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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Page 83
Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Page 92
Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Page 95
Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Suggested Citation:"5 Assessing Possible Control Strategies." National Academies of Sciences, Engineering, and Medicine. 2017. Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals. Washington, DC: The National Academies Press. doi: 10.17226/24862.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

5 Assessing Possible Control Strategies The preceding chapters present the results of the committee’s deliberations on chemicals of interest (Chapter 2), domestic supply chains (Chapter 3), and the status of domestic and international policy (Chapters 3 and 4, respectively). Together, the results uncovered potential vulnerabilities, particularly at the retail level of the domestic supply chain, and suggest opportunities both to reduce the likelihood that malicious actors will obtain precursor chemicals and to gather information to prevent or respond to IED attacks, without undermining legitimate commerce and use. This chapter focuses on trade-offs among possible control strategies, derived largely from domestic and international experience, for mitigating vulnerabilities and gathering information. The committee did not presume the necessity of new controls, defined as mandatory restrictions on access to precursor chemicals (see Chapter 1 for definitions), or prejudge the legal standing of other policy mechanisms. Instead, the committee explored three types of strategy with new controls and one type without. In addition, the committee considered other measures and activities, such as outreach, training, and reporting, that could operate under public- or private- sector auspices, with or without legal mandates. These other measures and activities could serve supplemental or independent roles in different contexts. More specifically, the committee considered the economic and noneconomic benefits and costs of the strategies, in relation to three policy objectives: • restricting malicious actors’ access to precursor chemicals; • gathering and disseminating information to prevent or respond to terrorist episodes; and • minimizing the burdens on legitimate commerce and use. Each benefit or cost, be it economic or noneconomic, represents a factor for comparison in DHS’s statement of task (Box 1-1). To assess the trade-offs among control strategies, the committee engaged in an analytical exercise in which it walked through the strategies one by one and discussed the benefits and costs of each, qualitatively. It drew from evidence collected in the project and from principles of regulatory assessment, set out by the Office of Management and Budget (OMB) in Circular A-4,231 which provides guidance to federal agencies on the development of regulatory analysis (see Appendix G). For example, OMB specifies that a good regulatory analysis should include a PREPUBLICATION COPY: UNCORRECTED PROOFS 79

80 Restricting Access to Explosive Precursor Chemicals statement of the need for the proposed regulatory action, an examination of alternative approaches to addressing the need, and an evaluation of the benefits and costs—quantitative, if possible, and qualitative otherwise—of the proposed action and the main alternatives. OMB sets out a hierarchy of analytical methods, preferring benefit-cost analysis (BCA), which, ideally, would monetize all the benefits and costs of a proposed regulatory action, over other methods (see Appendix G). Regulatory analysis, even in the ideal, which the committee did not attain, cannot address all aspects of the trade-offs among control strategies, but the underlying premise of each method—that policy interventions entail benefits and costs that can differ by approach—suggests means to systematically consider the relative merits of different strategies and inform the selection of one strategy over another. One might describe the exercise as a notional analysis of benefits and costs and a starting point for a more-detailed and rigorous analysis of policy options, but not as a BCA per se. Noteworthy among the deviations from a conventional BCA are the following: the committee did not attempt to identify all the benefits or costs associated with each control strategy; the committee lacked the data and resources to monetize or otherwise quantify the benefits and costs that it did identify; and the committee framed most of the benefits as pathways to attaining policy objectives (e.g., the capability to restrict access to precursor chemicals, the capability to track and correlate suspicious behavior), not as actual policy outcomes, such as reductions in bombings, injuries, or deaths. Nevertheless, the committee was able to rank each strategy with a new control based on its assessment of individual benefit and cost attributes. For those three strategies, the committee was able to say whether a particular benefit or cost, exclusive of various uncertainties, was expected to be higher or lower under that strategy than under one of the others. The committee could not say how much higher or lower a benefit or cost might be from one strategy to the next, or whether one benefit or cost would outweigh another under the same strategy, but it was able to use the rankings to draw insight into trade-offs among the strategies. For purposes of this exercise, the committee set out the broad contours of all four strategies, but left many of the specifics that would be necessary for a complete, qualitatively or quantitatively oriented policy analysis to future efforts. POSSIBLE CONTROL STRATEGIES Potential vulnerabilities, as evident in the committee’s chemical, supply chain, and policy assessments, exist primarily at retail-level points of sale, especially non-agricultural. Although gaps in visibility and policy coverage exist elsewhere in the supply chains, the committee chose to focus on retail-level sales in this chapter as the highest priority. A strategy to mitigate potential vulnerabilities could include different combinations of new and existing controls and other measures and activities, such as outreach, training, and reporting, which could be mandatory or voluntary under different configurations. At one end of the spectrum, all such measures and activities could be mandatory and, at the other, the measures and activities could all be voluntary. The committee presents the measures and activities without PREPUBLICATION COPY: UNCORRECTED PROOFS

Assessing Possible Control Strategies 81 specifically designating them as mandatory or voluntary and comments later in this chapter on the implications of choosing a mandatory or voluntary route. Retail-Level Controls The committee’s review of the policy landscape (see Chapters 3 and 4) suggests the possibility of at least four general types of control strategy for retail-level transactions, consisting of three that would include a new mandatory restriction on access to precursor chemicals (i.e., a control) and one that would not. In particular, the three strategies with new controls would implement one of the following; a retail-level ban, licensing, or a registry. The fourth strategy would augment federal, state, and local controls that exist at the time of this report with other measures and activities not currently in place. The committee refers to the fourth strategy as business as usual plus (BAU+). Any of the three controls, not just BAU+, could be implemented in conjunction with other measures and activities, established as mandatory or voluntary policy mechanisms, with varying degrees of government and industry involvement and oversight. A retail-level ban, licensing, or a registry could apply to all or a just subset of retail-level sales, with the subset depending, for example, on the type of transaction or product market. Given concerns about the potential for commercial disruption, the committee chose to focus on applications of those controls to noncommercial sales, but policymakers could include commercial sales within any of the frameworks. Each control would likely require regulatory action, which could be prescribed at either the federal, state, or local level, with due consideration of preferences for state or local autonomy, differences in circumstances among states and localities, and the need for coordination and harmonization across state and local borders. A ban on noncommercial sales might be implemented by requiring a purchaser’s evidence of commercial status; licensing for noncommercial sales might be implemented by requiring either evidence of commercial status or a license to purchase; and a registry for noncommercial sales might be implemented by requiring either evidence of commercial status or participation in a registry, for example, with a signature and government-issued identification (ID). In each case, the requirement to present evidence of commercial status, a license to purchase, or a signature and government-issued ID might fall on the purchaser, but the seller might also face a corresponding requirement to request or check any credentials for validity and legitimacy. For example, a retailer might be expected to check the expiration date of a license or ID and be able to recognize a counterfeit. A ban, licensing, or a registry could also include a restriction on quantities of purchases, as with the pseudoephedrine controls aimed to limit illicit drug manufacturing (Chapter 3). BAU+ would not add any new retail-level controls, but it would not preclude action on other types of measures or activities, discussed below. Moreover, any strategy, even BAU+, could include a provision that grants retailers the right to refuse suspicious sales, but this might require additional legal or regulatory action. PREPUBLICATION COPY: UNCORRECTED PROOFS

