A  Report for the MIC Task Force
  P,rogram Evaluation Division
  6'ffice of Management "Systems and Evaluation
  March  V "1985                     " -

     This report describes the current safety practices in the
     chemical manufacturing industry and the framework of
     federal, state, and local laws that guide those practices,
     particularly those intended to prevent sudden, catastrophic
     releases of hazardous substances.  The information in
     the report is based primarily on discussions with two
     large, multi-facility chemical companies and two small,
     single-plant firms, supplemented by interviews with two
     states and representatives of the insurance industry.

     In general, the external requirements that control and
     monitor the safety practices of the chemical industry
     are very limited in scope and in depth.  Requirements
     intended to prevent releases of hazardous materials,
     primarily under EPA or state air permitting programs,
     focus on controlling continuous or routine emissions fron
     normal operations, rather than on unintended releases.
     Regulations intended to minimize the effects of an accident
     through emergency response measures focus on in-plant
     effects and worker protection, and generally do not address
     releases that affect the surrounding community.

     One exception is the regulatory framework governing the
     transportation of hazardous materials.  DOT regulations
     are fairly comprehensive, particularly for acutely
     hazardous materials, prescribing packaging and labeling
     for hazardous materials in transport, and design standards
     for certain transport vehicles.

     No external agency or entity now conducts a comprehensive.
     evaluation of the chemical process itself to determine
     whether it is designed and operated properly, and whether
     back-up systems and emergency procedures are adequate.

     Nevertheless, the chemical companies take extensive pre-
     cautions to prevent accidents and releases that go far
     beyond what is required by law.   The companies'  principal ,
     motivations for these voluntary actions are:

     -  Concern for corporate profitability and employee morale;
        A well-run plant with few accidents is more profitable,
        and an employee with confidence in the safety of his
        work environment is more productive.

     -  Concern for financial loss due to property damages,
        loss of use, or liability claims;  Most companies self-
        insure for a large portion of their potential  costs,
        which translates to direct financial loss for damages
        when accidents occur.  Costs due to liability for
        damages from product use, worker injuries, and environ-
        mental impairment, or damage occurring outside the
        plant, can be significant.


   Sources of Information
   Control ^Points in the Manufacturer
     and Marketing of Chemicals
   Impact of Insurers on Safety Behavior

(Under each of the following headings as appropriate)
   Federal Controls
   State Controls
   Local Controls
   Insurer Controls
   Industry or Engineering Standards
   Large Company Practices
-  Small Company Practices






    Concern for  insurabilityand insurance  costs;  A company's
    ability to obtain  insurance  against  risks  and  the size
    of  the  premiums  depends  on its  accident and  loss record.

 The large  companies devote  considerable resources to
 hazard evaluation,  process  design  and safety  features,
 employee training,  and  internal inspections to  ensure
 equipment  is  in proper  working  condition and  operating
 procedures are  followed.  The companies conduct extensive
 analyses to ensure  a  new  process will operate safely,
 hypothesizing possible  events and  equipment failures, and
 building in back-up systems,  response mechanisms, and
 procedures to reduce  the  possibility of accidents and
 resulting  damages when  accidents occur.

 By  contrast, the small  companies have far  fewer resources
 available  for safety  assessments.   They generally do not
 have formal safety  review and evaluation systems  in place
 like those used by  the  larger firms, and tend to  rely on
 suppliers  and published sources of  information  for hazard
 data.   They depend  more on  local authorities  for  fire-fighting
 and other  emergency response  services,  while  large plants,
 for the most part,  are  self-sufficient.

 However, neither of the small companies interviewed handles
 extremely  hazardous materials.   They know  the limits of
 their  equipment and expertise and will  not produce or
 use chemicals with  hazards  they are not equipped  to handle.

 Moreover,  the small companies generally use and produce
 relatively small quantities of  chemicals.   They sell
 almost exclusively  to large chemical firms, who use
 the small  chemical  manufacturers when they need only a
 limited amount  of a specific  chemical that is not econom-
 ically feasible for them  to produce.

 The small  firms use batch processes and  specialize in the
 manufacture of  a limited  range  of related  chemicals.  They
 know the handling characteristics and potential hazards
..of  these chemicals  well.

 Both of the large firms have  undertaken  intensive self-
 evaluations in  response to  the  catastrophe at Bhopal.
 They are identifying  the  chemicals they  use that  have the
 potential  for serious effects if a release  were to occur
 and inspecting  their  plants and procedures to ensure they
 are adequate.   In addition, one of the  small  firms has
 joined with several of  its  neighboring  plants to  work
 with local  authorities  to develop emergency procedures.
 They also  intend to evaluate  the safety  practices  of each
 of  the participating  firms.

         Current Practices in Handling Hazardous Chemicals
                      in the Chemical Industry
     Chemical manufacturers operate within a framework of
federal, state and local laws that guide many of their safety
practices.  A number of incentives - concern for insurability,
avoidance of liability, and worker safety and morale - encourage
companies to go beyond the minimum required by law.  This report
examines current safety practices in the chemical industry that
affect the chance of an accidental, catastrophic release of a
hazardous chemical to the environment or the potential impact of
such a release.  It also discusses the internal and external controls
intended to ensure that companies behave responsibly in handling
dangerous chemicals.

Sources of Information

     The report is based primarily on interviews with officials of
four chemical manufacturing companies: two large companies with
many domestic and overseas plant sites and two small, owner-operated
companies with single plants.  The large companies are among in
the top five in chemical production, with annual sales of more
than S5 billion.  One company manufactures basic chemicals only,
while the other produces both end-products and basic chemicals.
Both have large safety departments in corporate headquarters that
design new processes and safety systems and oversee safety practices
in individual plants.

     Each of the small companies that were interviewed have annual
sales of $4 to $10 million, or a hundred-fold less than the major
companies.  Both companies produce specialty chemical intermediates,
usually in small quantities (one company manufactures a maximum of
40,000 pounds per chemical product, the other 100,000 pounds, and
both might produce as little as one pound of a given product).
The companies use batch processing to manufacture a variety of
related chemicals: one company specializes in variations of long
chain, saturated alkanes, brominated alkanes, and alkenyl succinic
anhydrides; the other in intermediates for pharmaceutical chemicals.
In general, the feedstocks and products handled by these two firms
did not have extremely hazardous properties; flammability and
chronic effects, like potential carcinogenicity, are the properties
of greatest concern.

