Regulations Implementing the Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (the SAFETY Act), 33147-33168 [06-5223]

Agencies

• Office of the Secretary
• DEPARTMENT OF HOMELAND SECURITY

[Federal Register Volume 71, Number 110 (Thursday, June 8, 2006)]
[Rules and Regulations]
[Pages 33147-33168]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-5223]



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Federal Register / Vol. 71, No. 110 / Thursday, June 8, 2006 / Rules 
and Regulations

[[Page 33147]]



DEPARTMENT OF HOMELAND SECURITY

Office of the Secretary

6 CFR Part 25

[USCG-2003-15425]
RIN 1601-AA15


Regulations Implementing the Support Anti-terrorism by Fostering 
Effective Technologies Act of 2002 (the SAFETY Act)

AGENCY: Office of the Secretary, Department of Homeland Security.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule implements Subtitle G of Title VIII of the 
Homeland Security Act of 2002--the Support Anti-terrorism by Fostering 
Effective Technologies Act of 2002 (``the SAFETY Act'' or ``the Act''), 
which provides critical incentives for the development and deployment 
of anti-terrorism technologies by providing liability protections for 
providers of ``qualified anti-terrorism technologies.'' The purpose of 
this rule is to facilitate and promote the development and deployment 
of anti-terrorism technologies that will save lives. The final rule 
amends the interim rule to incorporate changes resulting from the 
comments.

DATES: This final rule is effective July 10, 2006.

ADDRESSES: You may submit comments identified by Coast Guard docket 
number USCG-2003-15425 or RIN 1601-AA15, to the Docket Management 
Facility at the Department of Transportation, by one of the following 
methods:
    (1) Web Site: https://dms.dot.gov.
    (2) Mail: Docket Management Facility, U.S. Department of 
Transportation, 400 Seventh Street, SW., Washington, DC 20590-0001.
    (3) Fax: 202-493-2251.
    (4) Delivery: Room PL-401 on the Plaza level of the Nassif 
Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is 202-366-9329.
    (5) Federal eRulemaking portal: https://www.regulations.gov. 
Instructions: Comments and materials received from the public, as well 
as documents mentioned in this preamble as being available in the 
docket, are part of docket USCG-2003-15425 and are available for 
inspection or copying from the Docket Management Facility, U.S. 
Department of Transportation, room PL-401, 400 Seventh Street, SW., 
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday except 
Federal holidays. You may also find this docket on the Internet at 
https://dms.dot.gov. You may also access the Federal eRulemaking Portal 
at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: If you have questions on this final 
rule, contact the Director of the Office of SAFETY Act Implementation, 
Science and Technology, Department of Homeland Security, telephone 703-
575-4511. If you have questions on viewing or submitting material to 
the docket, call Dorothy Beard, Chief, Dockets, Department of 
Transportation, telephone 202-366-5149.

SUPPLEMENTARY INFORMATION: Capitalized terms appearing in this preamble 
shall have the meanings ascribed to such terms in Sec.  25.2 of this 
final rule. This section is organized as follows:

Table of Contents

I. Analysis of the SAFETY Act
    A. Background
    B. Statutory and Regulatory History and Analysis
    C. Government Contractor Defense
    D. Exclusive Federal Jurisdiction and Scope of Insurance 
Coverage
    E. Relationship of the SAFETY Act to Indemnification Under 
Public Law 85-804
II. Discussion of Changes and Comments
    A. Confidentiality of Information
    B. Application Preparation Burden
    C. Certifying ``accuracy and completeness''
    D. Conditions on Designations
    E. Significant Modification to a Qualified Anti-
TerrorismTechnology
    F. Exclusive Responsibility for Government Contractor Defense, 
Definitions of Fraud and Willful Misconduct
    G. Definition of an ``Act of Terrorism''
    H. Retroactive Designation
    I. Bias Toward Product-Based Anti-Terrorism Technologies
    J. Scope of Insurance Coverage
    K. Interactions With Public Law 85-804
    L. Prioritization of Evaluations
    M. Standards
    N. Expiration of Designations
    O. Appeal/Review of Decisions Regarding SAFETY Act Applications
    P. Coordination With Government Procurements
    Q. Pre-Application Consultations
    R. Developmental Test & Evaluation Designations
    S. Seller's Continuing Obligations With Respect to Maintaining 
Insurance
    T. Block Designations and Block Certifications
    U. Reciprocal Waivers
    V. Deference Due to Other Federal or State Regulatory or 
Procurement Officials
III. Regulatory Requirements
    A. Executive Order 12866
    B. Regulatory Flexibility Act
    C. Unfunded Mandates Reform Act of 1995
    D. Executive Order 13132--Federalism
    E. Paperwork Reduction Act

I. Analysis of the SAFETY Act

A. Background

    Congress was clear, both in the text of the SAFETY Act and in the 
Act's legislative history, that the SAFETY Act can and should be a 
critical tool in expanding the creation, proliferation and use of anti-
terrorism technologies. On July 11, 2003, the Department of Homeland 
Security (``DHS'') published its first proposed rules for 
implementation of the SAFETY Act (Notice of Proposed Rulemaking 
entitled ``Regulations Implementing the Support Anti-terrorism by 
Fostering Effective Technologies Act of 2002 (the SAFETY Act)'' (68 FR 
41420), laying out its fundamental interpretive approach to the Act and 
requesting comment. On October 16, 2003, an interim rule governing 
implementation of the SAFETY Act was promulgated making certain changes 
to the proposed rules but again embracing many of the fundamental 
interpretive approaches proposed several months earlier (68 FR 59684). 
Subsequently, the Department published detailed procedural mechanisms 
for implementation of the Act and announced additional details relating 
to the process for filing and adjudicating applications.

