufficient quantities to result in an offsite 
residential exposed population;
    <bullet> Whether the facility has any specified chemical weapon 
or chemical weapon precursors; To address economic impacts, the tool 
would ask the facility the following types of questions:
    <bullet> Whether the facility produces products of national 
economic importance or whose loss could negatively impact multiple 
economic sectors;
    <bullet> Whether an attack on the facility could cause 
collateral physical damage to key transportation assets;
    To address mission impacts the tool would ask questions, such as 
whether the facility:
    <bullet> Has chemical(s) for which it provides 35% of the U.S. 
domestic production capacity;
    <bullet> Is the sole U.S. supplier;
    <bullet> Produces a chemical or product used in the manufacture 
of defense weapons;
    <bullet> Produces a chemical or product supplied to and for use 
by multiple defense weapons systems contractors;
    <bullet> Is a major chemical supplier (>35% market share) to DoD 
for reasons other than defense weapons systems;
    <bullet> Produces a chemical or product directly to another 
manufacturer, producer, or distributor for subsequent use in the 
manufacture of defense weapons systems;
    <bullet> Serves as a major or sole supplier to a public health, 
water treatment, or power generation facility;
    The Top-screen tool has the ability to calculate populations at 
risk and other potential consequences based upon factors such as 
geo-location and type and quantity of chemical without further 
information from the provider. The Top-screen tool will be part of a 
sophisticated system that allows the importation of data from the 
National Geospatial-Intelligence Agency (NGA) and other such data 
repositories, as well as the importation and use of modeling tools 
from the National Laboratories System. Accordingly, DHS will 
calculate consequentiality based upon the data that facilities 
provide during the Top-screen process.

Appendix B

Background: Risk Analysis and Management for Critical Asset Protection 
(RAMCAP) Vulnerability Assessment Methodology

Preface

    RAMCAP is an overall strategy and methodology to allow for a 
more consistent and systematic analysis of the terrorist threat and 
vulnerabilities against the U.S. infrastructure using a risk-based 
framework. RAMCAP was developed under contract to DHS by the 
American Society of Mechanical Engineers Innovative Technologies 
Institute, LLC (ASME).
    As indicated, the Department is considering options for a 
vulnerability assessment tool for its chemical sector security 
program and invites comments on available options, including the 
elements of the process described below.
    The Department thanks the Center for Chemical Process Safety 
(CCPS), the American Petroleum Institute (API), and the National 
Petrochemical & Refiners Association (NPRA) all of whom agreed to 
make their VA Methodology and other materials available to DHS as a 
reference to support the effort to produce a methodology that would 
support the Department's needs.

RAMCAP Vulnerability Assessment Methodology

General

    The Risk Analysis and Management for Critical Asset Protection 
(RAMCAP) approach to risk analysis was developed for the Department 
to be broadly applicable to all critical infrastructure sectors. 
RAMCAP can assist with an overall strategy and methodology to allow 
for a more consistent and systematic analysis of the terrorist 
threat and vulnerabilities against the U.S. infrastructure using a 
risk-based framework. Phase 1 of the project developed the overall 
risk framework while Phase 2 was the further refinement and 
development of the methodologies at the sector level.
    A Sector module includes 2 components--a screening process 
referred to as a Top-screen, and a vulnerability assessment tool, 
referred to as the VA.
    1. The screening process provides a basis for understanding the 
critical infrastructures of greatest concern and the magnitude and 
nature of their significance. The DHS Top-screen to be employed in 
the implementation of regulations is described in general terms in 
Appendix A.
    2. Vulnerability assessments will provide further vulnerability 
and consequence information based on several postulated threats of 
concern.
    The threat scenarios to be used for RAMCAP were provided by DHS. 
The concept is as follows:
    1. Each infrastructure would use the same threat scenarios
    2. The user would begin by analyzing each of the scenarios on 
the list. If the facility cannot tolerate or neutralize this threat, 
or if a higher level of force causes a greater outcome, then the 
scenario would consider that greater force and analyze it.
    3. The facility is not necessarily expected to be able to 
prevent or protect against the scenario.
    This concept provides DHS with the information they require to 
make decisions about maximum expected consequences for each 
scenario. In this context, ``threats'' should be viewed as a 
yardstick employed to ascertain a consistent expression of 
vulnerability. These ``threats'' should not be seen as either 
indicative of government knowledge of enemy intent, nor as an 
expected design basis for security programs.
    The RAMCAP methodology produces a relativistic expression of 
risk.

Objectives

    The RAMCAP project creates a set of sector-specific 
vulnerability assessment tools that are:
    <bullet> Consistent across sectors
    <bullet> Appropriate to sector capabilities
    <bullet> Reflective of asset owner/operator concerns, strengths 
and weaknesses
    <bullet> Able to capture those datum points which support DHS 
information needs
    The sector-specific vulnerability assessment tool being 
developed is:
    <bullet> Based upon specific metrics, the use of which is 
repeatable sector to sector; thereby allowing cross-sector 
comparative risk assessment.
    <bullet> Designed to employ specific, defined consequence 
generators (threat scenarios);
    <bullet> Designed to evaluate:
    [cir] Consequences (impact produced by the defined consequence 
generator);
    [cir] Vulnerabilities (potential point targets and/or attack 
vectors, a broadly accepted surrogate for frequency/probability of 
success of an attack);
    [cir] Countermeasures (including factors in mitigation, 
deterrent factors, detection factors, delay factors, response 
capability, and inherent robustness);
    [cir] Actions/countermeasures at different threat levels;
    [cir] Residual security vulnerability (gap analysis).

[[Page 78304]]

    The purpose for a sector-specific assessment tool is to advance 
sector organization efforts to:
    <bullet> Integrate key features of RAMCAP that cover 
Vulnerability Assessment (including threat and consequence analysis) 
into existing sector-specific methods, metrics and documentation, 
or;
    <bullet> Assist sector organizations in developing new sector-
specific Vulnerability Assessment methods, metrics and documentation 
as appropriate.

Overview of the RAMCAP VA Methodology

    The RAMCAP VA process is a risk-based and performance-based 
methodology. The user can choose different means of accomplishing 
the general VA method so long as the end result meets the same 
performance criteria. The overall 5-step approach of the RAMCAP VA 
methodology is as follows:

Step 1: Asset Characterization

    The asset characterization includes analyzing information that 
describes the technical details of facility assets as required to 
support the analysis, identifying the potential critical assets, 
identifying the hazards and consequences of concern for the facility 
and its surroundings and supporting infrastructure, and identifying 
existing layers of protection.

Step 2: Threat Assessment

    This step involves choosing appropriate threats for the SVA 
based on a DHS provided sector-level Threat Assessment of the 
potential threats to the critical infrastructure/key resource (CI/
KR) sectors, as well as analysis of how those threats relate to 
sector vulnerabilities and consequences.