     Small chemical producers occupy a valuable niche in the chemical
manufacturing field: they specialize in certain classes of chemical
products and produce volumes too small to be economically feasible
for large companies with their dedicated equipment and large bureau-
cracies.  Both small companies interviewed sell almost exclusively
to large chemical manufacturers.


     In addition to consulting with chemical manufacturers, we
talked to several state agencies in two states to supplement
information provided by the companies on state and local regulations
We also met with a representative of the insurance industry to
discuss that industry's influence on safety practices.

Control Points in the Manufacture and Marketing of Chemicals

     This discussion covers eight areas where external controls
and internal decisions about safety systems and precautions affect
the liklihood of catastrophic release similar to that which occurred
in Bhopal.  These are:

       o  Chemical hazard evaluation
       o  Siting of a new chemical plant or process
       o  Process and equipment design
       o  Construction
       o  Process operations and maintenance
       o  Emergency response
       o  Product marketing
       o  Transportation

     In each area, we discuss federal, state, and local laws that
control or influence company decisions, the role of other outside
forces, and the companies practices and motivations.

     The discussion of federal laws that regulate chemical companies
primarily covers laws and authorities mentioned by industry repre-
sentatives in our interviews, and therefore is not a comprehensive
or exhaustive list of all the federal laws that might influence
company behavior.  A more complete analysis of federal statutes
and regulations is covered in other work conducted for the Task

     Information presented here on controls at the state and local
level is derived from discussions with two states and with the
industry representatives.  While we have tried to reflect the
situation in states and localities generally, some states and
local authorities may have somewhat different laws and concerns
than those described here.

Impact of Insurance on Safety Behavior

     Concern for liability and insurability influence company
behavior in all of the areas listed above.  All firms insure to
some extent against property damage, worker compensation claims,
and product liability.  Many carry other types of liability
insurance as well.

     The current situation in insurance creates strong incentives
for companies to take actions to reduce the risk of accidents.
First, premium costs are based on a company's past safety record.
A firm can significantly reduce insurance costs by lowering its
accident rate.  Moreover, a company with an unusually bad accident
history faces loss of insurance coverage.

•  .:                           -3-

     Second, many companies self-insure for a portion of their
potential damage or liability costs, building predictable losses
into their operating costs.  This practice of self-insurance thus
translates into direct financial loss to the company if accidents
occur.  A large company may self-insure for up to the first $50
million in damages, carrying only catastrophic insurance coverage
for claims that exceed that amount.

     Third, insurers influence a company's safety practices directly
by inspecting a plant when a policy is first issued and often
requiring certain safety practices as a condition of the policy.

     Fourth, liability insurance for sudden or accidental releases
outside the workplace boundaries, called "environmental impairment
liability," is becoming increasingly difficult to obtain.  A company
must seek to minimize this kind of risk to prevent bearing the full
amount of any financial loss if it cannot obtain insurance.


     In order to design and operate a safe process, the company
must first know the hazards of the chemicals it uses and produces.
This may involve testing new chemical products in the research
phase with an eye toward future product liability, or evaluating
the hazards of feedstocks and intermediates to assess whether a
product can be made safely.

Federal Controls

o    Under the Toxic Substances Control Act (TSCA) EPA reviews
     available data on new chemicals to ensure they will not
     present unreasonable risks.  Although it focuses on the
     properties of proposed new chemicals, EPA can also assess the
     hazards of the production process.  It can impose a variety
     of controls on the manufacturer, ranging from testing and
     worker safety precautions, to a total ban on production.

o    Under the Federal Insecticide, Fungicide and Rodenticide Act
     (FIFRA), EPA reviews and registers pesticide products, weighing
     the risks of each product against its efficacy.  EPA evaluates
     only the product and its use and does not have authority to
     consider the hazards associated with its manufacture.

o    The Occupational Safety and Health Administration (OSHA) has
     set permissible exposure limits (PEL) in the workplace for
     some 400 chemicals and developed comprehensive standards for
     an additional 22..  To use or produce these chemicals, a
     manufacturer must design a process that ensures levels in the
     workplace will be below the PEL.

o    OSHA has also recently promulgated a hazard communication
     standard, or "right to know" regulation, effective in November
     1985.  It requires manufacturers to develop hazard information
     on all their products and transmit that information through
     labels and material safety data sheets (MSDS) to their workers
     and industrial customers.

o    The Department of Transportation (DOT), under the Hazardous
     Materials Transportation Act, places labeling, packaging and
     other requirements on chemicals with certain hazard properties
     while in transport.  To comply with DOT regulations, a manu-
     facturer must know if his chemicals fall into one of DOT's
     hazard classes.

St^ate Controls

o    Pew if any states have laws that specifically require companies
     to test their chemicals for hazards, and most states do not
     know the chemicals in use in their states.

o    However, both states we interviewed recently passed "right to
     know" laws, similar but broader than OSHA's, that require all
     employers to transmit chemical identity and hazard information
     to their users and to the state.  In one state, the law applied
     to all chemical products; in the other, it applied to a list
     of over 800 chemicals developed by the state.  Laws like
     these indirectly encourage testing to identify hazards,
     although the two states did not know whether more testing was
     actually taking place.

o    The question of preemption of similar state laws by the new
     OSHA hazard communication law has not yet been settled.

Large Company Practices

o    Testing to evaluate the hazards of a proposed chemical and
     the intermediates involved in its production begins at the
     research phase and continues throughout process development.
     Nearly all chemicals used or made in the process are tested
     to determine their physical properties, such as flammability
     and corrosivity, and acute toxicity.  A series of short-term •
     tests for chronic effects like mutagencity and teratogencity
     are also run on most organic chemicals.  The results of these
     tests determine what the controls and safety procedures used
     in the production process will be.

o    The company may decide not to proceed with >the development of
     a new product if the results of the hazard evaluation indicate
     that the process may create serious, uncontrollable hazards.
     The company will first seek a substitute chemical or a safer
     synthesis route.  If no workable alternative is found,  product
     development may stop.

