Risk, Terror and H.R. 5695

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Reactive materials are often hazardous. But, reactive materials are useful. They do things. They “react”.  The very reactivity that might mark a compound as hazardous also gives it utility in industry. The chemical industry is to a large extent in the business of doing reactions. The central theme in chemical technology is obtaining the right kind of reactivity and then harnessing it to do a transformation.

So, when a piece of legislation like H.R. 5695 comes along that proposes to examine reactive materials and allow the Secretary of Homeland Security to define some or all of them as “substances of concern”, I become suspicious and concerned myself.

For the sake of readers who have no direct involvement in the chemical processing industry, allow me to just come out and say it- Safety is a big deal in the chemical processing world. Chemical plants spend large sums of money and time trying to minimize the occurrence and consequences of incidents and accidents. This attention is mandated by numerous government agencies, insurance carriers, company policies, and common sense. A chemical plant is a complex place that can have many layers of hazards- ice covered sidewalks, forklift activity, hazardous material releases, chemical exposure, fires, and explosions. The kinds of hazards present depend on the plant processes and the kinds of materials on site. 

The nature of chemical plant operation is usually a mystery to people outside of the industry. It is often complex, confidential, and of a highly specialized nature. Surrounding communities tend to tolerate chemical industry as long as things go smoothly. But when things go wrong, the publics perceived value of the industry comes into serious scrutiny. That’s fine. Any business should have to justify it’s existence when it risks exposure to workers and the community of unique hazards. But it is not inaccurate to say that the public is substantially lacking in knowledge when it comes to the chemical industry and it’s substantial part in our modern world.  Rightly or wrongly, a chemical plant accident can induce a special kind of fear in the public. This kind of fear elicited by members of the public can be called “dread fear”.

Dread fear is a kind of visceral response that is brought on by the prospect of consequences that appear horrible, irreversible, or incomprehensible. Dread consequences cannot be controlled, avoided, or even detected immediately. They include cancer, death, mutations, loss of home & property, etc. Chemical or nuclear accidents are often cited as dread circumstances that can affect large areas and are of such a nature that they render most people helpless in their response. Not only is it hard to understand and respond to a dread circumstance, but the state is likely to intervene and impose restrictions on civil liberties.

It is in the nature of terrorism that it is inexpensive and possessing of a disproportionate leverage. The shoe bomber in his clumsy attempt to set off an explosive in a passenger jet, spread dread fear primarily among security agencies and secondarily, I would judge, among the flying public. The result was a response that is arguably disproportionate to the event. It has been described by some as “security theatre”. Bruce Schneier has written an excellent and cogent essay on this theme. I’ll leave it to the reader to follow this thread.

I am leading to a point. The assembly of a proportionate response to a risk is a difficult thing to do because uncertain threat and risk are hard to quantify. When faced with a question of a risk to safety, some will take the approach that a full defensive response is the only choice. Others may want more data. Still others will be more laconic about it, preferring to deal with it when it happens.  Clearly, a wise decision maker must take security risks seriously, but at the same time understand that some risk is inherent to living.  

At any given moment we are aware of only a few of the risks that we are under from the totality of our activities in life. If we focused on all of these risks- driving, cancer, accident, disease, contagion, etc- we might freeze in our tracks. Some individuals are risk averse and others are not. To add to the complexity surrounding risk assessment, many decision makers may chose actions that minimize the threat to their careers. These kinds of choices in risk management always tend towards low risk taking.

All of this prelude takes me to H.R. 5695.  A decent summary of commentary by house committee members has been reported.  H.R. 5695 is sponsored by Rep Daniel E. Lungren (R-CA) and cosponsored by 10 others.

It must have been because of dread fear that Rep. Lungren and others conceived of H.R. 5695. This bill contains numerous zingers that are worthy of concern to industry. Beyond the obvious thick overlay of regulation and generous discretion bestowed upon the Secretary of Homeland Security are a few gems that are worthy of highlight. Consider 1802 (a)(1)(A) 

`(a) Substances of Concern-

 `(1) DESIGNATION BY THE SECRETARY- The Secretary may–

`(A) designate any chemical substance as a substance of concern;

Think of all of the abuse potential here.  Under the guise of homeland security, any substance could be designated as a substance of concern and submitted to regulation under the whim of whatever political wind is blowing at the time.

`(B) exempt any chemical substance from being designated as a substance of concern;

`(C) establish and revise, for purposes of making determinations under subsection (b), the threshold quantity for a chemical substance; or

`(D) require the submission of information with respect to the quantities of substances of concern that are used, stored, manufactured, processed, or distributed by any chemical facility.

