The Challenge of Protecting Critical Infrastructure: To Deal with Terrorist Threats, the Government Must Engage in More Deeply Rooted Collaboration with the Private Sector

Article excerpt

In protecting critical infrastructure, the responsibility for setting goals rests primarily with the government, but the implementation of steps to reduce the vulnerability of privately owned and corporate assets depends primarily on private-sector knowledge and action. Although private firms uniquely understand their operations and the hazards they entail, it is clear that they currently do not have adequate commercial incentive to fund vulnerability reduction. For many, the cost of reducing vulnerabilities outweighs the benefit of reduced risk from terrorist attacks as well as from natural and other disasters.

The National Strategy for Homeland Security, released on July 16, 2002, reflects conventional notions of market failure that are rapidly becoming obsolete: "The government should only address those activities that the market does not adequately provide--for example, national defense or border security. For other aspects of homeland security, sufficient incentives exist in the private market to supply protection. In these cases we should rely on the private sector." The Interim National Infrastructure Protection Plan (NIPP), released by the Department of Homeland Security (DHS) in February 2005, takes a similar position.

Although some 85% of the critical infrastructure in the United States is privately owned, the reality is that market forces alone are, as a rule, insufficient to induce needed investments in protection. Companies have been slow to recognize that the border is now interior. National defense means not only sending destroyers but also protecting transformers. In addition, risks to critical infrastructure industries are becoming more and more interdependent as the economic, technological, and social processes of globalization intensify. Just as a previous generation of policymakers adapted to the emergence of environmental externalities, policymakers today must adapt to a world in which "security externalities" are suddenly ubiquitous.

The case of CSX Railroad and the District of Columbia illustrates the tensions that have emerged over the competing needs for corporate efficiency and reduced public vulnerability to terrorist acts. Less than a month after a January 2004 train crash in South Carolina resulted in the release of deadly chlorine gas that killed 9 people and hospitalized 58 others, the District's City Council passed an act banning the transportation of hazardous materials within a 2.2-mile radius of the U.S. Capitol without a permit. The act cited the failure of the federal government "to prevent the terrorist threat." Subsequently, CSX petitioned the U.S. Surface Transportation Board (USSTP) to invalidate the legislation, claiming that it would "add hundreds of miles and days of transit time to hazardous materials shipments" and adversely affect rail service around the country. USSTP ruled in CSX's favor in March 2005, putting an end to the District's efforts.

Shortly after the decision, Richard Falkenrath, President Bush's former deputy homeland security advisor, highlighted in congressional testimony the severity of the threat that the act was intended to address: "Of all the various remaining civilian vulnerabilities in America today, one stands alone as uniquely deadly, pervasive, and susceptible to terrorist attack: toxic-inhalation hazard (TIH) of industrial chemicals, such as chlorine, ammonia, phosgene, methylbromide, hydrochloric and various other acids."

If industry itself is not motivated to invest in protection against attack and the federal government does not take the initiative, who will take responsibility for protecting chemical plants, rail lines, and other critical infrastructure? Who will make it harder for terrorists to magnify the damage of an attack by first attacking the infrastructure on which effective response depends? Who will ensure that these and other elements of the infrastructure are not used as weapons to kill or maim thousands of people in our cities? …