Step 3: Vulnerability Analysis

    The vulnerability analysis includes the relative pairing of each 
target asset and threat to identify potential vulnerabilities 
related to process security events. This involves the identification 
of existing countermeasures and their level of effectiveness in 
reducing those vulnerabilities.
    The degree of vulnerability of each valued asset and threat 
pairing is evaluated by the formulation of security-related 
scenarios or by an asset protection basis. If certain criteria are 
met, such as a higher consequence ranking value, then it may be 
useful to apply a scenario-based approach to conduct the 
Vulnerability Analysis. It includes the assignment of risk rankings 
to the security-related scenarios developed. If the asset-based 
approach is used, the determination of the asset's consequences may 
be enough to assign a target ranking value and protect via a 
standard protection set for that target level. In this case, 
scenarios may not be developed further than the general thought that 
an adversary is interested in damaging or stealing an asset.

Step 4: Risk Assessment

    The risk assessment determines the relative degree of risk to 
the facility in terms of the expected effect on each critical asset 
as a function of consequence and probability of occurrence. Using 
the assets identified during Step 1 (Asset Characterization), the 
risks are prioritized based on the likelihood of a successful 
attack. Likelihood is determined by the team after considering the 
degree of threats assessed under Step 2, and the degree of 
vulnerability identified under Step 3.

Step 5: Countermeasures Analysis

    Since RAMCAP is designed for use in a voluntary program wherein 
asset owners are only providing certain information to DHS, the 
asset owner is not required under RAMCAP to make security 
enhancements. However, within the DHS regulatory structure, the VA 
will lead directly to the production of a Site Security Plan, which 
must effectively address the vulnerabilities and risks identified in 
the VA. Accordingly, once the VA is completed, the team must make 
suggested recommendations to reduce security risks.
    Based on the vulnerabilities identified and the risk that the 
layers of security are breached, appropriate enhancements to the 
security countermeasures are recommended. Countermeasure options 
will be identified to further reduce vulnerability at the facility. 
These include improved countermeasures that follow the process 
security doctrines of deter, detect, delay, respond, mitigate and 
possibly prevent. Some of the factors to be considered are:
    <bullet> Reduced probability of successful attack
    <bullet> Degree of risk reduction by the options
    <bullet> Reliability and maintainability of the options
    <bullet> Capabilities and effectiveness of mitigation options
    <bullet> Costs of mitigation options
    <bullet> Feasibility of the options
    The countermeasure options should be re-ranked to evaluate 
effectiveness, and prioritized to assist management decision making 
for implementing security program enhancements. The recommendations 
should be included in a VA report that can be used to communicate 
the results of the VA to management for appropriate action.
    There is a need to follow-up on the recommended enhancements to 
the security countermeasures so they are properly reviewed, tracked, 
and managed until they are resolved. Resolution may include adoption 
of the VA team's recommendations, substitution of other improvements 
that achieve the same level of risk abatement, or rejection. 
Rejection of a VA recommendation and related acceptance of residual 
risk should be based on valid reasons that are well documented.
    This VA process is summarized in Figure 1 and illustrated 
further in the flowcharts that follow in Figures 2a through 2c. 
Later in this chapter, preparation activities, such as data 
gathering and forming the VA team are described. Later sections 
provide details for each step in the RAMCAP VA methodology. These 
steps and associated tasks are also summarized in Figure 5.
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Figure 2a--RAMCAP Vulnerability Assessment Methodology--Step 1
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Figure 2b--RAMCAP Vulnerability Assessment Methodology--Step 2

    Details of the Threat Assessment portion of the methodology are 
still being developed.

Figure 2c--RAMCAP Vulnerability Assessment Methodology--Steps 3-5
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VA METHODOLOGY

Planning for Conducting an VA

    Prior to conducting the VA team-based sessions, there are a 
number of activities that must be done to ensure an efficient and 
accurate analysis. There are many factors in successfully completing 
an VA including the following:
    <bullet> The activity should be planned in advance;
    <bullet> Have the full support and authorization by management 
to proceed;
    <bullet> The data should be verified and complete;
    <bullet> The objectives and scope should be concise;
    <bullet> The team should be knowledgeable of and experienced at 
the process they are reviewing; and,
    <bullet> The team leader should be knowledgeable and experienced 
in the VA process methodology.
    All of the above items are controllable during the planning 
stage prior to conducting the VA sessions. Most important for these 
activities is the determination of VA-specific objectives and scope, 
and the selection and preparation of the VA Team.
    Prerequisites to conducting the VA include gathering study data, 
gathering and analyzing threat information, forming a team, training 
the team on the method to be used, conducting a baseline security 
survey, and planning the means of documenting the process.

VA Team

    The VA approach includes the use of a representative group of 
company experts plus outside experts if needed to identify potential 
security related events or conditions, the consequences of these 
events, and the risk reduction activities for the operator's system. 
These experts draw on the years of experience, practical knowledge, 
and observations from knowledgeable field operations and maintenance 
personnel in understanding where the security risks may reside and 
what can be done to mitigate or ameliorate them.
    Such a company group typically consists of representation from: 
Company security, risk management, operations, engineering, safety, 
environmental, regulatory compliance, logistics/distribution, IT and 
other team members as required. This group of experts should focus 
on the vulnerabilities that would enhance the effectiveness of the 
site security plan. The primary goal of this group is to capture and 
build into the VA method the experience of this diverse group of 
individual experts so that the VA process will capture and 
incorporate information that may not be available in typical 
operator databases.
    If the VA will include terrorism attacks on a process handling 
flammable, explosive, reactive or toxic substances, the VA should be 
conducted by a team with skills in both the security and process 
safety areas. This is because the team must evaluate traditional 
facility security as well as process safety-related vulnerabilities 
and countermeasures. The final security strategy for protection of 
the process assets from these events is likely to be a combination 
of security and process safety strategies.
    It is expected that a full time ``core'' team is primarily 
responsible, and that they are led by a Team Leader. Other part-time 
team members, interviewees and guests are used as required for 
efficiency and completeness. At a minimum, VA teams should possess 
the knowledge and/or skills listed in Figure 3. Other skills that 
should be considered and included, as appropriate, are included as 
optional or part-time team membership or as guests and persons 
interviewed.
    The VA Core Team is typically made up of three to five persons, 
but this is dependent on the number and type of issues to be 
evaluated and the expertise required to make those judgments. The 
Team Leader should be knowledgeable and experienced in the VA 
approach.

VA Objectives and Scope

    The VA Team Leader should develop an objectives and scope 
statement for the VA. This helps to focus the VA and ensure 
completeness. An example VA objectives statement is shown in Figure 
4.
    A work plan should then be developed to conduct the VA with a 
goal of achieving the objectives. The work plan needs to include the 
scope of the effort, which includes which physical or cyber 
facilities and issues will be addressed.
    Given the current focus on the need to evaluate terrorist 
threats, the key concerns are the intentional harm to critical 
infrastructure that may result in catastrophic consequences. For the 
RAMCAP methodology, the key events and consequences of interest 
include those described as key security events in the CCPS VA 
guidelines.\7\ In addition to the security events recommended in 
those guidelines, the RAMCAP VA methodology recommends including 
injury to personnel and the public directly or indirectly.
    Other events may be included in the scope, but it is prudent to 
address these four primary security events first since these are 
primarily events involving the processes that make the petroleum 
industry facilities unique from other facilities.

