R Sheet on Chemical Facility Anti-Terrorism Standards

Authors

C. Jarrett Dieterle
Resident Senior Fellow, Competition Policy
Nick Zaiac
Former Associate Fellow

Key Points

The Chemical Facility Anti-Terrorism Standards program offsets the costs of national security preparations at critical infrastructure sites.

Chemicals firms face incomplete incentives to account for national security externalities related to their business.

Terrorism risks at chemical facilities are of national significance, and federal regulation is appropriate to manage them.

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BACKGROUND

America’s chemical facilities produce materials that are essential to the nation’s economy and the lives of everyday citizens. Farming requires fertilizer, medical patients need pharmaceuticals and chemical coatings make sure our public infrastructure lasts for decades. But handling chemicals, like all heavy industry, is not without risk, both to chemical firms and their workers. But unlike other heavy industry, chemical facilities carry the risk of their sometimes-volatile and -dangerous materials falling into the hands of terrorists and others who mean to do harm.

To that end, Congress created the Chemical Facility Anti-Terrorism Standards (CFATS) program in 2007 to manage risk associated with chemical plants through regulation and a modest grant program. The program is overseen by the Cybersecurity and Infrastructure Security Agency at the Department of Homeland Security. Initially designed as a program with limited duration, it was reauthorized by Congress in 2014 and again in 2019. The program is set to expire in 2020, leaving lawmakers to decide whether to allow CFATS to sunset, reauthorize the program for a limited time, or make it a permanent part of CISA/DHS efforts to mitigate terrorism risk.

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