82 Restricting Access to Explosive Precursor Chemicals Other Retail-Level Measures and Activities Different combinations of other measures, involving either legal mandates or voluntary participation, could accompany a ban, licensing, a registry, or BAU+: • training of retailers to, for example, request and verify evidence of commercial status, licenses, or government-issued IDs; identify suspicious behavior, fraud, theft, or loss; or fulfill responsibilities for reporting and documentation; • reporting of suspicious behavior and fraud, theft, or loss to federal authorities and local law enforcement, respectively; and • documentation of transactions, which could involve electronic record keeping and data analytics. In each case, the measure could be publicly or privately sponsored. Other activities could include outreach for awareness, random audits, and systematic inspections. The federal government, several state governments, and trade associations already conduct some outreach on precursor chemicals, regulation, and safety (Chapter 3), but they and others could choose to do more to educate retailers on precursors, including the requirements associated with any new controls. In addition, government officials, trade associations, or other third-party verifiers could evaluate retailers’ implementation of new controls or other measures through random audits, systematic inspections, or a combination of the two. Random audits would catch retailers off-guard, whereas systematic inspections could allow time for self-assessment and preparation. Some EU MS, including the United Kingdom, employ mystery shopping, a practice by which government officials—or potentially others—attempt to purchase regulated precursor chemicals incognito and then provide feedback to retailers on the interaction and whether it met regulatory requirements or fell in line with guidance. In the EU, the approach serves more as an educational tool than as an enforcement tool, but it can also support enforcement objectives. Although targeting retailers, mystery shopping can also inform government program managers; for example, some mystery shoppers have uncovered opportunities for agencies to improve their outreach. For the purposes of this report, mystery shopping is considered a subset of audits and inspections. Product placement might also play a part in each strategy. Retailers could choose or be required to place products that contain precursor chemicals behind the sales counter or in a locked case, so that consumers must request them directly. The extra layer of interaction and engagement might provide retailers with an opportunity to assess whether the purchase is suspicious and should be reported or denied, if they have the right to refuse a sale. Building a Control Strategy from Controls, Measures, and Activities The committee assembled three control strategies as packages of policy mechanisms, featuring either a ban on noncommercial sales, licensing for noncommercial sales, or a registry PREPUBLICATION COPY: UNCORRECTED PROOFS

Assessing Possible Control Strat g C tegies 83 for noncoommercial sales, togethe with an un er nspecified lim on the qu mit uantity of nooncommerci ial sales and a right to re d efuse sales to anyone, un o nder suspicio condition Each con ous ns. ntrol strategyy also inclu uded a suite of suppleme ental measur and activ res vities, consistting of outre each, trainingg, reporting documenta g, ation, and auudits and insp pections. To facilitate th compariso of strateg o he on gies, the commmittee held th measures and activities constant a he across strateegies. Each sstrategy treatts commerc sales ide cial entically, for example, coommercial ppurchasers m provide evidence of their must f commerc status to complete a transaction, but treats no cial oncommerci sales diff ial ferently. The committee al looked se c lso eparately at a BAU+ straategy that in ncluded addit ach, tional outrea training, audits and in nspections, reporting, an document r nd tation, absen any new controls. nt Appendix H includes a summary of findings on cautiona labeling a well, but t committ x s y ary as the tee did not in nclude cautioonary labelin in any of the strategie because o concerns r ng f es of raised in the EU and elsewwhere about unintentiona knowledg transfer (A al ge Appendix H) ). Figur 5-1 illustrates the deve re elopment of a strategy fr f from a menu of options, starting with the h selection of a new co n ontrol, if any and procee y, eding to the sselection of measures an activities that nd can eithe supplemen the new co er nt ontrol or acc company exi isting controls. In this ill lustrative example, the resultin package consists of lic , ng censing with training, re h eporting, doc cumentation, , outreach, and audits and inspections. , FIGURE 5-1 Illustra E ative exampl of the dev le velopment of a control st f trategy. A sc chematic representtation of the strategy devvelopment pr rocess that r results in a p package of poolicy mechanis that con sms nsists of licen nsing with tr raining, repoorting, docummentation, ou utreach, and d audits an inspection nd ns. The committee did not specif whether a particular m c fy measure or activity woul be volunta or ld ary mandator but envis ry, sioned that, in either case retailers w i e, would be exp pected to me a standard of eet d performa ance rather th a standa of design or behavior In the case of a manda han ard n r. e atory measur re, the retailer might be held to the standard by a governmen agency, fe s nt ederal, state, or local; in the case of a voluntary measure, a tra associati might pr m ade ion rovide oversight. Perform mance stand dards express requirements in terms of outcomes, not the mean to achievi outcomes and give r s f n ns ing s, regulated parties the flexibility to achieve reg d o gulatory obje ost-effectively as possibl 231 ectives as co le. PREPUBLIC P CATION CO OPY: UNCOR RRECTED P PROOFS

