oEPA
United States
Environmental Protection
Agency
UNDERSTANDING WATER TREATMENT
CHEMICAL SUPPLY CHAINS AND THE
RISK OF DISRUPTIONS
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Office of Water (MC-140) EPA 817-R-22-004 December 2022
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Disclaimer
The Water Infrastructure and Cyber Resilience Division of the Office of Groundwater and Drinking Water has
reviewed and approved the report "Understanding Water Treatment Chemical Supply Chains and the Risk of
Disruptions" for publication in February 2023. This document is intended for use by the Water and Wastewater
Systems Sector to better understand the risk of disruptions in the supply of water treatment chemicals. It may
provide information useful for conducting Risk and Resilience Assessments, as required under America's Water
Infrastructure Act (AWIA) of 2018.
AWIA, Section 2013 requires community water systems (CWS) serving more than 3,300 people to conduct Risk
and Resilience Assessments, which must consider important system assets, including chemical storage and
utilization. This report demonstrates that there are risks to the supply of critical water treatment chemicals, and
that these risks vary by chemical. Furthermore, the local risks for a specific water system may differ from the
national risks presented in this report. Thus, water systems may want to consider the risk of disruptions in their
supply of the water treatment chemicals during future AWIA Risk and Resilience Assessments.
This report is new. It does not modify or replace any previous U.S. EPA guidance documents. This document
does not impose legally binding requirements on any party. The information in this document is intended solely
to serve as a resource and does not imply any requirements. Neither the U.S. Government nor any of its
employees, contractors or their employees make any warranty, expressed or implied, or assumes any legal
liability or responsibility for any third party's use of any information, product or process discussed in this
document, or represents that its use by such party would not infringe on privately owned rights. Mention of
trade names or commercial products does not constitute endorsement or recommendation for use.
Questions concerning this document should be addressed to SupplvChainSupport@epa.gov or the following
contact:
Steve Allgeier
U.S. EPA Water Infrastructure and Cyber Resilience Division
26 West Martin Luther King Drive
Mail Code 140
Cincinnati, OH 45268
(513)569-7131
Allgeier.Steveffiepa.gov
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ACKNOWLEDGEMENTS
The document was developed by the U.S. EPA Water Infrastructure and Cyber Resilience Division, with
additional support provided under U.S. EPA contract EP-C-15-022. The following individuals contributed to the
development of this document:
• Aileen Bressman, Cadmus
• Melissa Brown-Rosenbladt, Cadmus
• Kyrien Edwards, Cadmus
• Josh McGhee, Cadmus
Peer review of this document was provided by the following individuals:
• Andrew Barienbrock, Ohio Environmental Protection Agency, Division of Drinking and Ground Waters
• Robyn Brooks, The Chlorine Institute
• Ryan Coby, Idaho National Laboratory, Infrastructure Assurance and Analysis Division
• Kevin Morley, American Water Works Association
• Jeffrey Sloan, American Chemistry Council
• David Travers, U.S. EPA, OGDW, Water Infrastructure and Cyber Resilience Division
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TABLE OF CONTENTS
ACKNOWLEDGEMENTS II
TABLE OF CONTENTS Ill
LIST OF FIGURES IV
LIST OF TABLES V
ACRONYMS VI
1 INTRODUCTION 1
1.1 BACKGROUND 1
1.2 PURPOSE AND SCOPE 2
1.3 DOCUMENT OVERVIEW 3
2 METHODOLOGY 7
2.1 TREATMENT CHEMICAL PROFILES 7
2.2 INFORMATION RESOURCES 9
2.3 RELATIVE RISK EVALUATION FRAMEWORK 11
2.4 DATA REVIEW AND QUALITY CONTROL 13
2.5 STUDY LIMITATIONS 13
3 RESULTS AND DISCUSSION 15
3.1 CONDITIONS LEADING TO SUPPLY DISRUPTIONS 15
3.2 CASE STUDIES OF WATER TREATMENT CHEMICAL SUPPLY DISRUPTIONS 18
3.3 RISK OF WATER TREATMENT CHEMICAL SUPPLY DISRUPTION 28
4 SUMMARY AND CONCLUSIONS 40
4.1 NATURE OF THE WATER TREATMENT CHEMICAL SUPPLY CHAIN 40
4.2 KEY RISK FACTORS 40
4.3 HIGH RISK CHEMICALS 41
4.4 KNOWLEDGE GAPS 42
5 PRACTICAL APPLICATIONS 44
5.1 EPA ROLE IN ASSESSING NATIONAL RISK OF SUPPLY DISRUPTIONS 44
5.2 WATER SYSTEM ROLE IN ASSESSING LOCAL RISK OF SUPPLY DISRUPTIONS 44
6 REFERENCES 47
7 GLOSSARY 50
8 APPENDIX A 51
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LIST OF FIGURES
Figure 2-1. Relative Risk Rating Bins
Figure 3-1. Sourcing of Raw Materials and Precursors to Manufacture Aluminum Sulfate
Figure 3-2. Chlor-alkali Production Locations and Sites of Reduced Production Capacity ...
Figure 3-3. Status (2021) of Domestic Carbon Dioxide Purification Plants
Figure 3-4. Domestic Supply of Purified Oxygen in the Southeastern U.S
Figure 3-5. Criticality Rating for 46 Chemicals Important to Water Treatment 31
Figure 3-6. Number of Derivative Water Treatment Chemicals Manufactured with the Listed Direct-Use Chemicals
32
Figure 3-7. Water Treatment Chemicals and Precursors Derived from Sodium Chloride 33
Figure 3-8. Water Treatment Chemicals and Precursors Derived from Phosphate Rock and Sulfur 34
Figure 3-9. Likelihood Ratings forthe46 Chemicals Important to Water Treatment 35
Figure 3-10. History of Supply Chain Disruptions (2000-2022) for 46 Chemicals Important to Water Treatment.. 36
Figure 3-11. Vulnerability Rating for 46 Chemicals Important to Water Treatment 37
Figure 3-12. U.S. Net Import Reliance for Raw Materials Used in the Production of Water Treatment Chemicals
(2019) 38
Figure 3-13. Influence of Input Vulnerability on the Vulnerability Rating of Direct-Use Chemicals 39
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LIST OF TABLES
Table 1-1. Water Treatment Chemicals and Precursors Considered in this Study 4
Table 3-1. Supply Disruptions for Direct-Use Water Treatment Chemicals (2020-2023) 16
Table 3-2. Risk Rating Summary for 46 Chemicals Important to Water Treatment 29
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ACRONYMS
Acronym Definition
ACC
American Chemistry Council
ATSDR
Agency for Toxic Substances and Disease Registry
AWIA
America's Water Infrastructure Act
AWWA
American Water Works Association
CAS No.
Chemical Abstracts Service Number
CBI
Confidential Business Information
CDR
Chemical Data Reporting
COVID-19
Coronavirus Disease of 2019
CWS
Community Water System
DAD MAC
Diallyldimethylammonium chloride
DOE
U.S. Department of Energy
DOJ
U.S. Department of Justice
EPA
U.S. Environmental Protection Agency
FTC
U.S. Federal Trade Commission
HS
Harmonized System
HTS
Harmonized Tariff Schedule
LOX
Liquid Oxygen
NIAC
National Infrastructure Advisory Council
NSF/ANSI
National Standards Foundation / American National Standards Institute
OGDW
Office of Groundwater and Drinking Water
SDWA
Safe Drinking Water Act
TSCA
Toxic Substances Control Act
USGS
U.S. Geological Survey
USITC
U.S. International Trade Commission
WARN
Water/Wastewater Agency Response Network
WITS
World Integrated Trade Solutions
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1 INTRODUCTION
1.1 Background
Drinking water and wastewater systems rely on the consistent delivery of water treatment chemicals to
maintain operations and provide essential services to the public. An interruption to chemical supply, whether
short-term or long-term, can have a significant impact on a system's ability to provide safe drinking water and
treat wastewater prior to discharge.
Drinking water and wastewater treatment use a variety of chemicals to effectively treat water. Important types
of water treatment chemicals include coagulants, disinfectants, acids, bases, corrosion inhibitors, dechlorination
chemicals, and fluoridation chemicals. While there are typically multiple options for chemicals used in a
particular unit process, the selected chemicals and associated feed equipment are often customized for the
water quality being treated, the target treatment objectives, safety considerations, and cost considerations.
Additionally, chemicals used for water treatment may be required to meet specific standards and regulations.
Compliance with the National Standards Foundation/American National Standards Institute (NSF/ANSI 60)
standards is required for almost all drinking water treatment chemicals used in the U.S. Many wastewater
systems specify adherence to American Water Works Association (AWWA) Standards when requesting bid
proposals for chemical supply agreements. Collectively, these constraints and requirements can significantly
limit the pool of available chemicals that can be used by water systems and may limit flexibility to turn to other
available supplies in the face of a shortage.
To better understand the supply challenges facing the Water and Wastewater Systems Sector (i.e., the water
sector) and to identify which vulnerabilities may be prominent for a given chemical, supply chain profiles were
developed for 46 chemicals used directly in water treatment or as precursors or raw materials used in the
manufacture of those water treatment chemicals. Each profile includes information about typical uses in water
treatment, competing uses, domestic manufacturing processes, domestic production and consumption,
distribution of manufacturing and supply locations, history of supply disruptions, and an assessment of the risk
of future disruptions. The complete profiles for each of these 46 chemicals can be found at Water Treatment
Chemical Supply Chain Profiles. This report presents a synthesized analysis of these 46 chemical supply chain
profiles to support a greater understanding of water treatment chemical supply chain dynamics and the risk of
supply disruptions. Such an understanding may prompt greater preparedness for and resilience to supply chain
disruptions within the water sector.
The U.S., though able to manufacture many of the 46 chemicals studied, is highly reliant on imports for many
raw materials and precursor chemicals used to manufacture direct-use water treatment chemicals.
Furthermore, even in cases where the U.S. has significant manufacturing capacity for a given chemical, captive
consumption, a process in which the chemical produced is used directly by the same manufacturing entity to
produce derivative chemical products, may consume a significant fraction of the quantity produced. In situations
where supply chains are stressed, these dynamics in production, consumption, and import can present
challenges to the reliable supply of chemicals needed for water treatment.
There have been few published studies attempting to characterize the supply chain for water treatment
chemicals. The following summarizes the previous work deemed most relevant to the objectives and scope of
the current study.
Henderson et al. (2009) reviewed the risk of shortage for 11 commonly used water treatment chemicals in the
U.S. Their study covered a period of economic expansion in the U.S. (2003-2007), when water treatment
chemical shortages were largely driven by high demand that exceeded supply followed by a period of severe
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economic contraction (The Great Recession of 2007-2009). Under these conditions supply chain disruptions
were more pronounced for water treatment chemicals that are byproducts of an industry that experienced a
contraction in demand. For example, water fluoridation chemicals, which are a byproduct of fertilizer
production, were in short supply when the demand for phosphate-based fertilizers decreased significantly.
During the period of 2003-2007, their study found that increased cost of manufacturing inputs, such as energy,
raw materials, along with increased foreign demand were drivers of significant water treatment chemical price
increases as well as occasional supply disruptions.
A 2015 report published as a collaboration between the UK Water Industry Research and the Water Research
Foundation (Dillon et al., 2015) included a review of 20 water treatment chemicals used in the greatest quantity
in England. The study focused on alternative chemicals with potential supply chain concerns as one approach to
reducing risk. The study period included events encountered in the years prior to 2014, including the Great
Recession of 2007-2009, and focused on chemical supply chains in the UK. The study findings suggest that many
chemicals would most likely be available to the UK water sector during a short-term shortage, albeit at an
elevated price. The authors identified geographic concentration of raw materials and the percentage of the
chemical market provided for water treatment to be important long-term risk factors for continued chemical
supply. As part of the risk analysis, the authors included measures reflecting price volatility, availability of
chemical alternatives, impact of the loss of the chemical to water treatment requirements, and measures of
security of the supply chain. Based on the risk ranking conducted as part of the study, phosphoric acid was
identified as the highest risk chemical, followed by polyamines, chlorine, and polydiallyldimethylammonium
chloride (polyDADMAC).
In a 2016 report from the National Infrastructure Advisory Council (NIAC) on water sector resilience (Baylis et al.,
2016), a specific recommendation was made to identify and define agency and utility roles and responsibilities
during an emergency to ensure continued supply of critical water treatment chemicals. The report highlighted
the dependence of the water sector on other sectors, including the chemical industry, and made clear that
forming partnerships across sectors could lead to an understanding of resource prioritization needs in
circumstances where this may be required.
These studies demonstrate vulnerabilities in production and distribution of water treatment chemicals, and the
resulting risk of disruptions in supply of critical water treatment chemicals. However, the studies have been
limited in scope and do not capture the severe, and multifaceted supply chain disruptions that started at the
beginning of the COVID-19 pandemic. The supply disruptions that have occurred during the pandemic era
revealed a range and intensity of supply chains stressors that had not previously been observed in such a short
timeframe. While high-impact events such as a pandemic or repeated extreme weather events concentrated on
industrial hubs may have been considered low-probability in previous assessments, supply chain risk planning
may have to consider greater frequency and cooccurrence of such high-impact events. This report attempts to
provide a comprehensive and current (as of 2022) picture of the risk of disruptions in the supply of critical water
treatment chemicals.
1.2 Purpose and Scope
Disruptions in the supply of water treatment chemicals discussed in the previous section, as well as those
experienced between March 2020 and the date of publication of this report, demonstrate the need for the
water sector to develop a better understanding of chemical supply chains and their risk of experiencing supply
disruptions in the future.
The purpose of this report is to present the results from a risk evaluation of the supply chain for the 46
chemicals listed in Table 1-1. The chemicals researched include 35 chemicals that are directly used in water
treatment in critical unit processes such as disinfection, coagulation, corrosion control, and dechlorination (of
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treated wastewater). The other 11 chemicals are raw materials or precursors necessary to produce one or more
of the 35 selected water treatment chemicals. While the list of chemicals presented in Table 1-1 is not
comprehensive of all chemicals used in water treatment or used to manufacture water treatment chemicals, the
selected chemicals are representative of a broad range of water treatment chemicals and their precursors.
The results of this study can help the water sector anticipate and prepare for possible supply chain disruptions
and inform an analysis of supply chain risks for individual water systems as part of a Risk and Resilience
Assessment, such as those required under America's Water Infrastructure Act (AWIA), Section 2013.