[[Page 78309]]

Figure 3--RAMCAP VA Team Members
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Figure 4--VA Sample Objectives Statement
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Figure 5--RAMCAP VA Methodology, Security Events of Concern
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Data Gathering, Review, and Integration

    The objective of this step is to provide a systematic 
methodology for Owner/Operators to obtain the data needed to manage 
the security of their facility. Most Owner/Operators will find that 
many of the data elements suggested here are already being 
collected. This section provides a systematic review of potentially 
useful data to support a security plan. However, it should be 
recognized that all of the data elements in this section are not 
necessarily applicable to all systems.
    The types of data required depend on the types of risks and 
undesired acts that are anticipated. The operator should consider 
not only the risks and acts currently suspected in the system, but 
also consider whether the potential exists for other risks and acts 
not previously experienced in the system, e.g., bomb blast damage. 
This section includes lists of many types of data elements. The 
following discussion is separated into four subsections that address 
sources of data, identification of data, location of data, and data 
collection and review.
    Annex 1 includes a list of potentially useful data that may be 
needed to conduct an VA.

Data Sources

    The first step in gathering data is to identify the sources of 
data needed for facility security management.
    These sources can be divided into four different classes.
    1. Facility and Right of Way Records. Facility and right of way 
records or experienced personnel are used to identify the location 
of the facilities. This information is essential for determining 
areas and other facilities that either may impact or be impacted by 
the facility being analyzed and for developing the plans for 
protecting the facility from security risks. This information is 
also used to develop the potential impact zones and the relationship 
of such impact zones to various potentially exposed areas 
surrounding the facility i.e., population centers, and industrial 
and government facilities.
    2. System Information. This information identifies the specific 
function of the various parts of the process and their importance 
from a perspective of identifying the security risks and mitigations 
as well as understanding the alternatives to maintaining the ability 
of the system to continue operations when a security threat is 
identified. This information is also important from a perspective of 
determining those assets and resources available in-house in 
developing and completing a security plan. Information is also 
needed on those systems in place, which could support a security 
plan such as an integrity management program and IT security 
functions.
    3. Operation Records. Operating data are used to identify the 
products transported and the operations as they may pertain to 
security issues to facilities and pipeline segments which may be 
impacted by security risks. This information is also needed to 
prioritize facilities and pipeline segments for security measures to 
protect the system, e.g., type of product, facility type and 
location, and volumes transported. Included in operation records 
data gathering is the need to obtain incident data to capture 
historical security events.
    4. Outside Support and Regulatory Issues. This information is 
needed for each facility or pipeline segment to determine the level 
of outside support that may be needed and can be expected for the 
security measures to be employed at each facility or pipeline 
segment. Data are also needed to understand the expectation for 
security preparedness and coordination from the regulatory bodies at 
the government, state, and local levels. Data should also be 
developed on communication and other infrastructure issues as well 
as sources of information regarding security threats, e.g., ISACs 
(Information Sharing and Analysis Centers).

Identifying Data Needs

    The type and quantity of data to be gathered will depend on the 
individual facility or pipeline system, the VA methodology selected, 
and the decisions that are to be made. The data collection approach 
will follow the VA path determined by the initial expert team 
assembled to identify the data needed for the first pass at VA. The 
size of the facility or pipeline system to be evaluated and the 
resources available may prompt the VA team to begin their work with

[[Page 78311]]

an overview or screening assessment of the most critical issues that 
impact the facility or pipeline system with the intent of 
highlighting the highest risks. Therefore, the initial data 
collection effort will only include the limited information 
necessary to support this VA. As the VA process evolves, the scope 
of the data collection will be expanded to support more detailed 
assessment of perceived areas of vulnerability.

Locating Required Data

    Operator data and information are available in different forms 
and format. They may not all be physically stored and updated at one 
location based on the current use or need for the information. The 
first step is to make a list of all data required for vulnerability 
assessment and locate the data. The data and information sources may 
include:
    <bullet> Facility plot plans, equipment layouts and area maps
    <bullet> Process and Instrument Drawings (P&IDs)
    <bullet> Pipeline alignment drawings
    <bullet> Existing company standards and security best practices
    <bullet> Product throughput and product parameters
    <bullet> Emergency response procedures
    <bullet> Company personnel interviews
    <bullet> LEPC (Local Emergency Planning Commission) response 
plans
    <bullet> Police agency response plans
    <bullet> Historical security incident reviews
    <bullet> Support infrastructure reviews

Data Collection and Review

    Every effort should be made to collect good quality data. When 
data of suspect quality or consistency are encountered, such data 
should be flagged so that during the assessment process, appropriate 
confidence interval weightings can be developed to account for these 
concerns.
    In the event that the VA approach needs input data that are not 
readily available, the operator should flag the absence of 
information. The VA team can then discuss the necessity and urgency 
of collecting the missing information.

Analyzing Previous Incidents Data

    Any previous security incidents relevant to the vulnerability 
assessment may provide valuable insights to potential 
vulnerabilities and trends. These events from the site and, as 
available, from other historical records and references, should be 
considered in the analysis. This may include crime statistics, case 
histories, or intelligence relevant to facility.

Conducting a Site Inspection

    Prior to conducting the VA sessions, it is necessary for the 
team to conduct a site inspection to visualize the facility and to 
gain valuable insights to the layout, lighting, neighboring area 
conditions, and other facts that may help understand the facility 
and identify vulnerabilities. The list of data requirements in 
Appendix A and the checklist in Appendix B may be referenced for 
this purpose.

Gathering Threat Information

    The team should gather and analyze relevant company and industry 
and DHS (or other governmental) provided threat information, such as 
that available from the Energy ISAC, DHS, FBI, or other local law 
enforcement agency. At a minimum, the DHS-provided Threat Handbook 
should be thoroughly reviewed by all team members.

STEP 1: ASSETS CHARACTERIZATION

    Characterization of the facility is a step whereby the facility 
assets and hazards are identified, and the potential consequences of 
damage or theft to those assets is analyzed. The focus is on 
processes which may contain petroleum or hazardous chemicals and key 
assets, with an emphasis on possible public impacts. This factor 
(severity of the consequences) is used to screen the facility assets 
into those that require only general vs. those that require more 
specific security countermeasures.
    The team produces a list of candidate critical assets that need 
to be considered in the analysis. Attachment 1--Step 1: Critical 
Assets/Criticality Form is helpful in developing and documenting the 
list of critical assets. The assets may be processes, operations, 
personnel, or any other asset as described in Chapter 3.
    Figure 6 below summarizes the key steps and tasks required for 
Step 1.

Step 1.1--Identify Critical Assets

    The VA Team should identify critical assets for the site being 
studied. The focus is on petroleum or chemical process assets, but 
any asset may be considered. For example, the process control system 
may be designated as critical, since protection of it from physical 
and cyber attack may be important to prevent a catastrophic release 
or other security event of concern. Assets include the full range of 
both material and non-material aspects that enable a facility to 
operate.