     -  One company decided not to produce a pesticide that it found
        was capable of producing irreversible eye damage.   The company
        believed there was  no way of guaranteeing that applicators in
        the field would be  protected.

o    New hazard information on a chemical already in production
     has also affected company decisions.

        A solvent used in making a pigment was found to be a mild
        carcinogen.  Although carefully handled, it was produced
        .in very large quantities.  The company believed the solvent
        presented an unacceptable risk to its employees and stopped
        production of the pigment.

Small Company Practices

o    While the large companies conduct extensive hazard testing on
     the chemicals they use and produce, the small companies primarily
     use hazard data developed by others.  They rely on literature
     searches of scientific journals or public data bases to assess
     the hazards of unfamiliar chemicals.  They also obtain infor-
     mation from chemical suppliers, although there is considerable
     variation in the quality and completeness of the information

o    The small companies treat "new" chemicals, those subject to
     EPA review under TSCA, quite differently from existing ones,
     even those that are new to the company.

     -  One company hires outside labs to test new chemicals for
        their acute hazard properties and frequently for chronic
        hazards using an Ames test.  Although such testing is not
        required, the company prefers to have EPA review real
        hazard data rather than have to rely on an assessment of
        structural analogs.

        The company usually decides not to manufacture a new
        chemical if tests results indicate potential hazards.  It
        will not manufacture a chemical, for example, if the Ames
        test is positive.  It makes this choice less from concern
        about the product than concern about costs and "hassles"
        associated with the premanufacture notification (PMN)
        process at EPA.

    .. -  Whether or not a chemical is "new" plays an important part
        in the other company's decision to accept an order.  If
        the chemical will be subject to a PMN, the company will
        negotiate with its customer, generally a large company,
        concerning submitting the notice and developing hazard data.


     The physical location of the plant facility is an important
factor in determining the amount of damage or harm that results if
an environmental release occurs.  The more remote the location,
the less the. impact will be.  However, the primary factors affecting
a company's siting decisions are financial and administrative,
rather than environmental.


        Federal Controls

        o    The most  significant external constraints on  siting  are  those
             imposed by the  air  permitting program  under the  federal  Clean
             Air Act and  administered  by EPA  or  the states.

                Prevention of  Significant Deterioration  (PSD)  requirements
                are the most constraining because of the delays involved.
                No construction  can  begin until  a pre-construction  permit
                is issued/ which requires a year of background ambient
                data for  site, extensive modelling, and  lengthy review
                time by the  permitting agency.   Because  EPA and the states
                share  review responsibilities, additional  time may  pass as
                they resolve differences.

                State  Implementation Plan  (SIP)  requirements  in non-
                attainment areas tend  to be less constraining.  A company
                wanting to locate in a given  area must find an existing
                source with  similar  emissions  for an "emissions trade."
                Delays can occur if  a  state or local agency asks  for
                identification of the  specific components  of  any  volatile
                organic compounds (VOCs) to be emitted and insists  that
                those  traded be  of comparable  toxicity and volatility.
        State Controls
 ! i
o    Generally, most states can only exercise control over siting
     of new facilities through their air or water permitting programs,
     although there are exceptions.  For example. New York requires
     a state-level environmental impact statement for every new
     facility or significant modification to an existing facility.

Local controls

o    Most local authorities have final control of facility siting
     through land use planning and zoning laws.  This can be a
     significant constraint in some states and localities, but
     most local governments welcome new industrial facilities
     and the jobs they bring, and willingly modify zoning plans
    . to accommodate proposed new facilities.  ,

o    In general, zoning is a problem only for new facilities; it
     is less of an issue if an existing facility is expanded or
     modified.  One state pointed out that a company can build a
     new facility in an area already zoned for industrial develop-
     ment without applying to the local zoning board.  In that
     state's older cities, heavy industry is often located adjacent
     to residential areas.

o    All communities have load limits on feeder roads, and some
     have restricted routes for hazardous loads.  These controls
     generally have not been a significant constraint for the
     reason cited above: a locality will normally take the necessary
     measures to accommodate a proposed new facility.

Large Company Practices

o    The large chemical companies, with many plant sites to
     choose from, usually adapt existing facilities or build new
     plants on existing sites to accommodate new chemical processes.
     Decisions on location of the new process are based not on
     concerns about the proximity to population, but on economic
     and managerial considerations.

o    One company said it rarely opens a new plant site anymore,
     but modifies its operations at an existing site.  Decisions
     about location are made early in the development process and
     are based on factors like the adaptability of existing equipment,
     proximity to raw materials and markets, and availability of
     qualified personnel.

o    The other firm had specific guidelines for siting new processes
     that take similar factors into account.

     -  Use of existing facilities.  The company prefers to adapt
        an existing plant if there is one that can accommodate the
        new process.

     -  Transportation cost.  The process is located to minimize
        transportation costs of raw materials and finished products.
        Proximity to consumers is usually weighed more heavily
        because transportation costs are for finished products are
        usually more than those for raw materials.

        Total size, complexity of the facility.  The company
        believes a facility can be too large and complex to be
        manageable.  When considering an expansion, it assesses
        whether the expanded facility will be within the ability
        of a plant manager to oversee it.  The company noted,
        however, that other chemical companies prefer to locate
        all their facilities in one place.

     -  Availability of a qualified labor pool is a consideration
        in siting a new facility.  The company takes into account
        amenities in the community that will make it attractive to
        employees, such as good local schools and educational
        institutions for professional training.

     -  The potential impact on ground water is a new, major concern
        in siting new facilities.  In the future, the hydrogeology
        of a proposed new site will be an important factor in site

o    In the past two decades, this company has made it a policy to
     acquire an excess of land beyond what is needed for the plant
     itself.  If a facility requires tens of acres, the company
     acquires thousands of acres.  It creates this sizeable buffer
     zone primarily for aesthetic reasons, a response to recent
     local concerns about the visual impact of industrial facilities.

o    Beyond its policy of acquiring excess land, the company does
     not deliberately site plants away from residential areas,
     because it recognizes that no site will remain remote; new
     residential areas will inevitably be built to accommodate
     employees who want to live nearby.  It believes that its
     safety measures to protect plant employees, who would be
     affected first if an accident occurred, are adequate to protect
     the surrounding population.