[[Page 33148]]

    The SAFETY Act program is now in its third year, and the Department 
has a substantial record of program performance to evaluate. While the 
Department concludes that the Department's core legal interpretations 
of the Act's provisions are fundamentally sound, experience in 
administering the program has demonstrated that certain of the 
procedural processes built to administer the Act can be improved. 
Shortly after being sworn in, Secretary of Homeland Security Michael 
Chertoff stated: ``There is more opportunity, much more opportunity, to 
take advantage of this important law, and we are going to do that.'' In 
the past year, the Department has instituted process improvements which 
have yielded positive initial results. In the first sixteen months of 
the SAFETY Act program, from October 2003 to February 2005, six 
technologies were designated Qualified Anti-Terrorism Technologies 
under the SAFETY Act. By contrast, since March 2005, 68 additional 
technologies have received SAFETY Act protections. This is a greater 
than ten-fold increase in SAFETY Act approvals in the past 14 months. 
In addition, the Department has instituted a program to run SAFETY Act 
reviews in parallel with key anti-terrorism procurement processes.
    Despite these recent improvements, further changes to Department 
rules and processes are necessary to ensure that the program achieves 
the results that Congress intended. With this final rule, the 
Department:
    1. Further clarifies the liability protections available under the 
SAFETY Act;
    2. States with greater specificity those products and services that 
are eligible for Designation as a Qualified Anti-Terrorism Technology;
    3. Clarifies the Department's efforts to protect the confidential 
information, intellectual property, and trade secrets of SAFETY Act 
applicants;
    4. Articulates the Department's intention to extend SAFETY Act 
liability protections to well-defined categories of anti-terrorism 
technologies by issuing ``Block Designations'' and ``Block 
Certifications;''
    5. Discusses appropriate coordination of SAFETY Act consideration 
of anti-terrorism technologies with government procurement processes; 
and
    6. Takes other actions necessary to streamline processes, add 
flexibility for applicants, and clarify protections afforded by the 
SAFETY Act.
    While this rule is indeed final, the Department remains committed 
to making future changes to the implementing regulation or to any 
element of the program that interferes with the purposes of the SAFETY 
Act. To that end, the Department seeks further comment on the specific 
issues identified herein.
    Section I of this preamble reviews the Department's longstanding 
legal interpretation of the SAFETY Act's provisions and reviews the 
Act's statutory and regulatory history. Section II addresses regulatory 
changes and outlines additional improvements in SAFETY Act processes 
and procedures that the Department will implement in the coming months 
that will improve administration of the Act. Section III addresses this 
rule's compliance with other regulatory requirements.

B. Statutory and Regulatory History and Analysis

    As part of the Homeland Security Act of 2002, Public Law 107-296, 
Congress enacted liability protections for providers of certain anti-
terrorism technologies. The SAFETY Act provides incentives for the 
development and deployment of anti-terrorism technologies by creating a 
system of ``risk management'' and a system of ``litigation 
management.'' The purpose of the Act is to ensure that the threat of 
liability does not deter potential manufacturers or sellers of anti-
terrorism technologies from developing, deploying, and commercializing 
technologies that could save lives. The Act thus creates certain 
liability limitations for ``claims arising out of, relating to, or 
resulting from an act of terrorism'' where Qualified Anti-Terrorism 
Technologies (as such term is defined in 6 CFR 25.2) have been 
deployed.
    Together, the risk and litigation management provisions provide the 
following protections:
     Exclusive jurisdiction in Federal court for suits against 
the sellers of ``Qualified Anti-Terrorism Technologies'' (Sec.  
863(a)(2));
     A limitation on the liability of sellers of Qualified 
Anti-Terrorism Technologies to an amount of liability insurance 
coverage specified for each Qualified Anti-Terrorism Technology, 
provided that sellers cannot be required to obtain any more liability 
insurance coverage than is reasonably available ``at prices and terms 
that will not unreasonably distort the sales price'' of the technology 
(Sec.  864(a)(2));
     A prohibition on joint and several liability such that 
sellers can only be liable for the percentage of noneconomic damages 
that is proportionate to their responsibility (Sec.  863(b)(2));
     A complete bar on punitive damages and prejudgment 
interest (Sec.  863(b)(1));
     The reduction of a plaintiff's recovery by the amount of 
collateral source compensation, such as insurance benefits or 
government benefits, such plaintiff receives or is eligible to receive 
(Sec.  863(c)); and
     A rebuttable presumption that sellers are entitled to the 
``government contractor defense'' (Sec.  863(d)).
    The Secretary's designation of a technology as a Qualified Anti-
Terrorism Technology (QATT) confers each of the liability protections 
identified above except the rebuttable presumption in favor of the 
government contractor defense. The presumption in favor of the 
government contractor defense requires an additional ``Certification'' 
by the Secretary under section 863(d) of the Act. In many cases, 
however, SAFETY Act Designation and Certification are conferred 
contemporaneously.
    As noted above, the Designation of a technology as a Qualified 
Anti-Terrorism Technology confers all of the liability protections 
provided in the SAFETY Act, except for the presumption in favor of the 
government contractor defense. The Act gives the Secretary broad 
discretion in determining whether to designate a particular technology 
as a Qualified Anti-Terrorism Technology, although the Act sets forth 
the following criteria for consideration of a particular technology: 
(1) Prior United States Government use or demonstrated substantial 
utility and effectiveness; (2) availability of the technology for 
immediate deployment; (3) the potential liability of the Seller; (4) 
the likelihood that the technology will not be deployed unless the 
SAFETY Act protections are conferred; (5) the risk to the public if the 
technology is not deployed; (6) evaluation of scientific studies; and 
(7) the effectiveness of the technology in defending against acts of 
terrorism. It is not required that applicants satisfy all of the 
preceding criteria to receive SAFETY Act protections. Moreover, these 
criteria are not exclusive--the Secretary may consider other factors 
that he deems appropriate. The Secretary has discretion to give greater 
weight to some factors over others, and the relative weighting of the 
various criteria may vary depending upon the particular technology at 
issue and the threats that the particular technology is designed to 
address. The Secretary may, in his discretion, determine that failure 
to meet a particular criterion justifies denial of an application under 
the SAFETY Act. However, the Secretary is

[[Page 33149]]

