July 14, 2008
The Cost of Lowering Risk ; New Safety Rules May Stifle New Jersey’s Chemical Industry
By RICHARD NEWMAN, STAFF WRITER
The reality of New Jersey is certain parts of the state are hotbeds of hazardous chemicals.Oil companies such as ConocoPhillips and Valero Energy Corp. use them in their refineries. Food businesses such as Farmland Dairies in Wallington use highly toxic ammonia for refrigeration. Some water treatment plants handle so much poisonous chlorine they may pose a threat to people who live and work close by.
Now new state rules make companies and utilities that handle large amounts of dangerous substances more accountable to state authorities. The changes require 89 chemical plants, food companies and water treatment plant operators to do safety reviews every five years of the chemicals and processes they use, with the goal of reducing the risk of harmful chemical releases.
The changes were made under the Toxic Catastrophe Prevention Act, a state law passed in the 1980s after an accident at a pesticide plant in Bhopal, India, killed thousands. The new rules build on that act, which requires that users and handlers of large quantities of very dangerous substances have emergency response and risk management plans reviewed and approved by the state Department of Environmental Protection.
Concerns about chemical hazards in North Jersey were heightened when five workers died in a chemical explosion in Lodi in 1995 and when nine workers were injured in 1998 at a chemical plant in Paterson.
Companies and utilities targeted by the added rules must come up with options for reducing risks that chemicals will escape and determine whether the company has the resources to implement the identified options. Companies and utilities are not required to actually make the changes, but state officials believe over time they are likely to do so voluntarily.
Companies will make changes voluntarily to reduce their liabilities, improve their public image and lower maintenance and emergency response costs, according to Jill Lipoto, director of DEP's division of environmental safety and health.
New Jersey is the first state to require such reviews, which were opposed by industry groups. The Bush administration has tried to preempt state chemical regulations, but a provision that Sen. Frank Lautenberg added late last year to a spending bill helped preserve New Jersey's rules.
The chemical industry objected to the requirements mainly because companies that handle very hazardous substances already do reviews, similar to those now required by the state.
"Our companies have been and are compliant," said Elvin Montero, spokesman for the New Jersey Chemistry Council, which has about 100 member companies. "This just makes it more official," he said. "It makes us accountable to DEP."
The state three years ago required more than 40 chemical companies to conduct one-time safety reviews as an anti-terrorism security measure. The recently expanded rules add food companies and water treatment plants that are big users of very hazardous chemicals to the list of those that must do reviews.
Now the reviews must be done every five years or every time a new hazardous chemical or process is introduced, although the chemical companies that completed reviews over the past few years need not do another one right away.
Reviews must include analysis of ways to reduce the amount of hazardous material in question, a means to substitute less hazardous materials, ways to use dangerous materials in their least hazardous form and designs of equipment and processes to reduce the chance of equipment failure and human error.
For Philip Kirschner, president of the New Jersey Business and Industry Association, the new rules are an example of over- regulation and they could deter companies from doing business in New Jersey.
"Do you think these big chemical companies want to blow up?" he said. "It's just going through hoops for the purpose of going through hoops. I think it's a real impediment to job growth in the state."
Chemical manufacturers employ about 70,600 people in New Jersey, according statistics from the state Department of Labor and Workforce Development, unchanged over the past three years and down 1 percent from 71,300 in 2005.
DEP said the rules will likely create a few jobs as companies build compliance teams or hire consultants. "We don't expect any negative impact as far as job losses go," said Paul Baldauf, assistant director for radiation protection and release prevention at DEP. "We expect a positive impact as far as workplace safety is concerned."
Whether the slight decline in jobs in recent years resulted from chemical companies' aversion to operating under New Jersey regulations is "really hard to determine," said Montero. "A lot of job losses are due to increased energy costs," he said.
Rick Engler, executive director of the state Work Environment Council, led a group of labor unions, environmentalists and community activists who pushed for the new rules. He hoped they would go further and require that changes be made to make facilities more safe. "This is an option analysis which is quite different from a mandatory government edict," he said.
The cost of doing reviews will vary, depending on the size and complexity of the operation. Some facilities will have to hire consultants to complete reviews, and that may cost tens of thousands of dollars, according to state estimates.
The state estimated that refineries would likely pay about $56,000 to complete reviews using their own staff. Costs for chemical plants could range from about $2,400 to $30,800, and other companies and utilities would likely shell out about $1,200.
"We thought the costs were reasonable," Baldauf said.
Maximum penalties for failing to comply are $10,000 for a first offense, $20,000 for a second offense and $50,000 for a third.
Baldauf said companies can reduce their legal liability by conducting reviews and choosing to implement identified options. The initiative is already working, said Baldauf, who cited the Schweitzer-Mauduit paper mill in Spotswood as an example.
Before the rules went into effect, the mill stopped having poisonous chlorine gas shipped in on rail cars and stored on the site. It started using a different form of chlorine bleach produced at the plant as needed, and the mill is no longer on the state's list of companies that have to do reviews.
New state rules for companies and utilities that handle large amounts of very hazardous substances:
* As of May 5, about 90 chemical plants and water treatment plant operators statewide are required to do regular safety reviews of the chemicals and processes they use, with the goal of reducing the risk of harmful chemical releases.
* Companies and utilities must come up with options for reducing risks, determine whether the options are financially feasible and submit reports to the state.
* Companies and utilities are not required to make the identified changes.
* Reviews must be done every five years, or whenever a dangerous chemical or process is introduced.
* The deadline to complete initial reviews is Sept. 2.
* Companies that fail to comply can be fined.
Source: New Jersey Department of Environmental Protection
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