Additionally, the results of this study can provide insight into the availability of water treatment chemicals, in
terms of both producers and suppliers. This information also has value to the implementation of Section 1441 of
the Safe Drinking Water Act (SDWA), Assurance of Availability of Adequate Supplies of Chemicals Necessary for
Treatment of Water. If the U.S. Environmental Protection Agency (EPA) determines that a water treatment
chemical is not reasonably available, it may issue a certification of need to prioritize water systems for access to
available supplies (EPA, 2022a).
1.3 Document Overview
The remainder of this report is organized into the following major sections:
• Section 2 provides an overview of the methodology used to develop chemical profiles and conduct a
relative risk evaluation
• Section 3 provides a discussion of factors that can lead to supply disruptions, case studies of disruptions
in the supply of water treatment chemicals, and results of the relative risk evaluation
• Section 4 provides a summary of the key findings from this study
• Section 5 describes the practical applications of the results of this study, for federal agencies as well as
individual water systems
• References lists all sources used in this study
• Glossary provides definitions for terminology used in this report
• Appendix A provides the quantitative rating scales used to perform the relative risk evaluation
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Table 1-1. Water Treatment Chemicals and Precursors Considered in this Study
Chemical Name
CAS No.
Treatment Applications
Derivative Water Treatment Chemicals
(Treatment Application)
Acrylamide
79-06-1
None identified
Polyacrylamide (PAM) (coagulation)
Aluminum Hydroxide
21645-51-2
None identified
Aluminum sulfate (coagulation)
Polyaluminum chloride (coagulation)
Aluminum Sulfate
10043-01-3
Coagulation
None identified
Ammonium Hydroxide
1336-21-6
Used to form chloramines for residual disinfection
None identified
Anhydrous Ammonia
7664-41-7
Used to form chloramines for residual disinfection
Ammonium hydroxide (residual disinfection)
Carbon dioxide, a byproduct of ammonia
production (pH adjustment)
Bauxite
1318-16-7
None identified
Aluminum-based coagulants
Calcium Carbonate
1317-65-3
pH and alkalinity adjustment
Calcium oxide (softening)
Calcium Hydroxide (Slaked Lime)
1305-16-0
pH and alkalinity adjustment
Calcium hypochlorite (disinfection)
Calcium Hypochlorite
7778-54-3
Disinfection
None identified
Calcium Oxide (Quick Lime)
1305-78-8
Precipitative softening
Calcium hydroxide (pH adjustment)
Carbon Dioxide
124-38-9
pH adjustment
None identified
Chlorine
7782-50-5
Disinfection
Algal control
Onsite generation of chlorine dioxide
Hydrochloric acid (pH adjustment)
Sodium hypochlorite (disinfection)
Calcium hypochlorite (disinfection)
Ferric chloride (coagulation)
Ferrous chloride (coagulation)
Citric Acid
77-92-9
Membrane cleaning
None identified
Diallyldimethylammonium chloride
(DADMAC)
7398-69-8
None identified
PolyDADMAC (coagulation)
Disodium Phosphate
7558-79-4
Corrosion control
Sodium polyphosphates (corrosion control)
Ferric Chloride
7705-08-0
Coagulation
None identified
Ferric Sulfate
10028-22-5
Coagulation
None identified
Ferrous Chloride
7758-94-3
Coagulation
Ferric chloride (coagulation)
Ferrous Sulfate
7720-78-7
Coagulation
Ferric sulfate (coagulation)
Fluorosilicic Acid
16961-83-4
Fluoridation
None identified
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Chemical Name
CAS No.
Treatment Applications
Derivative Water Treatment Chemicals
(Treatment Application)
Hydrochloric Acid
7647-01-0
pH adjustment
Regeneration of ion-exchange resins
Polyaluminum chloride (coagulation)
Ferric chloride (coagulation)
Ferrous chloride (coagulation)
Zinc orthophosphate (corrosion control)
Hydrogen Peroxide
7722-84-1
Oxidation
Dechlorination
Sodium chlorite (chlorine dioxide production)
llmenite
98072-94-7
None identified
Ferric chloride (coagulation)
Ferrous sulfate (coagulation)
Manganese Ore
1313-13-9
None identified
Potassium permanganate (oxidation)
Monosodium Phosphate
7558-80-7
Corrosion control
Sodium polyphosphates (corrosion control)
Oxygen
7782-44-7
On-site generation of ozone
Aeration
Sulfur dioxide (dechlorination)
Sulfuric acid (pH adjustment)
Phosphate Rock
1306-05-4
None identified
Fluorosilicic acid (fluoridation)
Phosphoric acid (corrosion control)
Phosphoric Acid
766-38-2
Corrosion control
pH adjustment
Sodium ortho- and polyphosphates
(corrosion control)
Zinc orthophosphate (corrosion control)
Polyaluminum Chloride
101707-17-9
Coagulation
None identified
Potassium Chloride
7447-40-7
None identified
Chlorine (disinfection)
Potassium hydroxide (pH adjustment)
Potassium Hydroxide
1310-58-3
pH adjustment
Potassium permanganate (oxidation)
Potassium Permanganate
7722-64-7
Oxidation
None identified
Silica
7631-86-9
Filtration media
Sodium silicate (corrosion control)
Sodium Carbonate
497-19-8
pH and hardness adjustment
Sodium phosphates (corrosion control)
Sodium silicate (corrosion control)
Sodium Chlorate
7775-09-9
None identified
Sodium chlorite (chlorine dioxide generation)
Chlorine dioxide (disinfection)
Sodium Chloride
7647-14-5
On-site generation of sodium hypochlorite
Regeneration of ion-exchange resin
Chlorine (disinfection)
Sodium hydroxide (pH adjustment)
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Chemical Name
CAS No.
Treatment Applications
Derivative Water Treatment Chemicals
(Treatment Application)
Sodium Chlorite
7758-19-2
On-site generation of chlorine dioxide
None identified
Sodium Hydroxide
1310-73-2
pH adjustment
Precipitation of metals
Calcium hypochlorite (disinfection)
Disodium phosphate (corrosion control)
Monosodium phosphate (corrosion control)
Sodium hypochlorite (disinfection)
Sodium silicate (corrosion control)
Sodium chlorite (chlorine dioxide generation)
Sodium Hypochlorite
7681-52-9
Disinfection
Algal control
None identified
Sodium Salts of Polyphosphates
10124-56-8
68915-31-1
7758-79-4
7558-80-7
Corrosion control
None identified
Sodium Silicate
6834-92-0
Corrosion control
None identified
Sulfur
7704-34-9
None identified
Sulfur dioxide (dechlorination)
Sulfuric acid (pH adjustment)
Sulfur Dioxide
7446-09-5
Dechlorination
Sodium metabisulfite (dechlorination)
Sodium thiosulfate (dechlorination)
Sulfuric Acid
7664-93-9
pH adjustment
Regeneration of ion exchange resins
Aluminum sulfate (coagulation)
Ferric sulfate (coagulation)
Ferrous sulfate (coagulation)
Fluorosilicic acid (fluoridation)
Phosphoric acid (corrosion control)
Zinc Orthophosphate (corrosion control)
Zinc
7646-85-7
None identified
Zinc Orthophosphate (corrosion control)
Zinc Orthophosphate
7779-90-0
Corrosion control
None identified
A profile was developed for each treatment chemical, precursor, and raw material listed in Table 1-1. according to the methodology described in
Section 2.1. These profiles are available at Water Treatment Chemical Supply Chain Profiles.
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2 METHODOLOGY
This section provides an overview of the methodology employed in the supply chain research and profile
development for the chemicals listed in Table 1-1. The resulting supply chain profiles provided the input to the
relative risk evaluation. The methodology used to develop the risk evaluation framework is discussed below in
Section 2.3.
2.1 Treatment Chemical Profiles
Research into the supply chains for water treatment chemicals relied extensively on publicly available resources
developed by the U.S. government, industry groups, trade organizations, journal publications, and other credible
sources. In some instances, individual companies and water systems were contacted to gain additional insights
and to validate information gathered through other sources. The following subsections describe the process
used to develop the water treatment chemical supply chain profiles, which serve as the basis for the analysis
and findings in this report.
2.1.1 Applications in Water Treatment
Water treatment application information was primarily gathered from the AWWA document library. Where
chemicals have an associated AWWA Standard, the Standard was reviewed for background on accepted use for
drinking water. Other primary sources included textbooks such as Wastewater Engineering by Metcalf & Eddy,
the National Center for Biotechnology Information's PubChem database, and producer/manufacturer websites
which may contain detailed information on applications of their products. NSF International, which certifies
drinking water treatment chemicals, served as an additional source of information on typical application. A
secondary source of information regarding chemical use, including applications and specifications, was obtained
through a search of requests for proposals (RFPs) published by municipalities or water utilities for the purchase
of water treatment chemicals.
2.1.2 Other Applications
The National Center for Biotechnology Information's PubChem database of chemical molecules served as a
primary resource for information on the variety of applications for a given chemical. The Agency for Toxic
Substances & Disease Registry (ATSDR) provides detailed profiles for numerous hazardous substances, including
some direct-use water treatment chemicals and their precursors. Additional information about the uses of
chemicals was gathered from EPA and U.S. Geological Survey (USGS) publications, American Chemistry Council
publications, trade associations such as the Aluminum Association and the Chlorine Institute, and chemical
manufacturer websites which list specific application for their products.
The USGS National Minerals Information Center publications served as the primary source of information on raw
material uses.
2.1.3 Manufacturing Process
PubChem served as a primary resource for information on the manufacturing method(s) of a given chemical.
Additional resources consulted to characterize manufacturing methods include manufacturer publications, and
websites of trade organizations such as the Chlorine Institute. If distinct grades or purity are required for water
treatment applications, the additional manufacturing steps required to achieve the desired purification were
investigated.
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2.1.4 Domestic Production
Estimates of total domestic production were based on one of several government sources or trade organization
sources. The first primary government source consulted for most chemicals is data collected as part of the
Chemical Data Reporting (CDR) rule under the Toxic Substances Control Act (TSCA). The CDR rule requires
manufacturers (including importers) to provide EPA with information on the production of chemicals in
commerce. This information includes the types and quantities of chemical substances produced domestically.
The information is collected every four years and represents annual production volumes of 25,000 lbs. or
greater. However, companies may submit a request to designate production volume as confidential business
information (CBI), and due to acceptance of these requests, CDR data can underestimate actual domestic
production. Furthermore, some chemicals, such as those manufactured for non-TSCA uses, are exempt from
reporting. The majority of production data collected was obtained from the 2020 CDR dataset and reflects data
for 2019 (EPA, 2020). There were some instances in which data from the 2016 CDR dataset (which reflects data
collected for 2015) was used instead, due to an increase in CBI claims or other concerns with the 2020 CDR
dataset for a given chemical.
The USGS National Minerals Information Center publications served as the primary source of information on raw
material production volumes. Available information includes yearly mineral industry surveys and commodity
summaries, which provide domestic production and consumption statistics for the past five years, as well as
trade, trends, and any marketplace issues of note.
In instances where the two primary resources listed above could not provide chemical production data, industry
publications, journal articles, and news items were reviewed.
2.1.5 Domestic Consumption
Values for total domestic consumption were unavailable from the publicly available resources used for this
study, thus, total domestic consumption was estimated using one of several primary sources.
• For chemicals with relatively complete CDR data (i.e., few CBI reporting exemptions), domestic
consumption was estimated by subtracting total domestic exports from the sum of estimated domestic
production and imports for consumption.
• The USGS National Minerals Information Center publications served as the primary source of
information on domestic consumption of raw materials.
• For chemicals with incomplete CDR data, other resources were used to estimate domestic consumption,
including: publications from federal agencies such as USGS, EPA, and U.S. Department of Energy (DOE);
publications for relevant trade organizations, such as gasworld, the American Chemistry Council, or
WaterWorld; ATSDR profiles, which often include data on consumption; and internet searches on
consumption patterns, both broadly as well as specific to the water sector.
2.1.6 Trade and Tariffs
Trade data was considered from two perspectives: international trade among all countries, and domestic import
and export.
Worldwide import and export data were collected through the World Integrated Trade Solution (WITS)
database. The WITS database is a compilation of data from international sources including the World Bank,
United Nations Conference on Trade and Development, United Nations Statistical Division, and World Trade
Organization. The WITS database provides worldwide import and export data for commodities at the level of the
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international 6-digit Harmonized System (HS) commodity classification code. General imports and total exports
measure the total movement of goods in and out of a country. This resource was used to determine the largest
importing and exporting countries (by quantity), and the status of the U.S. in relation to all other reporting
countries.
Domestic import and export data were collected through the U.S. International Trade Administration
Commission (USITC) DataWeb, which provides U.S. trade and tariff data for commodities based on the
Harmonized Tariff Schedule of the United States (HTS), which is a hierarchical system that builds on the 6-digit
HS coding system, subdividing goods into 8-digit and 10-digit categories, as explained through an example
below. For this research, analysis focused on subsets of general imports and total exports. Imports for
consumption, representing a subset of general imports, encompass total commodity volume that has cleared
U.S. customs for consumption. Domestic exports, representing a subset of total exports, encompass total
commodity volume produced or manufactured in the U.S. and commodities of foreign origin modified in the U.S.
These trade categories were chosen to more accurately assess the quantity of goods associated with U.S.
production activities. In addition to quantity of traded goods, information on trading partners was collected.
Differences in trade classification codes at the 6-digit vs. 8- or 10-digit level may lead to different reporting
categories for a given chemical. For example, ferric chloride is categorized in the HTS system by an 8-digit code,
2827.39.55, which encompasses solely chlorides of iron. The HS system, used in this study to characterize
international trade, uses a 6-digit categorization (2827.39) and includes chlorides of iron as one group of several
chlorides apart from those of magnesium, aluminum, and nickel. Instances where this distinction may impact
the trade volumes reported were considered and noted. Duty estimates were obtained using the most recent
publication of the USITC HTS Tariff Schedule.
2.1.7 History of Shortages
Research for this study investigated previous supply disruptions that occurred over the period of 2000 to 2022.
Disruptions identified through this research were characterized as widespread or regional, depending on their
geographic extent. Less severe supply disruptions were also captured, including issuance of force majeure,
systemic delivery delays, significant and repeated price increases, challenges in obtaining key inputs as reported
by manufacturers and suppliers, and issues related to price fixing and Sherman Act violations.