not required to reject an application that fails to meet one or more of 
the criteria. Rather, the Secretary may conclude, after considering all 
of the relevant criteria and any other relevant factors, that a 
particular technology merits Designation as a Qualified Anti-Terrorism 
Technology even if one or more particular criteria are not satisfied. 
The Secretary's considerations will also vary with the constantly 
evolving threats and conditions that give rise to the need for the 
technologies.
    The SAFETY Act applies to a broad range of technologies, including 
products, services, and software, or combinations thereof, as long as 
the Secretary, as an exercise of discretion and judgment, determines 
that a technology merits Designation. The Secretary may designate a 
system containing many component technologies (including products and 
services) or may designate specific component technologies 
individually. Further, as the statutory criteria suggest, a Qualified 
Anti-Terrorism Technology need not be newly developed--it may have 
already been employed (e.g. ``prior United States government use''') or 
may be a new application of an existing technology.
    The SAFETY Act provides that, before designating a Qualified Anti-
Terrorism Technology, the Secretary will examine the amount of 
liability insurance the Seller of the technology proposes to maintain 
for coverage of the anti-terrorism technology at issue. Under section 
864(a), the Secretary must certify that the coverage level is 
appropriate ``to satisfy otherwise compensable third-party claims 
arising out of, relating to, or resulting from an act of terrorism when 
qualified anti-terrorism technologies have been deployed.'' Sec.  
864(a)(1). While the Act provides the Secretary with significant 
discretion in this regard, the Secretary may not require the Seller to 
obtain liability insurance of more than the maximum amount of liability 
insurance reasonably available from private sources on the world 
market. Likewise, the Secretary may not require a Seller to obtain 
insurance, the cost of which would unreasonably distort the sales price 
of Seller's anti-terrorism technologies. Sec.  864(a)(2). Although the 
Secretary may permit the Seller to self-insure, he may not require the 
Seller to self-insure if appropriate insurance is unavailable. Sec.  
864(a)(2).
    The Secretary does not intend to set a ``one-size-fits-all'' 
numerical requirement regarding required insurance coverage for all 
technologies that have been designated as QATTs. Instead, as the Act 
suggests, the inquiry will be specific to each application and may 
involve an examination of several factors, including without limitation 
the following: (i) The amount of insurance the Seller has previously 
maintained; (ii) the amount of insurance maintained by the Seller for 
other related technologies or for the Seller's business as a whole; 
(iii) the amount of insurance typically maintained by Sellers of 
comparable technologies; (iv) data and history regarding mass casualty 
losses; and (v) the particular technology at issue. Once the Secretary 
concludes the analysis regarding the appropriate level of insurance 
coverage (which typically will include discussions with the Seller), 
the Secretary will provide a description of the coverage appropriate 
for the particular Seller of a Qualified Anti-Terrorism Technology to 
maintain. The Seller's insurance certification may identify an 
appropriate amount of insurance coverage available under a 
comprehensive general liability policy or other liability insurance 
program. The insurance certification also may specify that the amount 
of insurance required to be maintained will be the amount of coverage 
available under the terms of the specific policy at issue. If, during 
the term of the Designation, the Seller desires to request 
reconsideration of that insurance certification due to changed 
circumstances or for other reasons, the Seller may do so and the 
Secretary is authorized to use the discretion described above to adjust 
insurance requirements appropriately. If the Seller fails to maintain 
coverage at the certified level, the liability protections of the Act 
will continue to apply, but the Seller's liability limit will remain at 
the certified insurance level. The Department recognizes that the 
market for insurance might change over time and seeks further comment 
on how the Department can and should address changes in insurance 
availability.

C. Government Contractor Defense

    The SAFETY Act creates a rebuttable presumption that the government 
contractor defense applies to those Qualified Anti-Terrorism 
Technologies ``approved by the Secretary'' in accordance with certain 
criteria specified in Sec.  863(d)(2). The government contractor 
defense is an affirmative defense that immunizes Sellers from liability 
for certain claims brought under Sec.  863(a) of the Act. See Sec.  
863(d)(1). The presumption of this defense applies to all ``approved'' 
Qualified Anti-Terrorism Technologies for claims brought in a ``product 
liability or other lawsuit'' and ``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 and such claims result or may result in loss to 
the Seller.'' Id. While the government contractor defense is a 
judicially-created doctrine, section 863's express terms supplant the 
requirements in the case law for the application of the defense. First, 
and most obviously, the Act expressly provides that the government 
contractor defense is available not only to government contractors, but 
also to those who sell to State and local governments or the private 
sector. See Sec.  863(d)(1) (``This presumption of the government 
contractor defense shall apply regardless of whether the claim against 
the Seller arises from a sale of the product to Federal Government or 
non-Federal Government customers.'') Second, Sellers of Qualified Anti-
Terrorism Technologies need not design their technologies to federal 
government specifications in order to obtain the government contractor 
defense under the SAFETY Act. Instead, the Act sets forth criteria for 
the Department's Certification of technologies. Specifically, the Act 
provides that before issuing a Certification for a technology, the 
Secretary will 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.'' 
Sec.  863(d)(2). The Act also provides that the Seller will ``conduct 
safety and hazard analyses'' and supply such information to the 
Secretary. Id. This express statutory framework thus governs in lieu of 
the requirements developed in case law for the application of the 
government contractor defense. Third, the Act expressly states the 
limited circumstances in which the applicability of the defense can be 
rebutted. The Act provides expressly that the presumption can be 
overcome only by 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 such technology. 
See Sec.  863(d)(1) (``This presumption shall only be overcome by 
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 such technology under this 
subsection.'')
    The applicability of the government contractor defense to 
particular technologies is thus governed by these express provisions of 
the Act, rather than by the judicially-developed criteria

[[Page 33150]]

for applicability of the government contractor defense outside the 
context of the SAFETY Act. While the Act does not expressly delineate 
the scope of the defense (i.e., the types of claims that the defense 
bars), the Act and the legislative history make clear that the scope is 
broad. For example, it is clear that any Seller of an ``approved'' 
technology cannot be held liable under the Act for design defects or 
failure to warn claims, unless the presumption of the defense is 
rebutted by evidence that the Seller acted fraudulently or with willful 
misconduct in submitting information to the Secretary during the course 
of the Secretary's consideration of such technology. In Boyle v. United 
Technologies Corp., and its progeny, the Supreme Court has ruled that 
the government contractor defense bars a broad range of claims. For 
example, the Supreme Court in Boyle concluded that ``state law which 
holds Government contractors liable for design defects'' can present a 
significant conflict with Federal policy (including the discretionary 
function exception to the Federal Tort Claims Act) and therefore ``must 
be displaced.'' Boyle v. United Technologies Corp., 487 U.S. 500, 512 
(1988). The Department believes with the SAFETY Act that Congress 
incorporated government contractor defense protections outlined in the 
Supreme Court's Boyle line of cases as it existed on the date of 
enactment of the SAFETY Act, rather than incorporating future 
developments of the government contractor defense in the courts. 
Indeed, it is difficult to imagine that Congress would have intended a 
statute designed to provide certainty and protection to Sellers of 
anti-terrorism technologies to be subject to future developments of a 
judicially-created doctrine. In fact, there is evidence that Congress 
rejected such a construction. See, e.g., 148 Cong. Rec. E2080 (November 
13, 2001) (statement of Rep. Armey) (``[Companies] will have a 
government contractor defense as is commonplace in existing law.'') 
(emphasis added).
    Procedurally, the presumption of applicability of the government 
contractor defense is conferred by the Secretary's Certification of a 
Qualified Anti-Terrorism Technology specifically for the purposes of 
the government contractor defense. This Certification is an act 
separate from the Secretary's issuance of a Designation for a Qualified 
Anti-Terrorism Technology and confers additional benefits to Sellers. 
Importantly, Sellers may submit applications for both Designation as a 
Qualified Anti-Terrorism Technology and Certification for purposes of 
the government contractor defense at the same time, and the Secretary 
may review and act upon both applications contemporaneously. The 
distinction between the Secretary's two actions is important, however, 
because the approval process for the government contractor defense 
includes a level of review that is not required for the Designation as 
a Qualified Anti-Terrorism Technology. In appropriate cases, Sellers 
may obtain the protections that come with Designation as a Qualified 
Anti-Terrorism Technology even if they have not satisfied the 
additional requirements for the government contractor defense.
    In an effort to provide greater clarity, the Department intends to 
publish guidance regarding its interpretation of the government 
contractor defense and the Supreme Court's Boyle line of cases as it 
existed on the date of enactment of the SAFETY Act.