Small Company Practices

o    Siting a new facility is not a concern of the small companies
     we interviewed, who operate single plants and have no plans
     to expand.  They did mention, however, that adequate utilities
     and access to a nearby hazardous waste disposal facility are
     important considerations.  Transportation costs for feedstocks
     or products are less important to the small firms, which deal
     with relatively small quantities.
     Design of the chemical process involves choosing pathways and
operating parameters, and selecting the appropriate equipment to
produce the product in the most efficient and safest way possible.
At this point, a company will usually have obtained chemical
hazard information that determines what safety features and backup
systems are needed to ensure a safe operation.

Federal Controls

o    EPA influences process and equipment design, directly or
     indirectly, through its pollution control programs in air,
     water, and hazardous waste.  Requirements to control air
     pollution probably have the greatest impact on design features
     related to environmental releases, but, even in this program,
     the focus is on continuous, anticipated releases, not on
     accident prevention.

        Limits on air emissions affects the design of scrubbers
        and of valves and .seals to minimize fugitive emissions.

     -  The increasing costs of hazardous waste management under
        RCRA requirements provide an incentive for companies to
        design or modify their processes to reduce the volume of
        wastes generated, and to recover and reuse more of the
        wastes that are generated.

        A company may need to install special equipment or modify
        its process to comply with permit limitations on its
        wastewater discharges.

o    Two types of OSHA requirements affect process design:

     -  Permissible exposure limits and maximum allowable con-
        centrations for certain chemicals, which may require some
        processes to be enclosed;

        Standards for potential safety hazards, such as those
        covering the handling of flammable and combustible liquids;
        reactive and unstable liquids; and the design, installation
        and operation of storage tanks.

State Controls

o    The state is likely to have the greatest impact on process
     design through its air permitting program for proposed
     facilities.  Many states now require facilities to meet
     EPA-developed draft RACT (Reasonably Available Control Tech-
     nology) guidelines for volatile organic compounds.  One state
     requires new facilities to meet Best Available Control Tech-
     nology standards, which go beyond federal requirements.  In
     making permitting decisions, it reviews the engineering design
     and proposed operating procedures prior to construction.  It
     also has information on all chemicals used in the plant, as
     well those that may present emissions problems.  It does not,
     however, require existing facilities to meet these standards
     unless the facility has a very serious pollution problem.

o    Virtually every state requires that pressure vessels meet
     ASME {American Society of Mechanical Engineers) standards.
     There are separate standards for fired pressure vessels, or
     boilers, and unfired pressure vessels, or pressurized storage
     tanks.  The state usually inspects fired pressure vessels
     when first installed, with periodic checks thereafter to make
     sure all such equipment has the ASME seal on it.  Unfired
     vessels are generally inspected only at the time of installation,

Local Controls

o    Although local building codes apply to chemical plants, they
     are intended mainly for homes, apartment buildings, and com-
     mercial buildings.  There is little in these codes applicable
     to chemical plants design, although there are some exceptions.
     For example, there may be local requirements that internal
     electrical lines be placed in conduits.

o   ' One company said that local authorities rarely inspect its
     chemical plants to assess compliance with the building code.
     Instead, the company "certifies" that the design complies
     with the applicable portions of the code.  If an inspection
     is conducted, it is done only when the plant first goes into

o    The National Fire Protection Association (NFPA) has developed
     a model code addressing the storage and handling of flammable
     materials.  The NFPA Code addresses such matters as:

     -  the amount of certain materials that may be stored in
        a single container, including fixed tanks and drums.
        the minimum spacing between such containers.
     -  required fire protection equipment at a facility, given
        the quantity and flammability of the materials present.


o    Approximately one-third of the 14,000 local code-setting
     authorities  (i.e., counties, townships, cities, etc.) require
     facilities to follow the NFPA code.  Some facilities are
     inspected by the fire marshal for conformity with the code;
     others are not, especially those that are self-sufficient in
     terms of fire protection.

o    In one state, a plant is required to have a license to store
     flammable materials, issued by the local fire marshall.
     However, a license, once issued, is transferable, and the
     practices of a new license holder are not subject to review.

Industry or Engineering Standards

o    There are many voluntary industry standards developed by
     committees of industry experts that cover a variety of aspects
     of plant engineering, design, and maintenance.  They include,
     for example, the construction and maintenance of electrical
     equipment, piping, valves, and storage vessels and standards
     specific to the petroleum industry.  There are also standards
     for handling and transport of chlorine. (See attachment for a
     list of industry standards.)

o    These standards are revised periodically.  For example, the
     National Electrical Manufacturers Association standards are
     revised every 3 years, with opportunity for review and comment
     from the entire Association membership, a process that takes
     two years to complete.

o    Most companies follow these standards unless there is a
     compelling reason to modify them.  Some standards, like the
     NFPA, are incorporated into state or local law.  Even where
     compliance is not required, the standards are widely used to
     ensure safe practices and satisfy insurers.

