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May 10, 1999

Mr. Chairman and Members of the Committee:

I am Jim Makris, Director of the Environmental Protection Agency's Chemical Emergency Preparedness and Prevention Office. I am accompanied today by Oscar Morales, Associate Director of the Information Management Division, Office of Prevention, Pesticides, and Toxic Substances, and Don Flattery, EPA's Year 2000 Sector Outreach Coordinator. It is a pleasure to be here today to discuss the implications of the Year 2000 (Y2K) technology problem for chemical safety. We appreciate the Committee's efforts in both educating and alerting government, industry, and the public at large to our potential vulnerability to the Y2K problem. We welcome the Committee's invitation to appear here today to discuss the chemical safety aspects of Y2K which we all agree is an important topic for this hearing.

Just to bring the Committee up to date since our appearance at your field hearing in Anaheim in December, EPA has continued to make substantial progress in putting our own house in order by ensuring that our internal systems are Y2K compliant. I am pleased to report that we have evaluated all of our mission-critical systems for vulnerability and have completed the appropriate conversion steps. This success was recognized by the Subcommittee on Government Management, Information, and Technology of the House Committee on Government Reform, and we remain in OMB's top tier ranking of Federal agencies making very satisfactory progress. By ensuring the readiness of these systems, we expect to be prepared to continue to protect public health and the environment on January 1, 2000, and beyond.

Now let me turn specifically to the subject of the impact of Y2K disruptions on chemical safety. As you know, EPA is the Federal agency with primary responsibility for ensuring that the environment and the public are protected from the unreasonable risks of toxic chemicals and other dangerous substances. We identify chemical hazards in the environment, regulate the use of pesticides, protect the public from existing and proposed new toxic chemicals in the marketplace, prevent and respond to the accidental release of hazardous chemicals, and assess the risks of such releases to public health and the environment. In doing all this, EPA operates under four major legislative mandates: the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the Toxic Substances Control Act (TSCA), the Emergency Planning and Community Right-To-Know Act (EPCRA), and Section 112(r) of the Clean Air Act Amendments of 1990.

EPA's Relationship With the Chemical Industry

Under TSCA and FIFRA, the Agency evaluates pesticide and chemical products entering commerce to safeguard against public health hazards and environmental harm. Under FIFRA, this is accomplished by registering and reregistering new and older pesticide active ingredients and by establishing maximum levels for pesticide residues in food. EPA also promotes the use of safer chemicals and manufacturing processes and technologies. Through our pollution prevention programs under TSCA, we encourage the chemical industry to test chemicals in advance of introducing them into the marketplace, to design them at the molecular level to be less toxic to humans and the environment, and to re-engineer chemical processes to make them safer and less wasteful so as to minimize their environmental impact at the time of manufacture.

Following the world's largest chemical accident in Bhopal, India, Congress enacted the Emergency Planning and Community Right-To-Know Act in October 1986, as Title III of the Superfund Amendments and Reauthorization Act. EPCRA helps communities prepare for chemical emergencies and grants citizens and government officials access to information about potential chemical hazards. The law requires industries to participate in emergency planning and to notify their communities of the existence and/or releases of hazardous chemicals. EPCRA's goal is to help citizens, officials, and community leaders to be better informed and understand the risks associated with toxic and hazardous materials in their communities through emergency planning, hazardous chemical inventory reporting, public access to chemical information, hazardous substance release reporting, and the Toxic Release Inventory (TRI) database.

By its enactment of Section 112(r) of the Clean Air Act Amendments of 1990, the Congress recognized the need for facilities to develop or improve their planning and accident prevention programs to reduce the risk of chemical accidents and to allow local communities to enhance emergency preparedness and accident prevention. The law also affirms the rights of citizens to have access to information about the hazards these facilities present. Under the chemical accident provisions of Section 112(r), facilities must conduct hazard assessments, establish accident prevention programs, and bolster emergency response planning. EPA implements these requirements through the Agency's Risk Management Program (RMP) regulations which are aimed at reducing the likelihood and severity of chemical releases.

The Risk Management Plan regulations require facility hazard assessments from over 69,000 facilities nationwide which use or store any of 140 specified chemicals. These assessments address off-site disaster risks caused by chemical releases, fires, explosions, or other natural events. Covered facilities must submit to EPA a Risk Management Plan in 1999, have an accident prevention program in place, and have developed an emergency response plan.

