Congress, DHS, and Water Utilities Act on Infrastructure Security Issues

This issue alert provides an overview of the provisions of the Intelligence Reform and Terrorism Prevention Act of 2004 (Intelligence Reform Act) that may be of particular interest to industry, and reports on developments related to congressional jurisdiction over homeland security issues, the Department of Homeland Security’s (DHS) National Cargo Security Strategy, a Congressional Budget Office (CBO) report on Homeland Security, and recently issued security guidance for water utilities.

Intelligence Reform & Terrorism Prevention Act

On December 20, 2004, President Bush signed into law the Intelligence Reform Act, which implements a number of recommendations made by the 9/11 Commission. While fundamentally restructuring the intelligence community, the Intelligence Reform Act also has a number of potential implications for the private sector, including the following:

• Private Sector Preparedness. Section 7305 of the Intelligence Reform Act reflects a “sense of Congress” that the Secretary of Homeland Security should promote, where appropriate, the adoption of voluntary national preparedness standards. Section 7804 of the Act articulates another “sense of Congress” that the insurance industry and credit rating agencies should carefully consider a company’s compliance with standards for private sector disaster and emergency preparedness in assessing insurability and creditworthiness. While neither of these provisions imposes legal obligations on the private sector, they do make clear a congressional intent “to ensure that private sector investment in disaster and emergency preparedness is appropriately encouraged.”
• Transportation Security. Section 4001 of the Intelligence Reform Act requires the Secretary of Homeland Security to develop, prepare, implement, and update a “National Strategy for Transportation Security” (NSTS). The NSTS must include, among other things: (1) an identification and evaluation of transportation assets that must be protected from attack or disruption, including modal security plans for aviation, bridges and tunnels, commuter rail and ferry, highway, maritime, pipeline, rail, mass transit, and other such public transportation infrastructure assets; (2) risk-based priorities across all transportation modes and the establishment of deadlines to address the security requirements of transportation assets; and (3) appropriate, practical, and cost-effective means of defending transportation assets.
• Critical Infrastructure and Readiness Assessments. Section 7306 of the Intelligence Reform Act directs the Secretary of Homeland Security to submit to Congress, within 180 days from the date of enactment, a report discussing: (1) the DHS’s progress in completing vulnerability and risk assessments of the nation’s critical infrastructure; (2) the adequacy of the government’s plans to protect such infrastructure; and (3) the readiness of the government to respond to threats against the United States.

Congressional Oversight Over Homeland Security Issues

On January 4, the House of Representatives approved H. Res. 5 which, among other things, establishes the Committee on Homeland Security as a permanent standing committee. The Committee will now have jurisdiction over the following issues: (1) overall homeland security policy; (2) organization and administration of DHS; and (3) functions of DHS relating to border and port security (except immigration policy and non-border enforcement), Customs (except Customs revenue), integration, analysis, and dissemination of homeland security information, domestic preparedness for (and collective responses to) terrorism, research and development, and transportation security. Jurisdiction over related homeland security issues will remain with other House Committees; for example, the House Committee on Energy and Commerce will have jurisdiction over cybersecurity and the House Committee on Transportation and Infrastructure will retain jurisdiction over the Coast Guard.

In the Senate, the Committee on Governmental Affairs has been renamed the Senate Committee on Homeland Security and Governmental Affairs and will exercise oversight over the Information Analysis and Infrastructure Protection Directorate, the Science and Technology Directorate, and management of DHS. Jurisdiction over a number of homeland security related issues, however, has been retained by other committees, including the Committees on Judiciary, Finance, and Commerce, Science, and Transportation.

CBO Study on Security and the Private Sector

Last month, at the request of the Ranking Member of the House Select Committee on Homeland Security, the CBO issued a report entitled “Homeland Security and the Private Sector.” The report, which focused on critical infrastructure owned by the nuclear, chemical, agricultural, natural gas, and electric utility sectors, identifies potential strategies that the federal government could undertake to enhance homeland security. Although the CBO report states that it does not contain policy recommendations, it sets forth a number of measures that could be employed to ensure that the private sector assumes a greater role in the protection of critical infrastructure. These measures include stricter regulations, establishment of new taxes, additional insurance requirements, and other mechanisms that would require industries to internalize the cost of new security measures. The CBO report also provides an overview of programs that could socialize security-related costs.

Draft National Cargo Security Strategy

DHS has issued a draft National Cargo Security Strategy white paper which is intended to be a “starting point” for the development of a comprehensive strategic plan for cargo security. The white paper proposes a framework comprised of eight priority objectives including: (1) interdiction of weapons of mass effect at U.S. borders; (2) implementation of more effective data analysis to identify high risk cargo for inspection earlier in the supply chain; (3) application of secure stuffing procedures and container seals/sensors on international in-bound maritime and surface containers (including, as a short-term measure, mandating the use of high-security mechanical seals on all in-bound containers); (4) strengthening public-private partnership measures to enhance supply chain security and the development of minimum standards; (5) development and implementation of domestic cargo security best practices; (6) coordinated federal research and development; (7) development of protocols for the resumption of trade in the event of an attack; and (8) continued outreach to achieve a full partnership with affected industries. Announcing the white paper, Homeland Secretary Tom Ridge called upon industry participants to “vent, modify, [and] alter” the draft National Cargo Security Strategy so it can be refined and finalized.

Voluntary Security Guidance Issued for Water Utilities

On December 9, 2004, three leading industry associations – the American Water Works Association, the Water Environment Federation, and the American Society of Civil Engineers – issued interim voluntary security guidelines for water utilities. The interim guidelines, which were funded by a grant from the U.S. Environmental Protection Agency, include Security Guidance for Water Utilities, Security Guidance for Wastewater Utilities, and Guidelines for Designing an Online Contaminant Monitoring System. The draft Security Guidance documents, which contain recommendations to improve physical security and reduce vulnerabilities, will be the foundation for voluntary consensus standards issued in 2006.