Facility Agreement and Model Facility Agreements under the CWC: Paper 19

YORK VON LERSNER, THOMAS KURZIDEM, PATRICIA RADLER,
THOMAS STOCK AND RONALD G. SUTHERLAND

Bad Homburg, Germany
8- 10 September 1995


I. Introduction

Facility Agreements, which by nature are international law agreements, areof major importance
for chemical industries and thus, do, to some extent, affect the implementationprocess of the
CWC. This paper attempts to evaluate and analyze the most important aspectsrelating to
Facility Agreements under the CWC in the context of future inspections activities,that will be
conducted by the Organisation for the Prohibition of Chemical Weapons (OPCW).

Under the CWC routine on- site inspections and systematic on- site inspectionswill be conducted for industrial facilities, chemical weapons productionfacilities (CWPFs), chemical weapons
destruction facilities (CWDFs), chemical weapons storage facilities (CWSFs)and sites with old
and abandoned chemical weapons (OCW and ACW). For these activities the Convention
foresees the conclusion of Facility Agreements between a State Party andthe OPCW which are
related to a specific facility subject to on- site inspections. The paperalso studies some national
implementation legislation as regards Facility Agreements.

II. Facility Agreements and the CWC

Under the Convention the term Facility Agreement is defined as 'an agreementor arrangement
between a State Party and the Organization relating to a specific facilitysubject to an on- site
verification pursuant to Articles IV, V, VI'. 1

The purpose of such a Facility Agreement, which will be concluded betweenthe State Party, i. e., the National Authority, and the Technical Secretariatof the OPCW and subject to approval by the Executive Council, 2 isto govern the activities of both the inspected site and the internationalinspection team. It shall (a) facilitate future inspections; (b) protectconfidential business information; and (c) secure that the time-frames forthe inspections can be kept.

Pursuant to paragraph 8 of Part II of the Verification Annex, Facility Agreementsshall be
negotiated on the basis of model Facility Agreements. Model Facility Agreementsare defined as
'document( s) specifying the general form and content for an agreement concludedbetween a
State Party and the Organization for fulfilling the verification provisions...'. 3

A model agreement has to be held in general terms and serve as a negotiationbasis for the conclusion of more detailed Facility Agreements between StatesParties and the OPCW.
As Facility Agreements will govern activities during on- site inspections,the following parties
will be involved in the negotiating process:

a) management of the facility;
b) National Authority; and
c) the Technical Secretariat of the OPCW.

The agreements agreed upon will have to balance the needs of confidentiality(to protect
business information) and limitation of intrusiveness against the need todemonstrate
compliance with the obligations under the CWC.


III. Inspections and Facility Agreements

As the Convention foresees different types of on- site inspections, onehas to indicate for which
facilities a Facility Agreement is required. The basic obligations for on-site inspections are to
grant access to a facility and to avoid undue intrusion into activitiesof the inspected facility and
not prohibited under the CWC 4
These two obligations have to be balanced in the Facility Agreement.

Facility agreements are required to conduct systematic verification throughon- site inspections
and monitoring with on- site instruments for: chemical weapons (CW) (includingold CWs and
abandoned CWs), CWPFs, CWSFs and CWDFs, and single small- scale facilities(Schedule 1
chemical production).

Facility Agreements are also required for Schedule 2 facilities, that willbe controlled by
means of data monitoring and on- site verification. Schedule 3 and otherfacilities are not
required to conclude a Facility Agreement but may request one.

Part III of the Verification Annex provides the general provisions for verificationmeasures
including Facility Agreements. For the attainment of Facility Agreementsthe following concept
will apply in general: promptly after a facility is declared an initialinspection takes place for
facilities subject to systematic on- site verification and monitoring byinstruments. After that
inspection a Facility Agreement has to be agreed upon within specific time-frames. The time-frame
depends on the relevant Articles of the CWC for the facility.

