May 2003 Bulletin 03-42 Homeland Security Update: Continuous Challenges Lie Ahead If you have questions or would like additional information on the material covered in this Bulletin, please contact the author: Stephen M. Sorett 202.414.9260 ssorett@reedsmith.com or the Reed Smith attorney with whom you regularly work, or any of the following. David C. Evans 202.414.9221 devans@reedsmith.com Richard L. Moorhouse (Falls Church) 703.641.4244 rmoorhouse@reedsmith.com Christopher L. Rissetto 202.414.9206 crissetto@reedsmith.com Summary This bulletin is presented for informational purposes and is not intended to constitute legal advice. Reed Smith LLP 2003. All Rights Reserved. Reed Smith refers to Reed Smith LLP, a limited liability partnership formed in the state of Delaware. The Department of Homeland Security, with Secretary Tom Ridge at the helm and Gordon England as Deputy Secretary, became effective on January 27, 2003. This new Department was created to execute three primary missions: prevent terrorist attacks within the United States, reduce America s vulnerability to terrorism, and minimize the damage from potential attacks and natural disasters. The Department initiated the most significant transformation of the U.S. government in more than a half-century. It is designed to provide state and local officials with a primary agency for matters relating to training, equipment, planning, exercises and other critical homeland security needs. Two purposes of the new Department that are of particular interest include its management of federal grant programs for enhancing the preparedness of firefighters, police, and emergency medical personnel, and the standards it will set for state and local preparedness activities and equipment. The Divisions Within the Department of Homeland Security Border and Transportation Security ( BTS ): BTS will be led by Undersecretary Asa Hutchinson, and is responsible for maintaining the security of our nation s borders and transportation systems. The largest of the Directorates, it will become home to agencies such as the Transportation Security Administration, U.S. Customs Service, the border security functions of the Immigration and Naturalization Service, Animal & Plant Health Inspection Service, and the Federal Law Enforcement Training Center. Darlene Freeman is a point of contact at the BTS Division and can be reached at 202.282.8064. Emergency Preparedness and Response ( EPR ): This Directorate, which will be headed up by Undersecretary Mike Brown, ensures that our nation is prepared for, and able to recover from, terrorist attacks and natural disasters. Josh Batkin is a point of contact at the EPR Division and can be reached at 202.646.4563. Science and Technology ( S & T ): Under the direction of Undersecretary Dr. Charles McQueary, this Directorate will coordinate the Department s efforts in research and development, including preparing for and responding to the full range of terrorist threats involving weapons of mass destruction. Holly Dockery is a point of contact at the S & T Division and can be reached at 202.786.0076. Information Analysis and Infrastructure Protection ( IAIP ): IAIP merges the capability to identify and assess LONDON NEW YORK LOS ANGELES SAN FRANCISCO WASHINGTON, D.C. PHILADELPHIA PITTSBURGH OAKLAND PRINCETON NORTHERN VA WILMINGTON NEWARK MIDLANDS, U.K. CENTURY CITY RICHMOND HARRISBURG WESTLAKE VILLAGE r e e d s m i t h. c o m
a broad range of intelligence information concerning threats to the homeland under one roof, issue timely warnings, and take appropriate preventive and protective action. Steven Cooper is the Chief Information Officer for the Department. Dave Wray is a point of contact at the IAIP Division and can be reached at 202.282.8378. Management: The Undersecretary of Management Designate, Janet Hale, will be responsible for budget, management and personnel issues in DHS. Besides the five Directorates of DHS, several other critical agencies were folded into the new Department or were newly created: United States Coast Guard: The Commandant of the Coast Guard, Admiral Thomas H. Collins, reports directly to the Secretary of Homeland Security. However, the USCG will also work closely with the Undersecretary of Border and Transportation Security as well as maintain its existing independent identity as a military service. Upon declaration of war or when the President so directs, the Coast Guard would operate as an element of the Department of Defense, consistent with existing law. Jerry Yoest is a point of contact at the Coast Guard and can be reached at 202.267.2280. United States Secret Service: The primary mission of the Secret Service is the protection of the President and other government leaders, as well as security for designated national events. The Secret Service is also the primary agency responsible for protecting U.S. currency from counterfeiters and safeguarding Americans from credit card fraud. W. Ralph Basham is the Director of the Secret Service. Bureau of Citizenship and Immigration Services: While BTS will be responsible for enforcement of our nation s immigration laws, the Bureau of Citizenship and Immigration Services is dedicated to providing efficient immigration services and easing the transition to American citizenship. This Bureau was specifically created by the Homeland Security Act as a separate Bureau and is tasked to improve the administration