D. Exclusive Federal Jurisdiction and Scope of Insurance Coverage

    The Act creates an exclusive Federal cause of action ``for any 
claim for loss of property, personal injury, or death 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 and such claims result or may result 
in loss to the Seller.'' Sec.  863(a)(2); See also Sec.  863(a)(1). 
This exclusive ``Federal cause of action shall be brought only for 
claims for injuries that are proximately caused by sellers that provide 
qualified anti-terrorism technology.'' Sec.  863(a)(1). The best 
reading of Sec.  863(a), and the reading the Department has adopted, is 
that
    (1) Only one cause of action exists for loss of property, personal 
injury, or death for performance or non-performance of the Seller's 
Qualified Anti-Terrorism Technology in relation to an Act of Terrorism,
    (2) Such cause of action may be brought only against the Seller of 
the Qualified Anti-Terrorism Technology and may not be brought against 
the buyers, the buyers' contractors, downstream users of the Qualified 
Anti-Terrorism Technology, the Seller's suppliers or contractors, or 
any other person or entity, and
    (3) Such cause of action must be brought in Federal court. The 
exclusive Federal nature of this cause of action is evidenced in large 
part by the exclusive jurisdiction provision in Sec.  863(a)(2). That 
subsection states: ``Such appropriate district court of the United 
States shall have original and exclusive jurisdiction over all actions 
for any claim for loss of property, personal injury, or death 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 and such claims result or 
may result in loss to the Seller.'' Id. Any presumption of concurrent 
causes of action (between state and Federal law) is overcome by two 
basic points. First, Congress would not have created in this Act a 
Federal cause of action to complement State law causes of action. Not 
only is the substantive law for decision in the Federal action derived 
from State law (and thus would be surplusage), but in creating the Act 
Congress plainly intended to limit rather than increase the liability 
exposure of Sellers. Second, the granting of exclusive jurisdiction to 
the Federal district courts provides further evidence that Congress 
wanted an exclusive Federal cause of action. Indeed, a Federal district 
court (in the absence of diversity) does not have jurisdiction over 
State law claims, and the statute makes no mention of diversity claims 
anywhere in the Act.
    Further, it is clear that the Seller is the only appropriate 
defendant in this exclusive Federal cause of action. First and 
foremost, the Act unequivocally states that a ``cause of action shall 
be brought only for claims for injuries that are proximately caused by 
sellers that provide qualified anti-terrorism technology.'' Sec.  
863(a)(1). Second, if the Seller of the Qualified Anti-Terrorism 
Technology at issue were not the only defendant, would-be plaintiffs 
could, in an effort to circumvent the statute, bring claims (arising 
out of or relating to the performance or non-performance of the 
Seller's Qualified Anti-Terrorism Technology) against arguably less 
culpable persons or entities, including but not limited to contractors, 
subcontractors, suppliers, vendors, and customers of the Seller of the 
technology. Because the claims in the cause of action would be 
predicated on the performance or non-performance of the Seller's 
Qualified Anti-Terrorism Technology, those persons or entities, in 
turn, would file a third-party action against the Seller. In such 
situations, the claims against non-Sellers thus ``may result in loss to 
the Seller'' under Sec.  863(a)(2). The Department believes Congress 
did not intend through the Act to increase rather than decrease the 
amount of litigation arising out of or related to the deployment of 
Qualified Anti-Terrorism Technology. Rather, Congress balanced the need 
to provide recovery to plaintiffs against the need to

[[Page 33151]]

ensure adequate deployment of anti-terrorism technologies by creating a 
cause of action that provides a certain level of recovery against 
Sellers, while at the same time protecting others in the supply chain.

E. Relationship of the SAFETY Act to Indemnification Under Public Law 
85-804

    The Department recognizes that Congress intended that the SAFETY 
Act's liability protections would substantially reduce the need for the 
United States to provide indemnification under Public Law 85-804 to 
Sellers of anti-terrorism technologies. The liability protections of 
the SAFETY Act should, in many circumstances, make it unnecessary to 
provide indemnification to Sellers. The Department recognizes, however, 
that there are circumstances in which both SAFETY Act coverage and 
indemnification are warranted. See 148 Cong. Rec. E2080 (statement by 
Rep. Armey) (November 13, 2002) (stating that in some situations the 
SAFETY Act protections will ``complement other government risk-sharing 
measures that some contractors can use such as Pub. L. 85-804''). In 
recognition of this close relationship between the SAFETY Act and 
indemnification authority, in section 73 of Executive Order 13286 of 
February 28, 2003, the President amended the existing Executive Order 
on indemnification-Executive Order 10789 of November 14, 1958, as 
amended. The amendment granted the Department of Homeland Security 
authority to indemnify under Public Law 85-804. At the same time, it 
requires that all agencies--not just the Department of Homeland 
Security--follow certain procedures to ensure that the potential 
applicability of the SAFETY Act is considered before any 
indemnification is granted for an anti-terrorism technology. 
Specifically, the amendment provides that Federal agencies cannot 
provide indemnification ``with respect to any matter that has been, or 
could be, designated by the Secretary of Homeland Security as a 
qualified anti-terrorism technology'' unless the Secretary of Homeland 
Security has advised whether SAFETY Act coverage would be appropriate 
and the Director of the Office of Management and Budget has approved 
the exercise of indemnification authority. The amendment includes an 
exception for the Department of Defense where the Secretary of Defense 
has determined that indemnification is ``necessary for the timely and 
effective conduct of United States military or intelligence 
activities.''

