The Clinton administration’s plans to expand the scope of information U.S. companies are required to report under the Toxic Release Inventory (TRI) “will make it easier for foreign intelligence services and foreign competitors to steal–legally and without much effort–some of America’s businesses’ most sensitive and valuable business information,” concludes a report just released by the Chemical Manufacturers Association (CMA).
By requiring businesses not only to report which chemicals they emit into the environment, but also to reveal detailed (and sensitive) production information, EPA may be opening the door to widespread looting of some of America’s most cherished industrial secrets, the report warns.
In its proposed Phase III expansion of the TRI, EPA wants to include what is known as “materials use accounting” (MUA) in the information the 26,000 companies covered under the TRI will be required to turn over to the agency. Materials use accounting would include information on which chemicals are used at each stage of the manufacturing process. Wanting to make this information available to the public, EPA has proposed putting the data on the Internet.
The new CMA report, Economic Espionage: The Looting of America’s Economic Security in the Information Age, points out that the Internet-bound information will include such data as the quantity of starting raw material inventories, the quantity of materials and products produced at specific manufacturing facilities, and the quantity of raw, intermediate, and finished materials and products these facilities ship off-site.
Weakening Data Protection
“The agency seems unaware of the significant damage now being sustained by the U.S. economy because of economic espionage,” the report notes. “It also seems equally unaware of how its proposal to expand current TRI reporting requirements will make it easier for foreign intelligence services and foreign competitors to steal–legally and without much effort–some of American business’ most sensitive and valuable business information. Clearly the proposal weakens what data protections that do exist–and will make the jobs of other Federal agencies which are struggling to stem the growth of economic espionage against the U.S. all the more difficult.”
Only in the past few years has official Washington begun to appreciate the damage being done to U.S. security through economic espionage. While American companies spend an estimated $125 billion a year on R&D, the government puts the loss to the U.S. economy from economic espionage at $100 billion annually. With its tradition of open institutions, the United States–the “test lab of the world”–is an inviting target for foreign competitors of all persuasions.
The CMA report points out that an estimated 90 percent of all strategically valuable economic data being gathered by foreign spies and America’s economic competitors comes from information that is legally available, most of it from the U.S. government. Alerted to the danger, the CIA, FBI and Departments of State, Treasury, and Commerce have recently stepped up their efforts to address the issue. A careful reading of the CMA report suggests that one of the first holes the FBI and the other agencies might want to plug is at EPA.
The Kline Study
Just how damaging TRI expansion may be can be seen in a little-noticed study CMA undertook two years ago. In 1995, CMA commissioned Kline & Company, Inc., a member of the Society of Intelligence Professionals (SCIP), the professional association of intelligence gatherers, to build a profile of a chemical production facility (which volunteered for the project)–first by using “conventional” data (information already publicly available from EPA and other agencies). The firm was then asked to develop a profile of the facility using the data that will have to be reported report under EPA’s proposal to expand the TRI to include MUA.
According to Kline & Company, data that the facility must now publicly report to obtain Clean Air Act permits (one of literally dozens of federal and state reporting requirements) can be used to establish the plant’s physical configuration, the overall structure of reaction sequences, product and byproduct streams, and an overview of the plant’s production capacities.
More alarming, Kline researchers found that EPA’s proposal for expanding the TRI would give foreign competitors access–legally, and for the first time–to information that, in wartime, “would be the equivalent of having the U.S. voluntarily turn over its code book to its enemies.” Among other things, the information would allow foreign competitors to determine:
- a target company’s manufacturing costs;
- the scale and efficiency of the company’s operations;
- what probable technical advances the company has made;
- specific chemistries the firm uses to make its products;
- the firm’s economic breakpoints;
- whether the firm has any flexibility in pricing its products;
- what plans the firm might have to expand its operations; and
- the firm’s general health and strength.
Stringing Together the “Nuggets”
“Like so much of the information the competitive intelligence professionals and economic spies collect, the information EPA’s proposal will make publicly available–for the first time–are bits and pieces (what the security professionals call ‘nuggets’) of data that spies can (and do) string together to reveal a company’s most important and valuable production secrets,” the CMA report observes.
Ever since EPA put forward its TRI Phase III proposal, the agency has defended its action by pointing out that confidential business information (CBI) has been stored on EPA’s highly secure data banks for years, without the information having fallen into the wrong hands. (There have been three reported penetrations of EPA’s CBI data bank by hackers in recent years, but the break-ins were quickly spotted, and, as far as anyone knows, no CBI was compromised.)
EPA spokespersons have assured businesses covered under the TRI that no sensitive information will end up on the Internet, and that the data are merely intended to let communities know which chemicals are being emitted in their proximity. But industry sources note that the EPA officials deciding what does and what does not go on the Internet have little if any experience in manufacturing, and thus are not the best judges of what is sensitive information.
Since taking office in 1993, the Clinton administration has championed a vigorous expansion of community-right-to-know policies. Under Browner’s leadership, EPA has doubled the number of chemicals whose emissions companies are required to report to EPA for listing on the TRI. The agency considers the TRI a useful public relations tool that shows communities located near plants that the agency is looking out for their interests. But now that the element of espionage has entered the picture, the debate over TRI will enter a new–more serious, and one can hope less political–stage.