Burden of compliance

Once the federal government merged nearly two dozen agencies into the new Department of Homeland Security five years ago in the name of combating terrorism, two results were inevitable – more regulations and more fees to pay for those regulations.

Pat Hyland

True to form, the department’s belated Nov. 20 announcement of the final roster of substances subject to the new Chemical Facility Anti-Terrorism Standards adds at least one more layer of paperwork and a cost of $2,300 to $3,500 for most all of the 8,000 retail propane storage facilities across the nation. Check that – DHS will not accept paper mail or faxes; Internet surveys only for an industry of small, rural businesses that likely don’t possess great broadband connectivity or have online access at all. What a great way to discourage participation.

All 30,000-gallon storage tanks commonly used at propane bulk plants are on the list. That means plant owners must complete the DHS “Top Screen” online survey by Jan. 22, 2008 – thoughtfully at the peak of the industry’s most demanding season. The agency will then evaluate the data submitted and determine whether each facility should be categorized as “high risk” and subject to further regulatory compliance. Just a hunch – probably additional fees for those who move on to Round 2, right?

Survey responses will be run through a computer program that calculates populations at risk and potential consequences. If deemed a high risk, two more reports will be required.

A Security Vulnerability Assessment must be completed within 60 days of notification by DHS. It includes an asset characterization, threat assessment, security vulnerability assessment, risk assessment and countermeasures analysis.

Then, a Site Security Plan must be developed within 120 days of the initial DHS notification to address each vulnerability, describe how security measures will address various potential terrorist vulnerability and describe how security measures will meet or exceed DHS-mandated performance standards.

Both of these reports must be sent to DHS for review and approval. Violations of these regulations can bring fines of up to $25,000 per day.

Believe it or not, it could have been much worse. DHS originally wanted to include all facilities that stored more than 7,500 pounds (1,785 gallons) of propane. That threshold would have required all propane retailers plus hundreds of thousands of farms, small businesses and homeowner consumers to pay the fee and fill out the survey. Good luck explaining that to your loyal customers already irked by extraordinary fuel prices this winter.

DHS apparently did listen to the National Propane Gas Association‘s argument that those rules would actually decrease safety in our industry by creating substantial incentives for customers to demand more deliveries of smaller quantities just to stay below the regulatory threshold.

I guess the “superagency” didn’t grasp the concept that more frequent deliveries and product transfers obviously heighten the likelihood of transportation-related accidents. It has since amended that threshold level to 60,000 pounds (14,285 gallons) and specified that vessels holding less than 10,000 pounds (2,358 gallons) do not have to be counted toward the 60,000-pound cumulative cutoff.

Despite that significant victory, which was greased by the submission of about 4,000 comments critical of the plan, the frustrating bottom line is this: The DHS process effectively requires retail and some customer propane facilities to pay for and perform a Risk Management Program worst-case release scenario evaluation from which they are exempt from doing under federal law.

Although we certainly support security plans for our industry and nation, it is increasingly clear why propane marketers consistently cite their frustration with overly invasive federal bureaucracy as a top concern and a primary reason for getting out of an otherwise rewarding business.