Regime for Schedule 1 Chemicals

For facilities of this category, i. e., CWPF, CWDF, CWSF and Schedule 1facilities, a Facility
Agreement has to be concluded not later than 180 days after the CWC enteredinto force or after
the facility has been declared for the first time. 5 This requiresthat the initial inspection will be
accomplished in due time. Otherwise the information the initial inspection,which is the basis
for the Facility Agreement- negotiation, cannot be used. Further verificationwill then be carried
out by on- site inspections, governed by the Facility Agreement for thatspecific facility. These
inspections have to verify that the declared quantities of Schedule 1 chemicalsare correct and
that their aggregated sum not exceed 1 tone. 6

Regime for Schedule 2 Chemicals

Any facility under the control of a State Party that produces, possessesor consumes Schedule 2
chemicals will be subject to the Verification regime for Schedule 2 chemicals.The regime
requires that an initial inspection takes place as soon as possible afterthe facility has been
declared, preferable not later than three years after the declaration.7

Based on the information of this inspection and the model agreementa Facility Agreement has then to be concluded not later than 90 days afterthe completion of the inspection. 8 The Facility Agreement will governthe subsequent routine inspections. Different from the Schedule 1 regimeand due to the wider time- frame, the negotiations of the Facility Agreementcan begin before the initial inspection takes place.

Further, the OPCW and the inspected State Party can agree that a FacilityAgreement is not needed for a certain declared plant site. 9 Thepurpose of the inspection regime is to verify the non- production of Schedule1 chemicals, the correctness of the declared information and the non- diversionof Schedule 2 chemicals for purposes prohibited under the CWC. In this respectthe importance of a suitable Facility Agreement for the facility and theOrganization has to be emphasized, especially if one takes the short timelimit, i. e., 96 hours for these inspections into account.

Regime for Schedule 3 and other chemicals

Schedule 3 and other chemicals, which are subject to on- site inspections,10 represent the
exception to the above mentioned concept. In general, a Facility Agreementrequired under the
Convention. However, a Facility Agreement can be prepared upon request ofa State Party. 11

This point may be of importance to commercial plant sites. Without a FacilityAgreement there
is no limitation for the inspection teams' access to the plant site, exceptthrough managed
access. So any scheduled or other facility owner who foresees difficultiesin negotiating plant
site access may ask the National Authority to request the development ofa Facility Agreement.

But it must be mentioned that industry does not recommend a Facility Agreementfor Schedule
3 facilities since the odds of a routine inspection does not warrant theeffort involved in the
conclusion of a Facility Agreement. 12

IV. Model Agreements

It is outlined in the Verification Annex that Facility Agreements are tobe based on models that
govern the conduct of inspections in detail at a specific plant site. TheExpert Group on
'Declarations and Model Facility Agreements' in the PrepCom has developedand drafted
various model Facility Agreements. 13 But these model agreementsare still under review. A
draft (of 27 Feb. 1995) is currently under consideration for Schedule 2facilities. Once the
model Facility Agreements are agreed upon, they have to be adopted by theConference of
States Parties at its First Session.

The purpose of these model agreements are many. The most important one isof course, on
the one hand, as for as possible, a uniform application of the OPCW inspectionregime in order
to ensure equitable treatment and, on the other hand, to be flexible enoughto take the specific
circumstances of each facility into account. Further, this concept shouldreduce the cost for
industry involved in the negotiation of the actual Facility Agreement. Finally,the model
agreement provides for the facility management a reasonable predictabilityas concerns the
actions taken by inspectors during any following inspection. 14

Due to the fact that the model agreement is the basis for conducting negotiationsof an actual
Facility Agreement, it became obvious that not one model agreement can bedeveloped for all
different facilities. Thus, various model agreements have to be developed,which are facility-type
related and refer to a well defined category of facilities. 15

V. National Authority and Facility Agreements

Facility Agreements will be concluded directly between States Parties andthe OPCW and
thus, be international legal documents. However, the usual situation willbe that the National
Authority, on behalf of the State Party, and the Technical Secretariat,on behalf of the OPCW,
will negotiate and conclude Facility Agreements. The importance of a FacilityAgreement for
the conduct of on- site inspections and the direct effect on the inspectedfacilities poses diverse
tasks to the National Authority.