of benefits and immigration services for applicants. The Director of Citizenship and Immigration Services will report directly to the Deputy Secretary of Homeland Security. Tom DiNanno is the point of contact for private sector-related matters and can be reached at 202.282.8043. Valerie Veatch is the point of contact for contracting matters and can be reached at 202.786.0103. Office of State and Local Government Coordination: A truly secure homeland requires close coordination between local, state and federal governments. This office will ensure that close coordination takes place with state and local first responders, emergency services and governments. Office of Private Sector Liaison: The Office of Private Sector Liaison will provide America s business community a direct line of communication to the Department of Homeland Security. The office will work directly with individual businesses and through trade associations and other nongovernmental organizations to foster dialogue between the private sector and the Department of Homeland Security on the full range of issues and challenges faced by America s business sector in the post 9-11 world. Office of Inspector General: The Office of Inspector General serves as an independent and objective inspection, audit, and investigative body to promote effectiveness, efficiency, and economy in the Department of Homeland Security s programs and operations, and to prevent and detect fraud, abuse, mismanagement, and waste in such programs and operations. Office of International Affairs: The Office of International Affairs will promote information and education exchange with friendly nations, including: R & D on homeland security technologies; joint training exercises of first responders; and terrorism prevention, response, and crisis management. The Office will manage international activities within the Department. Pancho Kinney is a point of contact at the Office and can be reached at 202.282.8240. - 2 -
On March 1, 2003, the functions of several border and security agencies including the U.S. Customs Service, Federal Protective Service, the former Immigration and Naturalization Service and Border Patrol, and the Animal and Plant Health Inspection Services were transferred into the Directorate of Border and Transportation Security within the new Department. These agencies have now been divided into two new bureaus in an effort to refocus homeland security inspection and investigation functions. Bureau of Customs and Border Protection: This new Bureau brings together approximately 30,000 employees including 17,000 inspectors in the Agricultural Quarantine Inspection program, INS inspection services, Border Patrol, and the Customs Service, including canine enforcement officers. It will be headed by the Commissioner of Customs, Robert Bonner, who will report to the Undersecretary for Border and Transportation Security. The Bureau will focus its operations on the movement of goods and people across our borders. Bureau of Immigration and Customs Enforcement: This Bureau will bring together the enforcement and investigation arms of the Customs Service, the investigative and enforcement functions of Immigration and Naturalization Service, and the Federal Protective Services. The reorganization involves approximately 14,000 employees, including 5,500 criminal investigators, 4,000 employees for immigration and deportation services and 1,500 Federal Protective Service personnel that will focus on enforcing the immigration and customs laws within the interior of the United States, in addition to protecting specified federal buildings. The air and marine enforcement functions of the Customs Service will also be a part of this Bureau. Given the scope of its focus, the Bureau is also tasked with enhancing the information-sharing with the Federal Bureau of Investigation and the U.S. Attorneys Office. This Bureau is headed by an Assistant Secretary who reports directly to the Undersecretary for Border and Transportation Security and advises the Undersecretary on any policy or operation of the Bureau that may affect the Bureau of Citizenship and Immigration Services. Information Sources for the Department Department of Homeland Security website: http://www.dhs.gov/dhspublic/ Department of Homeland Security Organization: http://www.dhs.gov/dhspublic/interapp/editorial/editorial_0086.xml Department of Homeland Security Reorganization Plan: http://www.dhs.gov/dhspublic/display?theme=10&content=12 Homeland Security Act of 2002: http://thomas.loc.gov/cgi-bin/query/z?c107:h.r.5005.enr Key Legal Issues Under Development in the Homeland Security Environment Export, Customs and Trade: Homeland security issues have already reshaped the customs landscape and are now reshaping rules for outbound trade as export control agencies reorient their enforcement priorities and become more vigilant in enforcing restrictions against unauthorized exports. Port Security: More than 50 percent of U.S. imports (by value) arrive by sea annually, including six million cargo containers. Port security has a significant impact on the way port operators, associated facilities, and other companies and industries dependant on commerce operate. Enhanced communication among these parties is now a must and additional funding will be critical to assist these parties in improving the functionality and enhancing the security of this industry. Immigration: The nation s emphasis on homeland security places new challenges on the immigration environment. Compliance with new homeland security regulations applicable to all employers with foreign workers, including foreign-owned manufacturers and high-tech companies, is critical. - 3 -