Large Company Practices

o    Design and evaluation of a new process begins in the research
     stage, where the chemical process and operating parameters
     are laid out, and moves to engineering analysis, which designs
    •-the equipment and process flow to produce »the chemical.  At a
     very early stage, safety assessments come into play, which
     look at the need for special equipment or backup systems to
     ensure the system can be monitored and managed safely.  One
     company uses a project team to develop a new process, which
     includes safety specialists to ensure safety concerns receive
     full attention.

o    For each new process or significant modification, the companies
     conduct extensive analyses identifying possible events that
     could lead to accidents, informally called "what if" analysis.
     The analysis identifies the consequences and possible responses
     to such events to ensure they will be resolved safely.


o    One company conducts a formalized, quantititive fault-tree
     analysis, called "Process Hazard Assessment," that may take
     6 months to complete.  It uses a strict operational definition
     of "acceptable risk," defined as one serious accident over a
     period of 300 to 600 times the projected life of the facility.
     Thus, if a process is expected to be in operation 40 years,
     it will take measures to reduce the risk of a serious accident
     to once every 12,000 to 24,000 years.  Even mining process
     modifications are subjected to an explicit hazard analysis,
     though a less quantitative one.

o    The companies rely heavily on fail-safe designs for each
     process component, which means if the component fails, it
     will fail in a way that does not impair safety.  For example,
     valves are designed to remain open or closed, whichever is
     the safer condition, if the process that activates them shuts

o    The companies rely heavily on "redundancy," or backup
     systems, to reduce risks.  For example, tanks where pressure-
     creating reactions are possible may be designed with two
     independent pressure relief valves as well as a separate
     rupture disk, which ruptures at high pressure, to guard against
     multiple failures in the valves.  One company that uses a
     computer system to monitor and control the chemical reaction
     has a backup computer in case the main system goes down.

o    Companies have developed their own internal standards for
     certain items.  For example,

     -  One company developed its own design for safety showers
        for any new safety showers installed in its facilities.

        A company decided the standard design for tank cars for
        three chemicals (metallic sodium, hydrogen cyanide, and
        tetraethyl lead) did not provide what it considered to be
        an adequate degree of protection.  It developed more
        stringent, specialized tank car designs for each substance,
        now in use for 15-20 years.  Although some of these cars
        have been involved in serious rail accidents, there has
        never been a loss of material from any 'of the cars.  One
        tank car containing sodium was involved an accident that
        knocked it off a barge to the bottom of a river.  It was
        hoisted up two days later without any sodium being released.
        Metallic sodium reacts so violently with water that an
        violent explosion would have occurred had the tank car

Sma11 Company Practices

o    Process design for the small companies involves a deter-
     mination of whether a new chemical requested by a customer
     can be safely produced with existing equipment.  Rather than
     designing an entirely new process and new equipment, they
     limit their production to related chemicals that are
     appropriate for their equipment and expertise.


o    One of the factors important in that determination is the
     hazards of the chemicals used and produced in the process.
     If the process involves acutely hazardous chemicals that the
     company is not equipped to handle, it will generally not
     accept the order.  In seven instances last year, one company
     decided the process was too hazardous for its operations and
     decided not to produce the chemical.


     After the process is designed, the plant must be constructed
in conformance with the approved design.

Federal Controls

o    There is no federal oversight of construction other than
     to ensure the safety of the construction workers.  No
     inspections are conducted to ensure the facility is
     properly constructed.

S t a te Con t roIs

o    While states do not have specific construction standards,
     some states do conduct inspections of newly-built facilities
     under air permitting programs.

Local Controls

o    Some local jurisdictions inspect new facilities to assess
     whether they meet building codes.  As discussed previously,
     the scope of the inspection is limited.

Insurer Controls

o    An insurance company often inspects a facility when it first
     insures a plant or new process against property damage, except
     in cases where the size of the premium or coverage is not
     large enough to justify the cost of inspection.  Insurers may
     also be consulted when a plant is being designed.  The inspector
     looks at all aspects of equipment and design, assessing the
     chemical hazards and provisions made to prevent or mitigate
     risks, although the effectiveness of the inspection varies
     depending on the expertise of the inspector.  The insurance
     company may require changes or additional controls as a
     condition for insurance.

Industry or engineering standards

o    These standards specify design, but generally do not indicate
     what steps should be taken during construction of a facility
     or fabrication of a piece of equipment to ensure that the
     design specifications are met.


Large Company Practices

o    One company managed all facility construction in-house, using
     its own construction managers to supervise local construction
     workers, to ensure that the plant is built according to its
     specifications.  The other company hired outside construction
     firms like Bechtel, which it believed had superior expertise.

o    The companies conduct extensive evaluations of a new facility
     and run start-up tests before moving into full production.

o    Routinely, the companies test critical components that will
     be exposed to highly reactive materials or high pressures
     to ensure they meet specifications before they are installed.
     A company may also inspect the operations of suppliers of
     critical components or change suppliers if they have quality-
     control concerns.

Sma11 Compan ie s Pract i ce s

o    Small companies rely on outside contractors if construction
     is needed.  One interviewee expressed concern about this step,
     because small firms usually do not have the expertise to
     evaluate the quality of the construction work or the materials

     No matter how well-designed, a chemical process must be managed
and run properly in order to operate safely.  Equipment and safety
systems must be maintained in proper working condition to ensure
they operate as intended.

Federal Controls

o    EPA inspectors periodically check process equipment for
     fugitive emissions violations, including evaluations of valves
     and seals, and examine pollution control equipment to ensure
     it is working properly.

o    OSHA conducts periodic safety inspections,' which focus primarily
     on physical hazards, such as heat and moving parts in machinery,
     and on the condition of safety equipment, like safety masks
     and fire prevention equipment.  It conducts random inspections,
     and also targets inspections based on injury rates measured in
     terms of lost workdays.

o    OSHA also conducts health inspections that assess in-plant
     concentrations of toxic chemicals for which Permissible Exposure
     Limits have been set, again targetting its inspections to
     industries with a high rate of past violations.  Last year,
     OSHA inspected one in every five chemical manufacturing
     establishments under this system.

State Controls
o    Many states administer pollution control programs and occupa-
     tional safety and health programs in lieu of the federal
     agencies.  While there is considerable variation among states,
     in some cases, these programs are more stringent and inspections
     more frequent than required by EPA.  For example, New Jersey
     has inspectors stationed permanently at certain major facilities,

o    Like the federal programs they replace, however, state programs
     have a limited and specialized focus, primarily on routine,
     continuous emission controls and safety provisions for workers.
     They do not review the industrial processes themselves.

Local Controls

o    There is little routine inspection of chemical industry facil-
     ities by local authorities, other than some inspections by
     the fire marshal.

Insurer Controls

o    While insurers generally inspect an operation only when the
     policy is first issued, they may re-inspect a plant with an
     unusually high loss record.