II. Discussion of Changes and Comments

    The Department received 16 sets of comments to the interim rule 
during the comment period and has made substantive and stylistic 
changes in response to those comments. The Department considered all of 
the comments received and the Department's responses follow.

A. Confidentiality of Information

    Eight commenters expressed dissatisfaction with the Department's 
stated policy with regard to safeguarding proprietary information 
(including business confidential information) submitted as part of a 
SAFETY Act application. Some commenters desired the Department to 
declare that SAFETY Act application contents are ``voluntary 
submissions'' for purposes of determining whether the Critical 
Infrastructure Information Act applies. Commenters also noted that 
Exemption 4 of FOIA protects ``trade secrets or commercial or financial 
information from a person [that is] privileged or confidential.''
    The Department remains committed to the vigorous protection of 
applicants' submissions and confidential information. One applicant 
suggested that the Department ``adopt a general presumption of 
confidential treatment of all SAFETY Act applications, evaluations and 
studies of such applications, underlying decisional documentation, and 
application rejection notices.'' This has been the Department's 
intention, policy, and practice from the outset. DHS is committed to 
taking all appropriate steps to protect the proprietary information of 
applicants consistent with applicable FOIA exemptions and the Trade 
Secrets Act (18 U.S.C. 1905). As an example of this commitment, those 
engaged in evaluating applications are required to enter into 
appropriate nondisclosure agreements. In addition, prior to being 
granted access to any proprietary information associated with an 
application or its evaluation, each potential evaluator is examined for 
potential conflicts of interest. Finally, the Department's conflict of 
interest and confidentiality policies apply to everyone associated with 
SAFETY Act implementation.
    Underlying this commitment to protect an applicant's information 
are various Federal civil and criminal laws that potentially apply to 
unauthorized disclosure of SAFETY Act confidential materials, including 
the Trade Secrets Act and 18 U.S.C. Chapter 90 (Protection of Trade 
Secrets, especially section 1831--Economic Espionage, and section 
1832--Theft of Trade Secrets). These laws establish criminal penalties 
for disclosing proprietary data under various circumstances. There are 
also relevant state laws, including versions of the Uniform Trade 
Secrets Act adopted in the District of Columbia, the State of Maryland, 
the Commonwealth of Virginia, and 39 other states. In addition, 
sensitive homeland security information, including information 
regarding vulnerabilities of critical infrastructure can be entitled to 
certain statutory protections under sections 892(a)(1)(B), 892(b)(3), 
892(f) of the Homeland Security Act of 2002, Sensitive Security 
Information under 49 U.S.C. 40119, 49 CFR part 1520 and FOIA Exemption 
3 (among other FOIA exemptions).
    The Department also believes that all information that is submitted 
as part of an application, including the fact that a particular entity 
has submitted an application, is confidential commercial information 
under the tests established in National Parks & Conservation 
Association v. Morton, 498 F.2d 765 (D.C. Cir. 1974), and its progeny. 
In particular, much or all of this information qualifies as 
confidential under both the ``competitive harm'' prong of the test, and 
the ``third prong'' of government interest and program effectiveness.
    The Department will assert appropriate exemptions (including, as 
applicable, FOIA Exemptions 1 through 4) in declining to disclose under 
FOIA any information concerning the source of a SAFETY Act application 
or the contents of applications. This policy is now reflected in the 
rule at section 25.10 of this final rule. In addition, the Department 
will work with applicants to ensure that no proprietary information is 
published in connection with an announcement of a Block Designation 
(pursuant to Sec.  25.6(i) of this final rule), DHS's publication of 
the Approved Product List for Homeland Security (pursuant to Sec.  
25.8(k) of the final rule) or the voluntary publication by DHS of 
issued Designations. Moreover, the Government does not, at this time, 
intend to ``portion mark'' information contained in the application, or 
associated case file, to delineate between protected proprietary 
information (also referred to as ``SAFETY Act Confidential 
Information'') and other less sensitive data in the application. 
Instead the entirety of the application will be treated as confidential 
under appropriate law. It is the Department's

[[Page 33152]]

belief that requiring the reviewer to portion mark at the time of 
submission would greatly impact efficiency and applicants' confidence 
in the integrity of protections for proprietary information, and that 
such a practice does not reflect the requirements of applicable 
confidentiality protections.
    The Department has established internal security procedures for 
handling technical, business, and insurance information that is 
submitted in connection with a SAFETY Act application. Certain of the 
measures the Department has instituted to safeguard proprietary 
information are reflected in 6 CFR 25.10. All applications, whether 
paper or electronic, will be subject to stringent safeguards. In 
obtaining the input of subject matter experts and evaluators that 
analyze SAFETY Act applications, the Department will only seek input 
from individual experts or evaluators and will not consult any 
committee in the process of reviewing SAFETY Act applications. Finally, 
the Department recognizes that information submitted in SAFETY Act 
applications may constitute Protected Critical Infrastructure 
Information pursuant to sections 211-215 of the Homeland Security Act 
of 2002. The Department is in the process of revising its Protected 
Critical Infrastructure Information regulations and anticipates 
providing further information on this subject in the near future.

B. Application Preparation Burden

    Six commenters expressed concern that the amount and type of 
information required by the SAFETY Act Application Kit is extremely 
burdensome, if not prohibitively so, and that only large companies have 
the resources necessary to respond to each of the questions. Commenters 
also expressed the opinion that some of the information being 
requested-- particularly financial information--is not relevant to the 
evaluation of applications against the criteria of the Act.
    The Department recognizes that the SAFETY Act Application Kit 
utilized to date poses significant burdens for applicants. We are very 
sensitive to concerns about the application process and the difficulty 
of preparing and submitting a SAFETY Act application. The Department 
specifically solicited comments on the SAFETY Act Application Kit and 
application process set forth in the interim rule. In addition, the 
Department released for comment a revised SAFETY Act Application Kit in 
December 2004. Based on both the comments received concerning the 
SAFETY Act Application Kit as well as the experience of the Office of 
SAFETY Act Implementation (``OSAI'') with the applications filed to 
date, OSAI has published numerous Frequently Asked Questions on its Web 
site as well as undertaken a substantial revision of the SAFETY Act 
Application Kit. The Department plans to publish a revised SAFETY Act 
Application Kit, which will account for the changes contained in this 
final rule and which will state with greater specificity the 
information required to properly evaluate a SAFETY Act application. For 
example, the Department agrees that some of the financial information 
requested in the original SAFETY Act Application Kit is not essential 
to the evaluation of every application. The Department, therefore, will 
limit the amount of financial information requested as part of the 
initial submission and to supplement the information as needed 
throughout the evaluation process.
    The Department believes that the streamlining of the SAFETY Act 
Application Kit will result in further efficiencies and time 
reductions. We anticipate making a revised SAFETY Act Application Kit 
available as soon as practicable.