Key resources were identified for a review of market history, and include the following:
• News stories
• Industry publications
• Bid documents and water utility news items
• Force majeure notices
• USITC briefings and investigations
• U.S. Federal Trade Commission (FTC) cases and proceedings
• U.S. Department of Justice (DOJ) antitrust cases
• Communications with manufacturers and suppliers
• Direct reporting to EPA
2.2 Information Resources
Due to the unique nature of each chemical supply chain, distinct resources were used to research each chemical.
However, several common resources provided a foundation for this study. These common resources are briefly
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described here.
American Chemistry Council (ACC): A trade organization representing a diverse set of companies engaged in the
chemical industry including domestic chemical companies and the plastics and chlorine industries. The ACC
website offers basic information on the manufacturing, handling, and storage of a variety of chemicals.
https://www.americanchemistry.com/default.aspx
National Institutes of Health - PubChem Database: PubChem is a database of chemical molecules. The system is
maintained by the National Center for Biotechnology Information, a component of the National Library of
Medicine, which is part of the U.S. National Institutes of Health. This source was used to obtain basic chemical
information and determine use and manufacturing information, https://pubchem.ncbi.nlm.nih.gov/
The National Standards Foundation (NSF) International: NSF International is a non-governmental standard
setting and testing organization. NSF/ANSI Standard 60 provides standards and a certification program for
almost all direct and indirect drinking water additives. The standard, referred to as NSF/ANSI 60 specifies testing
and evaluation criteria to ensure that drinking water treatment chemicals meet globally accepted public health
standards, and is one of the most widely used and commonly accepted standards for drinking water treatment
chemicals in the U.S. NSF International provides a database of certified suppliers and products for NSF/ANSI 60
certified chemicals, http://info.nsf.org/certified/pwschemicals/
The Chlorine Institute: A technical trade association of companies involved in the production, distribution and
use of chlorine, sodium and potassium hydroxide, sodium hypochlorite, and hydrochloric acid. The Chlorine
Institute provides product stewardship documents, manufacturing pamphlets, and manufacturing data for select
chemicals, https://bookstore.chlorineinstitute.org/
U.S. Department of Health and Human Services. Public Health Service. Agency for Toxic Substances and Disease
Registry (ATSDR): ATSDR provides toxicological profiles which characterize the toxicologic and adverse health
effects information for select toxic substance. Each peer-reviewed profile identifies and reviews the key
literature that describes a substance's toxicologic properties, https://www.atsdr.cdc.gov/
U.S. Environmental Protection Agency Chemical Data Reporting (CDR) Rule: The CDR rule, under the Toxic
Substances Control Act (TSCA), updated every four years, requires EPA to compile information from
manufacturers and importers of chemicals used in commerce. Under the rule, EPA collects basic information on
the types, quantities and uses of chemical substances produced domestically and imported into the U.S. The
CDR was used as a primary source for estimating domestic production of chemicals considered in this study.
https://www.epa.gov/chemical-data-reporting
U.S. Geological Survey (USGS) - Mineral Commodity Summaries: Published on an annual basis, this report is the
earliest government publication to furnish estimates covering nonfuel mineral industry data. Data sheets
contain information on the domestic industry structure, government programs, tariffs, and 5-year salient
statistics for more than 90 individual minerals and materials. These summaries were used as a source of
information about raw materials researched as part of this study. Information collected includes trade data,
production and consumption amounts, typical uses, and historical supply chain disruptions.
https://www.usgs.gov/centers/nmic/mineral-commodity-summaries
U.S. Geological Survey Minerals Yearbook: These annual publications review the mineral industries of the United
States and of more than 180 other countries. They contain statistical data on minerals and materials and include
information on economic and technical trends and developments. The Yearbook was used as a source of
background information on available raw materials, https://www.usgs.gov/centers/nmic/minerals-yearbook-
metals-and-minerals
U.S. International Trade Commission (USITC) DataWeb: The USITC DataWeb provides U.S. merchandise trade
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and tariff data. Trade data for 1989 to the present are available on a monthly, quarterly, annual, or year-to-date
basis and can be retrieved using a querying tool with features such as user defined country and commodity
groups. The USITC DataWeb was the primary source for domestic import and export data.
https://dataweb.usitc.gov/
U.S. International Trade Commission (USITC) Harmonized Tariff Schedule (HTS): The USITC HTS provides a web-
based system to search the most recently published edition of the HTS. https://hts.usitc.gov/
World Integrated Trade Solution (WITS): The WITS database is a compilation of data from international sources
including the World Bank, United Nations Conference on Trade and Development, United Nations Statistical
Division, and World Trade Organization. The WITS database provides worldwide import and export data for
commodities at the level of the 6-digit HS commodity classification code and allows users to access and retrieve
information on trade and tariffs. The WITS database was the primary for international import and export data.
https://wits.worldbank.org/
2.3 Relative Risk Evaluation Framework
The information compiled in the supply chain profiles developed using the process and resources described in
Section 2.1 and Section 2.2. respectively, was used to conduct a relative risk evaluation of the 46 chemicals
considered in this study. The framework is based on a variation of the standard risk equation, as defined in the
following figure.
Relative Risk = Criticality x Likelihood x Vulnerability
Criticality Measure of the importance of a chemical to the water sector
Likelihood Measure of the probability that the chemical will experience a supply disruption in
the future, which is estimated based on past occurrence of supply disruptions
Vulnerability Measure of the market dynamics that make a chemical market more or less resilient
to supply disruptions
The standard risk equation uses the parameters consequence, threat, and vulnerability (AWWA, 2021a), while
this study replaced consequence with criticality and threat with likelihood to better reflect the risk drivers for
chemical supply chains. In order to assess risk, it is necessary to quantify, or at least characterize each of the risk
parameters, however, the authors were unable to identify a formalized methodology for doing so in the context
of chemical supply chain disruptions. Rather, a new approach for quantifying the risk parameters was developed
for this study based on an analysis of the supply chains and a review of historic disruptions in these supply
chains.
A framework was established to develop ratings for the three risk parameters, which are multiplied to yield a
relative risk rating for each chemical. The framework assigns values to the factors identified as being important
to each of the risk parameters. A rating scale was established for each factor in a manner to create a reasonable
spread in the resulting ratings. Once the initial risk parameter ratings were computed for all 46 chemicals, the
distribution of values was analyzed. If the values clustered at one end of the distribution, adjustments were
made to the rating scale to provide a useful distribution. While this rating framework is based on an analysis of
factors that demonstrably impact supply chain risk, the rating scale is based on professional judgement and thus
there is a degree of subjectivity in the development of the scale. Other frameworks could produce equally valid
results. However, the risk evaluation framework used in this study provides a meaningful assessment of relative
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risk of supply chain disruptions among the 46 chemicals, within the assumptions of this methodology. The
following sections provide details about the factors used to evaluate each of the three risk parameters. The
numeric rating scales used to assign values to the risk parameters are presented in Appendix A.
2.3.1 Criticality
While "Consequence" is the standard term used in the widely accepted form of the risk equation, for this supply
chain relative risk evaluation, "Criticality" is a more appropriate and inclusive parameter. Criticality is a measure
of the importance of a specific chemical to the water sector, either as a direct use chemical for treatment of
drinking water (raw or finished) or wastewater or as a precursor to the production of direct use treatment
chemicals. The attributes of the chemical used to assess its criticality include: (1) unit processes in which the
chemical is used; (2) extent of use of the chemical in treatment; and (3) number of applications, including both
direct use in treatment and as a precursor. The lowest rating possible is given to a chemical with a limited
number of applications, limited use in water treatment, and typically used in periodic applications rather than
on a regular basis. Chemicals with a high criticality rating are those that have widespread use in water
treatment, are necessary to produce treated water compliant with regulations, and are used as precursors in the
production of other water treatment chemicals.
2.3.2 Likelihood
"Likelihood," in the context of a risk evaluation, is defined as the probability that conditions will occur that
produce an undesirable outcome. In this relative risk evaluation of supply chains, likelihood is the probability
that a disruption in the supply of a chemical will occur. A common method of assessing likelihood as part of a risk
evaluation is to use past occurrence as a proxy for future occurrence, and this is the method used in this study.
Specifically, occurrence of the following types of supply disruptions between 2000 and 2022 was used to assign
a value to the likelihood risk parameter: (1) previous widespread disruption to domestic supply; (2) previous
supply disruptions isolated to a region; (3) previous invocation of force majeure clauses in supply contracts or
concerns about potential supply disruptions; (4) history of significant price increases; and (5) no known supply
disruption.
2.3.3 Vulnerability
"Vulnerability," in the context of a risk evaluation, is defined as the characteristics of an asset that provide
opportunity for it to experience an undesirable outcome. In this supply chain risk evaluation, vulnerability
considers the characteristics of the broad domestic market for a specific chemical that make it more or less
resilient to supply disruptions. The attributes of chemical markets that were used to assess the vulnerability of a
chemical market to a supply disruption include: (1) Import dependence and trade policies; (2) U.S. production
diversity; (3) domestic competition for supply; and (4) stability of the chemical in storage. The lowest
vulnerability rating possible represents a chemical widely produced in the U.S. in quantities necessary to meet
domestic consumption, with limited dependence on imports, limited competition from other markets, and long
shelf life. The highest rating possible is assigned to a chemical produced at a limited number of locations within
the U.S. in quantities insufficient to meet domestic consumption, high tariffs on countries that are major
producers of the chemical, and competition from other critical sectors.
2.3.4 Relative Risk Rating Categorization
To facilitate analysis, the ratings for the criticality, likelihood, and vulnerability risk parameters, as well as the
overall relative risk rating, were grouped into equally sized bins, as shown in Figure 2-1. The moderate bin is
further divided in half to create moderate-low and moderate-high bins. Grouping of chemicals into these bins is
not intended to present an absolute characterization and ranking of chemicals by their risk of experiencing
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supply disruptions, but rather to illustrate which chemicals have characteristics that may place them at greater
or lesser risk of supply disruptions relative to one another.
te-Low Moderaf
Rar>ge >e/>
¦^w^Y1
Figure 2-1. Relative Risk Rating Bins
2.4 Data Review and Quality Control
To ensure the data is of a quality necessary to support the study objectives, steps were taken to ensure the
validity and integrity of the information from the time it was collected through analysis. The procedures for data
source selection gave preference to sources that are reputable, well-documented, and peer-reviewed. Data
sources were also categorized by the level of accurate information they offer (e.g., sources maintained by EPA
and other government organizations or are otherwise reputable and well-documented, sources that are peer-
reviewed, sources that present measured rather than estimated quantities). Data partially behind a paywall or
otherwise incomplete information was not utilized.
A standardized data collection process was established for all data elements collected. To maximize the
comparability of common data elements across chemicals, each data element was populated from the same
data source or from other data sources considered in the priority order described above. Consistent data
formatting and a standardized set of units were established.
Data quality was evaluated based on availability, completeness, and transparency. Quality control activities
included an evaluation of accuracy by comparison of the same data element obtained from multiple,
independent sources, where possible. Data was rejected if determined to lack the accuracy or completeness
needed to support the study objectives. In some cases, subject matter expertise was utilized to evaluate the
suitability of data for a particular analysis. Limited data gaps did not necessarily preclude development of a
chemical profile or completion of the relative risk evaluation.
2.5 Study Limitations
One of the more significant limitations encountered while collecting data for this study was varying levels of
data availability and completeness. Data availability for manufacturing methods and locations, domestic
production, domestic consumption, and trade categorization varied among the chemicals researched. Some of
the specific challenges encountered include:
• Manufacturing Methods: Some chemicals, as manufactured for water treatment, have trade-secret
manufacturing methods or other barriers to understanding the domestic manufacturing process.
• Production Data: In some instances, there was limited or no production data available, and in other
instances there were limitations to the available production datasets. This included a high degree of CBI
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for select CDR datasets, limited sources of information for chemicals with no production data collected
under the CDR rule, and inconsistencies between two or more sources of production data.
• Production for the Merchant Market: Chemicals used for water
treatment are part of merchant market consumption, and thus
the portion of total domestic production destined for the
merchant market is of greatest interest for this study. However,
there were sparse data available for most chemicals to
distinguish between quantities of domestic production
destined for captive consumption vs. merchant market
consumption. Thus, the profiles and relative risk evaluation
typically use total domestic production, total imports, and total
consumption.
• Trade Data: As noted in Section 2.1.6, trade categories can
often refer to a group or groups of chemicals rather than a
specific chemical. This makes import and export data for such a
category an estimate of trade for a specific chemical among
several. Additionally, items coded by the international HS
system vs. the domestic HTS system may include different groupings of chemicals. Trade categorization
of a chemical was occasionally unclear in cases where the trade category does not specify the chemical
name. In these cases, supporting documentation was sought to attempt to identify the appropriate
category. In other instances, assigned trade categories for complex chemicals are sometimes
inconsistently used by foreign importers, making it unclear whether a given trade category provides a
clear and accurate assessment of the trade for a specific chemical rather than a broad category of
chemicals.
• Domestic Consumption Data: While this data was available directly from USGS for raw materials and
could be calculated using the method described in Section 2.1.5 for most chemicals with available
production data, generally there were no independent methods of verifying consumption data. In cases
where trade data represents a larger class of chemicals that the chemical of interest falls within,
consumption estimates likely have a wide margin of error.
With an understanding of these limitations, a relative risk evaluation framework was developed to use the
available data to estimate relative risk of future supply disruptions (see Section 2.3 for full discussion of the
methodology). The accuracy of the results from the relative risk evaluation depends on the availability of data
used to rate the three risk parameters. In cases in which the target data were unavailable or incomplete,
qualitative information was collected and used to estimate the factors needed to develop a rating for the risk
parameters. Furthermore, the relative risk evaluation framework is a construct that simplifies highly complex
supply chain dependencies. The results provide a relative, not absolute, estimate of risk and are intended only to
provide some insight regarding characteristics and vulnerabilities of each supply chain that may warrant further
evaluation and analysis.
While the study researched 46 chemicals used directly in water treatment or as precursors or raw materials, this
is not an exhaustive list of chemicals used in water treatment or their precursors and raw materials. There may
be additional chemicals that can be included as precursors or derivatives of the chemicals researched. Inclusion
of additional chemicals in the assessment could impact not only the relative risk evaluation for the 46 chemicals
included in this study, but more broadly our understanding of the factors and conditions that can drive chemical
supply disruptions.