Tasks of National Authorities as regards Facility Agreements

(1) As the purpose of a Facility Agreement is to ensure effective verificationmeasures by the
inspection team as well as sufficient protection of the interest of thefacility, the National
Authority has to mediate with both sides - the facility management and theTechnical Secretariat
- while conducting negotiations of the Facility Agreement.

(2) A major task of the National Authority will be to make the Model FacilityAgreement
operational on a national level. Due to the general nature of model FacilityAgreements, they
have to be adopted to the specific conditions of the State Party concerned.Thus, a concept has
to be developed, which complies with OPCW requirements and make the FacilityAgreement
operational at the national level. This requires that the National Authorityidentifies areas, where
a uniform approach can be taken and where specific regulations are requiredby the facility.

(3) For the preparation of Facility Agreements at a national level the NationalAuthority has to
identify all potential facilities, including Schedule 3 and other chemicalfacilities for which a
Facility Agreement may be needed. This can be done on the basis of declarationsby facilities
due to the national legislation requirements. A second step of the NationalAuthority is to enter
into consultations with the identified facilities, explaining their obligationsand rights of the
management. This requires that the management is prepared to spend significantamount of time
in the preparation of a Facility Agreement and is given a say in the conclusionof it.

(4) The National Authority has further to prepare for the initial inspections.In this respect the
National Authority has to prepare the management of a facility for the variousactivities carried
out by the international inspection team as well as to ensure that the declaredinformation, on
which the initial inspection is based, is correct. Insufficient or incorrectinformation will
certainly have a negative impact on negotiation of a Facility Agreement.For the concerned
facility this could mean a tighter inspection mandate for future inspections,for the concerned
State Party a loss of confidence at a political level. To find out aboutthe correctness of the
information, the National Authority has to rely on consultations with thefacility management,
as national inspection rights for a National Authority is not required underthe CWC and thus,
mostly not to be found in implementation legislation. In most cases facilitymanagement will
co- operate in this respect, especially after they become fully aware aboutthe consequences of
non- compliance. However, this might not be true for all cases. In orderto prevent an initial
inspection being conducted on the basis of insufficient information, itmight be useful to
empower the National Authority with inspection rights, at least for an intermediateperiod of
time. 16

All tasks listed above are rather time and staff consuming, especially forcountries with a
large number of facilities, subject to the requirement of a Facility Agreement.Thus, States
Parties have to take this into account in the planning of the establishmentof the National Authority.

V. National legislation concerning Facility Agreements

The most advanced and comprehensive regulation regarding Facility Agreementscan be found
in the US draft implementing legislation, Section 401 (f) of which readsas follows:

(1) Inspections of plants, plant sites, or other facilities or locationsfor which the United
States has a Facility Agreement with the Organization for the Prohibitionof Chemical
Weapons shall be conducted in accordance with the Facility Agreement.

(2) Facility Agreements shall be concluded for plants, plant sites, or otherfacilities or
locations that are subject to inspection pursuant to paragraph 4 of ArticleVI of the
Chemical Weapons Convention unless the owner and the operator, occupantor agent in
charge of the facility and the Technical Secretariat agree that such anagreement is not
necessary. Facility Agreements should be concluded for plants, plant sites,or other
facilities or locations that are subject to inspection pursuant to paragraph5 or 6 of Article
VI of the Chemical Weapons Convention if so requested by the owner and theoperator,
occupant or agent in charge of the facility.

(3) The owner and the operator, occupant or agent in charge shall, to theextent
practicable consistent with the obligations of the United States under theChemical
Weapons Convention, participate in the negotiation of all Facility Agreementsconcluded
pursuant to the Convention.

The approach taken by the CWCIA in regard to Facility Agreements is themost
comprehensive and progressive one in comparison to other legislation reviewed.Section 401
(f) of the CWCIA defines the role of facility owners in the negotiationsprocess of Facility
Agreements as being extensive. Paragraph 3 gives owners the right to participatein the
procedure. It is not a question of whether or not such right exists, butrather the extent of this
right as limited by practical and legal considerations. Paragraph 2 is evenmore interesting since
it mentions a direct link between the owner of a facility and the TechnicalSecretariat for cases
where a Facility Agreement for a Schedule 2 facility is found to be unnecessary.