`(2) MATTERS FOR CONSIDERATION-

`(A) IN GENERAL- In designating or exempting a chemical substance or establishing or adjusting the threshold quantity for a chemical substance under paragraph (1), the Secretary shall consider the potential extent of death, injury, or serious adverse effects to human health, the environment, critical infrastructure, national security, the national economy, or public welfare that would result from a terrorist release of the chemical substance.

`(B) ADOPTION OF CERTAIN THRESHOLD QUANTITIES- The Secretary may adopt the threshold quantity established under paragraph (5) of subsection (r) of section 112 of the Clean Air Act (42 U.S.C. 7412(r)(5)) for any substance of concern that is also listed under paragraph (3) of that subsection.

Imagine the effect of the uninformed designation of a useful but hazardous reagent. Pick one- say XXXXyl chloride. Yes, this material is noxious and could be used for mischief, but it’s very reactivity is the heart of it’s utility. What if a single person writes the Secretary and states, in a fit of paranoia, that it would be possible for a terrorist to get hold of this material from a catalog company and use it to poison people on a train. This reporting to the Secretary is provided for in the code.  Well, yes, it could happen. If past history is any indicator, it is unlikely to happen.

An individual could be walking down the street somewhere and be knifed, shot, or otherwise attacked. This does happen, but realistically it is infrequent almost everywhere. The same victim could be attacked by an assailant brandishing a bottle of reagent acid or caustic, or any of a hundred obscure corrosive substances.  This is even less likely to happen for several reasons. Most people are not aware of such materials, and even if they were aware of them, access is already difficult. Those few who do know of the hazards are no more likely to assault someone than the general population, so those with the means for a chemical attack are a small fraction of a small fraction of the population.

Any given useful reagent could become a ‘substance of concern’ by simple declaration. Suddenly, the sourcing, inventory, and use of such a material will be complicated by this law. Reporting requirements and layers of security will be associated with it’s very presence. More likely, the restrictions on reagent chemicals and specialty non-bulk materials will be more severe on the supply side rather than on the user side, though there is no mention of this in the bill.

The persons writing the bill (security consultants??) probably had large installations in mind. Refineries, fine chemical plants, polymer installations, etc.  Since terrorists do what they do for psychological effect, an attack on a large installation resulting in great tongues of orange flames licking the sky and cubic miles of black smoke is more likely to occur than most other scenarios. The bill provides for “red team” exercises for the high risk tier under 1803 (b)(4)-

`(4) RED TEAM EXERCISES- The Secretary shall conduct red team exercises at facilities selected by the Secretary that have been assigned to the high-risk tier under section 1802(c)(4). The exercises shall be conducted after informing the owner or operator of the facility selected and shall be designed to identify at each selected facility–

`(A) any vulnerabilities of the facility;

`(B) possible modes by which the facility could be attacked; and

`(C) any weaknesses in the security plan of the facility.

Imagine operating a chemical complex and in addition to just keeping all of the processes on line and getting products out the door, you now have to contrive war games with the Department of Homeland Security. Will companies be required to keep a standing security squad to satisfy DHS? Remember the old James Bond flick where Dr. No had an army of security goons to protect the hideout under the island volcano? C’mon.

Turning the USA into a security state is not the answer. Reasonable upgrades in perimeter security and fencing will go a long way toward making it harder to commit an act of terrorism on a plant by an outsider. Attaching complicated security restraints on individual materials will only serve to drag business down and hasten the current trent toward de-industrialization of US chemical production.

Research and Development Horsepower

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What is becoming more apparent in the chemical industry is the rapid rise of R&D horsepower in countries that had only recently been known for low cost manufacturing. Previously, the universe of nations known for their R&D engines was limited to the familiar players- USA, Japan, EU, and to a lesser extent Russia (or FSU). These countries have extensive institutional and university infrastructure that can be applied one way or another to manufacturing output. 

Today, India, China, Taiwan, and South Korea in particular have begun to apply considerable traction with their R&D engines. Really, anyone who reads C&EN, Chemical Week, or CMR knows this. 

But reading about it is just an abstraction. It is quite another thing to witness it face to face. It is especially obvious at chemical trade shows like Informex, ChemSpec, or CPhI. Large tracts of the exhibition halls are literally crammed with small booths- perhaps 25 % or more filled with representatives of Asian firms bearing exotic names unfamiliar to attendees from the western hemisphere. Many exhibitors have product lists that seem strangely similar: generic API’s, heterocyclic intermediates, natural products, etc. It is all quite bewildering to Americans who still swagger with the attitude of Manifest Destiny.

