SAFETY Act Sequence, Half 1: The SAFETY Act Is Highly effective Safety In opposition to Rising Liabilities
The SAFETY Act is a extremely efficient threat administration device created to incentivize the event of anti-terrorism applied sciences—broadly outlined—the SAFETY Act created a program to offer protections to suppliers of services and products meant to forestall or mitigate bodily and cyber-attacks. Amongst different advantages, firms receiving SAFETY Act protection for his or her applied sciences have their doubtlessly legal responsibility related to an act of terrorism capped on the quantity of insurance coverage protection required by the U.S. Division of Homeland Safety (“DHS”). Corporations looking for to scale back their publicity to legal responsibility related to cyber or bodily assaults ought to think about making use of for designation or certification underneath the SAFETY Act. DHS has additionally permitted all kinds of different applied sciences and safety packages for cover underneath the SAFETY Act.
Almost each enterprise is susceptible to potential cyber or bodily assaults. The liabilities arising in reference to cyber incidents will be big and are an growing focus for companies, giant and small. Equifax paid $700M to resolve authorities investigations and client claims arising out of a knowledge breach, and T-Cellular paid $500M to settle a knowledge breach class motion. Potential legal responsibility just isn’t restricted to the group; administrators and officers additionally face the specter of particular person legal responsibility. For instance, final 12 months, the Delaware Chancery Court docket dominated that officers owe an obligation of oversight (since clarifying that this responsibility can be analyzed underneath the identical customary as fir administrators), opening the door for civil breach of oversight claims to be introduced towards each administrators and officers.
What Is the SAFETY Act?
Congress handed the Supporting Anti-Terrorism by Fostering Efficient Applied sciences (“SAFETY”) Act[1] in 2002 following the September 11 terrorist assaults. The Act created a program administered by the DHS to advertise the event of “certified anti-terrorism applied sciences” meant to safeguard towards “acts of terrorism.” The SAFETY Act defines acts of terror broadly. Included are any acts which can be illegal and trigger hurt in the US utilizing strategies supposed to trigger mass losses.
Act of terrorism means any act [that]. . .
(1) Is illegal.
(2) Causes hurt, together with monetary hurt, to an individual, property, or entity, in the US, or within the case of a home United States air provider or a United States-flag vessel . . . in or outdoors the US.
(3) Makes use of or makes an attempt to make use of instrumentalities, weapons or different strategies designed or supposed to trigger mass destruction, damage or different loss to residents or establishments of the US.
49 C.F.R. 50.201. In passing this laws, and in its persevering with assist of this program, Congress seeks to encourage firms to put money into a variety of anti-terrorism applied sciences.
Importantly, merchandise, providers, and methods will be protected. The DHS notes that “certified anti-terrorism applied sciences” is outlined very broadly to incorporate “any qualifying product, gear, service (together with assist providers), machine, or know-how (together with data know-how)” that deserves safety. For instance, many varieties of providers— design, consulting, engineering, and software program improvement and/or integration—qualify as “know-how,” as do risk evaluation and vulnerability research. The truth is, DHS has decided that an enterprise-wide cyber governance framework can qualify as an authorized “know-how” for functions of the SAFETY Act. The DHS additionally lists detection methods, blast mitigation supplies, screening providers, sensors and detectors, determination assist software program, safety plans, and disaster administration methods as eligible for cover.[2]
The Act makes three ranges of safety accessible for qualifying applied sciences; so as of safety, they’re: (1) Growth, Testing, and Analysis Designation, (2) Designation, and (3) Certification.[3] Every has differing requirements, phrases, and accompanying protections. Some latest recipients of SAFETY Act safety embrace:
- Nationwide Soccer League: Certification for pointers for stadium safety administration to discourage and defend towards terrorist assaults at sports activities stadiums;
- Leidos: Designation for a non-intrusive inspection system to scan motorized autos;
- Hardwire, LLC: Designation for a bodily protect put in over susceptible cable bridge parts;
- ASIS Worldwide, Inc.: Designation for a certification and re-certification program for safety professionals primarily based on examinations;
- American Petroleum Institute: Certification for its customary offering necessities and steering for managing cyber threat for the oil and pure gasoline pipeline business.[4]
What Are the Advantages of Designation and/or Certification?
Designation or certification as a professional anti-terrorism know-how (“QATT”) entitles the creators or customers of certified applied sciences to highly effective legal responsibility protections within the occasion of a declared act of terrorism. These advantages could embrace, relying on the extent of designation or certification, unique federal jurisdiction and selection of regulation the place the assault occurred, caps on legal responsibility, prohibition of punitive damages, and authorities contractor immunity.
The SAFETY Act additionally provides significant reputational advantages. The know-how can be positioned on the DHS’s Accepted Applied sciences listing, and the creator is entitled to make use of a DHS seal of approval in public supplies. The federal authorities additionally generally requires SAFETY Act certification for its contractors. Corporations can switch certification together with the know-how within the occasion of a sale or merger.
Lastly, SAFETY Act safety can show extremely helpful in different contexts the place the protection and safety of an organization’s merchandise, providers, or operations is scrutinized— whether or not by regulators, traders, clients, or jurors. A SAFETY Act certification or designation might be a pivotal issue within the analysis of an organization’s conduct and potential legal responsibility within the wake of a cyber or bodily incident inflicting substantial hurt—even when the occasion just isn’t declared an act of terrorism that will set off the Act’s statutory protections. Insurers may additionally think about SAFETY Act safety in underwriting legal responsibility insurance policies, notably cyber and D&O legal responsibility. It is a big alternative for policyholders to show that they need to obtain the advantage of decrease premiums and higher protection given the proactive steps they’ve taken to scale back legal responsibility by making certain state-of-the-art know-how and acquiring recognition of these efforts by means of SAFETY Act certification or designation.
How Is Expertise Licensed?
Corporations looking for SAFETY Act safety should file a petition with the DHS. Extra on this course of can be addressed in Half 2 of this sequence.
[1] See 6 U.S.C. § 441 et seq.
[2] See SAFETY Act 101 Briefing at 3, Dep, Dep’t of Homeland Safety, accessible at https://www.safetyact.gov/externalRes/refDoc/refGroup/8/SAFETYpercent20Actpercent20101percent20Briefing.pdf.
[3] Id. at 6.
[4] See SAFETY Act, Accepted Applied sciences, Dep’t of Homeland Safety, https://www.safetyact.gov/lit/at/aa.
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