84 Restricting Access to Explosive Precursor Chemicals For example, a retailer might be expected to train its employees sufficiently to know when a product is subject to a control; when to ask for and how to check a purchaser’s credentials (e.g., evidence of commercial status, license, or government-issued ID); and how to identify and report suspicious behavior, fraud, theft, and loss, but the retailer would be given the flexibility to conduct the training by whatever means it deems most appropriate to its circumstances. To judge compliance, the policy could specify certification and testing requirements, rely on audits or inspections, or employ other tools, potentially left to the judgement of the retailer. Though businesses might choose to develop their own training materials, a government agency or trade association might provide retailers with training materials, such as pamphlets and videos, to support training (see Appendix F), but give retailers leeway to adapt and apply them as they see fit. In the discussion of trade-offs among strategies, later in this chapter, the committee considers how a business’s incentives might differ if a measure is voluntary or mandatory. Similarly, the committee did not assume a particular funding source—private or public—or assignment of responsibilities for outreach, training, reporting, documentation, or audits and inspections. In the case of a publicly funded program, the government would bear the initial cost, which would fall eventually on taxpayers; and, in the case of a privately funded program, industry would bear the initial cost, which would fall eventually on some combination of proprietors or shareholders, employees, and customers. In either case, the overall cost of the measure or activity should be about the same, if retailers are held accountable to the same standards of performance, whether by a government agency or private-sector entity. Ultimately, a control strategy would require the specification of threshold concentrations and quantities for each precursor chemical under consideration, but for purposes of this analytical exercise, the committee took the existence of specifications as given, but as yet unestablished. Moreover, the committee did not assess different approaches—bans, licensing, registries, or BAU+—for different precursor chemicals separately; rather, it considered each approach for any or all precursor chemicals of priority. In an actual policy making process, not all chemicals would need to be treated identically; that is, some Group A chemicals could be subject to a ban, while others are subject to a licensing regime, others to registry requirements, and others to additional mandatory or voluntary measures and activities without any new controls. However, the United Kingdom ruled out mixed controls, based on feedback from industry, which preferred the simplicity of a stand-alone licensing regime. The committee considered the potential for direct benefits, direct costs, ancillary benefits, and unintended consequences, the last of which might reduce benefits or add to costs, as factors to compare across strategies. An ancillary benefit is a favorable impact that is typically unrelated or secondary to the stated purpose of the control, measure, or activity. For example, a control might increase the visibility of transactions and, thus, present information that can be used to develop and improve policy. An unintended consequence is an undesirable security, economic, or social side effect of a policy action. For the most part, these definitions are consistent with those found in OMB guidance, but the committee parts from OMB by referring to a subset of unintended consequences that lack sufficient basis for ranking as uncertainties.231 Uncertainty, as a term of art among economists, differs from risk, a term that OMB applies, in that it can be used to describe conditions when the future is unknown—in the extreme, anything or nearly anything can happen—and it is impossible to characterize the probability, if not the severity, of a consequence. Thus, an uncertainty is akin to an unknown risk.232-234 The committee categorized PREPUBLICATION COPY: UNCORRECTED PROOFS

Assessing Possible Control Strategies 85 anticipated effects, whether direct, ancillary, or unintended, as either benefits or costs, but treated particular uncertainties, including displacement, separately. As noted previously, the committee also parts from OMB guidance insomuch as it framed most of the benefits of the control strategies as pathways to attaining policy objectives—or capabilities—and not as actual policy outcomes. In those instances, the committee had enough information about the structure of the pathway to support a qualitative, operational comparison across strategies, even if it did not have enough information to characterize the ultimate effect of the strategy. For example, the committee might feel comfortable comparing the stringency of a ban, licensing, or a registry, in terms of its operating principles, but would not feel comfortable comparing the effects of the controls on explosions, deaths, or injuries. ASSESSING TRADEOFFS AMONG CONTROL STRATEGIES In this section, the committee presents the results of the analytical exercise, which illustrates one possible approach to examining, qualitatively, the benefits, costs, and uncertainties of strategies and the trade-offs among them. The committee does not intend to suggest that this is the only possible approach to assessing tradeoffs or that these are the only possible strategies. However, the strategies under consideration encompass many features of control strategies that have been employed in other contexts (Chapter 3 and 4) and could be employed in this context. Different specifications are also possible; for example, licensing or registry requirements could cover all purchasers, but set different quantity limitations for commercial and noncommercial purchases. Similarly, the committee makes no claim to have identified all the benefits, costs, and uncertainties that could emerge from a strategy; rather, it addresses the particular types of benefits, costs, and uncertainties that came to the fore in its deliberations. The committee assessed the strategies slightly differently, depending on whether they included a new control. The committee treated the strategies with new controls—ban, licensing, or registry—as complete packages and assessed them in terms of how they might create a pathway or elicit an outcome in relation both to current policy and to each other. The committee ranked those three strategies with respect to the benefits and costs of each, but as noted above, it did not attempt to rank them on the basis of the uncertainties (see Appendix H). The committee treated the BAU+ strategy less as a package and more as a compendium of measures and activities, not strictly comparable to the other three strategies. These measures could be implemented together or separately, reflecting the flexibility of the premise that policy makers could choose to forgo new controls, but still require or encourage additional outreach, training, reporting, or other efforts. Thus, the committee considered individually and without rankings, the benefits, costs, and uncertainties of several measures and activities that could constitute elements of a BAU+ strategy. All the assessments, including the benefit and cost rankings of the strategies with new controls, are strictly qualitative. On that basis, the committee cannot say how much better or worse one strategy might be relative to any other, only that it might be qualitatively better or PREPUBLICATION COPY: UNCORRECTED PROOFS

86 Restricting Access to Explosive Precursor Chemicals worse with respect to each individual attribute. The committee did not attempt to convert the ordinal rankings to scores because it would have needed to apply weights to each benefit and cost. It is unlikely that society would value each benefit or cost equally; moreover, the relative importance of different costs, benefits, or uncertainties could change over time. By design, any benefits, costs, or uncertainties tied solely to a supplemental measure or activity, irrespective of the particular control, would be the same across the strategies that contain new controls, because the measures and activities are fixed across strategies. For example, the ban, licensing, and registry strategies rank equally in terms of awareness because that benefit flows largely from outreach and training, which is the same in each case. Assessment of Benefits The committee considered anticipated benefits relating to the capability to impede, deter, or reduce acquisitions of precursor chemicals for illegitimate purposes; the capability to increase awareness of chemicals, concerns, and requirements; the capability to track and correlate suspicious behavior; the capability to provide feedback on implementation; early warnings from vetting; better visibility of transactions and additional information for developing and improving policy; and noneconomic social benefits, some of which could be the same across strategies. These benefits, which include both direct and ancillary benefits, framed largely as pathways to attaining policy objectives or other outcomes, are described in Box 5-1. Table 5-1, below, presents a summary of the assessment of benefits, exclusive of any offsets that might emerge from the assessment of particular uncertainties later in this chapter. The committee ranked the ban, licensing, and registry strategies with respect to the benefits outlined in Box 5-1. The rankings depend on the type of access to precursor chemicals granted under each strategy. For a ban, only commercial purchasers would have access (denoted as C in Table 5-1). The ban would allow commercial purchases with evidence of the purchaser’s commercial status and disallow noncommercial purchases. In the case of a license, both commercial purchasers with evidence of commercial status and noncommercial purchasers holding a license would have access (denoted as C+L in Table 5-1). Finally, under the registry, commercial purchasers with evidence of commercial status and noncommercial purchasers who sign a registry and present a government-issued ID would have access (denoted as C+R in Table 5-1). Each strategy also includes outreach, training, reporting, documentation, and audits or inspections (Appendix H). All three of the controls have assumed some manner of differentiation between commercial and noncommercial sales, which is kept constant throughout the ranking process. Thus, the rankings apply only to the merits of each strategy in relation to noncommercial sales, ceteris paribus. In broad terms, separating between the two could require some additional credentialing for commercial entities, depending on the extent of ordinary business requirements for operating licenses, permits, etc., to prevent malicious actors from posing as commercial entities, as occurred in the case of the Oslo bombing. As evidenced by the difficulties that the EU has encountered making the distinction (see Chapter 4), the task of separating commercial and noncommercial users can present challenges. PREPUBLICATION COPY: UNCORRECTED PROOFS