C. Certifying ``accuracy and completeness'

    Two commenters expressed the opinion that it is unreasonable to 
require applicants to certify the application as ``accurate and 
complete'' under penalty of perjury when some of the questions require 
the applicant to provide answers on a ``best guess'' basis. In 
particular, the answers to the questions related to threat estimates, 
potential casualties, and potential casualty reductions were cited as 
questions whose answers may be essentially unknowable.
    The Department agrees that it would be unreasonable to expect 
applicants to certify the accuracy of their speculative or predictive 
estimates of future events and risks. The language of the completeness 
certification is qualified, however, by the phrase ``to the best of my 
knowledge and belief.'' Since the applicant either knows or is able to 
obtain accurate factual information about the applicant's anti-
terrorism technology and business enterprise, the Department believes 
the application's completeness certification is appropriate as to 
factual information and the application will so state. Conversely, 
since estimates are by definition not factual information, the 
Department's position is that the completeness certification requires 
only that estimates be provided in good faith with a reasonable belief 
they are as accurate as possible at the time of submission. The 
Department will add this explanation as to estimates to the application 
form, and will consider all forms presented to date as incorporating 
this explanation.

D. Conditions on Designations

    Two commenters took exception to the inclusion of limitations on 
SAFETY Act Designations (as such term is defined in 6 CFR 25.2) or 
Certifications (as such term is defined in 6 CFR 25.2), suggesting that 
the liability protections presented by the SAFETY Act potentially could 
be bypassed through a claim that such limitations imposed by the 
Department as a condition of SAFETY Act Designation were not met.
    The Department is aware of this concern and understands that 
undependable or uncertain liability protections would not have the 
desired effect of fostering the deployment of anti-terrorism 
technologies. Further, the Department is aware of the difficulty of 
crafting language for limitations that is not subject to multiple 
interpretations. As a general matter, the Department does not intend to 
impose conditions on SAFETY Act Designations and Certifications. If a 
question arises regarding the functionality of a technology, generally 
the Department will address and resolve that question in the course of 
the application process.

E. Significant Modification to a Qualified Anti-Terrorism Technology

    Section 25.5(i) of the interim final rule has been the focus of 
significant attention, both by commenters and by members of Congress. 
That provision provided for automatic termination of SAFETY Act 
protection if a ``significant modification'' was made to a QATT, 
defined as a modification that could significantly reduce the 
technology's safety or effectiveness, unless the Seller notified the 
Under Secretary and received approval of the modification. Several 
commenters have argued that the rule improperly suggests that a SAFETY 
Act Designation or Certification could terminate without notice if a 
``significant modification'' is made to the QATT. Commenters have 
argued that, in hindsight, any routine, non-substantive or immaterial 
change in use, implementation, components, manufacturing process or 
other facet of a Technology might later be regarded as a ``significant 
modification.'' If such a change might be used later in litigation to 
invalidate SAFETY Act coverage retroactive to the time of the change, 
they argue, the value of a SAFETY Act Designation or Certification is 
minimal. The American Bar Association, Public

[[Page 33153]]

Contract Law Section commented, for instance, that: ``the regulations 
should be clear that the designation cannot be stripped away after the 
fact by a claimant alleging a significant change * * *'' ``Because the 
SAFETY Act covers all parties in the stream of commerce who rely on the 
designation and certification, it makes sense that their justifiable 
reliance not be undermined by retroactive effect back to the time of 
the change * * *'' Other commenters were even more direct: ``This 
requirement is misplaced in several respects and undermines the intent 
of the SAFETY Act to provide certainty and protection for those 
afforded coverage under the Act.'' ``[T]he language of this provision 
is so broad that some unanticipated future change in operation, 
maintenance or methodology by a downstream user of the technology, 
totally outside the control of the QATT Seller, might ultimately be 
construed to terminate the Seller's SAFETY Act coverage. This is 
particularly problematic for technologies involving technical 
services--almost every new application of these technologies will 
encounter unique circumstances and variations in operation, 
installation, implementation that, in retrospect, might be construed to 
be `significant.' '' Commenters indicated that section 25.5(i) was thus 
a ``grave concern,'' and that ``it is essential that this provision be 
altered.''
    The American Bar Association proposed regulatory language to 
address this issue, including the following: ``The termination of the 
Designation will apply prospectively and will only affect products or 
services deployed after the DHS notice of termination * * *'' In 
addition, commenters and certain members of Congress have raised 
concerns about the tension between the statutory provision in Sec.  
863(d) of the SAFETY Act and the text of the section 25.5(i) of the 
interim final rule. Section 863(d) of the SAFETY Act provides that a 
SAFETY Act Certification is entitled to a presumption that the 
Government Contractor Defense applies, and specifies that a 
Certification may only terminate for one reason:

    This presumption shall only be overcome by 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 such technology under this subsection. 
Sec.  863(d)(1)