Large Company Practices

o    The companies have explicit operating instructions for each
     chemical process.  These cover normal operating procedures to
     ensure reactions proceed as intended and to maintain equipment
     in proper condition, along with appropriate responses to
     diagnose and correct problems that arise.  The procedures are
     revised any time the process is modified and are also reviewed
     and up-dated periodically even when modifications have not

o    Routine safety checks are built into the system at the plant
     and operator level to anticipate equipment failure and other
     problems.  In addition, corporate headquarters conducts an
     intensive inspection of each plant on a fixed schedule, usually
   .. annually, which identifies problems and lapses in plant proced-
     ures and makes recommendations for improvement.  One company
     commented that it is better at documenting the audit findings
     than it is the follow-up on recommendations, even though they
     routinely make the recommended changes.

o    The companies train their supervisors, who train the operators,
     on procedures for operating a new process.  New employees
     also receive extensive training; plant operators, usually
     high school graduates, undergo an apprentice period as well.

o    The companies track accidents, or "unusual events," and
     the handling and outcome of the events.  They look for patterns,
     which may indicate mismanagment or previously undetected
     flaws in the process or procedures, and will make changes
     if necessary.


o    Headquarters keeps statistics on several safety indicators,
     ranking plants and rewarding managers on safety performance.
     The plants report lost workday accidents (when an employee is
     unable to come to work because of an injury sustained on the
     job) and injuries requiring in-house medical aid.

o    The companies place a high priority on safety, which is
     reflected in the performance standards of their managers.
     Pay increases and bonuses are tied to the safety statistics
     and accident rates at all levels of the organization.  Operators
     who repeatedly violate safety procedures are fired.

Sma 11 Company Pra.ctices

o    The small companies interviewed have a less formal system of
     maintenance than the large firms, but also conduct routine
     inspections in-house.  One firm, which operates around the
     clock, shuts down for two weeks, twice a year, to perform
     non-emergency maintenance and repair.

o    The companies run batch process operations; the products
     they manufacture change frequently.  Equipment is thoroughly
     cleaned and inspected between batches, providing a periodic
     safety check on the integrity of equipment.


     Despite preventative measures, accidental releases and spills
inevitably occur.  Emergency response actions are intended to
minimize the damage that results from of an accidental release.

Federal Controls

o    Many federal agencies have responsibilities for hazardous
     releases that occur within their arena.  For example, EPA.
     requires that releases of certain hazardous, substances over
     a specified quantity be reported and has broad authority to
     respond to such a release; it also requires hazardous waste
     generators to develop contingency plans to minimize the effects
    ''of a release of hazardous waste.          >

o    In addition, DOT has requirements covering releases that
     happen in transit.  OSHA requires companies to have emergency
     plans and safety equipment for releases that affect workers.
     The Coast Guard responds to spills in navigable waters.  The
     Department of Interior has authority over releases on federal
     lands.  And the Nuclear Regulatory Commission covers releases
     of radioactive materials.

o    The National Response Team is a cooperative effort of all
     federal agencies with responsibilities for emergency response.
     Co-chaired by EPA and the Coast Guard, the WT monitors
     exposure and, working with local authorities, directs contain-
     ment and cleanup actions when a release occurs.  There are
     multi-agency response teams in each Region that can reach the
     site of the accident quickly.


o    The NRC requires nuclear power plants and surrounding
     communities to have emergency response systems in place,
     including offsite control centers, warning sirens, and
     community evacuation plans.  Although these are intended to
     mitigate the effects of a nuclear accident, they have also
     been used effectively when chemical spills have occurred
     in the vicinity of the plant.

State Controls

o    Many states have some system to respond to accidents or spills.
     One state had three response teams located around the state.
     These teams monitor environmental and health impacts, contain
     or mitigate the spill if no local or corporate response is
     available, and assist local agencies if the state determines
     evacuation is necessary.  Although companies are currently
     allowed 24 hours to report spills, the state is developing a
     20 minute response capability.

o    Another state felt its response capability was inadequate.
     Its emergency response team is located in the eastern part of
     the state and is not able to reach other areas quickly.  It
     is also designed to deal primarily with oil spills, and is
     not as well-equipped to handle chemical releases.

o    Neither state required industrial facilities to have contingency
     plans for emergencies, beyond what is required for hazardous
     waste releases under RCRA, and did not require communities
     around industrial facilities to develop response or evacuation

Local Controls

o    Local authorities are the first line of defense in an emergency
     situation.  In most communities, the fire department has
     primary responsibility in the event of an accident, and
     provides fire-fighting services to local industries.

o    There is considerable variation in the capability of local
     communities to deal with disasters.  Many^communities do not
     have adequate equipment to handle a serious accident nor
     workable evacuation plans.  Industrial facilities generally
     have some arrangement with local authorities in case of an
     environmental release and have provided them with limited
     hazard information on the chemicals in use in the plant.  The
     adequacy of these arrangements, however, depend on the initiative
     and interest of the community and the facility management.

o    NRC requirements for community preparedness in a nuclear plant
     emergency illustrates the problems facing local authorities.
     As a condition for licensing, NRC requires the community to
     have evacuation plans and annual drills, as well as adequate
     equipment and personnel to protect the community.  Most of
     the communities involved do not have the resources to meet
     NRC standards; consequently, the nuclear facilities generally
     foot the entire bill for the community.


Large Company Practices

o    Most of a company's emergency response measures are aimed at
     protecting the facility and its workers.  Procedures lay out
     responses to foreseeable events, like equipment failure,
     fires, and spills.  They establish a chain of command for
     emergency situations and an on-site command center that allows
     the manager to communicate with every part of the plant and
     direct emergency actions.

o    Large plants are essentially self-sufficent in an emergency.
     They have fire fighting equipment on-site, including fire
     engines and water storage tanks, in addition to automatic
     fire supression systems.  Plant employees are organized into
     fire brigades in which each employee has pre-assigned respons-
     iblities.  They also have medical units to treat injured
     workers, staffed by full-time paramedics.  Emergency drills
     are held periodically to train workers and test preparedness.

o    Although they have limited interaction with the surrounding
     community, the facilities generally have some arrangement
     with local authorities for assistance if a emergency grows
     beyond their ability to manage it.