   Figure 6--RAMCAP VA Methodology, Description of Step 1 and Substeps
------------------------------------------------------------------------
                  Step                                 Task
------------------------------------------------------------------------
                    Step 1: Assets Characterization
------------------------------------------------------------------------
1.1 Identify critical assets...........  Identify critical assets of the
                                          facility including people,
                                          equipment, systems, chemicals,
                                          products, and information.
1.2 Identify critical functions........  Identify the critical functions
                                          of the facility and determine
                                          which assets perform or
                                          support the critical
                                          functions.
1.3 Identify critical infrastructures    Identify the critical internal
 and interdependencies.                   and external infrastructures
                                          and their interdependencies
                                          (e.g., electric power,
                                          petroleum fuels, natural gas,
                                          telecommunications,
                                          transportation, water,
                                          emergency services, computer
                                          systems, air handling systems,
                                          fire systems, and SCADA
                                          systems) that support the
                                          critical operations of each
                                          asset.
1.4 Evaluate existing countermeasures..  Identify what protects and
                                          supports the critical
                                          functions and assets. Identify
                                          the relevant layers of
                                          existing security systems
                                          including physical, cyber,
                                          operational, administrative,
                                          and business continuity
                                          planning, and the process
                                          safety systems that protect
                                          each asset.
1.5 Evaluate impacts...................  Evaluate the hazards and
                                          consequences or impacts to the
                                          assets and the critical
                                          functions of the facility from
                                          the disruption, damage, or
                                          loss of each of the critical
                                          assets or functions.
1.6 Select targets for further analysis  Develop a target list of
                                          critical functions and assets
                                          for further study.
------------------------------------------------------------------------


   Figure 7--RAMCAP VA Methodology, Example Candidate Critical Assets
------------------------------------------------------------------------
          Security event type               Candidate critical assets
------------------------------------------------------------------------
Loss of Containment, Damage, or Injury.  <bullet> Process equipment
                                          handling petroleum and
                                          hazardous materials including
                                          processes, pipelines, storage
                                          tanks.
                                         <bullet> Marine vessels and
                                          facilities, pipelines, other
                                          transportation systems.
                                         <bullet> Employees,
                                          contractors, visitors in high
                                          concentrations.
Theft..................................  <bullet> Hydrocarbons or
                                          chemicals processed, stored,
                                          manufactured, or transported;
                                         <bullet> Metering stations,
                                          process control and inventory
                                          management systems.
                                         <bullet> Critical business
                                          information from
                                          telecommunications and
                                          information management systems
                                          including Internet accessible
                                          assets.

[[Page 78312]]

 
Contamination..........................  <bullet> Raw material,
                                          intermediates, catalysts,
                                          products, in processes,
                                          storage tanks, pipelines.
                                         <bullet> Critical business or
                                          process data.
Degradation of Assets..................  <bullet> Processes containing
                                          petroleum or hazardous
                                          chemicals.
                                         <bullet> Business image and
                                          community reputation.
                                         <bullet> Utilities (Electric
                                          Power, Steam, Water, Natural
                                          Gas, Specialty Gases).
                                         <bullet> Telecommunications
                                          Systems.
                                         <bullet> Business systems.
------------------------------------------------------------------------

    The following information should be reviewed by the VA Team as 
appropriate for determination of applicability as critical assets:
    <bullet> Any applicable regulatory lists of highly hazardous 
chemicals, such as the Clean Air Act 112(r) list of flammable and 
toxic substances for the EPA Risk Management Program (RMP) 40 CFR 
Part 68 or the OSHA Process Safety Management (PSM) 29 CFR 1910.119 
list of highly hazardous chemicals;
    <bullet> Inhalation poisons or other chemicals that may be of 
interest to adversaries.
    <bullet> Large and small scale chemical weapons precursors as 
based on the following lists:

-- Chemical Weapons Convention list;
-- FBI Community Outreach Program (FBI List) for Weapons of Mass 
Destruction materials and precursors;
-- The Australia Group list of chemical and biological weapons

    <bullet> Material destined for the food, nutrition, cosmetic or 
pharmaceutical chains;
    <bullet> Chemicals which are susceptible to reactive chemistry
    Owner/Operators may wish to consider other categories of 
chemicals that may cause losses or injuries that meet the objectives 
and scope of the analysis. These may include other flammables, 
critically important substances to the process, explosives, 
radioactive materials, or other chemicals of concern.
    In addition, the following personnel, equipment and information 
may be determined to be critical:
    <bullet> Process equipment
    <bullet> Critical data
    <bullet> Process control systems
    <bullet> Personnel
    <bullet> Critical infrastructure and support utilities

Step 1.2--Identify Critical Functions

    The VA Team should identify the critical functions of the 
facility and determine which assets perform or support the critical 
functions. For example, the steam power plant of a refinery may be 
critical since it is the sole source of steam supply to the 
refinery.

Step 1.3--Identify Critical Infrastructures and Interdependencies

    The VA team should identify the critical internal and external 
infrastructures and their interdependencies (e.g., electric power, 
petroleum fuels, natural gas, telecommunications, transportation, 
water, emergency services, computer systems, air handling systems, 
fire systems, and SCADA systems) that support the critical 
operations of each asset. For example, the electrical substation may 
be the sole electrical supply to the plant, or a supplier delivers 
raw material to the facility via a single pipeline. The 
Interdependencies and Infrastructure Checklist can be used to 
identify and analyze these issues. Note that some of these issues 
may be beyond the control of the owner/operator, but it is necessary 
to understand the dependencies and interdependencies of the 
facility, and the result of loss of these systems on the process.

Step 1.4--Evaluate Existing Countermeasures

    The VA team identifies and documents the existing security and 
process safety layers of protection. This may include physical 
security, cyber security, administrative controls, and other 
safeguards. During this step the objective is to gather information 
on the types of strategies used, their design basis, and their 
completeness and general effectiveness. A pre-VA survey is helpful 
to gather this information. The data will be made available to the 
VA team for them to form their opinions on the adequacy of the 
existing security safeguards during Step 3: Vulnerability Analysis 
and Step 5: Countermeasures Analysis.
    A Countermeasures Survey Form can be used to gather information 
on the presence and status of existing safeguards or another form 
may be more suitable. Existing records and documentation on security 
and process safety systems, as well as on the critical assets 
themselves, can be referenced rather than repeated in another form 
of documentation. An example is included in Attachment 1.
    The objective of the physical security portion of the survey is 
to identify measures that protect the entire facility and/or each 
critical asset of the facility, and to determine the effectiveness 
of the protection. Annex 2 contains checklists that may be used to 
conduct the physical security portion of the survey.
    Note that the infrastructure interdependencies portion of the 
survey will identify infrastructures that support the facility and/
or its critical assets (e.g., electric power, water, and 
telecommunications).

Step 1.5--Evaluate Impacts

    The Impacts Analysis step includes both the determination of the 
hazards of the asset being compromised as well as the specific 
consequences of a loss. The VA team should consider relevant 
chemical use and hazard information, as well as information about 
the facility. The intent is to develop a list of target assets that 
require further analysis partly based on the degree of hazard and 
consequences. Particular consideration should be given to the 
hazards of fire, explosion, toxic release, radioactive exposure, and 
environmental contamination.
    The consequences are analyzed to understand their possible 
significance. The Annex 1--Attachment 1--Step 1: Critical Assets/
Criticality Form is useful to document the general consequences for 
each asset. The consequences may be generally described but 
consideration should be given to the selection listed in Figure 8. 
For DHS purposes, an VA will consider the consequences shown in 
Figure 9.