As everyone knows, there has been a positive trend in outsourcing raw materials and intermediates from outside the USA. Having participated in this myself, I can say that foreign outsourcing allows much US manufacturing to remain competitive in world markets. However, it is one thing to outsource raw materials and quite another to outsource R&D.

While Americans must learn to adapt to the irreversible trend of positive growth in chemical discovery and manufacturing around the world, we should be a bit more circumspect about outsourcing R&D.

I’ve had the occasion to listen to more than a few American business leaders- smart upper level R&D management- crow about the cost savings they are seeing by outsourcing some of their R&D activity. In particular, we are seeing companies outsource custom synthesis of R&D materials or opening off-shore R&D centers. One US contract Pharma R&D firm specializing in API’s has been making hay about their outsurcing capabilities in discovery and process development to highlight their cost effectiveness.

These managers and executives give impressive talks at symposia and conferences. Their PowerPoint skills are impeccable, though no doubt aided by invisible in-house staff who gin up the cool graphics. These folks attend all of the trendy business method classes like Six Sigma and toss around quotes by Jack Welch.  They read all of the right business books found at airport bookshops. The obligatory and right-thinking buzzwords roll off their MBA tongues like melted chocolate, all carefully crafted to reassure stockholders that spending is being contained.

The out-sourcing of R&D doesn’t always begin with the outright execution of contracts to foreign comnpanies. It may begin more modestly, with the outsourcing of R&D custom projects. As relationships build and as project managers cycle through projects, greater and greater comfort with the outsourcing arrangement is felt. Soon, scale-up happens and substantial subunits of molecules are manufactured off-shore. Eventually, US plants are shut down and the equipment shows up on Dovebid for auction.

Yet for all the apparent good economic sense that R&D outsourcing may provide, I find myself uncomfortable with the concept. At one extreme there is the corporate cosmology spoofed in Sidney Lumet’s movie “Network“, where the real nations of the world are the multinational conglomerates who wield major currencies like an occupying army and nationality is an archaic formalism.  R&D is only the wagon that carries the troops for the greater glory and profit of the shareholders.

The other extreme would be the notion that R&D is part of our culture and is something to be guarded as national treasure. It is is an extension of who we are.

It’s obvious that R&D is part of the American economic driver and it should be expoited to bring prosperity to our nation. But that is not to say that US companies should provide companies in competing nations with a critical skill set in exchange for short term gain. Irrespective of non-compete agreements and secrecy arrangements, the fact is that once valuable technology is divulged you can depend on ambitious players to learn from it and accelerate their growth.  While apparently sensible in the short term, exporting your magic is ultimately foolish.

This essay may be a bit parannoid and provincial, but the USA is rapidly de-industrializing itself under the enchantment of its own intoxicating doctrine of promulgating laissez-faire. Allowing the progress of de-industrialization to occur under the influence of quarterly profit reports is perhaps inevitable under our present political era. 

I would argue that industry and commerce are not just a business math exercise. They are part of the fabric of our culture. Adopting abstract economic formalisms and dressing them up as social policy is to neglect why we start businesses at all. If the acquisition of money were the only goal, then we’d all go into finance. We start businesses in areas we prefer in order to make money and to have something constructive to do. It stimulates our brains and drives progress. It contributes to the common good. Work and industry are part of anthropology, not just economics.

Part 1. In which something was invented.

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There are companies within any industry that are inventive and there are those that are not. Inventive companies value innovation as company treasure and will provide a means for its capture.  Inventive companies have protocols for the screening of new intellectual property and the decision to patent, retain as trade secret, or disclose an invention.

While it is possible to be smart about patenting, it is also possible to be quite foolish about it. It is very easy to expend large sums of money over the life of a patent to get it issued and to protect it from trolls and other challengers. If the patent covers technology that is the core of your business, then this is justified. But if the patent claims processes or compositions that provide only a minor uptick in value, the assignee needs to look inward and decide if the possible downstream opportunity costs outway the patent expense. The answer is rarely clear cut since it involves predicting the future. Accordingly, most choose to fail on the conservative side and elect to file a patent application.

Many companies will have a set of core technology patents around which they file “picket fence” patents to ward off outside innovators who may claim conditions or variations that were not thought of initially. Companies with large legal budgets can afford to do this.

When you invent something in a competitive field, there is immediate pressure to protect the invention. A monopoly on an enabling technology can rocket a company to a dominant position in it’s market. Likewise, loss of the right to practice can be a disaster.

There is something that I have come to call “patent sickness”. Someone afflicted with patent sickness will present symptoms of paranoia or mania. Patent sickness is like gold fever. Perfectly intelligent and well meaning people can succumb to it and become lost for months or years.