Small Company Practices

o    While the small companies have some amount of emergency equip-
     ment on site, such as fire extinguishers and sprinkler systems,
     they rely on local authorities for fire-fighting services
     and other assistance in a major emergency.  Local authorities
     have some information on the chemicals in the plants, although
     they often have not formally developed comprehensive emergency

o    As generators under RCRA, the companies are required to prepare
     contingency plans for spills and accidents involving hazardous
     waste.  One company hired an outside consultant to conduct an
     extensive assessment of the plant and prepare complete plans,
     and found the results valuable.  The company has sent the
     draft plan to local authorities for review^ and plans to go
     through the plant with them to ensure the contingency plan
     can be implemented effectively.

PRODUCT MARKETING                                                _

     The risk from hazardous chemicals occurs not only during
production, but also during use.  Controls and practices in
product marketing are aimed at ensuring that those who purchase
hazardous materials are able to handle them safely.

Federal Controls

o    Under FIFRA, EPA can restrict who can -purchase and use
     certain pesticides.  Under TSCA, EPA has the authority to
     restrict the sale and use of chemicals that it finds present
     an unreasonable risk.


o    The Bureau of Tobacco, Alcohol and Firearms restricts the
     purchase of explosives.

State Controls

o    States can further restrict pesticide use beyond what is
     required under FIFRA, but few have actually done so.

Large Company Practices

o    Concerned in part for product liability, a company may reach
     beyond its boundaries to ensure that customers handle and use
     their products safely.  For especially hazardous chemicals, a
     company may visit the customer's plant to evaluate its safety
     practices and provide training and assistance on the chemical's
     use.  It may require, by contract, that the customer follow
     certain handling procedures.  If not satisfied with a customer's
     procedures or performance, the company may refuse to sell the

Small Company Practices

o    Since the small chemical producers interviewed sold exclusively
     to large companies, they were not concerned about their
     customers' ability to handle hazardous products.  However,
     one company did provide proof that the big firms are concerned
     about the capabilities of its customers.  After the small firm
     had ordered five drums of an highly toxic chemical, a repre-
     sentative from the supplier appeared at the company to find
     out what it would be used for and how it would be handled.
     Accidents during transport are a frequent source of environ-
mental release.  Considerable quantities of hazardous materials
can be released if a tank truck or rail car is damaged.

Federal Controls

o    Under the Hazardous Materials Transportation Act, DOT has
     extensive requirements governing the transport of hazardous
     materials, focusing primarily on those with acute hazards.
     First, DOT provides information during transport: it requires
     shipping papers showing the identity, hazard class, and amount
     of hazardous material, and container labels and vehicle placards
     identifying hazards.  It also specifies manufacturing require-
     ments for containers and rail tank cars.  In addition, DOT
     has banned the transportation of certain materials, and
     others must be approved before they can be transported.

o    While DOT views emergency response as primarily a local
     responsibility, it supports local efforts through a widely-
     used guidebook with information on response and through the
     National Response Team.

State Contro1s

o    Some states restrict transport of flammable and explosive
     materials on certain urban routes and on bridges and tunnels.

o    States can be delegated enforcement authority of transportation

Industry Practices

o    The Chemical Manufacturing Association maintains an emergency
     response center called CHEMTREC that provides response
     information for chemical spills and releases.  CHEMTREC
     provides a 24-hour liason service with member companies,
     relaying information in an accident on the chemicals involved,
     response procedures, and first aid.

Company Practices

o    Companies generally follow DOT requirements and design standards,
     but in some cases may go beyond federal requirements.  (See
     section on Process and Equipment Design).

o    Many large companies have a 24-hour emergency number to provide
     hazard, clean-up and first aid information for transportation
     accidents involving chemicals they produce. Some companies
     have staff available to respond on scene to major accidents.
     During our interviews, we occasionally were told of activities
that a state or company had undertaken in response to the
catastrophic accident in Bhopal.  Their concern was that it not
happen here, and that it not happen to them.

State Actions                                  '

o    One state has created a Chemical Safety Task Force composed
     of representatives from state and local government, the chemical
     industry, labor, and public interest groups.  The purpose of
     the Task Force is to examine current safety practices and
     existing laws in order to determine whether additional legis-
     lation is needed to protect against catastrophic accidents.
     To support the Task Force, the state is conducting intensive
     chemical safety audits in six plants and  is holding a series
     of public meetings to hear community concerns and provide

Large Company Actions

o    Both of the companies had undertaken special self-investigations
     to assess the adequacy of their procedures in preventing
     significant, accidental releases of highly toxic chemicals.
     One company required its plants to identify the chemicals in
     use that, considering hazardous properties, volumes, and
     worst case scenarios, could potentially result in a significant
     release.  It then intended to take a hard look at the way
     those chemicals were handled.

o    One company intended to make public the identity and the
     hazard properties of the chemicals in use in the plant and
     hold informational meetings for the surrounding communities
     on the systems it uses to ensure its chemicals are handled

Small Company Actions

o    One company has joined with 12 of its neighboring industrial
     facilities to develop emergency plans and improve handling
     procedures.  In phase I, the companies will develop plans
     that include certain elements, prepare maps for each facility
     that show the location of acutely hazardous chemicals using
     DOT classifications, and meet with the local fire marshall,
     and other local authorities to familiarize them with the
     plants and response plans.  In phase II, the group plans to
     evaluate the chemical process, equipment and and safety
     practices of each facility, using experts from a different
     facility or outside consultants.

                        NATIONAL CODES AND STANDARDS

Aluminum Structures

     Specifications for Structures of Aluminum Alloys, The Aluminum

Boilers, Incinerators, Furnaces, Heaters & Burners

     American Petroleum Institute
     American Society of Mechanical Engineers
          Section I, II, IV, V, IX
     American Society for Testing and Materials.
     National Fire Protection Association
     Underwriter Laboratories, Inc.


     The BOCA Basic Building Code, Building Officials & Code Administrators
     International Inc.
     The Uniform Building Code, International Conference of Building
     The Standard Building Code, Southern Building Code Congress
     International, Inc.

     American National Standard Minimum Design Loads for Buildings and Other
     Structures (ANSI A58.1), Amer. National Standard Dist.  Used primarily
     for wind loads.

