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U.S. Caps Firms’ Liability for Antiterror Products By Joe Fiorill WASHINGTON — The Bush administration acted Friday to protect the makers of a biological-agent detector and of three other products against potential lawsuits over product failure, marking the first concrete results of a 2002 law intended to increase the availability of such technology (see GSN, May 14). The U.S. Homeland Security Department announced it had approved the products for protection under the Support Antiterrorism by Fostering Effective Technologies (SAFETY) Act, which is meant to limit vendors’ legal liability in the event of a terrorist attack and, as a result, to lower prohibitive insurance costs. The law is part of the Homeland Security Act, in which Congress created the department. “We appreciate and encourage the innovative contributions of the private sector in providing new tools and new technologies that will help protect our homeland, and now it is time to let the marketplace work,” Homeland Security Undersecretary for Science and Technology Charles McQueary said in a statement. Included in the first set of approved products was Northrop Grumman’s Biohazard Detection System, which can detect traces of DNA from anthrax and other biological agents. The U.S. Postal Service has chosen the system for use at mail-sorting facilities around the country. Also approved were a Lockheed Martin computer platform that rapidly analyzes terrorism threat information, a water jet by Teledyne Technologies’ Brown Engineering division that can cut into explosive devices and a video system produced by Michael Stapleton Associates that allows remote screening of items for bombs and other hazardous materials. The approvals provide a window into Homeland Security priorities for defenses against terrorism. In the interim regulation governing implementation of the act, the department says its “approach … will be to prioritize and expedite SAFETY Act applications in order to ensure that the highest-risk vulnerabilities to the highest-consequence threats are addressed first.” Implementation of the act has generated controversy in recent months as application numbers have fallen short of expectations. Last month, three House of Representatives committee chairmen wrote the department to complain that an overly bureaucratic approval process was discouraging companies from seeking protections. Meanwhile, some agencies have indicated they plan to insist on SAFETY Act approval for their acquisitions, leading to concern that companies could drop out of the market altogether rather than investing in development of products they would then be all but required to submit to a process they view as opaque and uncertain. McKenna Long & Aldridge law firm partner Raymond Biagini, a liability-defense specialist who wrote a key portion of the act and who represents Brown Engineering and Michael Stapleton Associates, said the major reason for the paucity of applications is that companies are unsure whether the act will provide adequate protection. Vendors “want to know that it is in fact going to be robustly implemented by DHS,” Biagini said in an interview before the approvals were announced. Other reasons for lagging applications, Biagini said, are a lack of awareness about the act, particularly on the part of small companies, and an application process seen as “somewhat burdensome” and “requiring speculative information in some respects.” “It’s difficult for companies to say, ‘Well, I might be liable in this or that area,’” Biagini said. The department said Friday that it had received 19 full applications for SAFETY Act protection and 91 exploratory “preapplications.” It responded indirectly to concerns about numbers of applications, saying, “The application itself is currently undergoing revision as the department considers feedback from applicants, businesses and industry groups in order to make the process as user-friendly as possible.” The interim rule suggests the department initially was more concerned about an overabundance of new, potentially inferior products than a lag in applications. The rule indicates protections are needed because the post-9/11 “terrorism risk insurance market appears to be in disequilibrium,” but adds that new incentives for technology development could lower the average quality of the products. “The SAFETY Act removes a great deal of the risk and uncertainty associated with product liability and, in the process, creates a powerful incentive that will help fuel the development of critically needed antiterrorism technologies. Additionally, we expect the SAFETY Act to reduce the research and development costs of these technologies,” the department says in the rule. “The tradeoff, however,” it says, “may be that a greater number of technologies may be developed and qualify for this program that have a lower average effectiveness against terrorist attacks than technologies currently on the market or technologies that would be developed in the absence of this interim rulemaking.”
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