In the wake of the devastating West Texas fertilizer plant explosion in April, the federal government is moving to improve chemical facility safety and security. We anticipate a number of significant government proposals and actions over the next year.

The Presidential Executive Order of August 1, 2013, “Improving Chemical Facility Safety and Security,” directs the formation of a Working Group made up of the heads of six federal departments (the Departments of Homeland Security, Agriculture, Justice, Labor, Transportation and the Environmental Protection Agency). Over the next nine months the group is tasked with implementing and creating plans for:

  • improving operational coordination with state and local partners;
  • enhancing federal agency coordination and information sharing;
  • modernizing policies, regulations and standards; and
  • working with stakeholders to identify best practices. 

A plan for a regional test program will be developed to ensure that regulators and emergency responders have ready access to key information to prevent, prepare for and respond to chemical incidents. The Working Group will consult with the Chemical Safety Board (CSB).

The EO directs agencies to examine new options for ammonium nitrate and other chemical storage, handling and sales, including regulatory and legislative initiatives, and additions or changes to current federal chemical risk management programs.

Crisis Management: The August 1, 2013, EO demonstrates why the objectives of successful crisis management and financial risk reduction require experience with the multiple agencies involved and legal expertise in their varied statutory mandates. Investigation procedures for the identification and collection of evidence that affect a company’s risk vary widely by agency, as do each agency’s approach to press, community, and employee relations, and even cooperation with other agencies. For example, CSB has refused to conduct joint interviews or document collection with OSHA and other agencies, requiring companies to develop strategies to minimize multiple, duplicative and potentially conflicting investigation efforts.

Company counsel, with a duty to cooperate with all agencies (and insurance investigators), seek to conduct their own privileged investigation with experts. This may have to be done while facing rapid-fire document and interview demands from multiple agencies. Complying with agency demands, the duty to preserve electronic data, communications, paper documents and physical evidence, and providing notice to third parties potentially at fault can demand a massive effort and require a proven methodology.

The speed of crisis investigations and decisionmaking, and the massive legal risks they pose, including possible criminal prosecution and “bet the company” financial risks, mean that a seasoned crisis team should be prepared to respond 24/7 on multiple tracks. Otherwise, despite the President’s Executive Order, multiple agencies will compete to chart the course of an investigation and determine the outcome, without prioritizing or protecting the interests of the company and its employees.