Market Accessibility
Captive Consumption:
Chemicals manufactured and
internally consumed by a
given entity or subsidiary for
further manufacturing.
Merchant Market
Consumption: Chemicals
manufactured by a producer
and sold to another entity.
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3 RESULTS AND DISCUSSION
Results from the analysis of risks to the supply chain for water treatment chemicals are presented in the
following subsections:
3.1
Provides a summary of the conditions leading to supply disruptions
3.2
3.3
Presents case studies of specific water treatment chemical supply disruptions
Presents findings from the relative risk evaluation of water treatment chemicals and associated
raw materials and precursors
3.1 Conditions Leading to Supply Disruptions
Most water treatment chemical supply chains rely on multiple inputs at multiple steps in the manufacturing and
distribution process. Often, numerous raw materials are used to manufacture a single end product. This can
create complex interdependencies and may lead to increased risk of supply disruptions.
While there is not a "typical" supply chain that can represent all water treatment chemicals, the supply chain for
aluminum sulfate (alum) can serve to illustrate the complexities and dependencies of a given supply chain.
Production of alum relies on three inputs at different phases of production: bauxite, sodium hydroxide, and
sulfuric acid, as shown in Figure 3-1. Aluminum hydrate, extracted from mined bauxite, is dissolved in sodium
hydroxide to precipitate aluminum hydroxide. Subsequent reaction of aluminum hydroxide with sulfuric acid
yields crystalized aluminum sulfate. The U.S. is almost entirely reliant on imports for non-metallurgical uses of
bauxite. While the U.S. is a major producer of chemicals required at two of three steps of alum production,
there is competition among domestic consumers of these precursors (sodium hydroxide and sulfuric acid).
Domestic competition for these inputs, along with considerations of pricing and availability, may drive alum
manufactures to rely on import from a variety of countries, as depicted in the figure. Furthermore, production of
chemicals at each step in the manufacturing process may take place at different geographic locations within the
U.S. or abroad, and transport of precursors may be required to manufacture the final product.
Figure 3-1. Sourcing of Raw Materials and Precursors to Manufacture Aluminum Sulfate
2019
Brazil
Jamaica
Turkey
Australia
United
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Most chemicals researched as part of this study are similar to alum in that they require multiple manufacturing
steps, and chemicals with multiple production steps may have multiple inputs from a variety of sources.
Many chemical supply chains span multiple countries and multiple continents, which introduces a wide array of
vulnerabilities. This chain of interdependencies, coupled with practices such as just-in-time inventory, creates an
environment in which failure of a single link can result in a series of cascading impacts on downstream supply
chains.
Analysis of significant chemical supply chain disruptions between 2020 and 2023 revealed common conditions
that lead to supply disruptions and events or circumstances that cause those conditions, as summarized in
Table 3-1.
Table 3-1. Supply Disruptions for Direct-Use Water Treatment Chemicals (2020 - 2023)
Chemical Year Conditions Leading to Disruption Cause of those Conditions
Carbon Dioxide
2020
• Decrease in output of co-dependent
products (e.g., ethanol, ammonia) due to
a sudden decrease in demand for those
products
• Global pandemic
• Planned maintenance of facilities that
manufacture the co-dependent products
Chlorine
2021
• Decrease in production capacity
• Sudden increase in demand
• Inadequate logistics
• Global pandemic
• Extreme weather / natural disaster
• Change in business drivers leading to
planned reductions in production capacity
Sodium Hydroxide
2021
• Decrease in production capacity (co-
produced with chlorine during the chlor-
alkali process)
• Inadequate logistics
• Global pandemic
• Extreme weather / natural disaster
• Change in business drivers leading to
planned reductions in production capacity
Sodium
Hypochlorite
2021
• Sudden change in demand
• Insufficient supply of precursor material
(i.e., chlorine and sodium hydroxide)
• Inadequate logistics
• Volatility in the supply of key precursors
Hydrochloric Acid
2021
• Insufficient supply of precursor material
(i.e., chlorine)
• Inadequate logistics
• Volatility in the supply of key precursors
Ferric Chloride /
Ferrous Chloride
2021
• Insufficient supply of precursor material
(i.e., chlorine, hydrochloric acid, scrap
iron, spent steel pickling liquor)
• Inadequate logistics
• Volatility in the supply of key precursors
Oxygen
2021
• Sudden increase in demand
• Inadequate logistics
• Global pandemic
Fluorosilicic Acid
2021
• Disruptions in production of precursors or
co-dependent products
• Competition for domestically produced
precursor materials (i.e., phosphate)
• Inadequate logistics
• Extreme weather
• Geographic concentration of precursor
materials
Chlorine, among
others
2022
• Inadequate logistics due to embargoes on
rail transport of hazardous materials
• Impasse in negotiations between rail
carriers and unionized rail workers
Potassium
Permanganate
2023
• Complete loss of domestic production
capacity
• Severe fire damage to the only domestic
production facility
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Table 3-1 reveals four recurring conditions that lead to supply chain disruptions: decrease in production,
insufficient supply of precursor materials, sudden change in demand, and inadequate logistics. Each of these
conditions is briefly described below.
3.1.1 Decrease in Production Capacity
Availability of chemical production capacity that is sufficient to meet market demand is necessary for a
predictable supply of water treatment chemicals. From 2020 through 2022, measures to combat the COVID-19
pandemic led to temporary closures of manufacturing facilities across the globe and a resulting decrease in
production capacity for a variety of goods. Additional conditions that have led to reduced production capacity
include natural disasters, mechanical failures, cyberattacks, and inadequate transportation resources. In cases
where water treatment chemicals are manufactured by a small number of producers, the temporary or
permanent contraction in output at just a few facilities can have a large impact on product availability. Reduced
chlor-alkali production capacity in 2021 resulted in shortages of chlorine and sodium hypochlorite, as discussed
in Section 3.2.1.
3.1.2 Insufficient Supply of Precursor Materials
Availability of precursor materials for chemical production is necessary for a predictable supply of water
treatment chemicals. Whether due to geographic concentration of precursor materials, reliance on foreign
sources, competition for access, or logistics challenges that make transport of available resources impractical or
impossible, supply of raw or precursor materials can be strained or interrupted. The reduced chlor-alkali
production capacity in 2021 discussed in the previous section also resulted in shortages of derivative products
including ferric chloride, as discussed in Section 3.2.2.
3.1.3 Sudden Change in Demand
Chemical production capacity and distribution may not be able to adjust at a pace commensurate with rapid and
unexpected changes in demand. Numerous chemicals used in water treatment are used across other industries
that may experience fluctuations in demand, which can result in market volatility. These conditions developed in
the liquid oxygen (LOX) market in 2021 when an unprecedented increase in demand for LOX by the health care
sector led to an abrupt and significant decrease in available LOX for the water sector, as described in the case
study presented in Section 3.2.4. Supply and demand dynamics can also impact chemical supply chains in less
obvious ways. For example, Section 3.2.2 described how reduced demand for steel resulted in decreased
availability of spent pickle liquor, which is a necessary precursor in the most common production method for
ferric chloride. As a third example, decreased demand for gasoline during the early stages of the COVID-19
pandemic resulted in decreased demand for ethanol, which in turn resulted in a shortage of carbon dioxide, as
discussed in Section 3.2.3.
3.1.4 Inadequate Logistics
Regular, uninterrupted transport of chemicals is necessary for a predictable supply of water treatment
chemicals. All supply chains require efficient and effective logistics to function, and while the detailed
requirements vary across industries, they all require transportation and workforce. Efficient transport requires
the infrastructure and workforce to move material through ports, rail exchanges, and other transportation
nodes.
A 2021 survey of domestic chemical manufacturers by the American Chemistry Council cited transportation and
logistics challenges as significant impairments to the domestic chemical manufacturing sector, with 99% of
respondents indicating that supply chain and freight transportation disruptions had impacted their business in
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the year prior. Of the respondents, 96% indicated reliance on import of materials for production via ocean
shipping. In some instances, companies needed to change shipping methods to avoid additional delays, and
survey respondents reported that shipping delays had impacted overseas partners' production schedules. Labor
shortages were cited as a significant factor in transportation delays (American Chemistry Council, 2022).
Discussions with domestic chemical suppliers have highlighted transportation and logistics challenges as
significant supply chain disruptors. Workforce issues, including the lack of commercial drivers certified to haul
hazardous chemicals, a temporary halt to training new drivers and train conductors during pandemic-related
business closures, and other causes leading to a lack of rail and truck operators, were cited. Additional logistics
challenges mentioned include delays at ports of entry, shipping challenges and delays, and pandemic-related
border restrictions. Inadequate logistics played some role in all the case studies presented in Section 3.2.
Threat of a Nationwide Interruption in Rail Carrier Service
In September of 2022, U.S. rail carriers and unions were negotiating the terms of new contracts. As
the deadline of September 16, 2022 approached without agreement, the imminent threat of an
interruption in rail carrier service raised concerns about impacts on critical supply chains. On
September 12, in anticipation of a potential interruption in service, rail carriers began issuing
embargos on the transport of hazardous materials, including several water treatment chemicals.
Transport by rail is a significant means of distribution and supply of numerous water treatment
chemicals. These embargoes would likely have resulted in shortages of chlorine within 10 days, and
shortages of other water treatment chemicals1 occurring days or weeks later. Fortunately, a
tentative agreement was reached before the deadline, and transport of hazardous materials
resumed before shortages occurred. In November, Congress and the President enacted a law to
enforce the contract tentatively agreed to on September 16, thus ending the threat of a nationwide
stoppage of rail carrier service.
1Other water treatment chemicals that are primarily transported by rail include: sodium hydroxide, sodium hypochlorite,
sulfuric acid, hydrochloric acid, phosphoric acid, liquified carbon dioxide, anhydrous ammonia, ferric chloride, and ferrous
chloride.
3.2 Case Studies of Water Treatment Chemical Supply Disruptions
Analysis of the supply chain disruptions identified during this research revealed common conditions that lead to
supply disruptions, as summarized in Table 3-1. In this section, selected supply disruptions are discussed in more
detail.
3.2.1 Chlorine and Sodium Hypochlorite
Chlorine and sodium hypochlorite are the two most widely used disinfectants in drinking water and wastewater
treatment. Chlorine is primarily produced through the chlor-alkali process, which uses electrolysis of sodium
chloride to produce chlorine, sodium hydroxide, and hydrogen (although less common, other chloride salts, such
as potassium chloride, can be used.) Sodium hypochlorite is commonly produced by reacting chlorine with
sodium hydroxide. The U.S. produces over 99% of the chlorine it consumes and imports a small percentage of
chlorine to meet U.S. demand, primarily from Canada. Approximately 75% of chlorine produced in the U.S. is
used in the manufacture of plastics and other polymeric materials and inorganic chemicals, while approximately
9% is used for water disinfection (including industrial applications) (Kreuz et al, 2022). Domestic chlor-alkali
producers Olin and Axiall (Westlake) have indicated that looking to the future, the amount of chlorine dedicated
to integrated chlorovinyl and other higher-value derivative products may increase based on demand for these
products (Slater, 2020; Axiall, 2013). It is estimated that in 2022 only 32% of domestic chlorine production was
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allocated to the merchant market. Of this, water treatment accounted for 27% of merchant market use (Kreuz et
al., 2022).
As of 2019, there were 49 known chlor-alkali production facilities in the U.S. distributed across 24 states;
however, 16 (33%) of these production facilities are concentrated along the Gulf Coast, an area historically
prone to extreme weather events (Kaskey, 2017). Case in point, Winter Storm Uri directly hit the Gulf Coast
region in February 2021, resulting in a temporary loss in chlor-alkali production capacity of approximately 28%
(Chlorine Institute, 2021). Additionally, in spring and summer of 2021, several chlor-alkali production facilities
experienced significant equipment failures resulting in additional, temporary losses in production capacity.
While some of these impacted facilities were located in the Guif Coast region, others were located in West
Virginia, Utah, and Washington. Later in the summer of 2021, there was a permanent reduction in chlor-alkali
production capacity at facilities located in New York, Alabama, Louisiana, and Texas as a result of changing
business priorities. These temporary and permanent changes in domestic production capacity are shown in
Figure 3-2. The reductions in chlor-alkali production capacity that occurred in 2021 were compounded by the
impacts of CQVID-19, which had resulted in decreased output of chlor-alkali chemicals by as much as 24%
beginning in April 2020. There were also reports of truck and driver shortages impacting all parts of the supply
chain. Additionally, rail lines were temporarily blocked in the western United States due to wildfires, forcing
reroutes that delayed deliveries (Kaplan, 2021).
Domestic Production of Chlorine
# 49 Domestic Manufacturing Locations (The Chlorine Institute, 2019)
• Permanent Reduction in Production Capacity in 2021 , —^ x
O Temporary Reduction in Production Capacity in 2021
Figure 3-2. Chlor-alkali Production Locations and Sites of Reduced Production Capacity
©fPgfe
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Reductions in production capacity led many manufacturers to issue force majeure notices to their customers,
raise prices above those specified in existing contracts, and place some customers on reduced allocations.
Decreased allocations of chlorine and sodium hypochlorite for drinking water and wastewater systems reported
to EPA in 2021 occurred in California, Oregon, Washington, Alaska, Utah, Missouri, Ohio, Pennsylvania, New
York, Massachusetts, Louisiana, and Florida. Drinking water systems in these states reported that they would
issue a boil water notice or shut down if they could not procure the necessary quantities of chlorine or sodium
hypochlorite. Wastewater systems risked violation of their permits if they lacked the chemicals needed to
disinfect treated effluent prior to discharge.
To address this shortage, the water and chemical sectors worked collaboratively to ensure that available
supplies of chlorine and sodium hypochlorite were prioritized for water systems. Additionally, the supply of
chlor-alkali chemicals began to improve in the fall of 2021 as equipment issues were resolved and production
capacity restored; however, new production challenges occurred in spring of 2022, and widespread reports of
price increases continue as of the date of publication of this report.
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History of Section 1441 of the Safe Drinking Water Act
There have been repeated shortages of chlor-alkali chemicals that have directly impacted the Water and
Wastewater Systems Sector. In 1974, the New York Times reported on the potential for an historic shortage
of chlorine across the United States. The Times reported that large municipal water systems including
Philadelphia, Denver, and the Southern California Metropolitan Water District experienced challenges
identifying any responsive bidders for chlorine contracts. New York, Detroit, and Chicago all struggled with a
very limited chlorine supply, and some municipalities ceased chlorinating wastewater due to lack of supply.
