Homeland Security Watch

The title of this post is a bit big.  But nowhere near as huge as the idea behind it.

The basic concept is to build new underground electric power transmission lines, natural gas pipelines, and telecommunication, cable TV, and Internet communication lines on rights-of-way already established by America’s 40,000 mile Interstate Highway System. The Interstate Highway System reaches nearly every part of the nation, and states own the rights-of-way along these roads. It makes sense to leverage this asset.

The idea — called the National System of Resilient Infrastructure (or NSRI) — was developed by Ted G. Lewis, at the Naval Postgraduate School.  Here are the details of this $1,000,000,000,000 idea:

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Proposed

Electric power, energy for transportation, and telecommunications capacity are three major economic drivers for the future economy of the USA.  But these sectors are in trouble, for a variety of reasons, including NIMBY (not in my back yard), lack of investment, and lack of vision.

To overcome these barriers, stimulate the economy, and develop a resilient infrastructure for the 21^st century, the author proposes a “moon shot” scale effort to build a national system of resilient natural gas, electricity, and telecommunications infrastructure along the 40,000 miles of Interstate Highway.

This 20-year, $1 trillion project would be implemented by a public-private partnership structured much like a GSE (government-sponsored enterprise), and mainly funded by the private sector. Besides creating millions of jobs, enhancing our ability to transition to clean cars, trucks, and buses, the national system would be immediately self-sustained by usage fees, and therefore profitable. It would not cost the government any money, and would have an immense impact on the economy.

Infrastructure Equals Prosperity

The Dwight D. Eisenhower National System of Interstate and Defense Highways, commonly called the Interstate Highway System (or simply the Interstate) is the largest highway system and largest public works project in the world. More importantly, it propelled the United States into a new era of prosperity. Today, virtually all goods and services are distributed via the Interstate, which is still expanding.

In the 1990s the 25-year old Internet was commercialized, stimulating economic growth so much that it produced a bubble in 2000. Yet, the federal government’s $200 million investment has already returned 100-fold on investment, after less than 20 years of growth. The future of the global economy increasingly depends on the Internet.

It is clear that relatively modest investments in infrastructure reap exponentially large returns due to economic growth, job creation, and innovation. Since ancient Rome, no nation on earth has achieved or maintained greatness, security, and prosperity, without plentiful energy, robust communications, and transportation capacity.

The economy of the 21^st century will run on electrical power and Internet packets. Without these, the USA will slip into fourth or fifth place among nations.

The Challenge

The United States faces an “infrastructure challenge” and an equally big opportunity, today. The challenge is to rejuvenate our failing basic infrastructures: water, power, telecommunications, and energy.

Progress in green energy generation is stalled because of inadequate transmission capacity. Telecommunications capacity must be greatly increased to accommodate global 3D virtual reality, multi-party conferencing, and high-performance research and development in medical, environmental, and technical industries. Think of the possibilities of telemedicine piped directly into your home, or corporate meetings conducted with 100,000 participants from around the globe.

Advances in material science, bioengineering, medicine, green energy, revolutionary telecommunications, and green transportation will present great opportunity over the next 20 years to those nations prepared to capitalize on them.

These are the economic drivers of the future, but they require advanced infrastructure.

We know how to turn sunlight into electrons, but lack the distribution channel to transport electrons produced in New Mexico to markets in New York. We know how to telecommute via our computers, but lack the bandwidth for two-way, 3D telecommunication between grandmother and granddaughter across the continent. We know how to automate transportation systems to reduce auto accidents and congestion, but our highways are “dumb.”  In the next 20 years, cars will run on electricity and natural gas, but we lack the infrastructure to refuel them while achieving energy independence.

Venture capital is pent up, waiting for government to stimulate a “green economy,” but we do not currently have the market distribution infrastructure to make it possible.

We need a National System of Resilient Infrastructure (NSRI) to take advantage of opportunities that will create jobs and keep America economically strong.

The Solution

The National System of Resilient Infrastructure plan (NSRI) is designed to address two roadblocks in the way of the next stage of economic growth: NIMBY, and the enormous cost of rebuilding the power and telecommunications infrastructure of the 21^st century.

