The United States had not been attacked on its own soil since Japanese bombed Pearl Harbor in 1941. Following the attacks on the World Trade Center in New York City and on the Pentagon in our nation's capitol, national security again weighs heavy on the minds of policy makers in Washington. Based upon the President's initiative, Congress finally enacted the Homeland Security Act, which was signed by President Bush on November 25, 2002. The objectives of the Act are to prevent terrorist attacks within the United States, reduce the United States' vulnerability to terrorism and minimize the damage and recover from any terrorist attacks.

The Act impacts both the public and private sectors. Participation from the private sector is integral, in fact, to the successful operation of the new Department of Homeland Security because the private sector is not only the principal source of goods and services but also the owner of 85 percent of the nation's key infrastructures. A major emphasis has been the need for the sharing of information amongst government agencies as well as amongst the private sector, state and local governments, and individuals.

To better facilitate the sharing of information, several agencies and/or certain functions of those agencies have been moved under the new Department of Homeland Security including, for example, the INS, the Coast Guard, the Department of Health and Human Services, the Department of Agriculture and the Department of Energy. Perhaps more important and certainly more controversial are the provisions under Section 214 of the Act. To better encourage the private sector, state and local governments and individuals to share information with the Department of Homeland Security, this provision provides that any information supplied by a non-federal party to the Department relating to infrastructure vulnerabilities or other vulnerabilities to terrorism will not be subject to disclosure under the Freedom of Information Act ("FOIA"). Furthermore, the information would not become subject to disclosure if the Department forwarded it to other federal departments or agencies. To be subject to this protection, a statement regarding the expectation of non-disclosure should accompany the information. Specifically, Section 214 exempts from disclosure under FOIA critical infrastructure information that is voluntarily submitted to the Federal Government. Section 214(f) authorizes fines up to one year in prison, and job loss for federal officers or employees who not only disclose such critical infrastructure information. Section 214(a)(1)(C) of the statute provides that critical infrastructure information that is voluntarily submitted in good faith to the federal agency cannot, without written consent, be used directly by the agency "or any other Federal, State or local authority or any third party, in any civil action arising under federal or state law."

Justifications for this restriction on disclosure include national security and the protection of trade secrets. Critics, however, believe that this provision will provide a safe harbor for those who violate health and safety statutes and may endanger public safety. Lawmakers say that this restriction on disclosure under the FOIA will not enable businesses to end run regulatory reporting requirements and it will not wear away the oversight protections provided by the FOIA.

The Act contains several other provisions that may also impact the private sector. Harsher penalties are imposed for certain cyber crimes that threaten public health and safety and a structured Federal Cybersecurity Program will be established to improve the security of critical federal information systems, which includes those operated by contractors of civilian agencies. Specifically, under Section 225 of the Act, penalties for cyber crimes are increased and the ability of the government agency to gain access to email and other communications in emergency situations in enhanced. Section 225 expands the circumstances under which law enforcement can use PEN registers and trap and trace devices under emergency situations.

New grants, cooperative agreements and government contracts will be awarded to research and develop innovative technologies that secure citizens, infrastructure, property, resources and information from acts of terrorism. Because many businesses that have developed technologies to detect or prevent acts of terrorism fear the potential unlimited liabilities in the event of a terrorist strike, the Homeland Security Act also includes a provision called the Safety Act. This ensures not only that technologies meet stringent requirements and are made commercially available, but also that the companies producing those technologies are protected by the maximum amount of liability insurance possible. In this way, victims will be compensated for any injuries or economic losses but suppliers of anti-terrorism technology will not be subject to punitive or other non-economic damages.

The Act's provisions for increased border and transportation security might impact both domestic and foreign businesses operating in the United States. As part of the National Strategy for Homeland Security, major initiatives include the increased security of international shipping containers and the tighter restrictions on the flow of people, goods, and services across borders in order to prevent terrorists from using transportation systems to deliver tools of destruction. Another major initiative is to target and attack terrorist financing, which may knowingly or unknowingly be funneled through domestic banks and businesses.

The new Homeland Security Department becomes effective March 1, 2003. The White House continues to seek that the majority of the federal agencies and programs to be transferred are done so by that date. At that time, the White House expects agencies such as the Coast Guard, the Customs Service, the Transportation Security Administration, United States Secret Service and the Federal Emergency Management Agency to be transferred over to the new department. The various transfers should be completed by September 30, 2003, according to the Bush Administration Plan.

Ultimately, the Homeland Security Act will affect different businesses in different ways. Because the Act's impact is far reaching, it likely won't be long before the effects of this new legislation are felt in corporate America. What businesses need to be aware of are not just the potential restrictions but also the opportunities created by increased funding for the research and development of anti-terrorism technology coupled with improved liability protections. There are many critics who claim that this Act provides a safe-haven for violators of health and safety standards. What the Act ensures, though, is better communications not only amongst federal agencies but also between government and private industry, which controls the majority of our nations most important infrastructures, to better protect this country from future acts of terror.