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20 Air & Space Law. 1 (2005-2006)

handle is hein.journals/airspaclaw20 and id is 1 raw text is: AIR L A AMIRICAN HAR ASSOCIAION THE &SPACE VOLUME 20, NIIMIIi:R I SUMMER 2(1(5 An Overview of the Safety Act - Liability I Protection for Anti-Terrorism Technologies I I By Carlene V. McIntyre and Faith Tabafunda I mong the provisions con- tained in the lHomcland Security Act of 2002 is a provi- sion entitled the SAFETY Act - Support Anti-Terrorism by Fostering Effective Technologies [Saftetyl Act of 20(12 (Safety Act or act).' Ile goal of the act is to encourage the develop- nient and deployment of teclinolo- gies and service: that can be used to reduce the risk and lessen the effect of acts of terrorism. Through a process of designation and certilica- tion by the Departmcnt of Homeland Security (DIIS), the act provides lia- bility protection to technologies and services that might go undeveloped or whose development may be delayed becautse of the seller's inabili- ty to obtain liability instirance to insure against losses to sellers of such techinologics and scrvice., The cornerstone of the act is the creation of liability protection and risk management tools for sellers of anti-terrorisni technologies by remov- Passive Partners and Foreign Investment I By Frank J. Costello Foreign investment in the U.S. airline industry is a controversial issue, but that controversy focuses on strategic investors who intend to take an active role in U.S. airlines. IL:ft large- ly unnoticed is the ttuch larger pool of foreign passive investors whose only interest is to profit from their sharcholding. Foreign passive investors can pur- chase the stock of U.S. airlines on public exchanges, with no reporting requirements generally until a hold- ing exceeds 5 percent of the airline's equity.' For this reason, and because much of the passive investment in publicly traded companies is held in the street names of brokers, the anount of stock in U.S. airlines actually held by persons other than U.S. citizens is unknown, although ntost stspect that the percentage is substantial. Another type of passive invest- merit is more visible, namely, private equity funds. llese funds and their shorter temi counterparts, hedge funds, pool the money of wealthy individuals and private institutions. Conservative estinates place the unnested capital in these funds at an excess of $100 billion. The funds ing or at least mininizing and con- laining, tile prospect of limitless damage awards should such tuch- nologics and services be deployed in defense against acts of terrorism. The act Is designed to serve as a catalyst for private businesses to develop and market systems, devices and services to combat terrorism. In addition to private businesses that develop prod- ucts and services for the aviation industry, potential users of such contcontinued on page 13 generally are structured as limited partnerships, with the investors tak- Ing a passive role as limited partners subservient to a general partner. A limited partnership is neither fish nor fowl. It is a creature of state statutory law separate and apart from tradi- tional partnerships and corporations. It has the pass-through tax attributes of a partnership, but in all other respects it is sitnilar to a cor- poration. Private equity funds are a much needed resource for the troubled U.S. airlines, needed both to avoid continued on page 19 Forum on Air and Space La w

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