Thus, the argument goes, because the statute specifies one and only one 
means to terminate a certification, the regulations cannot add a second 
route to termination through the ``significant modification'' 
provision.
    The Department has carefully considered all of these comments and 
the legal arguments above. Section 25.5(i) of the interim final rule 
was intended to serve an important purpose--to provide the Department 
with knowledge of and the ability to address significant modifications 
that diminish the capability of a QATT. While the Department needs to 
preserve the intended function of this provision of the interim final 
rule, it agrees that changes to the provision are necessary to address 
the legal and policy concerns raised above.
    The final rule eliminates language from section 25.5(i) of the 
interim final rule that could suggest that a Designation or 
Certification could terminate automatically and retroactively to the 
time of change and without notice, and replaces such language with a 
portion of the suggested text from the ABA commentary, and with 
procedures similar to those recommended by other commenters. To be 
clear, modifications that do not cause the QATT to be outside the scope 
of the QATT's Designation or Certification will not adversely affect 
SAFETY Act coverage, nor are such modifications required to be notified 
to the Department. The final rule does not, however, eliminate the 
requirement that a Seller provide notice to the Department if the 
Seller intends to make, or has made, a modification that would cause 
the QATT to be outside the scope of a Designation or Certification.
    The Department recognizes that many modifications to components, 
processes, use, implementation or other aspects of a technology occur 
from time to time during the life of a technology, and that many 
modifications either will have no consequence for the functionality of 
the Technology or will improve it. While certain proposed significant 
modifications should require review, many routine or non-significant 
modifications will not. The Department needs a rapid system for 
prospectively reviewing significant modifications that could reduce the 
effectiveness of a QATT. Such a system must recognize that routine 
changes may occur to components or processes that do not reduce the 
safety or effectiveness of the Technology.
    This final rule modifies the procedure for Sellers to notify the 
Department of modifications or proposed modifications to a QATT and for 
the Department to respond quickly to such notifications with 
appropriate instructions for the Seller. Immaterial or routine 
modifications that are within the scope of the Designation will not 
require notice. It is important, however, and required, that the 
Department be informed of any significant modifications that the Seller 
makes or intends to make to a QATT. A significant modification is one 
that is outside the scope of a Designation. The Under Secretary will 
make the language of Designations and Certifications as precise as 
practicable under the circumstances to ensure that Sellers and other 
parties have fair notice of the scope of coverage, and in that regard 
the Department calls attention to the revisions in sections 25.6(e) and 
25.9(f) of the final rule.
    Whether notice to the Department is required for a change to a 
particular QATT will depend on the specific nature of the QATT and the 
terms of the Designation or Certification applicable to the QATT. If 
notice of a modification is required, review of the notice will also be 
undertaken in a reasonable time. If the Department does not take action 
in response to the notice, SAFETY Act coverage of the Technology as 
modified will be conclusively established. If the Department ultimately 
does not approve of the proposed changes, it will so notify the Seller 
and may discuss possible remedial action to address the Department's 
concerns or take other appropriate action in the discretion of the 
Under Secretary, as provided in section 25.6(l) of the final rule. In 
no event will a Designation terminate automatically or retroactively 
under this provision.
    It is also important to recognize that the ``significant 
modification'' provisions may require notice by the Seller to the 
Department only when the modifications are made to a QATT by the Seller 
or are made to a QATT with the Seller's knowledge and consent. The rule 
does not require that a Seller notify the Department of changes to a 
QATT made post-sale by an end-user of the QATT, and any such change by 
an end-user cannot result in loss of SAFETY Act protection for the 
Seller or others protected by the Seller's Designation or 
Certification.

F. Exclusive Responsibility for Government Contractor Defense, 
Definitions of Fraud and Willful Misconduct

    The Act is clear in allocating to the Secretary the exclusive 
responsibility for establishing the government contractor defense under 
section 861. The Act does not permit judicial review of the Secretary's 
exercise of discretion in this context. When the Secretary determines 
that a Certification is appropriate, that decision creates a

[[Page 33154]]

rebuttable presumption that the government contractor defense applies. 
This presumption may only be rebutted ``by clear and convincing 
evidence showing that the Seller acted fraudulently or with willful 
misconduct in submitting information to the Department during the 
course of the consideration of such Technology.'' See section 25.8(b).
    Two commenters expressed concern over the lack of a concrete 
standard of evidence for determining ``fraud'' or ``willful 
misconduct.'' One commenter specifically suggested adoption of the 
``clear and convincing evidence'' standard from common-law civil fraud 
jurisprudence.
    The Department agrees that the statutory presumption should only be 
overcome by evidence demonstrating an intentional effort to deceive the 
Department during the Certification process. This is the clear import 
of the statutory language and legislative history of the Act. Also, the 
traditional common law ``clear and convincing evidence'' standard is 
appropriate for evaluating a claim of fraud or willful misconduct in 
the SAFETY Act context.

G. Definition of ``Act of Terrorism''

    Two commenters expressed uncertainty concerning whether an act on 
foreign soil could be deemed an ``Act of Terrorism'' for purposes of 
the SAFETY Act. One commenter additionally requested clarification of 
the role of the Secretary in declaring whether a given event was or was 
not an ``Act of Terrorism'' for purposes of the SAFETY Act.
    The definition of the term ``Act of Terrorism'' set forth in the 
SAFETY Act provides that any act meeting the requirements specified in 
the Act, as such requirements ``are further defined and specified by 
the Secretary,'' may be deemed an ``Act of Terrorism.'' In the interim 
rule, the Department presented its view that the term ``Act of 
Terrorism'' potentially encompasses acts that occur outside the 
territory of the United States. The Department stated that the basis 
for that view is ``there is no geographic requirement in the 
definition; rather, an act that occurs anywhere may be covered if it 
causes harm to a person, property, or an entity in the United States.'' 
The Department confirms its prior interpretation. The statutory 
requirements for what may be deemed an ``Act of Terrorism'' address the 
legality of the act in question, the harm such act caused, and whether 
instrumentalities, weapons or other methods designed or intended ``to 
cause mass destruction, injury or other loss to citizens or 
institutions of the United States'' were employed. The statutory 
requirements are focused on the locus where harm was caused, the intent 
of the perpetrators and the victims of the particular act. See Sec.  
865(2)(B)(ii). The Department does not interpret the language of the 
Act to impose a geographical restriction for purposes of determining 
whether an act may be deemed an ``Act of Terrorism.'' In other words, 
the Act is concerned more with where effects of a terrorist act are 
felt rather than where on a map a particular act may be shown to have 
occurred. Accordingly, an act on foreign soil may indeed be deemed an 
``Act of Terrorism'' for purposes of the SAFETY Act provided that it 
causes harm in the United States. The Department interprets ``harm'' in 
this context to include harm to financial interests. It is certainly 
possible that terrorist acts occurring outside the United States could 
be intended to cause, and may result in, devastating financial harm in 
the United States.
    The focus of the ``Act of Terrorism'' definition on where harm is 
realized is appropriate in light of the possibility that an Act of 
Terrorism may be the result of a series of actions occurring in 
multiple locations or that the locus of the terrorist act may not be 
readily discernible. This is especially the case with respect to acts 
of cyber terrorism.

H. Retroactive Designation

    Five commenters found the distinction between ``sales'' and 
``deployments,'' as expressed in the interim rule, to be confusing. The 
commenters expressed concern that similar deployments of identical 
QATTs might not be similarly protected, depending on when the 
deployment was made. In particular, failing to extend SAFETY Act 
liability protections retroactively may incentivize Sellers to remove 
or nullify existing deployments, only to make identical new deployments 
at significant cost to the Seller and/or its customers.
    The Department believes these commenters may have misunderstood the 
language of the interim rule. As part of each Designation or 
Certification, the Department will specify the earliest date that 
deployments of the QATT will be accorded the protections of that 
Designation or Certification. The Seller supplies the information 
concerning the earliest date the technology was deployed.