At the time, the new requirements of the Clean Water Act for disinfection of treated wastewater, along with
increased oversight of industrial facilities, including those manufacturing chlor-alkali products, created a
supply/demand imbalance. At the same time, the oil embargo of 1973 led to fuel shortages and sky-high
energy prices. The cost of energy, which is significant to the manufacture of chlor-alkali products, greatly
impacted costs associated with chlorine production at the time.
Congressman Paul G. Rogers of Florida, Chairman of the House Subcommittee on Public Health and
Environment in 1974, recognized the significance of the chlorine supply shortage for water treatment, and
introduced an amendment to the Safe Drinking Water Act (SDWA). To address the pressing concerns of
chlorine availability for the water sector at the time, the Safe Drinking Water Act enacted in 1974 was
amended to include the following:
Safe Drinking Water Act, Section 1441
Assurance of Availability of Adequate Supplies of Chemicals Necessary for Treatment of Water
(a) If any person who uses chlorine or other chemical or substance for the purpose of treating water in
any public water system or in any public treatment works determines that the amount of such chemical
or substance necessary to effectively treat such water is not reasonably available to him or will not be
so available to him when required for the effective treatment of such water, such person may apply to
the Administrator (of U.S. EPA) for a certification (hereinafter in this section referred to as a
"certification of need") that the amount of such chemical or substance which such person requires to
effectively treat such water is not reasonably available to him or will not be so available when required
for the effective treatment of such water.
The first use of SDWA Section 1441 occurred in June 2021 after EPA developed a process to implement this
provision of SDWA in response to the supply challenges that threatened continuity of operations at several
water systems. A total of 28 applications from drinking water and wastewater system in nine states were
processed between June 2021 and April 2022. Applications were submitted for several chemicals, including:
chlorine, sodium hypochlorite, sodium hydroxide, ferric chloride, polymers, sulfur dioxide, liquid oxygen, and
carbon dioxide. Though historic instability in some chemical markets had been routine, the level of supply
chain disruption ushered in by the COVID-19 pandemic was unprecedented. While the pandemic was one
cause of these disruptions, other causes included production interruptions due to natural disasters,
equipment failures, planned maintenance, and permanent reductions in production capacity.
Despite the large number of applications received between 2021-2022, as of February 2023 a certification of
need has not been issued. Technical assistance from EPA, which has focused on assisting applicants with
locating alternative sources of chemical supply combined with outreach to manufacturers and suppliers, has
been successful in helping resolve supply shortages.
21
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3.2.2 Ferric Chloride
Ferric chloride is commonly used in drinking water and wastewater
treatment as a coagulant. It is estimated that approximately 80% of
ferric chloride produced in the United States is used for water
treatment, including drinking water as well as municipal and
industrial wastewater. In North America, ferric chloride is commonly
produced by reacting spent steel pickling liquors with scrap iron and
hydrochloric acid to produce ferrous chloride, which is then reacted
with chlorine in an oxygen-rich environment to generate ferric
chloride. Under normal conditions, these precursors are readily
available.
However, the disruption in chlor-alkali production that begin in the
fall of 2020 and continued through 2021 resulted in disruptions in
the supply of chlorine and hydrochloric acid (see Section 3,2,1).
Concurrently, there was also a contraction in domestic steel
production, which reduced availability of spent steel pickling
liquors. Discussion with industry representatives indicated that
challenges in obtaining ferric chloride were primarily due to a
shortage of hydrochloric acid and spent pickling liquor. In addition
to the shortage of precursors, there was also a series of equipment failures at a major ferric chloride production
facility, and due to the specialized nature of the equipment, it took months to complete the repairs and restore
facility operations There were also reports of truck and driver shortages impacting all parts of the supply chain.
Additionally, rail lines were temporarily blocked in the western United States due to wildfires, forcing reroutes
that delayed deliveries by several weeks.
These conditions resulted in a situation in which the total available supply of ferric chloride was insufficient to
meet water sector demand. Because the water sector is the primary consumer of ferric chloride, there was
insufficient inventory in the supply that would allow for reprioritization of available ferric chloride to the water
sector. Thus, impacted water systems had to work with their suppliers and state primacy agencies to evaluate
other coagulants that could be used until the supply of ferric chloride recovered.
Causes of Supply Chain Disruptions: Changing Business Models
Various business disrupters, most recently the supply chain disruptions associated with the
COVID-19 pandemic, have led many businesses to reevaluate reliance on complex global supply
chains. Supply chains built for maximum efficiency may be found to introduce vulnerabilities such
as overreliance on imports through transportation modes that have disruptions and
unpredictable costs. A move towards more resilient supply chains could result in an expansion of
domestic production capacity.
3.2.3 Carbon Dioxide
Gaseous carbon dioxide, stored as a cryogenic liquid, is used in both water treatment and wastewater treatment
for pH control. Much of the carbon dioxide sold in the commercial market is recovered as a byproduct of
ethanol, ammonia, and hydrogen production. Historically, the ethanol industry has produced more than half of
the carbon dioxide sold on the commercial market. The majority of carbon dioxide produced for the commercial
market is consumed by the food and beverage industry. The market for water treatment is significantly smaller.
r
Ferric Chloride Supply Chain
Mining,
Extraction,
Processing
A Raw Materials
Production
Iron
Sodium Chloride
Steel Pickling
Ferric Chloride
22
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Between 2017 and 2021 numerous water providers received force majeure notices from their contracted carbon
dioxide suppliers. In instances where a reason was offered for the notice, most suppliers referred to a lack of
feedstock (ethanol) due to temporary shutdown of ethanol production facilities. The fluctuation in demand for
ethanol due to fluctuating demand for refined petroleum products has directly affected the availability of
refined carbon dioxide. Carbon dioxide production can fluctuate seasonally as well, as it may be tied to corn
harvest (ethanol) and fertilizer production (ammonia). Both industries have planned downtimes for annual
maintenance.
The COVID-19 pandemic created significant volatility in the commercial market for carbon dioxide. In an April
2020 letter to the White House Coronavirus Task Force, the Compressed Gas Association and other stakeholders
expressed great concern regarding "a significant risk of a shortage in carbon dioxide that would significantly
impact access to essential food and beverage supplies and other essential sectors of the U.S. economy" due to
the ongoing pandemic (Compressed Gas Association, 2020). The idling of ethanol and ammonia production
plants, both primary sources of carbon dioxide raw, greatly reduced the domestic supply of purified carbon
dioxide. On April 20, 2020, Advanced Biofuels USA reported that 34 of the 45 U.S. ethanol plants had paused
operations. A confluence of events reduced demand for ethanol and ammonia-based fertilizer, and the supply of
purified carbon dioxide for the commercial market dramatically decreased (Advanced Biofuels USA, 2020).
Certain areas of the U.S. were more heavily impacted by the volatile carbon dioxide market conditions in 2020.
As shown in Figure 3-3, the northeast, southeast, and southwest were all impacted by closures or idling of
regional carbon dioxide purification plants from 2020 to 2021. Water systems in Florida are uniquely vulnerable
to disruptions in the supply of carbon dioxide given that there is only one producer in the region - in southern
Georgia. When that production facility permanently closed in 2020 (Voegele, 2020), the supply of carbon dioxide
to water systems in Florida was severely limited.
23
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®
©
~ ©• © •
©§• ¦ ©
• •" -©
•- •©
©
©
©
©
©
%
©
€®
©
• - • -
©• •
•_
©
©
©,
vl*
<©3
Carbon Dioxide Purification Plants (publicly available data, 2021)
# Operating Carbon Dioxide Purification Plant
9 Closed Carbon Dioxide Purification Plant
0 Carbon Dioxide Purification Plant - Status Unknown
• NSF/ANSI Standard 60 Verified Facility
Figure 3-3. Status (2021) of Domestic Carbon Dioxide Purification Plants
The period of 2020 to 2021 represented a true shortage, where the total regional supply of carbon dioxide was
insufficient to meet water sector demand in Florida. However, most water systems were able to obtain a supply
at a substantially higher cost, which was generally attributed to increased transportation costs as suppliers
brought in product from distant purification plants to meet the demand of their water system customers. Given
that food and beverage grade carbon dioxide is more widely available than NSF/ANSI Standard 60 certified
carbon dioxide, several water systems worked with their state drinking water primacy agency to allow for use of
food or beverage grade carbon dioxide until the supply of NSF/ANSI Standard 60 certified carbon dioxide was
restored. Some states have codified use of food or beverage grade carbon dioxide for drinking water treatment
into law. For example, in Florida, the regulations allow the use of chemicals certified in the standards in Food
Chemicals Codex per F.A.C. 62-555-350(3){a).
Carbon Dioxide Grading for Water Treatment
The purification specifications for carbon dioxide are driven in large part by the food and beverage
industry, the primary consumer markets. The standards that govern the quality of carbon dioxide
used by the largest customer base are established by the Compressed Gas Association, and not ail
carbon dioxide on the commercial market is NSF/ANSI Standard 60 certified.
24
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3.2.4 Liquid Oxygen (LOX)
Oxygen, provided in bulk as LOX, is used directly in drinking water treatment to generate ozone for use as a
primary disinfectant and strong oxidant, and in wastewater treatment for aeration and oxidation. Oxygen may
also be used directly or indirectly in the production of water treatment chemicals including ferric chloride, ferric
sulfate, potassium permanganate, sulfur dioxide, and sulfuric acid. The commercial market for LOX relies on
centralized production at facilities equipped with large air separation units and purification processes needed to
remove impurities and meet a variety of standards and the infrastructure and logistics to move the LOX to
where it is needed. Most cryogenic air separation facilities produce LOX at greater than 99% purity to cover a
broad range of applications, including industrial applications such as steel and other metals manufacturing,
petrochemical manufacturing, and the space industry (Cockerill, 2021; Parkinson, 2021). Highly purified LOX is in
high demand by several industries, including the healthcare and food and beverage industries. The overall water
sector market for LOX is estimated at less than 5% of total U.S. consumption. As pictured in Figure 3-4, while
there are an appreciable number of LOX production facilities throughout the geographic area shown in the
figure, there are only three production facilities in Florida and roughly half a dozen in nearby states that might
serve the Florida market.
v -"%r ¦
%•
IK
o
Domestic Supply of Purified Oxygen
O NSF/ANSI Standard 60 Certified Suppliers (NSF International, 2021)
^ Domestic Manufacturing Locations (EPA Chemical Data Reporting, 2016)
Figure 3-4, Domestic Supply of Purified Oxygen in the Southeastern U.S.
The availability of LOX for medical treatment during the COVID-19 pandemic was a persistent concern,
particularly with the adoption of high-volume oxygen therapy as standard treatment for hospitalized COVID-19
patients. In the summer of 2021, COVID-19 hospitalizations, and the accompanying demand for LOX in
25
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healthcare settings, soared. During this same period, several LOX suppliers issued force majeure notices to
industrial customers, which included drinking water and wastewater systems. In extreme cases, water system
customers were placed on zero allocation for an unspecified duration. Force majeure notices were also issued to
water treatment chemicals producers which require LOX to manufacture chemicals such as ferric sulfate.
The two primary reasons cited in force majeure notices were the increased demand for LOX in healthcare
settings for COVID-19 patients, as well as a lack of commercial drivers with a Hazardous Materials Endorsement
(HME) and experience offloading LOX. The increase in demand due to dramatic regional increases in COVID-19
hospitalizations coupled with insufficient transportation resources resulted in a severe regional shortage. Similar
to the situation with carbon dioxide discussed in the previous section, water systems in Florida faced unique
challenges in securing adequate supplies of LOX. This was not only due to the limited number of producers and
suppliers that serve the Florida market, but also the extraordinarily high number of COVID-19 hospitalizations
and high demand for medical use of LOX in the state.
Given that another critical infrastructure, healthcare, was competing for the available supply of LOX, it was not
feasible to divert LOX from hospitals to water treatment facilities. To address this issue, the water sector and
chemical sector collaborated to notify LOX suppliers of the criticality of water sector customers that depend on
LOX for ozone generation and subsequent water disinfection. Additionally, some water systems were able to
exercise operational flexibilities, such as feeding chlorine or sodium hypochlorite to meet disinfection
requirements, switching to another source that doesn't require disinfection with ozone, or issuing conservation
orders to stretch available LOX supplies. It was observed that LOX suppliers coordinated with their water system
customers to ensure that critical needs were met. For example, water systems that had the operational
flexibility to forego use of ozonation for a limited time might have been placed on zero allocation of LOX, while
systems that depended on ozonation to meet disinfection requirements were provided with full or partial
allocation depending on their stated needs. Fortunately, the COVID-19 spike in the summer of 2021 subsided
and the equilibrium between supply of and demand for LOX was reestablished.
Oxygen Grading for Water Treatment
The specifications for highly purified LOX are driven in large part by the standards required by the
sector with the largest demand. High-volume end uses such as medical applications and food
packaging are certified by a variety of organizations including the U.S. Food and Drug Administration,
Compressed Gas Association, International Organization for Standardization (ISO), and Food
Chemicals Codex standards. Most commercial air separation plants have on-site testing for quality
assurance to ensure that batches meet the intended specifications. These industry standards may be
different from those required for drinking water applications, and not all air separation plants have
been certified under NSF/ANSI Standard 60.
3.2.5 Phosphate Rock
Phosphate rock is a raw material necessary for production of phosphate-based corrosion control chemicals and
water fluoridation chemicals. While the U.S. is a leading worldwide producer of phosphate rock and phosphoric
acid, approximately 95% of domestically produced phosphate rock / phosphoric acid is used in captive
manufacturing to produce fertilizer (USGS, 2020). Domestic production of phosphate-based chemicals other
than fertilizer may rely on import of phosphate rock from a small number of countries including Morocco, China,
Peru, and Russia. Domestic manufacturers and suppliers of phosphate-based water treatment chemicals
oftentimes rely on the international market for supply of raw materials. Price and access on the international
market, like the domestic market, is driven by agricultural demand and increasingly by demand for lithium iron
26
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phosphate battery materials (Spears et al., 2022). The international market for phosphate rock and phosphoric
acid may also be impacted by trade barriers, international events such as armed conflict, and natural disasters.