[[Page 78313]]

Figure 8--RAMCAP VA Methodology, Selected Possible Consequences of 
RAMCAP VA Security Events
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[[Page 78315]]


    The consequence analysis is done in a general manner. If the 
security event involves a toxic or flammable release to the 
atmosphere, the EPA RMP offsite consequence analysis guidance can be 
used as a starting point. If it is credible to involve more than the 
largest single vessel containing the hazardous material in a single 
incident, the security event may be larger than the typical EPA RMP 
worst-case analysis.
    A risk ranking scale can be used to rank the degree of severity. 
Figure 10 illustrates a set of consequence definitions based on four 
categories of events: A. Fatalities and injuries; B. Environmental 
impacts; C. Property damage; and D. Business interruption. Asset 
owners may consider using a risk matrix such as this for making 
individual risk-based decisions for security, particularly if they 
use the RAMCAP VA methodology as a generalized vulnerability 
assessment tool.

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Figure 10--RAMCAP VA Methodology, Example Definitions of Consequences 
of the Event
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[[Page 78317]]


    As part of the RAMCAP program, DHS has been interested in 
certain consequence and vulnerability information for a limited 
number of more critical national sites. For reporting this 
information to DHS, the following ranking process should be used for 
assessing consequences.
[GRAPHIC] [TIFF OMITTED] TP28DE06.010

    The consequences of a security event at a facility are generally 
expressed in terms of the degree of acute health effects (e.g., 
fatality, injury), property damage, environmental effects, etc. This 
definition of consequences is the same as that used for accidental 
releases, and is appropriate for security-related events. The key 
difference is that they may involve effects that are more severe 
than expected with accidental risk. This difference has been 
considered in the steps of the VA. The economic consequences for 
RAMCAP include direct replacement costs, business interruption, and 
the cost of cleanup and restoration.
    The VA Team should evaluate the potential consequences of an 
attack using the judgment of the VA team. If scenarios are done, the 
specific consequences may be described in scenario worksheets.
    Team members skilled and knowledgeable in the process technology 
should review any off-site consequence analysis data previously 
developed for safety analysis purposes or prepared for adversarial 
attack analysis. The consequence analysis data may include a wide 
range of release scenarios if appropriate.
    Proximity to off-site population is a key factor since it is 
both a major influence on the person(s) selecting a target, and on 
the person(s) seeking to defend that target.

Step 1.6--Select Targets for Further Analysis

    For each asset identified, the criticality of each asset must be 
understood. This is a function of the value of the asset, the 
hazards of the asset, and the consequences if the asset was damaged, 
stolen, or misused. For hazardous chemicals, consideration may 
include toxic exposure to workers or the community, or potential for 
the misuse of the chemical to produce a weapon or the physical 
properties of the chemical to contaminate a public resource.
    The VA Team develops a Target Asset List that is a list of the 
assets associated with the site being studied that are more likely 
to be targets, based on the complete list of assets and the 
identified consequences and targeting issues identified in the 
previous steps. During Step 3: Vulnerability Analysis, the Target 
Asset List will be generally paired with specific threats and 
evaluated against the potential types of attack that could occur.
    The RAMCAP VA methodology uses ranking systems that are based on 
a scale of 1-5 where 1 is the lowest value and 5 is the highest 
value. Based on the consequence ranking and criticality of the 
asset, the asset is tentatively designated a candidate critical 
target asset.

STEP 2: THREAT ASSESSMENT

    This step involves identifying appropriate threat scenarios for 
the SVA based on a DHS provided sector-level Threat Assessment that 
provides an overall assessment of the potential threats to the CI/KR 
sectors, as well as analysis of how these threats relate to sector 
vulnerabilities and consequences.
    Threat assessment is an important part of a security management 
system, especially in light of the emergence of international 
terrorism in the United States. There is a need for understanding 
the threats facing the industry and any given facility or operation 
to properly respond to those threats.
    A threat assessment is used to evaluate the likelihood of 
adversary activity against a given asset or group of assets. It 
supports the establishment and prioritization of security-program 
requirements, planning, and resource allocations. A threat 
assessment identifies and evaluates each threat on the basis of 
various factors, including capability and intent.
    The assessment should identify threat categories and potential 
adversaries, such as insiders, external agents (outsiders), and 
collusion between insiders and outsiders. The SVA team should 
consider each type of adversary identified in the threat assessment 
and their assessed level of capability and motivation.
    To be effective, threat assessment must be considered a dynamic 
process, whereby the threats are continuously evaluated for change. 
During any given SVA exercise, the threat assessment is referred to 
for guidance on general or specific threats.
    Examples of threats are set forth on the following table (Fig. 
12):
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[[Page 78319]]


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[[Page 78320]]


    The threat assessment is not based on perfect information and 
will be developed in the absence of site-specific information on 
threats. A suggested approach is to make an assumption that 
international terrorism is possible at every facility.

VA STEP 3: VULNERABILITY ANALYSIS

    The Vulnerability Analysis step involves three steps. Once the 
VA Team has determined how an event can be induced, it should 
determine how an adversary could make it occur. There are two 
schools of thought on methodology: the scenario-based approach and 
the asset-based approach. Both approaches are identical in the 
beginning, but differ in the degree of detailed analysis of threat 
scenarios and specific countermeasures applied to a given scenario. 
The assets are identified, and the consequences are analyzed as per 
Step 2, for both approaches. Both approaches result in a set of 
annotated potential targets, and both approaches may be equally 
successful at evaluating security vulnerabilities and determining 
required protection.

Figure 13--RAMCAP VA Methodology, Description of Step 3 and Sub-steps
[GRAPHIC] [TIFF OMITTED] TP28DE06.013

Step 3.1--Define Scenarios and Evaluate Specific Consequences

    Each asset in the list of critical target assets from Step 2 is 
reviewed in light of the threat assessment, and the relevant threats 
and assets are paired in a matrix or other form of analysis, as 
shown in Attachment 1--Steps 3-5 RAMCAP VA Methodology--Scenario 
Based Vulnerability Worksheet/Risk Ranking/Countermeasures Form. The 
importance of this step is to develop a design basis threat 
statement for each facility.
    Once the VA Team has determined how a malevolent event can be 
induced, it should determine how an adversary could execute the act.
    The action in the Scenario-based approach follow the VA method 
as outlined in Chapter 3. To establish an understanding of risk, 
scenarios can be assessed in terms of the severity of consequences 
and the likelihood of occurrence of security events. These are 
qualitative analyses based on the judgment and deliberation of 
knowledgeable team members.

Step 3.2--Evaluate Effectiveness of Existing Security Measures

    The VA Team will identify the existing measures intended to 
protect the critical assets and estimate their levels of 
effectiveness in reducing the vulnerabilities of each asset to each 
threat or adversary.