Assessing Possible Control Strategies 87 BOX 5-1 Benefits The anticipated direct and ancillary benefits of each of the three strategies that contain new controls (a ban, licensing, or a registry) can include, but are not limited to, the following: • A capability to impede or deter and reduce acquisitions of precursor chemicals through legitimate channels. The ban, as specified, would prohibit all noncommercial purchases, but licensing or a registry, as specified, would allow some noncommercial purchases. The first control (the ban) might impede all noncommercial purchases; the second control (licensing) might impede illegitimate noncommercial purchases; and the third and least restrictive control (the registry) might deter and reduce illegitimate noncommercial purchases. • A capability to increase awareness of chemicals, concerns, and implementation mechanisms and requirements, stemming largely from outreach and training. • A capability to track and correlate suspicious activity, fraud, theft, and losses, ex ante, and/or investigate incidents, ex post, through data collection and analysis. • A capability to provide feedback on implementation to retailers and others from audits and inspections, including mystery shopping. Information might be used for educational purposes with or without an enforcement objective. • Better visibility of retail-level transactions and additional information about transactions, largely from reporting, record keeping, and data collection and analysis, for developing and improving policy. The literature on supply chain security (Chapter 3) indicates that visibility and transparency are essential to improving and maintaining supply chain security. • Noneconomic social benefits, e.g., from enhanced perceptions of safety. Moreover, in the case of a strategy with licensing, vetting for a license to purchase precursor chemicals could also draw early attention to bad actors. PREPUBLICATION COPY: UNCORRECTED PROOFS

TABLE 5-1 Strategies ranked by benefit type, excluding uncertainties. Capability to Capability to Increase Capability to Capability to Better Visibility Impede, Deter, Awareness of Provide Early Warning Noneconomic Track and of Transactions or Reduce Chemicals, Feedback on from Vetting Social Benefits Correlate for Policy Acquisitions Concerns, and Implementation Requirements Most Beneficial C C, C+L, C+R C+L C, C+L, C+R C+L C+L C Intermediate C+L C+R C+L Least Beneficial C+R C C C+R NOTE: C, C+L, and C+R correspond to three different strategies, featuring a ban, licensing, and a registry, respectively, on non- commercial purchases. For addition details, see text and Table H-1 (Appendix H). TABLE 5-2 Strategies ranked by cost type, excluding uncertainties. Administration Administration Additional and Law and Forgone Sales Forgone Use Noneconomic Transaction Implementation Enforcement Implementation and Surplus and Surplus Social Costs Time (Public) (Private) Most Costly C+L C+R C+L C C C+R C Intermediate C+R C+L C+R C+L C+L C+L C+L Least Costly C C C C+R C+R C C+R NOTE: C, C+L, and C+R correspond to three different strategies, featuring a ban, licensing, and a registry, respectively, on non- commercial purchases. For addition details, see text and Table H-1 (Appendix H). PREPUBLICATION COPY: UNCORRECTED PROOFS 88

Assessing Possible Control Strategies 89 The strategy featuring the ban (C) might be viewed as the most restrictive of the three strategies; the licensing strategy (C+L) is in the middle; and the registry strategy (C+R) is the least restrictive. Thus, the strategy with the ban (C) would rank highest for capability to impede, deter, or reduce acquisitions and for noneconomic social benefits, if stringency conveys perceptions of security, and the strategy with the registry (C+R) would rank lowest. Looking only at the benefits shown in Table 5-1, the licensing strategy (C+L) dominates the registry strategy (C+R), but the relative position of the ban strategy (C) is ambiguous, potentially ranking first or last among the three strategies. In some instances, the ban strategy ranks above the licensing or registry strategies and, in others, it ranks below them. The differences hinge largely on the relative stringency of the strategies, as noted above and of noneconomic social benefits, and on flows of information, as in the cases of tracking, correlation, and visibility. The strategy featuring the ban (C) ranks last in terms of both capability to track and correlate and better visibility of transactions. For these benefits, the results depend on the quantity and quality of information that a control might yield, which, in turn, depends on the number of transactions associated with each strategy and the type of information collected in each transaction. Because the ban is the most restrictive control, with the fewest potential transactions, it would necessarily generate the smallest number of observations. Moreover, whatever kinds of commercial information the policy community would gain from the ban, it would also gain from licensing or a registry, because they allow the same commercial purchases as the ban, under the same conditions. In summary, the strategy with the ban would rank last for these benefits, behind a strategy with licensing or a registry, because it would provide only a subset of the information that one would expect from licensing or a registry. Whether a strategy that features licensing would rank above or below a strategy with a registry on either tracking and correlation or visibility of transactions requires further consideration. One might expect to see the most transactions under the least stringent form of control, namely the registry, but it might not convey the best information. For purposes of tracking and correlation and for visibility of transactions, licensing seems almost certain to provide better information about legal transactions than a registry and, in these contexts, the quality of information matters. Licensing would require vetting beyond that required obtaining a typical government-issued ID, and, for that reason, it stands to provide more insight to the background of the purchaser and, possibly, the nature of the transaction. On balance, the committee chose to rank the licensing strategy ahead of the registry strategy because, in its view, a smaller number of observations that convey additional relevant details could be more useful analytically than a larger number of observations that lack those details. With regard to transaction visibility, the difference between licensing and a registry might depend partly on whether licensees must provide a justification for their license applications. If a licensee must provide a statement of need (e.g., use in a particular hobby) to obtain a license and if the transaction record includes the license number, then each transaction can be tracked to a specific need or category of need. However, the committee warns against overreaching for data. Relevant details come at a price to both the provider and the collector, and the more details that a program demands from participants, the costlier it might become to administer and implement. The benefits relating to awareness and feedback are the same across strategies, because each strategy includes the same provisions for outreach, training, audits, and inspections; however, the benefits of vetting apply only to licensing, because it is the only control that requires vetting. PREPUBLICATION COPY: UNCORRECTED PROOFS

