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One of the most significant provisions of the November 2002 Homeland Security Act may be a somewhat obscure section known as the Support Anti-terrorism by Fostering Effective Technologies (SAFETY) Act. The SAFETY Act is intended to create incentives for the development of anti-terrorist technology by limiting the risk of financial liability for suppliers of anti-terrorism technologies in the event they are sued for damages after a terrorist attack. That means that if biometric identification devices or bomb detectors fail to stop a terrorist attack, or if a gas mask fails to protect people after one, the manufacturers will be immune from suit if their products are properly qualified. ONLY IN FEDERAL COURT The SAFETY Act’s approach to litigation management begins with the creation of an exclusive federal cause of action for claims “arising out of, relating to, or resulting from an act of terrorism when qualified anti-terrorism technologies have been deployed in defense against or response or recovery from such act.” Based upon this language, the key issue for a seller of anti-terrorism technology will be whether the technology in question is a “qualified anti-terrorism technology.” The act addresses this issue by requiring the secretary of homeland security to designate “Qualified Anti-Terrorism Technologies” for inclusion on a list administered by the Department of Homeland Security. In the event that a particular anti-terrorism technology is included on the list, a contractor would be entitled to assert the “government contractor defense” in any lawsuit alleging that the failure of the technology was in some way responsible for damages caused by a terrorist attack. The act contains a list of seven nonexclusive criteria that the secretary should consider in determining whether a particular technology should be designated a qualified anti-terrorism technology. These criteria include (1) prior use by the U.S. government or demonstrated substantial utility and effectiveness; (2) availability of the technology for immediate deployment; (3) the existence of extraordinarily large or unquantifiable potential liability risks for the seller of such technology; (4) substantial likelihood that the technology will not be deployed absent the protections of the act; (5) the magnitude of risk to the public if the technology is not deployed; (6) evaluation of scientific studies assessing the capability of the technology; and (7) the effectiveness of the technology in preventing or defeating acts of terrorism or enabling effective response to such acts. In addition to these general criteria, the act directs the secretary to conduct a “comprehensive review of the design of such technology and determine whether it will perform as intended, conforms to the Seller’s specifications, and is safe for use as intended.” Technologies accepted by the secretary pursuant to this process will be placed on an “Approved Product List for Homeland Security.” The act affords the secretary considerable discretion in assessing whether a particular technology should be “qualified” as an anti-terrorism technology, and authorizes the secretary to issue regulations elaborating on the process to be used in determining whether a particular technology should be placed on the list. As noted above, once a seller’s anti-terrorism technology has been qualified and placed on the list, the seller is entitled to invoke the “government contractor defense” in response to any lawsuit covered by the act. Although the act does not provide any definition of the “government contractor defense,” the legislative history indicates that this provision is based upon the Supreme Court’s 1988 decision in Boyle v. United Technologies Inc. In Boyle,the Court held that under certain circumstances, government contractors may enjoy qualified immunity from state tort law claims alleging design defects in products provided to the Department of Defense pursuant to a government contract. Under Boyleand subsequent decisions, contractors seeking to invoke this immunity must generally establish that (1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States. Once these three criteria have been met, government contractors have been able to avoid liability in most cases involving design defect claims. BROAD CONTRACTOR IMMUNITY The immunity conferred by the act appears to have a far broader reach than the traditional “government contractor defense” set forth in Boyle. Historically, that defense immunized contractors against design defect claims only in instances where the contractor could establish facts satisfying the three-prong Boyletest described above. The act, however, shifts the responsibility for determining whether these criteria are satisfied from the courts to the secretary of homeland security. Once the secretary determines, based upon an evaluation of the criteria set forth in the act, that a seller’s product or service should be placed on the list, the act creates a “rebuttable presumption” that the government contractor defense applies in any future lawsuits covered by the act. The act also states that the only way a plaintiff can overcome this presumption is by presenting evidence “showing that the Seller acted fraudulently or with willful misconduct in submitting information to the Secretary during the course of the Secretary’s consideration [of whether to place the Seller's technology on the list].” The act thus offers broad protection to sellers whose anti-terrorism technology is included on the list. And unlike the traditional government contractor defense, it extends this protection to cases involving non-government commercial purchasers. Furthermore, the act’s definition of “qualified anti-terrorism technology” includes not only products but also services. The express inclusion of services is significant because it further demonstrates how the act has legislatively broadened the scope of the government contractor defense formulated in Boyle. Perhaps most important, by creating a rebuttable presumption of immunity for all technologies included on the list, and by requiring evidence of fraud or willful misconduct to rebut the presumption, the