- The Washington Times - Friday, March 1, 2002

The cost of business is rising for industries subjected to the federal effort to reduce security risks from terrorists.
Power plants, telecommunications companies, chemical plants, airlines, railroads and others are, or will be, paying for increased security measures prompted by the September 11 attacks.
The higher costs for the regulated industries eventually will become the higher costs of their business partners, their communities and their customers.
As the tab keeps growing, some business and community leaders wonder what price America is willing to pay for security.
"The magnitude of the total impact on regulated and unregulated industries is unclear because it's so new," said John Mayo, director of Georgetown University's Center for Business and Public Policy. "Security has never been a priority for federal agencies in the past."
But when the final bill is calculated, he expects the effect on the economy to be widespread.
Perhaps no industry felt the financial pinch of security as quickly and severely as the airlines.
Within days of the attacks, the Federal Aviation Administration required airlines to spend more money on security even as their businesses teetered on the edge of bankruptcy. Recent additions to security requirements have included hardened cockpit doors, cabin videos and transponders that allow air-traffic controllers to track airplanes with greater precision.
So far, Congress has agreed to spend $100 million to help airlines pay the bill.
"There's no question that our immediate costs will easily surpass $100 million, probably several hundred million," said John Heimlich, research director for the Air Transport Association, which represents major airlines.
Other costs result from the $2.50 security tax on airplane tickets, free seats for sky marshals and slower flight schedules that allow time for delays caused by bag matching. New security procedures also add to what Mr. Heimlich calls "the hassle factor" for passengers.
"From a demand point of view, we sell speed," he said. "That's why people fly, to get from A to B more quickly. Now it's more expensive and it's slower. That's the kind of thing that makes people think twice about their purchase."
The Nuclear Regulatory Commission is trying to respond to reported threats that terrorists might crash airplanes into nuclear power plants or blast them with car bombs.
Since September 11, "we have issued more than 20 advisories on extra security measures they should take and we have been doing inspections to make sure they do that," said Sue Gagner, Nuclear Regulatory Commission spokeswoman. "If we find violations of our regulations, we take enforcement actions. This has been stepped up since September 11."
The most recent advisory was Feb. 14, when the NRC required additional controls over access to secure areas, increased "stand-off distances" for vehicles approaching nuclear facilities and greater coordination with state and federal authorities.
Enforcement actions by federal agencies can include a range of fines, revocation of licenses and even jail for willful violations.
Other industries are only beginning to feel the effects of higher security costs as government regulators assess which new regulations to impose.
"Everyone anticipates that the additional security measures to make our facilities more secure are going to increase our costs," said Chris Vanden Heuvel, spokesman for the American Chemistry Council. "We're unclear what additional guidelines or regulations they might propose."
The railroad industry is asking the federal government for legislative assistance to drive down insurance costs. As common carriers, the Transportation Department requires them to carry insurance against terrorist acts. Since the attacks, anti-terrorism insurance has become prohibitively expensive.
The new Transportation Security Administration is considering a requirement that transportation workers carry identification cards for access to secure areas, which railroads or their employees would be required to purchase.
The Federal Transit Administration is sending teams to the nation's 41 largest transit agencies to assess their vulnerability to attack. Although new regulations have not been determined, they are expected soon.
A Federal Communications Commission task force is assessing security risks to the nation's telecommunications network. One priority is securing wireless communications systems for emergency personnel.
The FCC also is involved in Internet security, which has attracted the interest of Congress.
At a hearing last month before the Senate Judiciary administrative oversight and the courts subcommittee, Richard Clarke, chief of the White House's Office of Cyberdefenses, warned that a terrorist attack over the Internet was likely.
"Terrorists could gain access to the digital controls for the nation's utilities, power grids, air traffic control systems and nuclear power plants." said Charles E. Schumer, New York Democrat and subcommittee chairman.
The source for the security policies and costs ultimately can be traced to the Bush administration. President Bush's proposed fiscal 2003 budget allocates about $38 billion for new domestic-security expenses.
The Bush administration defends any doubts about security costs with references to airplanes slamming into the World Trade Center, postal workers dying from anthrax and continuing threats from the war on terrorism.
"September 11 dealt a very serious blow to the economy, demonstrating the cost of inaction," said White House spokeswoman Claire Buchan. New security measures are needed "for the sake of the economy and the safety of the American people."



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