Firms fear costs of new security

Industry representatives warned yesterday during a conference on homeland security that new government regulations risk hurting their competitiveness.

The conference at the Washington Convention Center represents an effort by the Department of Homeland Security to work with industry to develop antiterrorism policies.

It also responds to a presidential directive in December that ordered the Homeland Security Department to cooperate with the private sector to “identify, prioritize and coordinate the protection of critical infrastructure” against terrorism.

Retired Coast Guard Adm. James M. Loy, deputy homeland security secretary, acknowledged consumers would need to pay for higher security costs imposed on companies but said the costs are “a very logical extension of how America has worked for years.”

He also said the costs would be small.

“I don’t think it will hurt American competitiveness,” said Adm. Loy, who was promoted last year from head of the Transportation Security Administration.

He said government alone could not protect the 85 percent of the nation’s critical infrastructure owned by private operators.

“You are in the best position to tell us where your vulnerabilities lie,” he told about 300 corporate executives.

He mentioned new methods for inspecting imported cargo containers as an example of how government can minimize the effect of tighter security.

Instead of inspecting each of the millions of containers, Customs agents focus on shippers with bad security records or poorly documented shipments.

“Opening every single container would grind our imports to a halt,” Adm. Loy said.

Several executives expressed concern new security regulations would not be thought out well before being enacted by lawmakers.

“If you’re rushing to regulation, you’re taking a risk and it may be a misstep,” said Michael Assante, vice president of American Electric Power, a public utility holding company.

Christopher Lofgren, president of the trucking firm Schneider National Inc., said, “We’re clearly going to have to make investments but let’s do it in the right way.”

The best option is for government to develop security regulations that also benefit industry, he said.

An example is the global positioning satellite systems that help trucking companies schedule freight deliveries more efficiently but could help government track potentially hazardous cargo.

Several members of one panel warned new security procedures could trample the privacy of innocent people.

Computerized information-sharing with government and surveillance equipment create the greatest risks, they said. Jeffrey Rosen, a George Washington University law professor, said government regulators can design surveillance systems that protect privacy.

“Whether the good designs will be adopted is another matter,” Mr. Rosen said.