This finding is reinforced in a 2019 study by Nedelciu et al. (2020), which assessed that the global phosphate
supply chain is challenging to analyze in part due to a lack of global reporting, particularly as it relates to market
dynamics, and access and availability of phosphate rock resources.
Water producers have repeatedly experienced short-term disruptions in the supply of water fluoridation
chemical. Disruptions to phosphoric acid production and the supply chain for phosphate rock can have a
significant impact on availability of fluoridation chemicals. Much of the domestic fluoridation chemical supply is
produced as a byproduct of fertilizer production in a geographically concentrated area (i.e., Florida and
Louisiana), which may be impacted by natural disasters and planned maintenance periods. Manufacturers and
suppliers of other phosphate-based chemicals such as orthophosphates and polyphosphates may encounter
persistent challenges in obtaining phosphate rock, phosphoric acid, or downstream precursor chemicals such as
monosodium phosphate on the international market. This has led to repeated shortages of phosphate-based
water treatment chemicals. Between 2020 and 2022, the disruptions in international trade caused by the
COVID-19 pandemic severely challenged these manufacturers.
Availability and price increases of phosphate-based corrosion inhibitors can be a challenge considering Lead and
Copper Rule requirements. For example, Slabaugh et al. (2015) discussed potential improvements in sampling as
leading to increased use of phosphate-based corrosion inhibitors. Furthermore, the authors indicated that given
historically-documented price increases of approximately 233% during the Great Recession (Henderson et al.
2009), they anticipated the potential for future significant price increases and availability challenges.
Causes of Supply Chain Disruptions: International Trade Policies
Trade policies are often used as a tool to maintain good international relationships or as punitive
measures to address disagreements between trading partners. Between 2018 and 2022, domestic
trade policies have been adjusted to address trade disputes with China and Russia's invasion of
Ukraine. Trade disputes can impact the market for exports but can also impact the price and
availability of imports required for chemical manufacturing. If the trade partner is a crucial source of a
raw material, supply of the raw material may be heavily impacted.
China is a vital trading partner for the chemical industry. Starting in 2018, the United States imposed a
series of tariffs on import of Chinese goods, including a multitude of chemicals. A significant increase
in tariffs on many chemicals resulted in a subsequent shift in import dynamics where possible. Tariffs
imposed on chemical imports from China have resulted in improved supply chain resilience in
situations where manufacturers were able to pivot and import from other countries. In other
instances, alternative sources for the required chemicals have not been feasible, and the tariff has
resulted in higher prices or market instability for domestic products.
In spring of 2022 the U.S. and the European Union placed sanctions on Russia in response to Russia's
invasion of Ukraine. Though fertilizers are exempt from these sanctions, prices for nitrogen- and
phosphorous-based fertilizer, of which Russia is a significant exporter, increased worldwide in the
wake of implementation of the sanctions. While other countries look to fill the gap and supply
fertilizer, higher prices and a tighter market have placed pressure on the supply of phosphate rock,
potash, ammonia, and phosphoric acid. While the impact of these trade policies is still unfolding as of
the writing of this report, there is some expectation that competition on the international market
may limit availability of these resources.
27
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3.2.6 Potassium Permanganate
Potassium permanganate, and to a lesser extent sodium permanganate, are used as oxidants in drinking water
and wastewater treatment (AWWA, 2016). Common applications include iron and manganese removal,
hydrogen sulfide removal, taste and odor compound removal, arsenic removal, and control of nuisance
organisms such as zebra mussels. Municipal and industrial water treatment applications account for more than
50% of domestic consumption.
Domestic production capacity exceeds domestic consumption needs, and in 2019, approximately 27% of
domestic production was exported. Imports, almost exclusively from India, supplied approximately 11% of
domestic consumption in that same year. One company, Carus LLC, is the only domestic manufacturer of
potassium permanganate in North America.
On January 11, 2023, a fire broke out at the Carus LLC facility in LaSalle, IL, severely damaging the only
potassium permanganate production facility in the U.S. This prompted Carus LLC to issue a force majeure notice
stating that orders may not be filled within a 90-day period (Mullin, 2023). Carus and other water treatment
chemical suppliers turned to imports from India and China. However, at the time of this report, it was unclear
whether India had adequate capacity to make up for the lost production from the damaged Carus LLC facility,
and imports from China are stymied by anti-dumping regulations, imposing a 130% effective tariff on imports
from China (Federal Register, 2021).
This case study demonstrates how the combined vulnerabilities of a highly concentrated domestic production
base combined with trade policies that impede import from one of the largest world producers can present
significant risk to the domestic supply of water treatment chemicals.
3.3 Risk of Water Treatment Chemical Supply Disruption
While the previous section presented several case studies of supply disruptions that have occurred, this section
considers the potential for future water treatment chemical supply disruptions. The 46 chemicals, including 35
direct use water treatment chemicals along with 11 precursors and raw materials were evaluated to assess their
relative risk of a supply disruption. The relative risk analysis was conducted according to the methodology
described in Section 2.3, which was developed using insights gained from evaluation of real-world supply
disruptions, such as those described in Section 3.2, and an understanding of the conditions that lead to supply
disruptions as described in Section 3.1. The following four subsections discuss the relative risk as well as the
ratings for the three risk parameters.
3.3.1 Relative Risk
A summary of the relative risk evaluation results for the 46 chemicals considered in this study is presented in
Table 3-2. This table shows that most chemicals were assessed as low or moderate-low risk for supply chain
disruptions (23 and 17 of 46 chemicals, respectively). While there were no chemicals with a as high risk rating,
six chemicals were assessed to be at moderate-high risk of future supply chain disruption.
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Table 3-2. Risk Rating Summary for 46 Chemicals Important to Water Treatment
Chemical Name
Risk Rating
Criticality
Likelihood
Vulnerability
Acrylamide*
(ft)
O
(ft)
o
Aluminum Hydroxide*
(ft)
o
6
(m
Aluminum Sulfate
6
o
o
tai)
Ammonium Hydroxide
o
o
o
6
Anhydrous Ammonia
o
o
o
o
Bauxite*
(ft)
o
o
(m
Calcium Carbonate
6
o
o
6
Calcium Hydroxide
o
o
o
o
Calcium Hypochlorite
o
im)
o
(ft)
Calcium Oxide
o
6
o
b
Carbon Dioxide
(ft)
o
o
•
Chlorine
o
o
o
Citric Acid
(ft)
o
(ft)
(ft)
Diallyldimethylammonium
chloride (DADMAC)*
o
(ft)
(^1
Disodium Phosphate
(Gaca)
o
(ft)
(M)
Ferric Chloride
(ft)
o
o
6
Ferric Sulfate
(ft)
o
(ft)
o
Ferrous Chloride
(ft)
o
o
•
Ferrous Sulfate
o
o
o
o
Fluorosilicic Acid
(ill)
o
o
(m)
Hydrochloric Acid
(ft)
o
o
o
Hydrogen Peroxide
o
o
o
•
llmenite*
o
(M
o
(ft)
Manganese Ore*
o
o
o
Monosodium Phosphate
(ft)
o
(ft)
(Kffl)
Oxygen
(ft)
o
6
O
Phosphate Rock*
(ft)
o
o
o
Phosphoric Acid
o
o
o
Polyaluminum Chloride
(ft)
o
o
(GflKp
Potassium Chloride*
o
(pi)
o
(\m)
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Chemical Name
Risk Rating
Criticality
Likelihood
Vulnerability
Potassium Hydroxide
O
(ft)
O
Potassium Permanganate
O
O
o
(DKDKO
Silica
o
o
o
O
Sodium Carbonate
(ft)
o
o
(ft)
Sodium Chlorate*
o
to)
o
Sodium Chloride
o
°
o
o
Sodium Chlorite
o
(M)
o
W1
Sodium Hydroxide
([ffl)
O
o
©
Sodium Hypochlorite
(te)
o
o
o
Sodium Salts of
Polyphosphates
(ft)
o
(ft)
(DKDKO
Sodium Silicate
©
o
o
(ft)
Sulfur Dioxide
(ft)
o
o
O
Sulfur*
6
o
o
o
Sulfuric Acid
o
o
o
o
Zinc Orthophosphate
o
o
(ft)
o
Zinc*
o
o
o
o
High Risk (ffll) Moderate-High Risk (ill) Moderate-Low Risk Low Risk
*Denotes raw material or precursor chemical with no direct-use water treatment application
The six chemicals assessed to be at moderate-high risk are: chlorine, sodium hypochlorite, disodium phosphate,
phosphoric acid, sodium hydroxide, and DADMAC. All six of these chemicals have both direct use and precursor
applications, and four of the six have experienced supply chain disruptions between 2000 and 2022. The
criticality of all six chemicals was rated as high, and the likelihood of four of the six chemicals was also rated
high. However, vulnerability was rated as low for four of the six chemicals, including chlorine and sodium
hypochlorite.
It is notable that three chlor-alkali chemicals (chlorine, sodium hydroxide, and sodium hypochlorite) account for
half of the chemicals in this moderate-high risk category. This result warrants attention given the importance of
these chemicals to water treatment as direct-use treatment chemicals and the use of chlorine and sodium
hydroxide as precursors to the manufacture of numerous other water treatment chemicals.
Two phosphate rock derivative chemicals (disodium phosphate and phosphoric acid) are present in the
moderate-high risk category. This finding is partially attributable to the dependence of these two chemicals on
availability of phosphate rock, which is the raw material deemed at greatest risk of experiencing future supply
disruptions. As discussed in Section 3.2.5. there are specific vulnerabilities to the supply chain for phosphate
rock. These vulnerabilities, as applicable to disodium phosphate and phosphoric acid, are further discussed in
Section 3.3.4.
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Five of the six chemicals in the moderate-high risk category are derivative products of two chemical families:
sodium chloride and phosphate rock. The family trees for these raw materials are featured in Figure 3-6 and
Figure 3-7. Combined, water treatment chemicals requiring one or both of these foundational inputs account for
54% of the direct-use chemicals considered in this study.
Section 3.3.2 through Section 3.3.4 discuss the ratings for criticality, likelihood, and vulnerability, providing
insight into the drivers for the relative risk ratings for the 46 chemicals studied.
3.3.2 Criticality
Evaluation of the criticality of each chemical considered whether use of the chemical for water treatment is
necessary or discretionary, extent of use in water treatment, and use as a precursor in the manufacture of other
water treatment chemicals.
As shown in Figure 3-5 approximately 85% (39 of the 46 chemicals profiled) were assessed to have a criticality
rating that placed them in the high range, reflecting the study focus on chemicals that are essential to producing
safe drinking water for the public. Chlorine is one such chemical which was assessed in the high range based on
its widespread use in a critical treatment process (disinfection) along with use of chlorine in the production of
other water treatment chemicals (hydrochloric acid, ferrous and ferric chloride, ferric sulfate, sodium
hypochlorite, and calcium hypochlorite). The criticality rating for ilmenite, a raw material which can be used to
produce the ferrous/ferric chloride and ferrous/ferric sulfate was assessed in the moderate-low range because
its use as a raw material in the production of iron-based coagulants in North America is uncommon compared to
iron oxide (IDEM, 2016). Fluorosilicic acid was assessed in the low range based on its use in a non-critical water
treatment process (fluoridation) that is not required for compliance with federal drinking water regulations.
Furthermore, fluorosilicic acid is not used as a precursor in the production of other water treatment chemicals.
Figure 3-5. Criticality Rating for 46 Chemicals Important to Water Treatment
Chemicals that have both a direct use application and serve as precursors to the production of other water
treatment chemicals have the highest criticality rating. A list of these direct use treatment chemicals is
presented in Figure 3-6, along with the number of derivative water treatment chemicals, identified in this study,
that rely on the listed chemical for production. As an example, sulfuric acid is directly used in water treatment
for pH control but is also used in production of eight other direct-use water treatment chemicals, such as
phosphoric acid, ferrous sulfate, and ferric sulfate. The chlor-alkali chemicals sodium hydroxide and chlorine are
precursors to eight and five direct use chemicals, respectively.
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Figure 3-6. Number of Derivative Water Treatment Chemicals Manufactured with the Listed Direct-Use Chemicals
Number of Derivative Water Treatment Chemicals
Direct Use Water
Treatment Chemical
Anhydrous Ammonia '
Calcium Hydroxide i
Calcium Oxide ]
Disodium Phosphate '
Ferrous Chloride ]
Ferrous Sulfate ]
Hydrogen Peroxide l
Monosodium Phosphate ]
Potassium Hydroxide ]
Silica l
Oxygen :
Sodium Carbonate :
Phosphoric Acid i
Sodium Chloride ~
Hydrochloric Acid zi
Chlorine =1
Sulfuric Acid l
Sodium Hydroxide I
012345678
The criticality of chlor-alkali chemicals to the water sector is further illustrated in Figure 3-7, which shows the
primary chlor-alkali products and their derivative water treatment chemicals, all of which derive from sodium
chloride. In total, sodium chloride derivatives account for 26% (9 out of 35 chemicals) of the direct-use water
treatment chemicals assessed in this study.
Similarly, phosphoric acid and sulfuric acid are important to the water sector both as direct use chemicals and as
precursors to the manufacture of other water treatment chemicals. These chemicals derive from two minerals,
phosphate rock and sulfur, and the chemicals important to the water sector that are manufactured from these
two minerals are depicted in Figure 3-8. In total, phosphate and sulfur derivatives account for 29% (10 out of 35
chemicals) of the direct-use water treatment chemicals assessed in this study.
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I Precursor
Precursor and Direct
\ \ Use
Figure 3-7. Water Treatment Chemicals and Precursors Derived from Sodium Chloride
-------
Phosphate Rock
Phosphoric
Acid
1
Orthophosphate
{Sodium Carbonate)
Sodium
Orthophosphates
Sodium
Polyphosphates
Aluminum
Hydroxide
Sulfur
Dioxide
/
Sulfuric
Acid
Ferrous
Sulfate
W w
Chlorine
\ Precursor
Precursor > and Direct
/ Use
Figure 3-8. Water Treatment Chemicals and Precursors Derived from Phosphate Rock and Sulfur
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3.3.3 Likelihood
Evaluation of the likelihood of a supply disruption for each chemical was based on the historic record of supply
chain disruptions between 2000 and 2022, as described in Section 2.3.2. A summary of the likelihood ratings is
presented in Figure 3-9. The likelihood rating was assessed as high for 12 chemicals (26%), moderate-high for
eight chemicals (17%), and low for 26 chemicals (57%). Chemicals with a high likelihood rating have a history of
either widespread or regional domestic shortages. It is noteworthy that phosphate rock is included in this group.
