Letter to Mr. Stephen S. McMillin, Acting Director and Deputy Director, Office of Management and Budget

Letter

August 24, 2007

Mr. Stephen S. McMillin
Acting Director and Deputy Director
Office of Management and Budget
Executive Office of the President
725 17th Street, NW
Washington, DC 20503

Dear Acting Director McMillin:

As members of the United States Senate, we write today to highlight concerns we have with an administrative rule recently issued by the Department of Homeland Security (DHS) that will regulate stored quantities of propane. If implemented, this regulation threatens to place a significant regulatory burden upon rural homeowners, farmers, and small businesses. Accordingly, we ask that you modify these regulations to exclude amounts of stored propane that are commonly used by individual homeowners, farmers, and small businesses that operate in rural areas.

DHS published the Chemical Facility Anti-Terrorism Standards Interim Final Rule (herein CFATS or Final Rule) on April 9, 2007, and it became effective on June 8, 2007. The Final Rule sets standards for sites that store chemicals of interest above a threshold quantity and requires their registration with DHS. Under the rule, these sites must register with DHS and conduct a Chemical Security Assessment Tool (CSAT) consequence assessment known as "Top Screen." Once the Top Screen is completed, DHS will categorize all facilities into tiers based upon proposed vulnerability with facilities above a determined threshold required to complete a Security Vulnerability Assessment (SVA). Facilities that DHS determines are at high risk after completing the Top Screen and the SVA will then be required to file a Site Security Plan (SSP) to certify that the chemicals on site are secure.

Attached to the Final Rule is Appendix A which lists the chemicals of interest and the threshold quantities that triggers the initial Top Screen requirement. Currently, Appendix A lists propane as a chemical of interest when stored in quantities greater than 7,500 pounds. Based upon this threshold, any individual or business that keeps quantities greater than or equal to 7,500 pounds of propane would be required to complete the online Top Screen within 60 days of enactment. According to DHS's own regulatory analysis, this Top Screen requirement would likely cost between $2,300 and $3,500 per survey depending on the size and type of facility. Once this survey is completed, solely at the cost of the individual or business, DHS will make a determination whether the facility is "high risk" for a terrorist attack.

While we agree that protecting chemical facilities across the country should be one of the highest priorities for DHS, we are concerned with the scope of these regulations and the undue burden it may place upon rural Americans. Propane tanks are used by virtually all rural homes, farms, and rural small business across the country in areas not commonly supplied by natural gas. Given the current listed aggregate propane threshold of 7,500 pounds (approx. 1,785 gallons), many rural homes that have more than one 1,000 gallon propane tank that provides heat and cooking fuel would be required to fill out the Top Screen analysis. Further, many rural small businesses and agricultural facilities that use propane to heat their businesses and for agricultural uses such as drying grain will also be required to complete a Top Screen analysis. As such, this Final Rule and proposed Appendix A places an undue regulatory burden that disproportionately impacts rural homeowners, farmers, and small businesses across the country just because they store propane as opposed to receiving pipe supplied natural gas.

We believe the Final Rule is overly burdensome for three reasons. First, it imposes a registration requirement upon rural homeowners, farmers, and small businesses that costs thousands of dollars as a preliminary step to determine whether or not they are "high risk." Second, the Final Rule provides DHS the authority to impose civil fines and orders to cease operations for failing to register without offering exemptions for low risk targets. Finally, the registration requirement will include complex and detailed communications requiring back and forth between DHS and the regulated individuals potentially increasing the cost above the projections estimated by DHS. For instance, an elderly family farmer in rural Iowa who has stored propane for years could be subject to these regulations and required to hire an attorney just to ensure that the registration is completed properly. All this would be required prior to DHS finding and determining that such facilities are a threat to homeland security.

An additional concern that arises as a result of the CFATS Final Rule is the potential increase in propane tankers that will be traveling our highways. DHS has acknowledged that the safest point in the propane distribution network is stationary storage and the weakest is product transfer. Given the current listed threshold of 7,500 pounds, many individuals that currently have capacity greater than 7,500 pounds may choose to limit the amount of propane they store below the threshold level. Consequently, these individuals may require more trips from propane distributors to keep their tanks full during the winter heating season. As a result, the rule may have an unintended consequence of creating more vulnerable targets—propane tanker trucks—that will travel our highways and roads with increased frequency to meet this new demand for more frequent fillings.

Appendix A is not yet finalized and DHS still has time to amend the threshold quantities of propane in Appendix A to reduce this impact on rural Americans. Allowing Appendix A to become a final addendum to the CFATS Final Rule with the current threshold of 7,500 pounds of propane would place a serious hardship upon thousands of law abiding Americans who use propane to heat their homes and run their businesses. The Office of Information and Regulatory Affairs (OIRA) at OMB concluded a review the CFATS on April 2, 2007. However, as Appendix A remains incomplete, the full burden of the CFATS regulations has not been felt. Accordingly, as the Acting Director of the Office of Management and Budget, we ask that OMB review the impact Appendix A of the CFATS Final Rule will have and ensure that DHS includes a limited exemption for rural home, agricultural, and small businesses uses.

Thank you for your prompt attention to this matter and for considering the disproportionate impact this CFATS Final Rule and Appendix A may have on rural American homeowners, farmers, and small businesses.

Sincerely,

Chuck Grassley, of Iowa
Bob Casey, Jr., of Pennsylvania
Richard Burr, of North Carolina
Saxby Chambliss, of Georgia
James Inhofe, of Oklahoma
Barbara Mikulski, of Maryland
Kit Bond, of Missouri
Tom Harkin, of Iowa
Ben Cardin, of Maryland
Thad Cochran, of Mississippi
Mike Enzi, of Wyoming
Jon Tester, of Montana
Chuck Hagel, of Nebraska
Dick Durbin, of Illinois
Barack Obama, of Illinois
Ben Nelson of Nebraska
John Thune, of South Dakota