It goes without saying that this process would, of course, include the assistanceof the National Authority. However, this provision is mainly intended toprevent that the National Authority may over-rule the facility management,if the management wants to have a Facility Agreement.
The most important point in the current draft, however, is that it mentionsthe possibility of a
request by an owner of a Schedule 3 facility or a facility producing otherchemicals pursuant to
Part IX of the VA to conclude a Facility Agreement. The wording 'shouldconclude' implies
that the National Authority is not obliged to conclude such an agreement.However, since one
of the main tasks of the National Authority will be to protect reasonableinterests of its industry
this provision is not likely to be ignored if it enters into force in itscurrent form. This reflects
the general approach of the US draft implementing legislation to give theprotection of private
property top priority.

Other legislation reviewed, so far, takes a less advanced approach. In Germany,Article 13 of
the Implementation Act empowers the Export Control Office to negotiate FacilityAgreements
with the OPCW and to conclude such arrangements with the OPCW in co- ordinationwith the
Ministries of Foreign Affairs and Economics. In cases where there is anobligation to conclude
a Facility Agreement, the National Authority is requested to consult withthe management of the
affected facility before the negotiations of a facility Agreement with theOPCW starts. In all
other cases, i. e., Schedule 3 facilities and other chemical facilities,prior consent of the facility
management is required. The most interesting aspect of this regulation isthat it establishes
certain important rights for the owner of a facility, most important theright to participate in the
procedure and to be kept informed about the process.

Section 76 of the Australian Act specifically deals with Facility Agreementsand assigns to the
Minister of Foreign Affairs the powers to negotiate and conclude FacilityAgreements with the
OPCW and gives him wide discretion regarding the contents of a FacilityAgreement.
However, Section 76 makes no indication of what role facility owners shouldhave in this
procedure. The fact that facility owners are not granted specific proceduralrights under this act,
however, does not necessarily mean that they have no rights at all. Theextent of their
participation will depend both on practical and legal considerations.

Neither the Dutch nor the Swedish implementing legislation, this far, includesany regulation
regarding this problem. The Swedish Act on Inspections gives the inspectionteam very broad
rights in the inspection process and in the 'travaux prepartoires' it statesthat the Government or
a designated authority, i. e., the National Authority, shall take necessarydecisions during
inspections.

As concerns Finland the conclusion of facility Agreements are only stated
indirectly. The 'travaux prepartoires' to the Finnish CWC Act state theneed of facility
Agreements. Reasons why Finland nor Sweden provide direct legislation asregards the
conclusion of Facility Agreements is probably because they have very few,if any, facilities that
require such agreements.

Footnotes:

1 Verification Annex Part I paragraph 7.
2 Article VII paragraph 34 c) of the CWC.
3 Verification Annex, Part I, paragraph 19.
4 Article IV paragraphs 9 and 10 of the Convention.
5 Part III of the Verification Annex paragraph 4.
6 Verification Annex, Part VI paragraph 21.
7 Part VII of the Verification Annex paragraph 16.
8 Part VII of the Verification Annex paragraph 24.
9 Part VII of the Verification Annex paragraph 24.

10 See for that Part IX of the Verification Annex paragraph 1.
11 Part IX of the Verification Annex paragraph 16.
12 See Paper present by Peter J. Plant, at page 2.
13 See for example the 'Expert Group on Declarations and Model FacilityAgreements: First report', PC- VI/ B/ WP. 16, 25 March 1994.
14 Paper presented at the combined industry meeting at the Hague, 25- 27June 1995 at p. 1.
15 The work of the Expert Group focuses therefore mainly on Schedule 2 modelFacility Agreements at the moment.
16 The implementation Act of Australia provides for the conduct of nationalcompliance legislation carried out by national inspectors, although thisis not specifically mentioned in the Act.