The SAFETY ACT : Support Anti-Terrorism by Fostering Effective Technologies Act: The SAFETY ACT authorizes the Secretary of the Department of Homeland Security to designate qualified anti-terrorism technologies, which then qualify for significant protection against third-party liability under a comprehensive risk management system. The potential reach of this new legislation is extraordinary and industries must watch closely for the promulgation of the regulations governing this new process. Cyber-Security: The American telecommunications and computer industries recently announced the release of additional best practices for the protection of networks against terrorist attacks and for their prompt restoration in the event that they are rendered inoperative because of a malicious attack or natural disaster. Timely use of best practices in the proper situations could mean the difference between a functioning and a failed network. The USA Patriot Act and Financial Institutions: The USA Patriot Act was enacted to combat terrorist activity and money laundering. The underlying public policy of the Act is to enable financial institutions to scrutinize the private characteristics of their customers and work in alliance with the federal government to weed out customers who may threaten the nation, launder money or evade taxes. The Act applies to all financial institutions and requires entities subject to the final regulations to put in place a four-part anti-money laundering program. The privacy developments must be carefully monitored by financial institutions because more stringent state laws may be enacted and frequent developments may affect a bank s privacy objectives. FDA and its Effect on Foreign and Domestic Shipments: Under a recently proposed FDA rule, all domestic and foreign facilities that manufacture, process, pack, distribute, receive, or hold food or feed products (including dietary supplements, infant formula, beverages (both alcoholic and nonalcoholic), and food additives) for consumption in the United States must register with the U.S. Food and Drug Administration. The Bioterrorism Act includes other new requirements on companies governed by the FDA, which cover such issues as the establishment and maintenance of records, administrative detention, debarment, marking, port shopping, and import for export. Vaccination Programs and Other Employment-Related Issues: Many employment-related issues must be considered by employers in connection with homeland security, such as discrimination and time-off issues. As an example, some specialty employers such as hospitals deciding whether to participate in the new Federal smallpox vaccination program under the Homeland Security Act, have to consider liability exposure, risks to patients, furlough and workers compensation issues, just to name a few. * * * * * * * How Can a Company or State or Local Government Interested in Homeland Security Benefit from Law Firm Representation? There are many benefits to engaging counsel to assist your company or organization in navigating the complexities of the homeland security environment. Reed Smith has organized its lawyers into teams that can work with your organization to position it both to take advantage of the opportunities associated with the creation of the Department of Homeland Security and to comply with new regulatory requirements. The Reed Smith Teams can assist in many ways, including: crafting due diligence and compliance programs that will provide added security and minimize the potential for liability; providing procurement strategies and direction regarding available remedies; developing special funding strategies, including grants and other available mechanisms; and counseling on regulatory compliance and rulemaking opportunities. - 4 -
Our Homeland Security Team consists of attorneys and professionals practicing in all areas touched by the Department, including government relations, government contracts, infrastructure, immigration, communications, privacy, employment, and business transactions. Please contact the following Reed Smith Team leaders in Washington, D.C. regarding the Homeland Security Department and related programs: Steve Sorett, who is spear-heading the Homeland Security Team; Chris Rissetto, who heads the firm s Infrastructure and Financial Solutions Team; Dick Moorhouse, who heads the Reed Smith Government Contracts Team; and other members of the Government Services Group, chaired by David Evans, many of whom have decades of experience in these areas. Contact information may be found on the front page of this Bulletin. * * * * * * * Reed Smith, a leading global law firm with nearly 1,000 lawyers located in 16 U.S. and two U.K. cities, represents Fortune 100 as well as mid-market and emerging companies. Clients include technology companies and entrepreneurs, financial services firms, health care providers and insurers, communications companies, manufacturers, universities, non-profit organizations, real estate developers, and municipalities throughout the United States and in 40 countries. For more information, please visit reedsmith.com. - 5 -