potential applications and benefits of new technologies, the greater the likelihood that the market will support their production and reward their developers.

Indemnification

In many cases, up-front cost may not be the only factor holding industry back from investing in counterterrorism-related areas. Firms may also be unwilling to undertake certain efforts unless they are indemnified against the considerable risks involved.

A prime example is the research, development, manufacture, and distribution of new pharmaceuticals to be used against biological agents. These activities contain many risks, and indemnification provisions may be necessary to overcome what are otherwise seen as formidable obstacles. The development and distribution of vaccines needed to protect against diseases that no longer exist (or are unlikely to occur naturally), such as smallpox, is a particularly well-documented example. (This problem of orphan vaccine development is discussed in Chapter 3.)

Similar concerns have been raised in the context of secure transportation systems for cargo. Intermodal cooperation all along the logistics chain is needed, but many participants would probably opt out if their participation would expose them to substantial liability in the event of system failure.

Another area where liability is a potential issue is in vulnerability analysis. To make decisions based on the relative likelihood of various terrorist events, the government must understand where weaknesses lie in private-sector systems and products. But, absent some form of indemnification, many firms will be reluctant, for legal reasons, to share with government their proprietary knowledge of their own vulnerabilities.

Antitrust Exemptions

It is possible that current antitrust regulations could inhibit the necessary development of counterterrorism technologies. For example, it might be in the nation’s interest to allow all the firms in an industry (such as electricity generation or chemical manufacturing) to confer on how they might most economically make modifications so that the critical and often interoperable infrastructure they operate can be protected. Unless the companies are able to share this information, it could be difficult for the industry to reach agreement with government on public and private investment in appropriate research and development and work on needed standards. Thus, supervised antitrust exceptions may be needed in a variety of industries.

Government has passed limited antitrust exemptions before—e.g., in the energy crises of the 1970s. And bills are currently being considered to provide similar exemptions to support work on critical infrastructure protection and to



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