     Annual Book of ASTM Standards
          American Society for Testing and Materials

     Local Fire and Building Codes

Electrical andInstrumentation

     National Fire Protection Association

          NFPA 70 National Electrical Code
          NFPA 77 Static Electricity
          NFPA 78 Lightning Protection

     American National Standards Institute Standards

     Institute of Electrical and Electronic Engineers

     National Electrical Manufacturers Association Standards

     OSHA Electrical Standards - U.S. Department of Labor

     Instrument Society of America

     Illuminating Engineering Society

E1ectri ca1 and InstrumentatIon (Continued)
     Insulated Cable Engineers Association
     Underwriter's Laboratories (UL) Standards for Safety
     American Society of Testing Materials
     Factory Mutual (FM) Technical Reports
     American Petroleum Institute's (API) Recommended Practices
     National Academy of Science - National Materials Advisory Board
Fire Protection Systems
     National Fire Protection Association Standards
          11 and 11A   Foam Systems
                  Sprinkler Systems
                  Water Spray Systems
                  Carbon Dioxide Systems
                  Centrifugal Fire Water Pumps
                  Water TAnks for Private Fire Protection
Heat Exchangers
     Standards of Tubular Exchangers Manufacturers Association
Heat i ng Ve nt i1a11ng and A i r Condi ti on i ng
     American Society of Heating, Refrigeration and Air Conditioning Society
     Standards & Guidelines
Removal and disposition Occupational Safety and Health Administration
Code of Federal Regulation Title 29, Chapter 17, part 1910.95 Federal
Register  Vol. 37 No. 202  (90 dba for 3 hours) Hearing Conservation
Amendment 1981
Many state and local regulations


     Steel Structures Painting Council  (SSPC)

     American Society for Testing and Materials and American Institute for
     Steel Construction

     Occupational Safety and Health Administration


     American Society of Mechanical Engineers

          ANSI/ASME B31.3 - Power Piping
          ANSI/ASME B31.3 - Chemical Plant and Petroleum Refinery Piping
          ANSI/ASME B31.9 - Building Services Piping

          plus 19 other standards for piping, pipe flanges, fittings  and
          valves, including

          ANSI B16.5 - Pipe Flanges and Flanged Fittings
          ANSI B16.34 - Valves, Flanged and Buttwelding Ends

     Manufacturers Standardization Society of the Valve and Fittings  Industry

          30 standards for valves and fittings, including

          MSS SP-54 - Quality Standard for Steel Casting for Valves,  Flanges
                      and Fittings and Other Piping Components  - Radiographic
          MSS SP-61 - Pressure Testing of Steel Valves

     American Petroleum Institute

          14 standards for pipe, valves and fittings, including

          API 600 - Steel Gate Valves, Flanged or B^ttwelding Ends
          API 601 - Metallic Gaskets for Piping, Double Jacketed Corrugated
                    and Spiral Wound

     American Water Works Association

          AWWA C150 - Thickness Design of Ductile Iron Pipe
          AWWA C151 - Ductile Iron Pipe, Centrifugally Cast in  Metal  Molds or
                 Sand-Lined Molds, for Water and Other Liquids

     American Society for Testing and Materials
     Dozens of standards, including

          ASTM A 106 - Seamless Carbon Steel Pipe for High Temperature
          ASTM A 403 - Wrought Austentic Stainless Steel Piping Fittings

 Piping (Con't)
      "Recommended Practice  for Acoustic  Emission Testing of Reinforced
      Thermosetting Resin  Pipe  (RTRP),  Society  of the Plastics  Industry, New
      York,  July 1983.
 Pressure  Vessels
      American  Society  of  Mechanical  Engineers  ( ASME)  - Boiler and Pressure
      Vessel  Codes
      American  Petroleum Institute  Pressure Vessel  Inspection Code, for
      Maintenance, Rating, Repair and Alteration-API Standard 510
      National  Board of Boiler  and  Pressure Vessel  Inspectors - Inspection
 Reinforced/Plain Concrete
      American  Concrete
      A compendium of recommended standards and practices, American Concrete
      Institute, Detroit
 Rotating  Equipment
      American  Petroleum Institute  Codes  & Standards
      American  Society  of  Mechanical  Engineers
      American  National  Standards Institute
      National  Electrical  Manufacturers Association Standards for Gas & Steam
      American  Society  of  Testing Materials for materials used
      American  Gear Manufacturers Association Standards
      American  Friction Bearing Manufacturers Association Standards
      Compressed Gas Association
      American  Gas Association
 Safety -  General Guides
      National  Safety Council Occupational Safety and Health series of manuals
      1.  Accident Prevention  Manual for Industrial Operations
             Volume on  Administration and Programs
             Volume on  Engineering  and  Technology

Safety - General Guides (Continued)

     2.   Fundamentals of Industrial Hygiene

     3.   Industrial Noise and Hearing Conservation

     4.   Supervisors Safety Manual
     Prudent Practices for Handling Hazardous Chemical Sustances - National
     Academy of Science

     National Fire Protection Association - Life Safety Code

Storage Tanks

     American Petroleum Institute - Recommended rules for design and
     construction of large welded, low pressure storage tank
     API Standard 620

     American -Petroleum Institute - Welded Steel Tanks for Oil  Storage
     APE Standard 650

     American Petroleum Institute - Venting Atmospheric and Low Pressure
     Storage Tanks
     ASI Standard 2000

     American National Standards Insititute Specification Welded Aluminum
     Alloy Field Erected Storage Tanks

     National Fire Protection Association - Code for Storage of Liquefied
     Petroleum Flammables, Combustibles, Oxidizing Materials, and Codes for
     Explosion Venting.

     "Recommended Practice for Acoustic Emission Testing of Fiberglass
     Tanks/Vessels", Society of the Plastics Industry, New York, January
Structural Steel
     American Institute for Steel Construction

     American Welding Society

     American Iron and Steel Institute

     Annual Book of ASTM Standards, American Society for Testing and

Water System
     Cooling Tower Institute
     American Water Works Association
     National Fire Protection Association