

It seems like something from a James Bond film, with code names like Top Screen and "tiered security risk." Yet for the propane gas industry and thousands of other chemical facilities, this is no fiction.



Starting June 8, makers and sellers of the colorless, odorless, flammable gas and other chemicals face a new Department of Homeland Security rule requiring them to complete a secure online survey assessing whether they are a high-risk target for terrorists. If so, they must make security fixes or face $25,000-a-day fines or be put out of business.



The rule is the latest, and one of the most sweeping, of more than 150 the department has issued since the Sept. 11, 2001, terrorist attacks.



The complaints of propane manufacturers illustrate the delicate balance the department must maintain as it tries to terror-proof the nation without prohibitive expense for the industries. The department figures it may cost companies as much as $3.6 billion over three years to secure the facilities.



The rule will "reduce the safety of propane customers, hurt the environment and needlessly cost American businesses hundreds of millions of dollars on a paperwork exercise that will not improve our country's national security," said Philip Squair, senior vice president of the National Propane Gas Association. The Washington trade group represents 3,500 propane-related businesses.



Some 40,000 facilities across the nation would have to go through the initial screening, according to regulators' estimates. That's based on the 344 "chemicals of interest" listed in the appendix to the 59-page rule published last month.



The propane industry said the government estimate was too low. According to its calculations, about 144,000 propane facilities alone would be affected.



Some trade groups, including the International Dairy Foods Association (concerned about anhydrous ammonia in refrigeration systems) and the American Feed Industry Association (urea used in animal feed that could be used to make explosives), also have told federal regulators they don't present much security risk.



On the other hand, the American Chemistry Council, which speaks for 130 chemical companies including Dow Chemical, said it supports the rule. Members already have spent $3.5 billion to protect their facilities against terrorism, said council spokesman Scott Jensen.



"The interim final rule was a step forward in improving chemical facility security," he said.



Jensen suggested some smaller companies covered by the initial screening may be overreacting, since it's unlikely they will end up in the pool of 300 to 400 facilities the government thinks will have the highest risks. The risk is based on elements that include the nature of the substance and the facility's proximity to large populations.



Though other companies officially say they support the mission of the department, their preference often has been to seek voluntary compliance or stress that existing state and local storage and security requirements are sufficient.



In the case of propane, the association asked the department not to include the gas in the rule because it is "non-weaponizable." It has already been exempted from similar security requirements by the Environmental Protection Agency for accidental releases of chemicals, the trade group said.



The cost and benefits of many of the department's previous rules have been hard to assess since it is almost impossible to predict an attack, or whether one will ever occur, said Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University. The center supports free-market approaches and limited government.



Predicting the cost of the new rule is particularly difficult, because it's hard to gauge which risk level facilities will fall into. That will determine how much companies will have to spend.



It took five years to issue the chemical facility rule, even with prodding from Congress and public pressure. The department said its intent was "to work aggressively with chemical facilities presenting the very highest security risks first."



Critics said parts of the chemical industry are comfortable because it allows high-risk facilities to figure out how to meet a particular standard, rather than having the government tell them exactly what to do.



Groups critical of the rule wanted the government to mandate that companies use less-risky chemicals, instead of emphasizing security measures. They also wanted clear assurances that the federal government wouldn't overrule New Jersey and other states that already have chemical security rules in place.



"It provides cover to the chemical industry," said Clayton Northouse, information policy analyst with OMB Watch, a nonprofit group in Washington that monitors the regulatory process and openness in government. "It's woefully inadequate."



OMB Watch thinks more information about the program should be disclosed to the public and even more companies should be included in the initial screening.



The propane industry argues that it shouldn't be on the list at all. Squair said the department has dramatically undercounted the number of propane facilities that sell or store at least 7,500 pounds of the gas. (By comparison, the standard tank attached to your backyard grill is 20 pounds, containing about 4.3 gallons of gas weighing 17 pounds when full.)



Large retailers in the propane industry, such as AmeriGas Partners in Valley Forge, Pa., and Ferrellgas Partners in Overland Park, Kan., would have to use the Top Screen tool. So too, Squair said, would small businesses, hospitals, nursing homes, campgrounds, farms and homeowners who might have two big tanks in the backyard to heat a large house and a pool with a Jacuzzi.



Homeland Security regulators were nonplussed about pleadings for leniency. The government's position is that the need for a comprehensive picture of what facilities are at risk outweighs some industries' unhappiness, one official said.



Department spokesman Russ Knocke declined to comment.



Cindy Skrzycki is a regulatory columnist for Bloomberg News. Her e-mail address is [email protected]