EPA also addresses chemical safety through the Emergency Response Program, a coordinated effort among five EPA headquarters offices and our ten Regional Offices using legislative authority derived from EPCRA, the Comprehensive, Environmental Response, Compensation and Liability Act (CERCLA) --also known as Superfund-- the Clean Water Act (CWA), and the Oil Pollution Act. Under this program, EPA coordinates and implements a wide range of activities to ensure that adequate and timely response measures are taken in communities affected by chemical releases. The program's primary objectives are to take reasonable steps to prevent such emergencies; to prepare emergency response personnel at the Federal, State, and local levels for such emergencies; and, to respond quickly and decisively to such emergencies wherever and whenever they occur within our national borders. EPA and a network of Federal, State, and local responders stand ready twenty-four hours a day to contain and clean up released chemicals.

Y2K Chemical Sector Outreach

Based on our legislative authorities in this area and our long-standing relationship with the chemical industry, EPA was asked by the President's Council on Year 2000 Conversion to take responsibility for outreach to three of the more than twenty-five sectors of economic activity identified as high priority. They are water, waste, and chemicals. As the chemical sector lead, we have been working with chemical industry trade associations to help them address Y2K chemical safety concerns, implement plans to assess and repair potential problems, make contingency plans, and keep the public and Federal, State, and local governments informed of progress.

EPA's goal in our outreach to the chemical industry is to encourage and complement industry efforts to the best of our ability. We believe that we can most effectively address potential Y2K- related chemical risks and accidents by building upon our relationships with the industry through our existing statutory and voluntary programs.

In this regard, we have undertaken a broad array of outreach activities with the chemical industry. EPA speakers have addressed numerous fora. We have distributed specific "tool kit" materials including brochures, handouts, articles, and guidance documents. We have coordinated extensively with chemical industry trade associations. One of the larger trade associations, the Chemical Manufacturers Association (CMA), representing over 190 chemical companies, has initiated programs to share solutions and information with its member companies through the development of a comprehensive Internet website, Y2K contingency planning workshops, and a Y2K workgroup with an extensive industry-wide membership.

The chemical industry and its trade associations are our primary and best source of information related to plant operations, process management, and equipment and systems. In our chemical sector outreach, we will continue to provide additional helpful information regarding Y2K impacts on chemical company operations. We recognize, however, that chemical plant managers possess the knowledge, experience, and expertise on which we must rely. To this end, we have strongly encouraged the trade associations to develop additional information-sharing opportunities as they continue Y2K planning activities in the balance of 1999. CMA has positively responded to this challenge by agreeing to use its Responsible Care program to share Y2K information among members. In addition, the Chemicals Information Technology Association (CITA), a sub-group of CMA member companies participating in the CMA Y2K Workgroup, has developed a Y2K contingency planning guide for use by Association members.

Raising Y2K Awareness

EPA has chosen a coordinated approach of direct outreach to relevant stakeholders, data submitters, and pesticide registrants to ensure that no environmental programs are compromised and that every effort is taken to minimize the potential deleterious effects of computer problems on the regulated community. EPA's Office of Prevention, Pesticides, and Toxic Substances has directly contacted its primary group of data respondents-- including Toxic Release Inventory (TRI) facilities-- and pesticide registrants to remind them of their obligation to ensure the integrity of data reported to the Agency. Companies were also encouraged to work closely with testing laboratories and field sites to ensure that the data, which the Agency must act upon, is valid and reliable.

To further increase Y2K awareness among chemical companies, EPA's Chemical Emergency Preparedness and Prevention Office (CEPPO) developed a Year 2000 Chemical Safety Alert for the chemical industry. The Alert, a copy of which I am submitting with my statement, summarizes the steps that facilities need to take to address Y2K problems and lists the technical resources available on the Internet to help them, such as guidelines, planning documents, testing tools, solutions, services, and product status databases. The Alert urges facilities to prioritize critical systems for Y2K remediation and testing and emphasizes Y2K contingency planning in coordination with emergency planning and response partners.

Assessment of Chemical Industry Readiness

As is the case in other sectors, assessments of readiness are largely based on Y2K industry surveys. A number of these surveys have been conducted throughout the chemical industry. The most complete survey work has been done by CMA. As of March 1999, nearly 40 % of CMA's respondents --those who provided dates-- expect to be Y2K ready by the end of March 1999; 90 % say they will be ready by the end of September 1999; and, all respondents indicate they will be Y2K ready by December 1999. The survey results also indicate that as of February 1999, all of the respondents have action plans in place to address their potential Y2K problems. Of the respondents, 99 % have plan elements that include prioritization of the company's hardware, software, and embedded systems according to their mission-critical functions; 96 % of the plans include elements to assess supporting infrastructure systems such as communications, power, and other building systems; 98 % have addressed the readiness of key suppliers, customers, and organizations that make up the supply chain; and 97 % address safety, environmental, and health systems. Testing of mission-critical systems is a plan element for 98 % of the respondents; 89 % have plans to communicate Y2K readiness internally; 81 % plan to communicate externally; and, 92 % of the respondents have contingency planning elements for all business systems.