Though the U.S. is a leading worldwide producer of phosphate rock, historically approximately 95% of
domestically mined phosphate is used in captive production of fertilizer (USGS, 2017). Thus, at times water
treatment chemical producers must rely on imported sources of phosphate rock or phosphate precursor
chemicals for water treatment chemical production. This dynamic has created supply chain disruptions specific
to production of phosphate-based water treatment chemicals, including corrosion inhibitors and water
fluoridation chemicals.
Figure 3-9. Likelihood Ratings for the 46 Chemicals Important to Water Treatment
Figure 3-10 illustrates the distribution of 46 chemical researched under this study across the five categories of
historic supply disruptions. Overall, 59% of chemicals were found to have experienced at least one supply chain
issue between 2000 and 2022. Three (7%) water treatment chemicals have a history of widespread shortages,
while nine (20%) precursor and water treatment chemicals have a history of regional shortages. Two out of
three of the water treatment chemicals with a significant history of widespread shortage are chemicals
produced in the chlor-alkali industry, while the third, fluorosilicic acid, is a byproduct of domestic fertilizer
production.
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¦ Previous Widespread Shortage
¦ Previous Regional Shortage
¦ Previous Force Majeure, Trade Disputes, or Market Concerns
Previous Significant Price Increase
¦ No Previous Supply Disruptions Identified
Figure 3-10. History of Supply Chain Disruptions (2000-2022) for 46 Chemicals Important to Water Treatment
3.3.4 Vulnerability
Evaluation of the vulnerability of each chemical to conditions that can result in supply disruptions was based on
the following:
• Domestic production capacity relative to domestic consumption, without differentiating between
captive consumption and merchant market consumption
• Percentage of domestic consumption dependent on imports
• Barriers to international trade
• Competition for the chemical from other markets
• Shelf-life of the chemical
As show in Figure 3-11 approximately 32% (15) of the researched chemicals have a vulnerability rating that
places them in the moderate-high range. Two phosphate-based compounds (disodium phosphate and sodium
polyphosphates) have a vulnerability rated as moderate-high based on limited known domestic production
facilities, a highly competitive domestic market, short shelf life, and high tariffs on imports from the current
leading worldwide exporter (China). Citric acid, which has a vulnerability rated as moderate-low, has limited
known domestic manufacturing locations with significant competing markets, however, as of the writing of this
report there was significant domestic production. Chlorine and sodium hypochlorite were rated as low
vulnerability based on widespread domestic manufacturing capabilities and a robust domestic manufacturing
base. However, the permenant reductions in chlor-alkali production capacity that occurred in 2021, and the
potential for future reductions, could make chlor-alkali chemicals and their derivatives more vulnerable to
future supply disruptions.
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¦ High ¦ Moderate-High
Moderate-Low ¦ Low
Figure 3-11. Vulnerability Rating for 46 Chemicals Important to Water Treatment
Evaluation of a chemical's vulnerability to supply disruptions included an analysis of dependence on imports to
meet domestic consumption. Although the U.S. is a leading worldwide producer of many of the chemicals
evaluated, U.S. manufacturers and suppliers of water treatment chemicals rely on imports for many precursors
and raw materials. Dependence on imports was incorporated into the vulnerability rating through a review of
trade, production, and domestic consumption data. Figure 3-12 shows the U.S. dependence on imports, in 2019,
for 10 raw materials essential to the production of water treatment chemicals. The U.S. is nearly 100%
dependent on imports of manganese ore, one of the raw materials necessary for production of potassium
permanganate, and 72% of the manganese ore imported to the U.S. comes from one source, Gabon. The U.S. is
also highly dependent on imports of bauxite, which is the source of aluminum for all aluminum-based
coagulants, and 65% of bauxite imports originate from Jamaica.
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Imports as a Percent of Domestic Consumption
Manganese Ore
Bauxite
Potasium Chloride
llmenite
Zinc
Sodium Chloride
Sulfur
Phosphate Rock
Calcium Carbonate
Silica
Largest Source of Imports
Gabon
Jamaica
Canada
Madagascar
Canada
Canada
Canada
Peru
Canada
Canada
30% <0% $0% 60% Pjo% 80% lo0oy
Figure 3-12. U.S. Net Import Reliance for Raw Materials Used in the Production of Water Treatment Chemicals
(2019)
Risks to the supply of manufactured chemicals depend not only on the vulnerability of the chemical itself, as
characterized by the intrinsic vulnerability rating, but also the vulnerability of the raw materials and precursors
needed to manufacture these chemicals. This dependence was incorporated into the relative risk evaluation
framework by assigning a vulnerability rating to a manufactured chemical that was the greater value of the
intrinsic vulnerability rating or the vulnerability rating of any raw material or precursor needed to manufacture
the chemical. Figure 3-13 lists the 15 manufactured chemicals that were assigned a vulnerability rating higher
than the chemical's intrinsic vulnerability rating, and equal to the greatest vulnerability rating for a precursor or
raw material need to manufacture the chemical.
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Influence of Raw Materials and Precursor Chemical Vulnerability on
Vulnerability Rating of Direct-Use WaterTreatment Chemicals
c
Ol
CO
O)
a>
03
Sulfuric Acid
Ferric Sulfate
Sodium Hydroxide
Potassium Permanganate
Phosphoric Acid
Hydrochloric Acid
Carbon Dioxide
Ammonium Hydroxide
Sodium Salts of Polyphosphates
Ferric Chloride
Sodium Silicate
Potassium Hydroxide
Polyaluminum Chloride
Aluminum Sulfate
Aluminum Hydroxide
0% 10% 20% 30% 40% 50%
Increase in Vulnerability Rating
60%
Figure 3-13. Influence of Input Vulnerability on the Vulnerability Rating of Direct-Use Chemicals
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4 SUMMARY AND CONCLUSIONS
Reliable availability of drinking water treatment chemicals is necessary for the uninterrupted operation of
critical water services that support public health, environmental protection, and the national economy.
Historically, true water treatment chemical disruptions in the United States have been intermittent, mostly
regional in nature, and relatively uncommon. Recent events, including the COVID-19 pandemic have offered key
insights into characteristics of the chemical industry that impact the supply of water treatment chemicals. These
insights, along with additional, detailed information from past events, records of production and trade, and a
description of the primary manufacturing processes have been captured in this study to understand the unique
features of each chemical supply chain. The information documented in this report can serve as a planning tool
for assessing future risk of water treatment chemical supply disruptions.
Most of the water treatment chemicals researched as part of this study have complex, multi-step supply chains
that rely on inputs from multiple companies and possibly multiple countries. Despite the distinct nature of each
supply chain, overarching factors that inform the risk of future supply disruption emerged from this research.
These findings are discussed below.
4.1 Nature of the Water Treatment Chemical Supply Chain
Most of the water treatment chemicals and precursors
evaluated in this study are widely used in other,
competing industries. It is rare that use of a chemical
for water treatment accounts for most of the demand
in the commercial market. In addition to holding a small
market share, a chemical must meet certain standards
to be used for water treatment, which generally
requires additional certifications and processing. These
market characteristics for water treatment chemicals
can result in fluctuations in the availability and price of
chemicals certified for use in drinking water treatment.
The supply chain analysis developed as part of this research effort provide insight into the characteristics of
chemical supply chains that impact their risk of disruptions. It also identified a few foundational chemicals such
as chlorine and phosphate rock that are essential to the production of several other water treatment chemicals,
while also being essential to other competing industries, most of which have a larger market share than the
water sector.
4.2 Key Risk Factors
This study utilized a relative risk evaluation framework to identify water treatment chemicals with supply chain
characteristics that may increase their relative risk of future supply disruptions. Three risk parameters
(criticality, likelihood, and vulnerability) were evaluated to determine the relative risk ranking for each chemical.
This study evaluated a broad range of chemicals and conditions that resulted in disruptions in the supply of
those chemicals, revealing several factors that can increase relative risk of disruptions:
• Reliance on import of raw materials or precursors needed for manufacture. This factor is particularly
important when there is competing demand for those materials. Import dependencies can be
exacerbated by trade policies that impede access to major global producers. As an example, China is a
Water Treatment Chemical Supply Chain Profiles
Detailed supply chain profiles of each of the 46
chemicals and raw materials included in this study
can be viewed at Water Treatment Chemical
Supply Chain Profiles. The information in these
profiles can help to contextualize the market and
global conditions that may play a role in their
availability, guiding efforts to plan for future price
increases and shortages.
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major producer of mono- and disodium phosphate but import of these commodities from China are
subject to a 25% tariff.
• Availability of domestic product. In some key manufacturing sectors, captive consumption is known to
utilize a significant portion of overall domestic production capacity. Examples of chemicals that have
significant captive consumption include phosphate rock, phosphoric acid, and chlorine.
• Limited or geographically concentrated domestic manufacturing capacity. Industries that are
concentrated in regions of the country that frequently experience extreme weather events may be at
greater risk of supply disruptions that could have widespread impacts. For example, a significant
percentage of chlor-alkali production occurs in the Gulf Coast region, and extreme weather events in
this region have resulted in national disruptions in the supply of chlor-alkali chemicals.
• Dependence on production of a higher value commodity. Fluctuation in demand for a higher value
product can impact availability of a water treatment chemical that is a byproduct of the primary
industry, even when demand for the water treatment chemical remains unfilled. This was exemplified
by the decrease in availability of carbon dioxide that resulted from a decrease in demand for ethanol,
the primary market that drives production of purified carbon dioxide, during the COVID-19 pandemic.
• Competition for available supply, especially when competition is from other critical infrastructure
sectors. The most notable example from this study was the strain on the supply of LOX during the
COVID-19 spike in summer 2021. Available LOX supplies were prioritized for the healthcare sector, which
resulted in reduced allocations for water system customers, even though they were prioritized right
behind healthcare.
• Reliance on strained or inadequate logistics, in particular, transport of bulk commodities. This factor
impacts many, if not all, chemical industries. Congested railways and an insufficient number of
commercial truck drivers with Hazmat certifications has created bottlenecks in supply chains, leading to
extended lead times and delayed deliveries.
4.3 High Risk Chemicals
As part of this review, chemicals important to the water sector that may be at higher relative risk of future
supply disruptions were identified. While none of the chemicals were assessed to have a high overall relative risk
based on the characteristics evaluated, the separation of chemicals into low, moderate-low, and moderate-high
tiers may help identify supply chain susceptibilities and opportunities for future research. However, it is
important to remember that risk does not equal likelihood. While historic supply chain disruptions were used to
assess likelihood of potential future supply disruptions, historic behavior is not a definitive predictor of future
events. Case in point, several chemicals identified as being at moderate-low relative risk of a supply disruption,
such as LOX and carbon dioxide, experienced shortages during the unique conditions caused by the COVID-19
pandemic. While the likelihood was determined to be high for these chemicals, the other two risk parameters,
criticality and vulnerability were lower, resulting in a lower relative risk rating.
Three chlor-alkali chemicals, chlorine, sodium hydroxide, and sodium hypochlorite, all critical to water
treatment, were assessed as three of the six chemicals at greatest potential risk of a future supply disruption.
This result is due to the criticality of these chemicals both as direct use treatment chemicals and precursors to
the production of other water treatment chemicals, and the history of repeated supply disruptions of all three
chemicals. Of the other three chemicals with a moderate-high relative risk, two are phosphate-based chemicals
(phosphoric acid, and disodium phosphate). This result is due to the history of shortages and challenges in
obtaining necessary inputs for manufacturing. Specifically, there is high demand for the primary input
(phosphate rock) to the manufacture of these two chemicals, which results in some manufacturers relying on
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imports from highly competitive international markets. In the case of disodium phosphate, there are very few
domestic manufacturers, and there is a significant barrier to trade (high tariff) for this chemical from the largest
global producer, China (USITC, 2022). The sixth chemical considered moderate-high relative risk is DADMAC, the
precursor to polymer polyDADMAC. This result is due to a number of complex factors, including: a limited
number of domestic manufacturers, precursor dependence on production of other higher value commodities
(petroleum byproducts), production capacity concentrated in an area prone to extreme weather, a history of
significant price increases, and widespread use by the water sector.
These results echo the findings of the COVID-19 Water Sector Survey conducted by EPA in 2020 (EPA, 2021),
which indicated concern among CWSs regarding future supply disruptions of chlorine, sodium hypochlorite, and
polymers. These results also build upon the results of the AWWA October 2021 COVID survey, indicating
concern about reliable availability of chlorine and sodium hypochlorite in late 2021 (AWWA, 2021b).
Additionally, an earlier study of chemical supply chain risks in the UK came to similar findings, ranking
phosphoric acid first with respect to the risk of supply disruptions, followed by polyamines, chlorine, and
polyDADMAC (Dillon, et al., 2015).
4.4 Knowledge Gaps
The significant supply chain disruptions experienced between 2020 and 2022, along with concern about
availability and pricing of critical water treatment chemicals indicate that a fuller understanding of water
treatment chemical supply chains is necessary. While this report is intended to provide critical information
needed by the water sector to plan for future supply disruptions, there are important gaps in the information
available about water treatment chemical supply chains.
There is no readily available source of comprehensive, annual production data for all critical water treatment
chemicals. While the CDR does provide some chemical production data, it is incomplete because companies can
withhold production data based on CBI claims while other chemicals are not covered by the CDR rule.
Furthermore, the production data available through CDR is typically several years old. There may be insufficient
information to estimate the percentage of domestic production of a given chemical that is destined for the
commercial market versus captive consumption. This information is essential to understand the quantity of
water treatment chemicals that are truly available.
There are also data gaps with respect to consumption and demand. Currently, there are no national estimates of
annual consumption of a given chemical by the water sector. Identifying the chemicals used in the greatest
quantities by the water sector could help prioritize further efforts to characterize chemical supply chains. Along
with this, a clearer picture of the overall market share consumed by the water sector would offer greater clarity
on how to prioritize future needs and evaluate risk.
Several potential risks, based on critical infrastructure interdependencies, were not evaluated as part of this
study. One example that could pose significant risk of supply chain disruption is the price and delivery of energy.