Step 3.3--Identify Vulnerabilities and Estimate Degree of 
Vulnerability

    Vulnerability is any weakness that can be exploited by an 
adversary to gain unauthorized access and the subsequent destruction 
or theft of an asset. Vulnerabilities can result from, but are not 
limited to, weaknesses in current management practices, physical 
security, or operational security practices.
    For each asset, the vulnerability or difficulty of attack is 
considered using the definitions shown in Figure 14. For RAMCAP 
purposes, the asset owner also is asked to evaluate the likelihood 
of successful attack against the prescribed postulated threat 
scenarios at a minimum using the definitions shown in Figure 15.
    The Scenario-based approach is identical to the Asset-based 
approach in the beginning, but differs in the degree of detailed 
analysis of threat scenarios. The scenario-based approach uses a 
more detailed analysis strategy and brainstorms a list of scenarios 
to understand how the undesired event might be accomplished. The 
scenario-based approach begins with an onsite inspection and 
interviews to gather specific information for the VA Team to 
consider.
    The following is a description of the approach and an 
explanation of the contents of each column of the worksheet in 
Attachment 1--Steps 3-5 RAMCAP VA Methodology--Scenario Based 
Vulnerability Worksheet/Risk Ranking/Countermeasures Form.

[[Page 78321]]

Figure 14--RAMCAP VA Methodology, Vulnerability Rating Criteria
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[[Page 78322]]


[GRAPHIC] [TIFF OMITTED] TP28DE06.015


[[Page 78323]]


    The VA Team devises a scenario based on their perspective of the 
consequences that may result from undesired security events given a 
postulated threat for a given asset. This is described as an event 
sequence including the specific malicious act or cause and the 
potential consequences, while considering the challenge to the 
existing countermeasures. It is conservatively assumed that the 
existing countermeasures are exceeded or fail in order to achieve 
the most serious consequences, in order to understand the hazard. 
When considering the risk, the existing countermeasures need to be 
assessed as to their integrity, reliability, and ability to deter, 
detect, and delay.
    In this column the type of malicious act is recorded. As 
described earlier, the four types of security events included in the 
objectives of an VA at a minimum include:
    1. Theft/Diversion of material for subsequent use as a weapon or 
a component of a weapon
    2. Causing the deliberate loss of containment of a chemical 
present at the facility
    3. Contamination of a chemical, tampering with a product, or 
sabotage of a system
    4. An act causing degradation of assets, infrastructure, 
business and/or value of a company or an industry.
    Given the information collected in Steps 1-3 regarding the 
site's key target assets, and the existing layers and rings of 
protection, a description of the initiating event of a malicious act 
scenario may be entered into the Undesired Event column. The VA team 
brainstorms the vulnerabilities based on the information collected 
in Steps 1-3. The VA team should brainstorm vulnerabilities for all 
of the malicious act types that are applicable at a minimum. Other 
scenarios may be developed as appropriate.

Completing the Worksheet

    The next step is for the team to evaluate scenarios concerning 
each asset/threat pairing as appropriate. The fields in the 
worksheet are completed as follows:
    1. Asset: The asset under consideration is documented. The team 
selects from the targeted list of assets and considers the scenarios 
for each asset in turn based on priority.
    2. Security Event Type: This column is used to describe the 
general type of malicious act under consideration. At a minimum, the 
four types of acts previously mentioned should be considered as 
applicable.
    3. Threat Category: The category of adversary including 
terrorist, activist, disgruntled employee, etc.
    4. Type: The type of adversary category whether (I)--Insider, 
(E)--External, or (C)--Colluded threat.
    5. Undesired Act: A description of the sequence of events that 
would have to occur to breach the existing security measures is 
described in this column.
    6. Consequences: Consequences of the event are analyzed and 
entered into the Consequence column of the worksheet. The 
consequences should be conservatively estimated given the intent of 
the adversary is to maximize their gain. It is recognized that the 
severity of an individual event may vary considerably, so VA teams 
are encouraged to understand the expected consequence of a 
successful attack or security breach.
    7. Consequences Ranking: Severity of the Consequences on a scale 
of 1-5. The severity rankings are assigned based on a conservative 
assumption of a successful attack.
    8. Existing Countermeasures: The existing security 
countermeasures that relate to detecting, delaying, or deterring the 
adversaries from exploiting the vulnerabilities may be listed in 
this column. The countermeasures have to be functional (i.e., not 
bypassed or removed) and sufficiently maintained as prescribed 
(i.e., their ongoing integrity can be assumed to be as designed) for 
credit as a countermeasure.
    9. Vulnerability: The specific countermeasures that would need 
to be circumvented or failed should be identified.
    10. Vulnerability Ranking: The degree of vulnerability to the 
scenario rated on a scale of 1-5.
    11. L(ikelihood): The likelihood of the security event is 
assigned a qualitative ranking in the likelihood column. The 
likelihood rankings are generally assigned based on the likelihood 
associated with the entire scenario, assuming that all 
countermeasures are functioning as designed/intended. Likelihood is 
a team decision and is assigned from the Likelihood scale based on 
the factors of Vulnerability and Threat for the particular scenario 
considered.
    12. R(isk): The severity and likelihood rankings are combined in 
a relational manner to yield a risk ranking. The development of a 
risk ranking scheme, including the risk ranking values is described 
in Step 4.
    13. New Countermeasures: The recommendations for improved 
countermeasures that are developed are recorded in the New 
Countermeasures column.

STEP 4: RISK ANALYSIS/RANKING

    In either the Asset-based or the Scenario-based approach to 
Vulnerability Analysis, the next step is to determine the level of 
risk of the adversary exploiting the asset given the existing 
security countermeasures. Figure 16 lists the sub-steps.
    The scenarios are risk-ranked by the VA Team based on a simple 
scale of 1-5. The risk matrix shown in Figure 17 could be used to 
plot each scenario based on its likelihood and consequences. The 
intent is to categorize the assets into discrete levels of risk so 
that appropriate countermeasures can be applied to each situation.
    Note: For this matrix, a Risk Ranking of ``5 x 5'' represents 
the highest severity and highest likelihood possible.

3.7 STEP 5: IDENTIFY COUNTERMEASURES

    A Countermeasures Analysis identifies shortfalls between the 
existing security and the desirable security where additional 
recommendations may be justified to reduce risk. In assessing the 
need for additional countermeasures, the team should ensure each 
scenario has the following countermeasures strategies employed:
    <bullet> DETER an attack if possible
    <bullet> DETECT an attack if it occurs
    <bullet> DELAY the attacker until appropriate authorities can 
intervene
    <bullet> RESPOND to neutralize the adversary, to evacuate, 
shelter in place, call local authorities, control a release, or 
other actions.
    The VA Team evaluates the merits of possible additional 
countermeasures by listing them and estimating their net effect on 
the lowering of the likelihood or severity of the attack. The team 
attempts to lower the risk to the corporate standard.