In addition to the CMA survey, which serves as an indicator of sector readiness, many CMA members are members of other trade organizations currently working with the President's Council on Y2K issues. The most notable trade association with strong ties to and shared membership with CMA is the American Petroleum Institute (API). API surveys have reported high states of readiness among member companies.

Based on these surveys and others conducted by the Chlorine Institute and the Pharmaceutical Research and Manufacturers of America, we feel confident that large companies with sufficient awareness, leadership, planning, and resources are unlikely to experience Y2K failures. We are not as confident, however, about the readiness of small and medium-sized plants. Our participation in the U.S. Chemical Safety and Hazard Investigation Board's December 18, 1998 workshop, convened to discuss Y2K and chemical safety issues, bears out this finding. As highlighted in the Board's report, we simply do not have adequate information about the readiness of smaller companies.

Small and Medium-Sized Company Preparedness

To address the issue of preparedness among small and medium-sized companies, EPA's Office of Chemical Emergency Preparedness and Prevention (CEPPO) and our Office of Prevention, Pesticides, and Toxic Substances (OPPTS) have initiated a number of recent activities. In cooperation with CMA and the U.S. Chemical Safety and Hazard Investigation Board, EPA organized a trade group meeting of smaller or specialty chemical companies with a membership of approximately 7,000-10,000 chemical manufacturers, formulators, retailers, and distributors. This group has undertaken an additional survey to determine the extent of the Y2K problem among smaller companies and of the Y2K remediation efforts which may still be needed. We expect the results of this survey in late spring. Using these results, we hope to formulate more targeted plans for those companies identified as vulnerable.

EPA implemented an outreach campaign aimed at distributing the Y2K Safety Alert to small and medium-sized companies during the Spring of 1999. CEPPO also sent an electronic copy of the Alert to a group of small business trade associations and State Small Business Assistance Centers with which we maintain regular contact. EPA also made the Alert available to the 69 district offices that participated in the recent Small Business Administration's "National Small Business Y2K Action Week."

In addition, we are encouraging the development of a new guidance document based on expertise drawn from this group for use by small and medium-sized chemical companies. This document will be jointly developed and distributed by EPA, the Board, CMA, the Center for Chemical Process Safety (CCPS), and the consortium of smaller and specialty chemical associations. In order to help us determine the most useful Y2K information needed by the smaller companies, the trade associations will be soliciting recommendations from their membership.

Preparedness to Respond to Potential Chemical Industry Y2K Failures

EPA's approach is to build upon --not create anew-- the existing Federal emergency planning network to address Y2K risks in a number of ways. EPA's Office of Chemical Emergency Preparedness and Prevention (CEPPO) and Office of Emergency and Remedial Response (OERR) actively manage EPA's national level program for preparedness, planning, and coordinating response to chemical releases. EPA is involved in a network of contingency plans, representing different levels of geographical scope, which forms the backbone of our country's efforts to prepare for and coordinate responses to emergency incidents, including those resulting from Y2K malfunctions. This network is called the National Response System.

The National Contingency Plan is the Federal government's primary plan to prepare for chemical emergencies and to coordinate with other emergency responders. The Federal government also prepares Regional and Area Contingency Plans that coordinate effective responses within each of the ten standard Federal Regions and other designated Areas covering Alaska, the Caribbean, and several islands in the Pacific. At the local level, Local Contingency Plans are developed to prepare and organize local resources in the event of the accidental release of hazardous substances.

Under the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA), State governors establish State Emergency Response Commissions (SERCs), which, in, turn establish Local Emergency Planning Committees (LEPCs) for districts within each State. These emergency planning organizations are responsible for developing local contingency plans using chemical inventory information collected as part of the law's community right-to-know provisions. EPA has urged the SERCs and the LEPCs to encourage their local industrial facilities to address Y2K problems and to coordinate Y2K emergency response plans with the LEPCs.

We are working directly with the Federal Emergency Management Agency (FEMA) and the National Response Team (NRT) to carry out a full range of Y2K contingency planning activities across all Federal agencies. Recently, EPA served as a key participant in FEMA-organized Y2K contingency planning workshops. These workshops were designed to allow Federal planners to exchange readiness and planning information with emergency responders at the State and local level. Approximately 2,000 emergency management specialists, with representatives from every State, attended these workshops. EPA has been vigorously participating in many planning efforts as a Federal Response Plan lead agency with a particular emphasis on carrying out our responsibilities as the Chair for the Emergency Support Functions for Hazardous Materials. As a result of the Emergency Planning and Community Right-to-Know Act, Local Emergency Planning Committees (with participation from State and local planners and other community officials and representatives) already have contingency plans in place for emergency response. These contingency plans are designed for many types of hazardous materials emergencies, including those caused by potential Y2K disruptions.

