CFATS and Security from a Chemical Distributor’s Perspective

J’on RiderGallade Chemical, Inc.

National Association of Chemical DistributorsJuly 2008

California Chemical Security Conference

• Chemical Distribution Overview• NACD’s Responsible Distribution

Process and Security• CFATS Risk-Based Performance

StandardsRBPS 4 – Deter, Detect, and Delay

RBPS 5 – Shipping, Receipt, and Storage

RBPS 6 – Theft and Diversion

Introduction

• An essential component of the global manufacturing and distribution network

• Virtually every sector of the U.S. manufacturing base relies on chemical distributors for prompt availability of chemicals in a variety of grades and package sizes to produce their goods

Chemical Distribution Overview

In general, distributors take title to bulk and/or non-bulk chemicals from suppliers and re-sell them to end users• Some repackage bulk chemicals• Some (factory pack) do not repackage• Some blend products• Some act as broker-traders• Vast majority own or lease warehouses for

temporary storage

Chemical Distribution Overview

Chemical Distribution Overview

• Most distributors transport the chemicals they sell to their customers

• About half have own truck fleet

• Almost all use common carriers

• Some use rail cars (ship/receive)

• Some use barge

Chemical Distribution Overview

• Pharmaceuticals• Textiles• Automotive• Paints & Coatings• Soaps &

Detergents• Perfumes • Energy

• Food Flavorings• Plastics• Rubber

Compounds• Cosmetics &

Toiletries• Water Treatment• Many, many others

Industries Served

Manufacture

Distribution

End-Use Customer

Recycle/Reclamation

Raw Material

Consumer

Simple Value Chain

US Chemical Industry

ChemicalDistributors

Snapshot – Chemical Distribution

National Association of Chemical Distributors www.responsibledistribution.com

Chemical Distribution Overview

In 2007:More than 5,300,000 shipmentsMore than175,000,000 milesMore than 71,000,000,000 pounds

RDP• NACD initiative since 1991

• Mandatory NACD membership requirement

• Mandatory third-party verification

– Both as a pre-membership requirement & once every 3 years

• Sanctions for non-compliance

• Includes security requirements

Responsible Distribution ProcessSM

• Risk Management• Compliance Review & Training• Carrier Selection• Storage & Handling Security Issues• Job Procedures & Training• Waste Management• Emergency Response & Public Preparedness• Community Outreach• Product Stewardship• Internal Audits• Document Control• Corrective & Preventative Actions

RDP Codes of Management Practice

Verification of Implementation of RDP Security Measures by an Independent Third-Party Firm

All NACD Members and Chemical Handler Affiliates such as public warehouses required to undergo and successfully complete on-site third-party verification once every three years to verify implementation of RDP Policies and Procedures, including security measures.

Responsible Distribution ProcessSM

• Ensuring Physical Security of Facilities –CFATS, RDP Handling & Storage Code

• Ensuring Security Through Transportation – DOT HM-232, RDP Carrier Selection Code

• Assessing Security of Critical Third Parties – DEA “Know Your Customer” Policy, RDP Product Stewardship Code

Distribution Security Challenges

Risk-Based Performance Standards

• #4 - Deter, Detect, and Delay

• #5 - Shipping, Receipt, and Storage

• #6 - Theft and Diversion

Chemical Facility Anti-Terrorism Standards

• Deterrence: Risk of failure overcomes risk of success – Not focused on stopping attack, but on convincing an adversary not to attack in the first place

• Detection: Ability to identify potential attacks – Needs to occur prior to attack or early enough to allow effective adequate response

• Delay: Ability to slow down attack to allow appropriate response at least until local law enforcement and other response can arrive

CFATS RBPS 4 – Deter, Detect and Delay

Measures Used Dependent on Risk Tier

• Tier One – Highly Reliable, Absolute• Tier Two – Reliable, High Likelihood• Tier Three – Reasonable Ability• Tier Four – Some Ability

CFATS RBPS 4 – Deter, Detect and Delay

As with other RBPSs, there is no –“One Size Fits All”

• DHS cannot mandate specific measures

• No specific measure is the absolute right solution

• Single measures or a combination of measures can be used

CFATS RBPS 4 – Deter, Detect and Delay

Deterrence• Preventive• Convince Adversary to Go Someplace Else• Physical Barriers• Security Personnel• Obvious Electronic Surveillance• Lighting

“BE OBVIOUS”

CFATS RBPS 4 – Deter, Detect and Delay

Detection• Ability to identify precursors and potential attack

early enough to initiate response

Possible measures include:• Uniformed Physical Patrols• CCTV Systems • Other Monitored Electronic Detection/Sensing

Systems• Layered Security Measures Advisable • Measures may be the same as those used in RBPS

1 (Restrict Area Perimeter)

CFATS RBPS 4 – Deter, Detect and Delay

Delay• Impede Adversary’s Progress through

physical Measures and staffing time for protective forces to respond

• Barriers and barricades• Multiple layered where applicable• Well-coordinated response planning

CFATS RBPS 4 – Deter, Detect and Delay

Secure and monitor the shipping, receipt, and storage of hazardous materials for the facility

•Minimize the risk of theft or diversion of, or tampering with, any chemical of interest (COI) possessed by the facility, whether stored on-site or staged in areas adjacent to the facility (i.e. a rail car)

CFATS RBPS 5 – Shipping, Receipt, and Storage

Possible RBPS 5 Security Measures

Product Stewardship• Know Your Customer• System to Verify All Incoming and Outgoing

Shipments

Inventory Controls• Identification and Monitoring of All On-Site COI• Physical Security for All On-Site COI

*Train personnel on possible intruder recognition techniques

CFATS RBPS 5 – Shipping, Receipt, and Storage

Deter theft or diversion of potentially dangerous chemicals

• Preventing theft or diversion of dangerous chemicals such as materials that can be used as chemical weapons or their precursors or explosives or their precursors

Only applicable to facilities that have COIs with a theft security issue

CFATS RBPS 6 – Theft and Diversion

Possible RBPS 6 Security Measures(Should address both insider and outsider threats.)

Inventory Controls•Tracking Systems•Accurate Monitoring

Procedural Measures•Restricted Access to Areas with Theft COI•Two-Person Rule•Personnel Training

Physical Measures•Secured and Monitored Storage Facilities•Tamper-evident Locks or Other Security Devices

CFATS RBPS 6 – Theft and Diversion

Questions?

Visit NACD at www.nacd.com orwww.responsibledistribution.com

Chemical Distribution Security