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Figure 16--RAMCAP VA Methodology, Description of Step 4 and Substeps
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Figure 17--RAMCAP VA Methodology, Risk Ranking Matrix
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Figure 18--RAMCAP VA Methodology, Description of Step 5 and Substeps
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FOLLOW-UP TO THE VA

    The outcome of the VA is:
    <bullet> the identification of security vulnerabilities;
    <bullet> a set of recommendations (if necessary) to reduce risk 
to an acceptable level.
    The VA results should include a written report that documents:
    <bullet> The date of the study;
    <bullet> The study team members, their roles and expertise and 
experience;
    <bullet> A description of the scope and objectives of the study;
    <bullet> A description of or reference to the VA methodology 
used for the study;
    <bullet> The critical assets identified and their hazards and 
consequences;
    <bullet> The security vulnerabilities of the facility;
    <bullet> The existing countermeasures;
    <bullet> A set of prioritized recommendations to reduce risk;
    Once the report is released, it is necessary for a resolution 
management system to resolve issues in a timely manner and to 
document the actual resolution of each recommended action.

Attachment 1--Example RAMCAP VA Methodology Forms

    The following four forms can be used to document the VA results. 
Blank forms are provided, along with a sample of how each form is to 
be completed. Other forms of documentation that meet the intent of 
the VA guidance can be used.
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[[Page 78328]]



Glossary of Terms

    Adversary: Any individual, group, organization, or government 
that conducts activities, or has the intention and capability to 
conduct activities detrimental to critical assets. An adversary 
could include intelligence services of host nations, or third party 
nations, political and terrorist groups, criminals, rogue employees, 
and private interests. Adversaries can include site insiders, site 
outsiders, or the two acting in collusion.
    Alert levels: Describes a progressive, qualitative measure of 
the likelihood of terrorist actions, from negligible to imminent, 
based on government or company intelligence information. Different 
security measures may be implemented at each alert level based on 
the level of threat to the facility.
    Asset: An asset is any person, environment, facility, material, 
information, business reputation, or activity that has a positive 
value to an owner. The asset may have value to an adversary, as well 
as an owner, although the nature and magnitude of those values may 
differ. Assets in the VA include the community and the environment 
surrounding the site.
    Asset category: Assets may be categorized in many ways. Among 
these are:
    <bullet> People
    <bullet> Hazardous materials (used or produced)
    <bullet> Information
    <bullet> Environment
    <bullet> Equipment
    <bullet> Facilities
    <bullet> Activities/Operations
    <bullet> Company reputation
    Benefit: Amount of expected risk reduction based on the overall 
effectiveness of countermeasures with respect to the assessed 
vulnerabilities.
    Capability: When assessing the capability of an adversary, two 
distinct categories need to be considered. The first is the 
capability to obtain, damage, or destroy the asset. The second is 
the adversary's capability to use the asset to achieve their 
objectives once the asset is obtained, damaged, or destroyed.
    Checklist: A list of items developed on the basis of past 
experience that is intended to be used as a guide to assist in 
applying a standard level of care for the subject activity and to 
assist in completing the activity in as thorough a manner.
    Consequences: The amount of loss or damage that can be expected, 
or may be expected from a successful attack against an asset. Loss 
may be monetary but may also include political, morale, operational 
effectiveness, or other impacts. The impacts of security events 
which should be considered involve those that are extremely severe. 
Some examples of relevant consequences in an VA include fatality to 
member(s) of the public, fatality to company personnel, injuries to 
member(s) of the public, injuries to company personnel, large-scale 
disruption to public or private operations, large-scale disruption 
to company operations, large-scale environmental damage, large-scale 
financial loss, loss of critical data, and loss of reputation.
    Cost: Includes tangible items such as money and equipment as 
well as the operational costs associated with the implementation of 
countermeasures. There are also intangible costs such as lost 
productivity, morale considerations, political embarrassment, and a 
variety of others. Costs may be borne by the individuals who are 
affected, the corporations they work for, or they may involve 
macroeconomic costs to society.
    Cost-Benefit analysis: Part of the management decision-making 
process in which the costs and benefits of each countermeasure 
alternative are compared and the most appropriate alternative is 
selected. Costs include the cost of the tangible materials, and also 
the on-going operational costs associated with the countermeasure 
implementation.
    Countermeasures: An action taken or a physical capability 
provided whose principal purpose is to reduce or eliminate one or 
more vulnerabilities. The countermeasure may also affect the 
threat(s) (intent and/or capability) as well as the asset's value. 
The cost of a countermeasure may be monetary, but may also include 
non-monetary costs such as reduced operational effectiveness, 
adverse publicity, unfavorable working conditions, and political 
consequences.
    Countermeasures analysis: A comparison of the expected 
effectiveness of the existing countermeasures for a given threat 
against the level of effectiveness judged to be required in order to 
determine the need for enhanced security measures.
    Cyber security: Protection of critical information systems 
including hardware, software, infrastructure, and data from loss, 
corruption, theft, or damage.
    Delay: A countermeasures strategy that is intended to provide 
various barriers to slow the progress of an adversary in penetrating 
a site to prevent an attack or theft, or in leaving a restricted 
area to assist in apprehension and prevention of theft.
    Detection: A countermeasures strategy that is intended to 
identify an adversary attempting to commit a security event or other 
criminal activity in order to provide real-time observation as well 
as post-incident analysis of the activities and identity of the 
adversary.
    Deterrence: A countermeasures strategy that is intended to 
prevent or discourage the occurrence of a breach of security by 
means of fear or doubt. Physical security systems such as warning 
signs, lights, uniformed guards, cameras, bars are examples of 
countermeasures that provide deterrence.
    Hazard: A situation with the potential for harm.
    Intelligence: Information to characterize specific or general 
threats, including the intent and capabilities of adversaries.
    Intent: A course of action that an adversary intends to follow.
    Layers of protection: A concept whereby several independent 
devices, systems, or actions are provided to reduce the likelihood 
and severity of an undesirable event.
    Likelihood of adversary success: The potential for causing a 
catastrophic event by defeating the countermeasures. LAS is an 
estimate that the security countermeasures will thwart or withstand 
the attempted attack, or if the attack will circumvent or exceed the 
existing security measures. This measure represents a surrogate for 
the conditional probability of success of the event.
    Mitigation: The act of causing a consequence to be less severe.
    Physical security: Security systems and architectural features 
that are intended to improve protection. Examples include fencing, 
doors, gates, walls, turnstiles, locks, motion detectors, vehicle 
barriers, and hardened glass.
    Process Hazard Analysis (PHA): A hazard evaluation of broad 
scope that identifies and analyzes the significance of hazardous 
situations associated with a process or activity.
    Response: The act of reacting to detected or actual criminal 
activity either immediately following detection or post-incident.
    Risk: The potential for damage to or loss of an asset. Risk, in 
the context of process security, is the potential for a catastrophic 
outcome to be realized. Examples of the catastrophic outcomes that 
are typically of interest include an intentional release of 
hazardous materials to the atmosphere, or the theft of hazardous 
materials that could later be used as weapons, or the contamination 
of hazardous materials that may later harm the public, or the 
economic costs of the damage or disruption of a process.
    Risk assessment: Risk (R) assessment is the process of 
determining the likelihood of an adversary (T) successfully 
exploiting vulnerability (V) and the resulting degree of 
consequences (C) on an asset. A risk assessment provides the basis 
for rank ordering of risks and thus establishing priorities for the 
application of countermeasures.
    Safeguard: Any device, system or action that either would likely 
interrupt the chain of events following an initiating event or that 
would mitigate the consequences.\4\
    Security layers of protection: Also known as concentric ``rings 
of protection'', a concept of providing multiple independent and 
overlapping layers of protection in depth. For security purposes, 
this may include various layers of protection such as counter-
surveillance, counterintelligence, physical security, and cyber 
security.
    Security management system checklist: A checklist of desired 
features used by a facility to protect its assets.
    Security plan: A document that describes an owner/operator's 
plan to address security issues and related events, including 
security assessment and mitigation options. This includes security 
alert levels and response measures to security threats.
    Vulnerability Assessment (VA): An VA is the process of 
determining the likelihood of an adversary successfully exploiting 
vulnerability, and the resulting degree of damage or impact. VAs are 
not a quantitative risk analysis, but are performed qualitatively 
using the best judgment of security and safety professionals. The 
determination of risk (qualitatively) is the desired outcome of the 
VA, so that it provides the basis for rank ordering of the security-
related risks and thus establishing priorities for the application 
of countermeasures.
    Technical Security: Electronic systems for increased protection 
or for other security