Many chemical manufacturing processes are energy-intensive, with considerable manufacturing costs
attributable to the cost of energy. This risk could extend to logistics concerns and the price of fuel for
transportation. Another example of a factor beyond the scope of this study is the purposeful disruption of
communications networks and business software. This risk is real and potentially significant, as seen in a recent
event where chemical manufacturers which serve the water sector were the victims of a ransomware attack
(Bomgardner, 2021). Finally, there is a risk that producers or suppliers may cease operations for financial or
other reasons, such as changing business priorities or loss of operating permits (Simchi-Levi et al., 2014). While
these potential risks are acknowledged, there is an incomplete understanding of the significance of these risks to
the availability of water treatment chemicals.
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Progress in filling these knowledge gaps will enable water sector and chemical sector partners to better
recognize the conditions that could result in a supply disruption with the potential to impact water system
operations.
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5 PRACTICAL APPLICATIONS
The complexities and interdependencies of modern water treatment chemical supply chains puts them at risk of
supply disruptions. While the circumstances that lead to supply disruptions are beyond control, there are steps
the water sector, including EPA and individual water systems, can take to prepare for and respond to supply
chain disruptions.
5.1 EPA Role in Assessing National Risk of Supply Disruptions
The relative risk evaluation results presented in this report represent a national view of the risk of disruptions in
the supply of water treatment chemicals. This understanding enables EPA to take meaningful action to improve
the resilience of water treatment chemical supplies. Specific EPA initiatives supported by this assessment
include:
• Policy development: EPA can advocate for policies that address some of the risk factors identified in this
report. As an example, EPA has used these results to demonstrate that certain regulatory programs
could strain availability and increase prices of critical water treatment chemicals, and advocated for a
measured approach that avoids these unintended consequences.
• Resource development: EPA has used the information contained in this report and the accompanying
water treatment chemical profiles to develop resources to help individual water systems improve their
supply chain resilience. As an example, EPA developed the Chemical Suppliers and Manufacturers
Locator Tool (EPA, 2022b), which can help individual water systems identify primary and backup
chemical suppliers. EPA intends to continue to expand the water treatment chemicals included in the
Locator Tool using the information developed under this study.
• Technical assistance: EPA has developed a robust program to support water systems facing supply chain
challenges (see callout box at the end of this section). The understanding that EPA developed through
the information summarized in this report and the accompanying water treatment chemical profiles was
essential to respond quickly and effectively to requests for technical assistance from individual water
systems since 2020. EPA intends to continue to expand the knowledge base of chemical supply chains
and improve technical assistance capabilities.
5.2 Water System Role in Assessing Local Risk of Supply Disruptions
While the national level risk evaluation presented in this report provides a useful benchmark, the actual risk that
a supply disruption will impact a specific water system are highly specific to that system. A system-specific risk
assessment of chemical supplies can help focus efforts to build supply chain resilience. Factors to consider in
such a risk assessment include:
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• Number of suppliers: Inventory the number of suppliers
capable of delivering the water treatment chemical to
the system. In general, a distribution facility will deliver
to customer within a 5 hour drive, which allows drivers
to make a delivery and return to the distribution center
without exceeding the 11-hour limit for hours driven
without a 10-hour break. Also confirm that nearby
suppliers can deliver the chemical using a method
compatible with the water system's infrastructure (e.g.,
bulk delivery, containerized chemicals).
• Diversification of suppliers: Determine whether the
suppliers in the region are receiving chemicals from a
variety of producers. If all regional suppliers rely on a
single producer, that can increase vulnerability to supply
disruptions.
• Supplier performance: Review the performance history
of current or potential chemical suppliers. A history of delayed deliveries, unexpected price increases,
declarations of force majeure, poor communication, or other poor performance indicators could lead to
or exacerbate supply chain challenges.
• Transportation infrastructure: Evaluate the resilience of transportation resources used to transport
chemicals from the supplier to the water system, and from the chemical producer to the supplier.
Reliance on a single transportation resource (e.g., a single rail line) can increase vulnerability to supply
disruptions.
• Geographic considerations: Evaluate whether the geographic location of a water system could present
challenges to the availability or delivery of water treatment chemicals. Water systems in regions that are
vulnerable to natural disasters (e.g., hurricanes, wildfires, flooding) could also be at increased risk of
supply disruptions. Also, producers that are in such regions might be more vulnerable to disruptions in
production, and this could impact availability of water treatment chemicals 100's of miles away.
• Regional experience: Discuss supply challenges with other water systems in the region or the state
Water and Wastewater Agency Response Network (WARN). These experiences can provide insight into
the types of supply challenges that might be likely to occur in the future.
• Periodic review: Changes in chemicals used, quantity requirements, and contracting and procurement
policies may change a system's supply chain risk profile. Likewise, there may be changes in the suppliers,
producers, and transportation resources that service the system's region. Reassessing supply chains and
the associated risk of disruptions on a routine basis ensures that efforts to bolster supply chain
resilience are focused on the greatest risks.
Chemical Suppliers and Manufacturers
Locator Tool
This tool allows water and wastewater
utilities to search for suppliers and
manufacturers across the U.S. that may
be able to fulfill their chemical supply
needs and increase resilience to supply
chain disruptions. This tool can be useful
to water and wastewater utilities in
finding alternative chemical suppliers if
their primary supplier is unable to deliver.
https://www.epa.gov/waterutilityrespons
e/chemical-suppliers-and-manufacturers-
locator-tool
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Additional Resources to Build Supply Chain Resilience and Respond to Supply Challenges
• Supply Chain Resilience Guide for Water and Wastewater Utilities provides actionable
guidance for improving water system resilience to supply disruptions.
• Case Studies provide real-world examples of individual water systems navigating supply
chain challenges and building resilience.
• Water Treatment Chemical Suppliers and Manufacturers Locator Tool is an interactive
mapping tool that can be used to identify nearby chemical manufacturers and suppliers.
• Current Supply Chain Disruptions that could impact water systems are tracked and reported
in a central location. New information regarding supply disruptions can be reported to:
SupplyChainSupport@epa.gov.
• A Platform for Coordinating Supply Chain Efforts has been established to facilitate
information sharing between EPA and water systems, and between the water and chemical
sectors. Requests to join the effort can be sent to: SupplyChainSupport@epa.gov.
• Section 1441 of the Safe Drinking Water Act provides EPA with authority to issue a
certification of need to a water system if a necessary water treatment chemical is not
available.
• The Defense Production Act authorizes the President to require the preferential acceptance
of contracts and orders necessary to support the national defense, including critical
infrastructure.
• Contact SupplyChainSupport@epa.gov for direct technical assistance from EPA in resolving
supply challenges.
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7 GLOSSARY
Captive consumption. The internal transfer of manufactured products within a company for significant
production of derivative products.
CAS Registry Number. A unique numerical identifier which designates a unique substance, assigned to every
chemical substance identified in open scientific literature.
Chlor-alkali process. A process used in the manufacture of chlorine, hydrogen, and sodium hydroxide (or
potassium hydroxide) through the electrolysis of a sodium (or potassium) chloride brine.
Community water system. A public water system that provides water for human consumption through pipes or
other constructed conveyances and has at least fifteen service connections or regularly serves at least twenty-
five individuals, and which serves the same population year-round (as defined in SDWA section 1401(15)).
Derivative chemical. A chemical that is derived from a parent chemical through one or more chemical reactions
and retains one or more structural similarities to the parent chemical.
Force majeure. A provision of a contract that provides relief from contract obligations in the instance of an
extraordinary event which prevents one or both contract parties from completing their contractual obligations.
Interpretations of events characterized by force majeure vary based on jurisdiction.
Input. A raw material, chemical intermediate, or any other resource utilized in the production of a finished
chemical.
Manufacturer/Producer. An entity that produces chemicals from raw or prepared materials through a technical
process involving process equipment, energy, labor, or other resources.
Precursor. A chemical that is utilized in the chemical reaction to produce another chemical compound.
Raw material. An unprocessed material found in the environment that can be used directly or extracted and
used in production of other materials.
Supplier. An entity that sells chemicals on the commercial market. The supplier may be a manufacturer or
producer, or the supplier may purchase chemicals from a manufacturer and repackage or simply bring the
chemicals to market.
Supply chain. The network of all resources (materials, companies, technology, transportation) involved in the
creation and delivery of a product.
Toxic Substances Control Act (TSCA). Section 8 (b) of the Toxic Substances Control Act (TSCA) requires EPA to
compile, keep current and publish a list of each chemical substance that is manufactured or processed, including
imports, in the United States for uses under TSCA. The Chemical Data Reporting (CDR) rule is required by section
8 (a) of the TSCA.
Water treatment chemical. Any material (raw element or manufactured chemical) used as part of water
treatment process.
Water and Wastewater Systems Sector (water sector). One of the critical infrastructure sectors formally
designated by the Department of Homeland Security, Cybersecurity and Infrastructure Security Agency, that
includes the Nation's drinking water and wastewater infrastructure.
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8 APPENDIX A
The following discussion presents the detailed rating approach for the three main risk parameters (criticality,
likelihood, vulnerability).
The parameter multipliers assigned are only meant to determine the relative influence of the input attribute on
the output and should not be interpreted as estimates of absolute risk, due to various assumptions made. For
each chemical, incorporation of new information and additional data points may lead to adjustments to the
multiplier used for a given parameter attribute.
Criticality
Criticality is a measure of the importance of a specific chemical to the water sector, either as a direct use
chemical for treatment of drinking water or wastewater or as a precursor to the production of direct use
treatment chemicals. The raw rating for criticality is "10" and the following multipliers were applied according to
the listed attributes. Descriptive characterization of the multipliers used for the criticality risk parameter are
presented below in Table A-l. In cases where more than one multiplier could apply, the largest multiplier was
used. Each attribute multiplier range was adjusted to provide adequate separation of qualitative characteristics
while avoiding an underestimation of attribute and parameter risk.
Table A-l. Attributes Used to Rate Criticality
Criticality Attributes
Unit Process Weight
Multiplier
1.
Chemical is used for disinfection, coagulation, pH adjustment, post-treatment
stabilization, or corrosion control
1.0
2.
Chemical is used in a process that could potentially be temporarily suspended (e.g.,
pre-treatment, fluoridation)
0.7
3.
Chemical is used only periodically (i.e., membrane cleaning, resin regeneration)
0.5
Extent of Use Weight
Multiplier
1.
Chemical is widely used in water treatment
1.0
2.
Chemical is moderately used in water treatment
0.9
3.
Chemical is infrequently used in water treatment
0.8
Number of Applications Weight
Multiplier
1.
Chemical is used in four or more applications
1.0
2.
Chemical is used in fewer than four but more than one application
0.95
3.
Chemical is used in only one application
0.9
Likelihood
Historic supply chain disruptions were categorized into one of the five following groups: a rating of 10 for
widespread shortage(s) in the U.S.; a rating of 9 for regional shortage(s) in the U.S.; a rating of 7 for instances
where force majeure notices were issued or concerns of potential disruption were raised; a rating of 6 for
significant price increase; and a rating of 5 for no supply disruptions or significant price increase in the domestic
market. The raw rating for likelihood is "10" and the following multipliers were applied according to the listed
criteria. The multipliers used for the likelihood risk parameter are described in Table A-2. Since historic supply
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chain disruptions were not present for the supply chain of every chemical included in the study, the data
multiplier range was adjusted to avoid an overestimation of risk in supply chains that had experienced
widespread disruption in the past and an underestimation of likelihood as a factor of overall relative risk in
instances where supply chains were found to have no recent history of disruption.
Table A-2. Attributes Used to Rate Likelihood
Likelihood Attributes
Multiplier
1.
Chemical market has experienced at least one widespread disruption to domestic supply (2000-
2022)
1.0
2.
Chemical market has experienced at least one regional supply disruption (2000-2022)
0.9
3.
Chemical market producers or suppliers have invoked force majeure or raised concerns about
potential disruptions, including trade disputes (2000-2022)
0.7
4.
Chemical market has experienced significant price spikes (2000-2022)
0.6
5.
Chemical market has no know history of supply disruptions or significant price increase (2000-
2022)
0.5
Vulnerability
In this supply chain risk evaluation, vulnerability considers the characteristics of the entire market for a specific
chemical that make it more or less resilient to supply disruptions. The raw rating for vulnerability is "10" and the
following multipliers were applied according to the listed attributes, as described in Table A-3. In cases where
more than one multiplier could apply, the largest multiplier was used. Each attribute multiplier range was
adjusted to provide adequate separation of qualitative characteristics while avoiding an underestimation of
attribute and parameter risk.
Table A-3. Attributes Used to Rate Vulnerability
Vulnerability Attributes
Import Dependence & Trade Policies Weight Multiplier
1.
High import dependence and unfavorable trade policies: imports for domestic
consumption account for greater than 20% of U.S. consumption, and U.S. import
tariff on the largest global exporter (a country that controls more than 25% of the
global market) is equal to or greater than 5%
1.0
2.
High import dependence and favorable trade policies: imports for domestic
consumption account for greater than 20% of U.S. consumption, and U.S. import
tariff on the largest global exporter is less than 5%
0.9
3.
Low import dependence: imports for domestic consumption account for less than
20% of U.S. consumption
0.8
U.S. Production Diversity Weight
Multiplier
1.
The number of U.S. production locations is fewer than 10 and the production
locations are geographically concentrated
1.0
2.
The number of U.S. production locations is fewer than 10 and the production
locations are geographically distributed or the number of U.S. production
locations is equal to or greater than 10 and the production locations are
geographically concentrated
0.9
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Vulnerability Attributes
U.S. Production Diversity Weight
Multiplier
3.
The number of U.S. production locations is equal to or greater than 10 and the
production locations are geographically distributed
0.8
Domestic Competition Weight
Multiplier
1.
The water sector represents less than 10% of U.S. consumption and there is
significant competition for the chemical from another critical infrastructure
sector (i.e., healthcare, food and agriculture, energy, defense, transportation, or
critical manufacturing)
1.0
2.
The water sector represents greater than 10% of U.S. domestic consumption and
there is significant competition for the chemical from another critical
infrastructure sector; or the water sector represents less than 10% of U.S.
domestic consumption, but there is no significant competition for the chemical
from another critical infrastructure sector.
0.9
3.
The water sector represents greater than 10% of U.S. domestic consumption and
there is no significant competition for the chemical from another critical
infrastructure sector
0.8
Stability in Storage Weight
Multiplier
1.
Chemical has a shelf-life less than one month
1.0
2.
Chemical has a shelf-life less than six months but greater than one month
0.9
3.
Chemical has a shelf-life greater than six months
0.8
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