90 Restricting Access to Explosive Precursor Chemicals Assessment of Costs Table 5-2 presents a summary of the assessment of costs, exclusive of any losses that might emerge from the assessment of particular uncertainties later in this chapter. The first three costs are direct costs, whereas the last four are rankable unintended consequences. Looking only at the costs shown in Table 5-2, none of the strategies clearly dominates any other. The committee considered anticipated costs relating to public-sector expenditures on administration and implementation; public-sector expenditures on law enforcement; private-sector expenditures on administration and implementation; forgone sales and surplus; forgone use and surplus; additional transaction time; and noneconomic social costs. These costs, which include both direct costs and unintended consequences, are presented in Box 5-2. BOX 5-2 Costs The anticipated direct costs and unintended consequences of each of the three strategies that contain new controls (a ban, licensing, or a registry) can include, but are not limited to, the following: • Public-sector expenditures on licenses, administration, outreach, training, data intake and analysis, and audits and inspections. Expenditures here and in the following bullets include time and materials and capital outlays, e.g., for record-keeping systems. If licenses for noncommercial purchases are fee based, then public-sector expenditures on licensing and related administration would be limited to those exceeding the fee. • Public-sector expenditures on law enforcement. If retailers report fraud (i.e., fraudulent evidence of commercial status, license, or ID), suspicious behavior, or additional theft and loss, then law-enforcement agencies would incur additional costs. • Private-sector (business and consumer) expenditures on licenses, administration, outreach, training, reporting, documentation, and audits and inspections. • Forgone sales and associated losses of economic surplus. Surplus among sellers amounts to the difference between the price a seller would be willing to accept for a product and the price a seller actually receives. It is roughly akin to profit. If sales decline because of a control, that surplus might also decline. Costs to businesses might be passed on to proprietors, shareholders, employees, and consumers. • Forgone use and associated losses of economic surplus. Surplus among buyers amounts to the difference between the price a buyer would be willing to pay for a product and the price a buyer actually pays. A buyer might have been willing to pay $2.50 for a bottle of cleaning product, but the market price might only be $2.25. If a control limits purchases, buyers will tend to accrue less economic surplus. • Additional transaction time at the point of purchase, stemming partly from requirements to present evidence of commercial status, a license, or a government-issued ID. • Noneconomic social costs, e.g., from perceived losses of personal or societal freedom. If the costs of forgone sales and use were framed as opportunity costs, they would amount to the difference in the value of alternatives to sellers and buyers along the supply chain. The public- and private-sector costs of administering, implementing, and enforcing each strategy should be about the same in terms of the commercial component (i.e., the requirement for evidence of commercial status).Thus, any differences in these costs, by strategy, would reside in the additional requirements that would accompany licensing or a registry. PREPUBLICATION COPY: UNCORRECTED PROOFS

Assessing Possible Control Strategies 91 The strategy featuring the ban on noncommercial purchases (C) looks best in terms of expenditures on administration, implementation, and law enforcement, but shows relatively poorly in terms of forgone sales, forgone use, and noneconomic social costs. The ban has the fewest program features and, thus, it should be the least costly administratively; however, because of its relative stringency, it is expected to have the most noticeable effect on sales. If (1) all three strategies result in the same number of commercial transactions because the requirements for commercial sales are the same, (2) the ban results in the fewest noncommercial transactions, and (3) the registry results in the most, then it seems plausible that the ban would entail the largest losses of producer and consumer surplus and the registry would entail the smallest. Similarly, the public might feel most constrained under a ban and least constrained under a registry requirement, resulting in noneconomic social costs related to the losses of personal or societal freedom.235 A strategy with licensing might incur the highest administration and implementation costs because issuing licenses (application and approval) and collecting and analyzing license-related data would absorb additional resources. However, the distribution of those costs to the public or private sector would differ, depending on whether licensing fees covered some of those activities. Licensing, unlike a ban or registry, might also entail outreach and training on the license. In the case of law enforcement, the rankings of the strategies depend largely on differences in requirements for credentials and, hence, on differences in opportunities for fraud, and on differences in the number of transactions. This assessment assumes that the potential for theft and loss are about the same across options and that a federal hotline continues to handle some or most concerns about suspicious behavior, but not necessarily all. Strategies that feature licensing or a registry are likely to present more opportunities for fraud than a strategy with a ban because they require a license and government-issued ID, respectively. Lacking evidence on whether fraud would be more likely with licensing or a registry, the committee assumed that attempts to deceive—and detection—would be equally likely in either case. Thus, the ranking (C+R > C+L) assumes that a registry elicits more transactions than licensing and, as a consequence, generates a larger number of calls to police. Similarly, the ranking for transaction time (C+R > C+L) depends primarily on the relative number of transactions. Though, in this case, the registry might also be more costly because it requires not just the presentation of a credential, but also a signature. Consideration of Uncertainties The committee explored separately the potential for noncompliance among retailers, institutional amnesia and employee turnover, outright circumvention, unintended knowledge transfer, displacement, over-implementation, commercial disruption, and discriminatory profiling as relative unknowns that could affect the benefits and costs of controls. With less uncertainty, these consequences would have been incorporated in the foregoing benefit and cost assessments as either offsets to benefits or additional costs. Specifically, noncompliance, institutional amnesia and employee turnover, outright circumvention, unintended knowledge transfer, and displacement would have been handled as offsets to benefits. Similarly, over-implementation, commercial disruption, and discriminatory profiling might be handled as additional costs, though OMB suggests treating all unintended consequences as benefit offsets. These uncertainties are described in Box 5-3. PREPUBLICATION COPY: UNCORRECTED PROOFS