Y2K Planning Linked to the Risk Management Program

Mindful of the potential for process shutdowns and accidental releases, EPA has encouraged facility managers to think about their Y2K readiness as they prepare their Risk Management Plans (RMPs). EPA's previously described Y2K Chemical Safety Alert reminds managers that addressing Y2K risks is part of their responsibility to prevent accidents under the General Duty Clause of Section 112(r) of the 1990 Clean Air Act Amendments and Risk Management Program requirements. We also have placed Y2K reminders in the RMP reporting instructions and on our Website. RMP plans submitted to EPA must describe how facilities prevent or minimize chemical accidents and how they will promptly respond to accidents that do occur. EPA is encouraging facilities to address their Y2K readiness in an RMP executive summary. Linking sound Y2K planning to the Risk Management Program is consistent with our approach of utilizing existing regulatory and voluntary programs to address Y2K readiness.

Y2K Enforcement and Compliance Assurance Program

EPA expects the chemical sector, like every other sector, to be in compliance with environmental regulations before, during, and after the Year 2000. Regulated entities will not be allowed to use computer-based failure as a shield for not discharging their environmental compliance obligations. At the same time, EPA's Office of Enforcement and Compliance Assurance is actively working in several ways to promote the timely assessment and correction of Y2K problems.

EPA issued its Y2K enforcement policy on November 30, 1998. The policy is designed to encourage prompt testing among all sectors of computer-related equipment to ensure that environmental compliance is not impaired by the Y2K computer bug. Under the policy (published on the Internet at www.epa.gov/year2000 and in the March 10, 1999 Federal Register), EPA states its intention to waive 100% of the civil penalties that might otherwise apply, and to recommend against criminal prosecution for environmental violations caused during specific tests that are designed to identify and eliminate Y2K-related malfunctions. The civil penalty waiver and recommendation against criminal prosecution are limited to testing-related violations disclosed to EPA by February 1, 2000, and are subject to certain conditions, such as the need to design and conduct the tests well in advance of the dates in question, the need to conduct the tests for the shortest possible period of time necessary, the need to correct any testing-related violations immediately, and other conditions to ensure that protection of human health and the environment are not compromised.

EPA's recent publication of the policy in the Federal Register incorporated numerous clarifications suggested by commenters, some of which are directly relevant to chemical industry safety. For example, the policy now clarifies that Y2K testing protocols should be designed to prevent or limit violations that may result from such testing (e.g., through adoption or revision of appropriate contingency plans). This will help to ensure that all prudent steps are taken to ensure that such testing is as safe as possible. For violations occurring after January 1, 2000, EPA's long-standing enforcement response and penalty policies will continue to recognize a chemical facility's good faith efforts to test and remediate Y2K problems and other potentially mitigating factors in determining an appropriate enforcement response.

The enforcement and compliance assurance program is also reaching out to educate the chemical industry about Y2K problems. ChemAlliance, the Internet-based compliance assistance center for the chemical industry, posts a Y2K notice on its front page. (ChemAlliance is the product of a partnership between the chemical industry through various industry organizations, EPA's Office of Enforcement and Compliance Assurance, academia, and others.) The website (www.chemalliance.org) highlights the six-step action plan, described in EPA's Y2K Fact Sheet,"The Millennium Bug," and provides real life examples of equipment failure at chemical plants caused by confusion over leap year and Y2K testing, and offers links to EPA, other Federal, and trade and industry resources for Y2K. We believe these actions will help to motivate chemical companies to proactively meet their Y2K responsibilities.


In closing, we believe the chemical industry is making good progress in its efforts to identify and fix potential Y2K problems. EPA intends to continue working with chemical industry associations, private groups, and the U.S. Chemical Safety and Hazard Investigation Board to assess readiness, to promote effective planning, and to encourage the sharing of preparedness information with chemical customers, the general public, and local, State, and Federal officials. In doing so, we will utilize the many existing mechanisms available which are designed to allow us to perform our statutory responsibilities in this area as well as to effectively address potential Y2K problems in the chemical sector. We intend to continue to make this effort a priority with the help of this Committee.

Again, thank you for the opportunity to appear here today. I would be pleased to answer any questions you may have.


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