act may provide protection against nearly all claims a plaintiff could file, including claims alleging manufacturing defects or negligent performance of services. Of course, potential plaintiffs could argue that a product not manufactured according to approved specifications, or a service performed by a defendant in a negligent manner, should not be considered to be the same “qualified anti-terrorism technology” identified on the list. The viability of such arguments will likely depend on the level of detail describing particular products and services on the list. The potentially sweeping scope of this immunity and the charge that it essentially constitutes under-the-table tort reform, has led critics to challenge the SAFETY Act. Also, Sen. Joseph Lieberman (D-Conn.) has recently introduced legislation seeking to repeal it. Yet the Homeland Security Act passed with overwhelming support, and it appears unlikely that critics can muster the votes necessary to repeal the SAFETY Act provisions in the near future. Given the potential availability of the broad protections conferred by the act, producers of anti-terrorism technologies will want to act quickly in applying to have their technologies included on the secretary’s list, once regulations detailing the qualification process have been published. The act indicates that sellers who wish to have a product or service qualified by the secretary must take an active role in assisting the secretary’s analysis, by conducting safety and hazard analyses on such technology and by supplying information related to these analyses to the secretary. To increase the chances of obtaining the secretary’s approval, sellers should think creatively in terms of generating realistic threat environments for purposes of testing their technologies, keeping in mind that a key feature of any anti-terrorism technology must be its ability to withstand tampering or sabotage. Sellers would also be well-advised to define with specificity the technology’s “intended use,” in order to ensure congruence between any applicable safety standards and the scope of protection the technology is anticipated to provide. There are also interesting issues regarding how the SAFETY Act interacts with other laws. For instance, Public Law No. 85-804 and its implementing regulations currently authorize selected agencies to indemnify contractors for damages related to their performance of certain government contracts. However, in implementing the SAFETY Act, President George W. Bush recently signed Executive Order No. 13,286 (68 Fed. Reg. 10,619, Mar. 5, 2003), which restricts the availability of P.L. No. 85-804 relief for any product or service that either is on the Department of Homeland Security’s Approved Product List, or could be on the list. Absent the availability of P.L. 85-804 indemnification, the protections afforded by the SAFETY Act will become even more important to contractors in the future. SAFETY AND FOIA Similarly, there is a significant interaction between the SAFETY Act and the Freedom of Information Act. Title II of the Homeland Security Act allows companies to submit “critical infrastructure information” to the government and exempts all such information from disclosure under FOIA. Given the SAFETY Act’s requirement that contractors submit to the government details regarding the technology’s design and functionality, concerns may arise as to whether the secretary should disclose such information when responding to potential future FOIA requests from third parties. Given the rebuttable presumption concerning the government contractor defense, sellers have an incentive to make broad disclosures of information related to their products and services. This is because, if a seller is later found to have committed fraud or willful misconduct in its dealings with the secretary, the seller will lose the immunity conferred under the act. On the other hand, sellers should be aware that once information concerning the qualification of a technology is provided to the secretary, competitors may seek to obtain such information by filing FOIA requests. Similarly, plaintiffs in future lawsuits may seek the same information by initiating third-party discovery against the Department of Homeland Security. To take advantage of existing FOIA exemptions concerning critical infrastructure information and proprietary business information, sellers seeking protection under the act should be careful to mark qualification-related data and proprietary information with appropriate restrictive legends. Protecting such information from plaintiffs in civil litigation may prove more difficult, however, because plaintiffs in suits covered by the act likely will argue that they need access to the secretary’s files in order to rebut the presumption in favor of the government contractor defense, by establishing that the seller improperly withheld information from the secretary during the qualification process. Equally significant is the fact that the extensive safety testing, and the resultant data generated from such tests, can potentially be used against sellers in future civil suits in situations where the seller’s product is not qualified for inclusion on the secretary’s list. The liability protections offered under the SAFETY Act should prove to be a valuable incentive for government contractors and other companies wishing to develop and market anti-terrorism technologies. Companies seeking to qualify for the act’s liability protections must focus on persuading the secretary to include their proposed technologies on the Department of Homeland Security’s Approved Product List. Anticipated regulations from the secretary of homeland security will likely have a significant impact on the practical implementation of the act’s provisions, and so companies seeking to take advantage of the act should carefully follow continuing developments in this area. James J. McCullough is a partner and Abram J. Pafford is an associate in the D.C. office of Fried, Frank, Harris, Shriver & Jacobson, where they practice in the litigation department. They can be reached at [email protected]and [email protected], respectively.

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