92 Restricting Access to Explosive Precursor Chemicals BOX 5-3 Uncertainties The controls under consideration present uncertainties that can offset benefits or add to costs under a variety of circumstances, including the following: • Retailers might not comply, either inadvertently or intentionally, because compliance is too difficult or costs too much relative to the threat of penalties or concerns about market response, culpability, and liability, each of which could have substantial financial implications. • Institutional amnesia and employee turnover could undermine implementation if a company forgets its obligations as time passes, or cannot keep pace with a rapidly changing roster of employees, as might be typical of some retail environments. Institutional amnesia and employee turnover could be treated as a subset of noncompliance. • Outright circumvention, by comparison, would occur, for example, if a terrorist intentionally bypasses a control to obtain a precursor chemical without authorization through diversion from legitimate channels or document falsification. • Unintentional knowledge transfer would occur if adopting a control alerts terrorists to the potential utility of a chemical as a precursor or confirms suspicions of utility. • Displacement refers to the possibility that terrorists will adopt new modes of attack if obtaining precursor chemicals becomes too costly or difficult. Displacement would also include a shift among precursor chemicals; that is, a terrorist might obtain a different chemical to produce an IED, because his or her first choice becomes less readily available. • Over-implementation, a term of the committee’s devising, would occur, for example, if retailers request unnecessary credentials, such as a license or government-issued ID from a commercial buyer; turn back legitimate credentials; or apply controls to unrestricted products. • Commercial disruption might occur if a control were so burdensome as to drive businesses—producers, distributors, or retailers—out of the market or to deny supplies of a precursor chemical to an industry with immediate and legitimate need. If a control were sufficiently burdensome (e.g., in terms of complexity or cost) or resulted in too few sales, it could lead businesses to cease production, distribution, or sale of a particular chemical or, in the extreme, to fold. • Discriminatory profiling would occur if retailers base assessments of suspicious behavior on inappropriate visual or other cues, such as complexion, attire, or accent that might relate to gender, race, ethnicity, or religion. Profiling can, itself, create vulnerabilities if terrorists anticipate profiling and work around it, for example, by recruiting individuals who will not raise suspicion. The committee could not rank the control strategies for each type of uncertainty because of the complexity of the task and a lack of evidence. Nevertheless, the committee offers a small set of observations on the potential trade-offs among the strategies in this domain. First, it seems plausible that concerns about circumvention, on the one hand, and displacement and commercial disruption, on the other, would be inverted; in particular, circumvention might be of least concern for a strategy with a ban and of most concern for a strategy with a registry, while concerns about displacement and commercial disruption might be highest for a ban and lowest for a registry, at least insomuch as probability is a focal point of concern (see equations in Appendix B). As a matter of logic, the control that is most stringent and least susceptible to circumvention (specifically, the ban on noncommercial sales) might also be most likely to engender displacement and disrupt commerce, by giving terrorists a reason to try working with other chemicals or pursue other modes of attack, and by preventing legitimate sales and use, respectively. PREPUBLICATION COPY: UNCORRECTED PROOFS

Assessing Possible Control Strategies 93 Second, it is possible that concerns of retailer noncompliance, distinct from outright circumvention, would increase with complexity and administrative costliness, in which case the strategy that is easiest to implement might be the least likely to result in noncompliance. On that basis, a ban, which might be the least cumbersome of the three controls, might result in less retailer noncompliance than either licensing or a registry; however, the ranking would depend ultimately on the point of failure and its cause, for example, transaction time, implementation costs, or other factors. Third, concerns about over-implementation might differ for commercial and noncommercial purchasers. For a commercial purchaser, a ban on noncommercial sales might be the most worrisome control and the registry the least, not because bans are more likely to result in more over-implementation than registries, but because the consequences could be more serious. In the case of a registry, a retailer might needlessly request a signature and ID, but the request would not necessarily block the sale; however, in the case of a ban the retailer might flatly—and inappropriately—deny the sale. Under the ban, noncommercial purchasers do not face concerns about over-implementation, because they are not eligible to purchase precursor chemicals in the first place, but both the licensing and registry requirement could result in excessive denials, for example, if retailers reject valid licenses or IDs. There might be more purchases under a registry than with licenses and, hence, more opportunity for denials, but whether retailers are more or less likely to reject a license or a government-issued ID is an open question; thus, the committee has no basis for distinguishing between the two controls. Fourth, any of the strategies could lead to discriminatory profiling, because retailers have a right to refuse sales, whether they are noncommercial or commercial, if they encounter suspicious behavior. A retailer might, however, use the authority to turn away a legitimate buyer based on the retailer’s own biases. Two potential differences are that a strategy that features a registry might entail (1) more transactions and, thus, present more opportunities for profiling than a strategy that features either a ban or licensing and (2) a softer requirement for noncommercial purchasers and, thus, leave more room for subjectivity, which might also allow more profiling. Fifth, the committee found no basis for distinguishing among the strategies with regards to concerns about institutional amnesia, employee turnover, or inadvertent knowledge transfer. Assessments of Other Measures and Activities The committee also considered several measures and activities that could accompany existing controls as elements of a BAU+ strategy and operate under legal mandates or through voluntary participation, with varying degrees of government and industry involvement and oversight. Specifically, it looked separately at opportunities for outreach; training and reporting on suspicious behavior, theft, and loss; documenting transactions with electronic record keeping; and auditing with mystery shopping, partnered with training, reporting, or other measures. As noted previously, the committee also considered cautionary labeling, but did not include the measure in any of the strategies, including BAU+, because of concerns about unintentional knowledge transfer. The results of the committee’s assessments, which are presented under BAU+ in Table H-1, suggest that some gains in security and improvements in flows of information are possible without a ban, licensing, or a registry, but that BAU+ would still entail costs and uncertainties. For example, training and reporting on suspicious behavior, fraud, theft, and loss could create better awareness of chemicals, PREPUBLICATION COPY: UNCORRECTED PROOFS