NIMBY (Not-In-My-Backyard) is currently blocking many projects because people do not want power lines in their backyards. In addition, infrastructure is enormously expensive and unattractive as an investment because it does not give companies a competitive advantage. For example, the current 1 trillion dollar electrical power grid is fragile due to a lack of transmission capacity. It is also based on 1940’s technology. But who can afford to invest 1 trillion dollars to rebuild it?

NSRI proposes to avoid NIMBY by placing critical infrastructure underground. NIMBY can be avoided by building underground electric power transmission lines, natural gas pipelines, and telecommunication/CATV/Internet communication lines on rights-of-way already established by the Interstate Highway System. States already own these rights-of-way, and the Interstate Highway System reaches nearly every part of the nation. It therefore makes sense to leverage this asset even more so.

Energy, Power, and Communications infrastructure also requires storage nodes (for surge resilience), “service stations” (for distribution), and several network operation centers. The NSRI will be resilient because of its storage, security, and distributed architecture [decentralized assets].

Robust and redundant, able to transmit commodities such as Internet packets, electrons from solar farms, natural gas for future cars, trucks, and buses, and bountiful electrical power for future cyber businesses, the NSRI will be a quantum step forward for the nation and the economy.

NSRI is America’s 21^st century “moon shot.”

How to Pay for It

The NSRI network would be constructed much like the Interstate Highway network, over a 20-30-year period at an estimated cost of $50 billion per year.

The author estimates it would cost $25 million/mile to build the necessary tunnels, pipes, wires, etc. The Interstate is 40,000 miles long, hence a total estimated cost of $1 trillion over 20 years.

This may seem high, but it represents 3.6% of the combined revenues of the natural gas, electrical power, telecommunications, gasoline, and broadcast industries, see Table I.

The Interstate Highway System is “pay-as-you-go”, with 90% of the funding coming from the Federal government, and the remaining 10% from the States. In its first year of construction, 1958, total costs were $37.6 billion. By 1991, the cost was $128 billion. But these billions contributed nothing to the national debt because they were paid for by a 40 cent per gallon tax on gasoline. Title II of the Highway Revenue Act of 1956 created the Highway Trust Fund to collect and dispense funding for the Interstate System.

Similarly, the NSRI would be financed through a Trust Fund established by Congress to create and operate NSRI. The NSRI financing plan needs to be worked out in detail, but two attractive options are: Option I: GSE (Government Sponsored Enterprise), and Option II: excise taxation, similar to the model used by the Highway Revenue Act of 1956.

Ultimately, the NSRI must be self-sustaining, through revenues generated by its use. A toll fee would be charged for use of the pipelines, communication lines, storage facilities, and service stations. These fees can be based on current regulated fees charged by telephone, utility, and pipeline companies - a familiar fee structure for these industries.

Option I: GSE: Ginny Mae, Sallie Mae, Fannie Mae and Freddie Mac are GSEs, i. e., government-backed enterprises listed on stock exchanges, and therefore, investor supported. The idea here is to raise the major portion of funding from investment banks, retirement funds, and personal investors through an IPO [initial public offering]. Like a GSE, the NSRI Trust Fund would be backed by the Federal government, and at some point reach a self-sustainable level through usage fees. This model, however, would probably require temporary taxation to raise the full $50 billion needed to initiate NSRI.

Option II: Excise Taxes: The Interstate Highway System was funded by a $0.40/gallon tax on gasoline (part Federal and part State). This tax can be rolled back as expenses are replaced with usage fees. Consider this: a 3.6% excise tax on revenues shown in Table I would raise $50 billion per year. Alternatively, an additional $0.40/gallon excise tax would raise $56 billion per year.

Both options are no-cost options for the Federal Government. Both options follow the Interstate Highway model whereby States own the infrastructure. Unlike the Interstate Highway model, however, the NSRI can easily achieve sustainability through an industry-accepted fee structure.

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Dr. Lewis can be reached at tlewis[at]nps.edu