[[Page 78329]]

purposes including access control systems, card readers, keypads, 
electric locks, remote control openers, alarm systems, intrusion 
detection equipment, annunciating and reporting systems, central 
stations monitoring, video surveillance equipment, voice 
communications systems, listening devices, computer security, 
encryption, data auditing, and scanners.
    Terrorism: The FBI defines terrorism as, ``the unlawful use of 
force or violence against persons or property to intimidate or 
coerce a Government, the civilian population, or any segment 
thereof, in furtherance of political or social objectives.''
    Threat: Any indication, circumstance, or event with the 
potential to cause the loss of, or damage to an asset. Threat can 
also be defined as the intention and capability of an adversary to 
undertake actions that would be detrimental to critical assets.
    Threat categories: Adversaries may be categorized as occurring 
from three general areas:
    <bullet> Insiders
    <bullet> Outsiders
    <bullet> Insiders working in collusion with outsiders
    Undesirable events: An event that results in a loss of an asset, 
whether it is a loss of capability, life, property, or equipment.
    Vulnerabilities: Any weakness that can be exploited by an 
adversary to gain access to an asset. Vulnerabilities can include 
but are not limited to building characteristics, equipment 
properties, personnel behavior, locations of people, equipment and 
buildings, or operational and personnel practices.

Abbreviations and Acronyms

ACC--American Chemistry Council
AIChE--American Institute of Chemical Engineers
API--American Petroleum Institute
AWCS--Accidental Worst-Case Scenario
C--Consequence
CCPS--Center for Chemical Process Safety of the American Institute 
of Chemical Engineers (AIChE)
CCTV--Closed Circuit Television
CEPPO--Chemical Emergency Preparedness and Prevention Office (USEPA)
CMP--Crisis Management Plan
CSMS--Chemical Security Management System
CW--Chemical Weapons
CWC--Chemical Weapons Convention
D--Difficulty of Attack
DCS--Distributed Control Systems
DHS--Department of Homeland Security
DOE--Department of Energy
DOT--U.S. Department of Transportation
EHS--Environmental, Health, and Safety
EPA--U.S. Environmental Protection Agency
ERP--Emergency Response Process
EHS--Environmental, Health, and Safety
FBI--U.S. Federal Bureau of Investigation
FC--Facility Characterization
HI--Hazard Identification
HSAS--Homeland Security Advisory System
IPL--Independent Protection Layer
IT--Information Technology
LA--Likelihood of Adversary Attack
LAS--Likelihood of Adversary Success
LOPA--Layer of Protection Analysis
MARSEC--Maritime Security Levels
MOC--Management of Change
NPRA--National Petrochemical and Refiners Association
OSHA--Occupational Safety and Health Administration
PHA--Process Hazard Analysis
PLC--Programmable Logic Controller
PSI--Process Safety Information
PSM--Process Safety Management (Also refers to requirements of 29 
CFR 1910.119)
R--Risk
RAMCAP--Risk Analysis and Management for Critical Asset Protection
RMP--Risk Management Process (Also refers to requirements of EPA 40 
CFR Part 68)
S--Severity of the Consequences
SOCMA--Synthetic Organic Chemical Manufacturers Association
SOP--Standard Operating Procedure
T--Threat
TSA--Transportation Security Administration
V--Vulnerability
VA--Vulnerability Assessment
WMD--Weapons of Mass Destruction
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    *Categories: A = Documentation to be provided to VA team as much 
in advance as possible before arrival for familiarization;
    B = Documentation to be gathered for use in VA team meetings on 
site;
    C = Documentation that should be readily available on an as-
needed basis.

Acknowledgements

    ``Chemical Accident Prevention Provisions'' (part 68 of Title 40 
of the Code of Federal Regulations (CFR)).
    Chemical Facility Vulnerability Assessment Methodology, NIJ 
Special Report, U.S. Department of Justice, Office of Justice 
Programs, National Institute of Justice, July, 2002.
    Counterterrorism and Contingency Planning Guide. Special 
publication from Security Management magazine and American Society 
for Industrial Security, 2001.
    Guidance Document for Implementing 40 CFR Part 68, USEPA, 1998.
    Guidelines for Chemical Process Quantitative Risk Analysis, 
Second Ed., Center for Chemical Process Safety, American Institute 
of Chemical Engineers, 2000.
    Guidelines for Consequence Analysis of Chemical Releases, Center 
for Chemical Process Safety, American Institute of Chemical 
Engineers, 1999.
    Guidelines for Technical Management of Chemical Process Safety, 
Center for Chemical

[[Page 78332]]

Process Safety, American Institute of Chemical Engineers, 1998.
    Guidelines for Technical Planning for On-Site Emergencies, 
Center for Chemical Process Safety, American Institute of Chemical 
Engineers, 1996.
    Inherently Safer Chemical Processes A Life Cycle Approach, 
Center for Chemical Process Safety, American Institute of Chemical 
Engineers, 1996.
    Layers of Protection Analysis, Center for Chemical Process 
Safety, American Institute of Chemical Engineers, 2001
    ``Site Security Guidelines for the U.S. Chemical Industry'', 
American Chemistry Council, October, 2001.
    Bowers, Dan M., ``Security Fundamentals for the Safety 
Engineer'', Professional Safety, American Society of Safety 
Engineers, December, 2001, pgs. 31-33.
    Dalton, Dennis. Security Management: Business Strategies for 
Success. (Newton, MA: Butterworth-Heinemann Publishing, 1995).
    Fischer, Robert J. and Green, Gion. Introduction to Security, 
6th ed. (Boston: Butterworth-Heinemann, 1998).
    Ragan, Patrick T., et al., ``Chemical Plant Safety'', Chemical 
Engineering Progress, February, 2002, pgs. 62-68.
    Roper, C.A. Physical Security and the Inspection Process 
(Boston: Butterworth-Heinemann, 1997).
    Roper, C.A. Risk Management for Security Professionals (Boston: 
Butterworth-Heinemann, 1999).
    Walsh, Timothy J., and Richard J. Healy, eds. Protection of 
Assets Manual (Santa Monica, CA: Merritt Co.). Four-volume loose-
leaf reference manual, updated monthly.

[FR Doc. 06-9903 Filed 12-27-06; 8:45 am]
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