94 Restricting Access to Explosive Precursor Chemicals concerns, and implementation mechanisms and requirements; a capability to deter and reduce illegitimate acquisitions; a capability to track and correlate suspicious activity and investigate incidents; better visibility of retail-level transactions for developing and implementing policy; and some noneconomic social benefits. However, it would also entail public- and private-sector costs of administration and implementation, including data intake and analysis, and, to a lesser extent, many of the same kinds of uncertainties as the three strategies with new controls. Summary of Assessments and Trade-offs At the start of this chapter, the committee indicated that it would consider trade-offs among control strategies in relation to three policy objectives, namely restricting malicious actors’ access to precursor chemicals, gathering information that could be used to prevent future attacks or investigate prior attacks, and minimizing burdens on industry, commerce, and legitimate users. The foregoing assessments illustrate just one possible approach to comparing strategies; nevertheless, they shed light on potential economic and noneconomic trade-offs and the conditions that might affect them. The committee was able to rank the strategies in terms of individual benefit and cost attributes, but it cannot say how much more or less beneficial or costly one strategy is relative to the next; moreover, the final standing of the strategies would depend partly on whether and how uncertainties enter the assessment. The trade-offs among benefits, without yet considering the cost categories or uncertainties, are reasonably clear (Table 5-3). The strategy that features a registry never surpasses the strategy that features licensing for any of the anticipated benefits, thus leaving policy makers to consider the relative merits of licensing and a ban. Generally speaking, the ban would block more sales and, thus, looks better as an impediment to access, whereas licensing would allow more sales and, thus, looks better as a source of information, especially with vetting for licenses. However, upon introducing the committee’s observations on the uncertainties, the trade-offs in benefits become murkier. A strategy that features a ban might be less likely to result in noncompliance or circumvention than one that features licensing, but it might be more likely to yield displacement. Terrorists who cannot obtain precursor chemicals could opt for more or less damaging modes of attack; if the former, the control could make matters worse. Even if the new mode is no worse than the old, it is possible (as might be said of the pseudoephedrine example in Chapter 4) to solve the immediate problem, in this case, access, without solving the ultimate problem, terrorism, and to incur considerable cost in the process. PREPUBLICATION COPY: UNCORRECTED PROOFS

Asses ssing Possible Control Strategies S 95 T TABLE 5-3 Control stra ategy ranking by benefi gs it N NOTE: Sum mmary of ran nkings of stra ategies with new control by benefit type (not in ls t ncluding cost and ts u uncertainties First is be or most beneficial and third is wo or least b s). est d orst beneficial. T order of the The b benefits with each rank (first, secon or third) has no anal hin k nd, lytical signif ficance. The comp parison of co is less clear (see Tab 5-4). Th e strategy th features t ban ranks best on osts c ble hat the s e expenditures for implem s mentation, adm ministration, and enforc ement and o transaction time, but r on ranks w worst becaus of its strin se ngency on fo orgone sales, forgone use and nonec e, conomic soci costs. In addition, ial t potential for commer the rcial disrupti ion—which bears directl on sales a use—mig increase with ly and ght s stringency, which would reinforce th negative results, wher w d he r reas the pote ential for ove er-implemen ntation c could push in either direc n ction, depennding on com mmercial stat Licensin occupies t middle g tus. ng the ground o enforcement expendit on tures, forgon sales, forg ne gone use, no neconomic s social costs, and transaction t time, but ran poorly on implement nks n tation and ad dministration expenditur The strat n res. tegy that fea atures the r registry rank best on for ks rgone sales, forgone use, and noneco onomic socia costs; it occupies the m al middle g ground on ex xpenditures for implementation and administrati on; and it ra f anks worst fo transaction time or n a enforcem expend and ment ditures. Cost by cost, the strategy that features the registry ra at anks somewh better hat t than the strat tegy that fea atures licensi in most, but not all, r ing regards. Among the three con ntrol strategie the assessment sugge a trade-o between cost types: t es, ests off the s strategies tha rank well on the direct costs (expe at t enditures on implementa ation, admini istration, and d e enforcement) rank less well on the un ) w nintended co onsequences (forgone sa s ales, forgone use, noneco e onomic s social costs, and transact tion time), an vice versa nd a. Overall, the assessme of benefi costs, an uncertaint suggests that the ben t ent its, nd ties s nefits of strin ngency m might come at the price of lost econo o omic surplus to both sell and buye nonecon s lers ers, nomic social costs, l d displacement and comm t, mercial disrupption. As OM instructs (see Appen MB s ndix G), a go regulatory ood a analysis mus consider an st ncillary bene efits, uninten nded conseq quences, and what the co d, ommittee ref to as fers 231 u uncertainties To choo a strategy the policy community would need to flesh out the details of each s. ose y, y d t s strategy and, to the exten possible, put numbers into the ana , nt p alysis. PREPUBLIC P CATION CO OPY: UNCOR RRECTED P PROOFS

96 Restrictin Access to Explosive P ing o Precursor C Chemicals T TABLE 5-4 Control stra ategy ranking by costs gs N NOTE: Sum mmary of rannkings of stra ategies with new control by cost typ (not inclu ls pe uding benefit and ts u uncertainties First is the least costly and third is the most co s). e y s ostly. The or rder of the costs within e each r rank (first, se econd, or thi has no analytical sig ird) a gnificance. Finally, whether a measure or act w tivity is man ndatory or vooluntary mig affect the likelihood of a ght e r retailer’s com mpliance and hence, the efficacy of any strategy If a measu or activit is mandato d, e y. ure ty ory— r required und federal, st der tate, or local law or ordi l inance—com mpliance ince entives could flow from threats m o fines or im of mprisonment and concern about ma t ns arket respons moral cu ses, ulpability, an liability. A nd r retailer migh not want to be seen as a business th enables t ht o hat terrorism or to learn that it has enabled t t terrorism, if it might lose sales from the reputatio damage do harm to others, or b financia e onal e, o bear al r responsibility Concerns about marke responses, moral culp y. et pability, and liability wou persist w uld without s statutory thre in a volu eats untary progr ram, but an active trade a a association— exampl one that —for le, a administers outreach, tra o aining, report ting, or othe programs— er —can introdu reinforcing incentives. For uce e example, trad associatio can and have conditi de ons h ioned memb bership and bbenefits on ccompliance, h highlighted members’ ac m ccomplishme ents, issued public repor on membe perform p rts ers’ mance, and ad dopted o other tactics that shine light on memb bers’ behavi (Chapter 3). Neverth ior heless, a man ndatory meas sure or a activity, under force of la is likely to carry mo weight th a volunta measure or activity. A noted aw, ore han ary As previously, if held to a performance standard rath than a be p her ehavioral preescription, th costs of a he m mechanism should be ab s bout the same whether voluntary or m e, v mandatory. CO ONCLUSIO ON Thus far, this chapter has set asid some of th practical concerns rai , r de he ised in other chapters tha could r at b relevant to the assessm be o ments at han In Chapte 4, the com nd. er mmittee prese ented eviden from the EU,191 nce e U United Kingddom, and els sewhere on implementat i tion challeng that relat to market breadth and reach, ges te d c customer ide entification, and harmoni a ization. Alth hough the EU has not ye accumulate enough U et ed e experience to allow the committee to speak defin o c o nitively to th hese challeng it has ac ges, ccumulated e enough e experience to suggest im o mplications fo U.S. polic makers. or cy PREPUBLIC P CATION CO OPY: UNCOR RRECTED P PROOFS

