Infotech and the Law | Broad liability protection under Safety Act final rule

Jonathan Cain

More than two years after issuing its interim rules implementing liability protections for contractors under the Safety Act, the Homeland Security Department June 8 issued its final rule. The Safety Act created two tiers of liability protection for contractors that provide anti-terrorism products and services, and the final rule both clarified the procedures for getting the projection and expanded the scope of protection beyond that specifically provided in the act.

The final rule keeps the two levels of Safety Act liability protection: one for so-called qualified anti-terrorism technologies designated by DHS, and another in the form of presumption of availability of the government contractor defense for goods and services specifically approved by DHS.

The final rule makes these changes to the Safety Act:

»Provides that a technology includes services as well as equipment and software. Thus, maintenance contractors may be entitled to liability protection if they service equipment used for anti-terrorism purposes, or if they provide design, consulting, analysis or other professional services.

»Absolves anti-terrorism technology sellers from the responsibility of offering insurance coverage to third persons for acts of suppliers, vendors and subcontractors used to supply the technology. This expands the bargain struck in the Safety Act, which exchanged limitations on the seller's legal liability to the public for a requirement that the seller get liability insurance coverage.

»Lets a seller of a qualified anti-terrorism technology make changes to the product that modify its capabilities without approval by, or even notice to, DHS, and without loss of the liability projections provided by the Safety Act. Under the interim rule, a seller that made significant modifications to the technology that reduced its capabilities could lose its liability protection as of the time the change was made. Under the final rule, however, if the product modification is so significant that the product would no longer qualify for liability protection, and then the seller is required to give notice to DHS. The product retains the liability protections until DHS takes affirmative steps to terminate its qualification.

»Grants DHS the right to create so-called block designations and certifications for certain categories of anti-terrorism technologies. Sellers whose technologies fall within these will not have to demonstrate the their technology's technical merits. They will be entitled to receive the liability protections simply by submitting an abbreviated application showing that the technology is covered by the pre-approved block determination.

»Addresses DHS' policy on safeguarding proprietary information regarding applications for anti-terrorism designation and certification.

Under the Freedom of Information Act, Trade Secrets Act and other federal statutes, trade secrets and other proprietary information submitted to DHS by an applicant remain confidential. In the final rule, however, DHS has taken the position that all information submitted by an applicant, whether or not proprietary or a trade secret and including the applicant's identity, will be withheld from disclosure.

The breadth of the information that DHS may withhold is subject to debate, and DHS has staked out an aggressive position. Parties submitting applications for anti-terrorism technology designation or certification still should be careful because courts frequently have taken a more nuanced view of the proper balance between protecting commercially valuable information and the public's right to examine the decisions of its government agencies.

Jonathan Cain is a member of the law firm Mintz Levin Cohn Ferris Glovsky and Popeo PC in Reston, Va. The opinions expressed in this article are his. He can be reached by e-mail at jcain@mintz.com.

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