I. Bias Toward Product-Based Anti-Terrorism Technologies

    Despite the assurances of the interim rule, particularly in the 
responses to comments on the Notice of Proposed Rulemaking, four 
commenters thought that the language of the interim rule and of the 
SAFETY Act Application Kit implicitly assumed that all anti-terrorism 
technologies would be product-based and not service-based or analysis-
based.
    To avoid any confusion on this issue, the definition of 
``Technology'' set forth in this final rule clearly and unequivocally 
states that a Technology for SAFETY Act purposes includes ``any 
product, equipment, service (including support services), device, or 
technology (including information technology) or any combination of the 
foregoing.'' In particular, design services, consulting services, 
engineering services, software development services, software 
integration services, program management and integration services, 
threat assessments, vulnerability studies, and other analyses relevant 
to homeland security may each be deemed a Technology under the SAFETY 
Act. Corresponding changes will be incorporated into the revised SAFETY 
Act Application Kit. Further, this concern is not manifest in the 
operating history of the Act. Multiple anti-terrorism services have 
received SAFETY Act Designation to date.

J. Scope of Insurance Coverage

    Several commenters suggested there is no reason for the insurance 
required to be purchased by Sellers pursuant to the Act to cover claims 
brought against the Seller's supply and distribution chains since a 
plaintiff's sole point of recovery with respect to claims implicating 
the SAFETY Act would be the Seller. Furthermore, commenters pointed out 
that insurance policies offering coverage for a Seller and the Seller's 
contractors, subcontractors, suppliers, vendors and customers are not 
currently available on the open market.
    The Department recognizes that an action for recovery of damages 
proximately caused by a QATT that arises out of an Act of Terrorism may 
only be properly brought against a Seller. Accordingly, the Department 
has specified, and will continue to specify in particular Designations, 
that the liability insurance required to be obtained by the Seller 
shall not be required to provide coverage for the Seller's contractors, 
subcontractors, suppliers, vendors or customers.

K. Interactions With Public Law 85-804

    Three commenters believed that the language in the interim rule 
concerning Public Law 85-804, and its relationship with the SAFETY Act, 
was unclear, especially in light of Executive Order 13286. In 
particular, the commenters

[[Page 33155]]

sought clarification with respect to the circumstances in which both 
SAFETY Act Designation and indemnification under Public Law 85-804 
might be available. One commenter suggested that DHS implement a 
mechanism for simultaneous SAFETY Act and Public Law 85-804 
consideration in association with a procurement.
    Commenters also expressed concern with the availability of Public 
Law 85-804 indemnification for technologies for which Sellers do not 
apply for (or receive) SAFETY Act Designation. They suggested that the 
phrase ``any matter that has been, or could be, designated by the 
Secretary of Homeland Security as a Qualified Anti-Terrorism 
Technology'' in Executive Order 13286 is a potential source of 
confusion and an obstacle to otherwise appropriate indemnification for 
Sellers who do not seek, and would not merit, Designation.
    Section 73(b) of Executive Order 13286 revises Executive Order 
10789 to state that no technology that has been, or could be Designated 
as a QATT, can be considered for indemnification under Public Law 85-
804 (except by the Department of Defense) until ``(i) the Secretary of 
Homeland Security has advised whether the use of the authority provided 
under [the SAFETY Act] would be appropriate, and (ii) the Director of 
the Office and Management and Budget has approved the exercise of 
authority under this order.''
    The Department is sympathetic to the notion that separate processes 
in multiple agencies for Public Law 85-804 and SAFETY Act review could 
consume inordinate time and expense. The Department is supporting 
interagency efforts to find a solution to speed and ease the burden of 
both processes.
    The Department acknowledges that some anti-terrorism technologies 
involve unusually hazardous risk, independent of an act of terrorism, 
and that indemnification under Public Law 85-804 might appropriately be 
made available under such circumstances. In those circumstances, both 
the SAFETY Act and Public Law 85-804 could be applicable to the same 
technology for different risks at the same time, and one process should 
not slow progress in the other. Executive Order 10789, as amended by 
section 73 of Executive Order 13286, allows for such a solution with 
the concurrence of the Director of the Office of Management and Budget.
    Where appropriate, the Department will entertain letter requests 
for a ``Notice of Inapplicability of SAFETY Act Designation,'' which 
would allow entities to obtain a statement from the Department 
regarding the inappropriateness of SAFETY Act Designation for a 
particular technology in a particular context, outside of the 
established SAFETY Act application process. In this process, the 
Department expects that submitters will include sufficient information 
within their letter request to allow for a determination of 
inapplicability to be made. The Department will, however, reserve the 
right either to request additional information of the type included in 
the SAFETY Act application if it determines that the request does not 
adequately describe the Seller's technology before a determination of 
applicability or inapplicability, as the case may be, can be made.

L. Prioritization of Evaluations

    Three commenters noted the importance of an appropriate process for 
expediting SAFETY Act applications associated with government 
procurements that are ready to proceed and where the need for immediate 
deployment is urgent and compelling. They also asked that the 
Department publish guidance describing how it plans to prioritize 
application reviews.
    The Department will expedite the review of SAFETY Act applications 
that it deems particularly urgent and that involve government 
procurements and will publish guidance on how SAFETY Act applications 
and the government procurement process may best be aligned (See 
``Coordination with Government Procurements'' below and section 25.6(g) 
of the rule).

M. Standards

    Three commenters expressed concern about standards and suggested 
proposed changes to the interim rule in this area. The gist of these 
suggestions was to ensure that proprietary standards are not treated 
inappropriately by the Department, and that the Department not 
needlessly develop new standards in competition with existing, widely-
accepted, proprietary standards. In addition, several commenters felt 
that adherence to certain existing standards, or to Federal 
certifications of various kinds, should be deemed conclusive evidence 
of compliance with certain SAFETY Act evaluation criteria.
    The Department reiterates that it intends to protect proprietary 
and other protected information to the maximum extent possible. No 
copyrighted or otherwise protected intellectual property will be 
distributed by the Department without the express permission of the 
owner, unless the Department's rights in that data have been acquired 
through some other manner. Where specific proprietary standards are 
relevant to the SAFETY Act evaluation process, the Department will 
advise applicants of the appropriate channels for obtaining copies of 
such standards.
    The Department has to date and will continue to work closely with 
standard-setting organizations that have sought SAF