Assessing Possible Control Strategies 97 The EU and EU MS have had difficulty reaching all retail outlets because precursor chemicals are constituents of wide-ranging, broadly distributed products that are sold at brick-and-mortar outlets and online. Although European officials have been working with trade associations and engaging with internet retailers to address potential vulnerabilities, it might not be possible to reach everyone or address all the gaps fully. The United States presents a similar retail landscape, so similar problems can be expected. Moreover, as noted in Chapter 4, European officials have faced difficulty distinguishing between commercial and noncommercial purchasers and also between eligibility and need. If US policy makers were to attempt to distinguish between commercial and noncommercial purchasers, they would need to carefully consider means of implementation. Harmonization is, perhaps, more complicated. The European legislation, albeit applicable to all EU MS and thus “harmonized” as an overarching regulatory framework, provides the states with considerable flexibility by leaving open decisions about how to restrict the general public’s access to certain precursor chemicals, be it through a ban, licensing, or a registry. At present, most of the twenty- eight EU MS have complied with the legislation, but they have done so differently and without reciprocity, which has presented challenges for business seeking to engage in interstate commerce and which might also create opportunities for terrorists to game regulations across EU MS. Policy makers in the United States might face similar concerns about jurisdictional difference, both in contemplating federal, state, or local controls and in developing or encouraging related mandatory or voluntary measures and activities. For example, several states already restrict access to AN, but they do so by different means. The committee did not conduct a thorough review of legislation across states, but did observe a lack of uniformity in state law. Evidence obtained from a regulatory body in one state suggests that differences in states’ rules might lead to confusion among AN distributors, retailers, and purchasers that could interfere with commerce—across or within states—and undermine one or another state’s efforts to mitigate risks. The evidence, both foreign and domestic, suggests a potential role for national coordination, if not federal legislation, as a matter of commerce and security. The committee offers three final comments on policy design and analysis: more specifically, on providing flexibility to leverage experience, on harvesting lessons-learned to leverage experience, and on the need for future analytical efforts. First, experience that is fed back into policy design and implementation can be used to improve both of these dimensions of policy, but only if policy makers can revisit or even re-craft some aspects of whatever control strategies they choose initially. They cannot leverage the experience if the strategies are unalterable. Each of the foregoing control strategies is defined generally and can be amended insomuch as policy makers can add or subtract precursor chemicals, as they have in Europe (Chapter 4); can curb or extend provisions to cover a smaller or larger slice of society, as the EU is contemplating; and can add or subtract supplemental measures and activities. The previous Academies’ study suggested shifting from one level of stringency to another with changes in the policy environment, but wholesale adjustments might be difficult, in practice.14 It could, however, be easier to shift from a less stringent set of requirements to a more stringent set in response to a change in circumstances. Second, as a related matter, policy makers cannot leverage experience if they cannot harvest it through evaluation or other means. Developing metrics, measures, or other tools to assess the effectiveness of a control strategy that is already in place presents methodological and practical challenges much like those of retrospective regulatory assessment (Appendix G). For example, it might be difficult to separate the effects of a control strategy from the effects of everything else that is PREPUBLICATION COPY: UNCORRECTED PROOFS

98 Restricting Access to Explosive Precursor Chemicals happening in a particular environment, in part because little is known about the underlying risks and data are scarce or sensitive. A terrorist event might not occur because a control strategy worked, because such events rarely occur in any case, or because the terrorists chose a different course of action. Notwithstanding the analytical challenges, the policy community could take a step toward evaluation by reviewing program implementation, treating the EU’s experience with its control strategy as a test case, and, potentially, experimenting with a broader range of methodologies. Program participation rates and results from audits and inspections, including mystery shopping, can be used, for example, to review the extent to which controls, measures, and activities are up-and-running and how they are playing out, at least administratively. Moreover, the EU’s continuing experience with bans, licensing, and registration might provide fertile ground for an analysis of those types of controls. As time passes, it might be possible to learn more about what is or is not working in the EU, the related costs and unintended consequences, and the applicability of lessons learned to U.S. policy making. Obviously, the EU and United States face substantially different threats and differ in many social, political, and economic regards, but it might still be possible to learn from the EU’s experience. In addition, it might be possible to make better—or additional—use of data on terrorist episodes , not just for purposes of regulatory impact assessments, but also for conducting other types of supporting analyses.236,237 Approaches might include, for example, applications of fault trees and dynamic behavioral models that can provide insight to terrorists’ and others’ responses to policy and threats. Even if some data must be held closely because of their sensitivity, data still can be used in rigorous analyses that are subject to peer review, criticism, and scrutiny, in accordance with appropriate restrictions on handling and distribution. Work to address the limitations of current analytical methods (Appendix G) could, eventually, help to support a more complete assessment of possible controls. Third, this report constitutes a starting point, not an ending point, for analyzing possible control strategies. Whereas this report sets out an analytical framework and draws insight from a notional, qualitative assessment of benefits, costs, and uncertainties, a full consideration of specific regulatory or other actions would require more time, data, industry participation, and specificity, including a clear articulation of the structure and content of proposed regulatory or other actions. With more deliberative thinking now, the policy community might avoid the pitfalls of intuitive thinking later. PREPUBLICATION COPY: UNCORRECTED PROOFS

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Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals Get This Book
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Improvised explosive devices (IEDs) are a type of unconventional explosive weapon that can be deployed in a variety of ways, and can cause loss of life, injury, and property damage in both military and civilian environments. Terrorists, violent extremists, and criminals often choose IEDs because the ingredients, components, and instructions required to make IEDs are highly accessible. In many cases, precursor chemicals enable this criminal use of IEDs because they are used in the manufacture of homemade explosives (HMEs), which are often used as a component of IEDs.

Many precursor chemicals are frequently used in industrial manufacturing and may be available as commercial products for personal use. Guides for making HMEs and instructions for constructing IEDs are widely available and can be easily found on the internet. Other countries restrict access to precursor chemicals in an effort to reduce the opportunity for HMEs to be used in IEDs. Although IED attacks have been less frequent in the United States than in other countries, IEDs remain a persistent domestic threat. Restricting access to precursor chemicals might contribute to reducing the threat of IED attacks and in turn prevent potentially devastating bombings, save lives, and reduce financial impacts.

Reducing the Threat of Improvised Explosive Device Attacks by Restricting Access to Explosive Precursor Chemicals prioritizes precursor chemicals that can be used to make HMEs and analyzes the movement of those chemicals through United States commercial supply chains and identifies potential vulnerabilities. This report examines current United States and international regulation of the chemicals, and compares the economic, security, and other tradeoffs among potential control strategies.

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