First, I’m not a patent lawyer or agent. But I do find myself strangely enchanted by the Byzantine ways of this league of office workers and their Masonic-like temple, the USPTO.  Just so there is no misunderstanding, there are many legitimate reasons to get a patent. I’m not against patenting. But I do believe that inventors and assignees need to be smarter about the patenting process and more circumspect about the need to patent.

It is possible to make bad choices from the very start. One of the worst things you can do after you realize that you have invented something is to run directly to a patent lawyer. When you are a hammer, everything looks like a nail. When you’re a patent lawyer, everything looks like an invention. OK, that is an exaggeration, but only slightly. Many attorneys do have your best interests at heart, but always remember that they are in the business of generating billable hours for the firm. That’s perfectly fine- it’s allowed. But when you retain a lawyer to prosecute your appln you need to remember that the assignee, not the inventor or the lawyer, is really driving the boat.  Too many people simply hand the disclosure documents to the attorney and say “do it”. And do it they will.

Fine. You don’t run off to a patent lawyer immediately. What should you do? First, stop and THINK.  What are you going to actually do with it? You have this 20 year monopoly over some set of processes and/or compositions. Is it a global or a local type of innovation? That is, does it offer a whole new way of doing something or does it just offer some incremental improvement? Will potential licensees have to drop some other established technology, change their manufacturing process, and face revalidation of their product with their customer just to adopt your invention? If so, what is the clear cost advantage? 

Will the patent be defensive in nature, i.e., is it meant to prevent others from inventing it independently and possibly shutting you out? Or, is it a technology that you plan to run with aggressively out in front of god and everyone? Will a trade secret suffice?  What about a defensive disclosure? Will it be enough to disclose it in an obscure publication and hide in plain site?  That way you bar others from claiming the technology, but in exchange you let others have an easy entry.

Your initial slide down the slippery slope of patent prosecution will seem completely reasonable.  Patent lawyers are officers of the court and they have many solemn liabilities that you are unaware of, but by nature they are inclined to “find a way” to get a patent appln allowed.  The patent lawyer should ask some basic questions- Who are the inventors? Has this been offered for sale? Has it been disclosed to the public? Has this already been invented? Who really owns the invention? etc. After these questions have been answered to the lawyers satisfaction, the inventor/assignee may be advised to submit a provisional or a regular appln.

It is at this point that the inventor may find him or herself in the early stages of patent disease.  Sitting there talking with the attorney, the dizzying realization of the invention’s potential washes over you like the first gasp of nitrous oxide at your ex-girlfriends party. As the attorney drones along, advising you of the application process and the fees, your mind reels through the business possibilities. You’re hooked.

What next for organic chemistry?

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Due to a festering project at work I had to miss the Gordon Conference in Newport, RI, this year. I attended the organometallic session last year for the first time and found it to be a very stimulating experience.  Some background for context- My graduate & post-doc training is in organic synthesis. I did my graduate work in a group well known for asymmetric C-C bond forming chemistry in the 80’s. My post-doc was in catalytic asymmetric C-C synthesis with rhodium carbenoids.  It is with this background that I have noticed a bit of a sea change in the big ocean of Organic Chemistry.

Salve Regina and the Gordon Conference

At ACS meetings lately it seems that most of the excitement is at the INORG sessions. I’ll qualify that. The excitement for me seems to be at the organometallic sessions. Some pretty stunning work continues to pour out of the labs of the usual rock stars of academia- Bergman, Fu, Grubbs, etc. If you go to INORG talks you could see Harry B. Gray give a rousing account of electron quantum tunneling in enzymes before a packed house. It really is quite a thing to see.

Organic talks at the national meetings seem to be fewer in number than in years past. I don’t have hard numbers, but qualitatively it seems so. Since my grad school time in the 80’s we’ve seen asymmetric synthesis bloom and then go to seed as mechanisms were elucidated and high % ee’s became fairly commonplace. We’ve seen an almost fractal-like growth in catalysts come along to make transformations more efficient. We’ve seen combichem and cheminformatics multiply the efficiency of discovery.

A cryptozoology of hyphenated analytical devices have come along. They can be quite invaluable, but they can choke the budgets of anayltical departments in academia and industry alike, filling disc drives with galaxies of data and graphic user interfaces with an explosion of windows and settings. 

Have I become a Luddite?  No, but I am fussier about commiting hours and hours to learning new software and having to adapt to the machine’s “requirements”.

Obviously, the past 20 years of organic chemistry have been very fruitful. But, the Organometallic people are coming up with the really interesting new examples of organic transformations. Why the lull, why the lack of buzz at ACS meetings in the ORGN sessions? Will the upcoming San Francisco meeting be alight with some new excitement, or will it be a pageant of variations on a theme? I’ll be there to have a look.