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Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Proposed Rules

This effort to insulate the United

States Government and its agencies,

personnel and contractors involved in

DOT-licensed launch activities from a

significant measure of exposure to

liability, loss or injury resulting from

licensed activities is important because

of the Government's liability exposure.

This exposure derives from two sources.

Under international treaty, especially

the Treaty on Principles Governing the

Activities of States in the Exploration

and Use of Outer Space, including the

Moon and Other Celestial Bodies (Outer

Space Treaty) (entered into force

October 1967), and the Convention on

International Liability for Damage

Caused by Space Objects (Liability

Convention) (entered into force

September 1972), the United States

Government has accepted certain

obligations to compensate parties

outside the United States for damage,

including personal injury and loss of

life, caused by space objects launched

from the United States or by persons or

entities whose activities are supervised

or overseen by the United States

Government. In addition, when the

Government is involved in private

sector launch activities through use of

its property, facilities, equipment or

personnel to support and facilitate those

activities, the United States Government

risks damage or injury to its own

property and personnel and legal

liability for other losses. It is the Office's

view that, under the 1988 Amendments,

risk for these losses should be allocated

primarily to the nongovernmental

launch participants, subject to three

important exceptions, and the statutory

requirements for insurance and waivers

of claims must be construed and

implemented to effect this allocation of

risk. (The term "nongovernmental" is

used throughout this discussion to mean

launch participants other than U.S.

Government, its agencies, contractors

and subcontractors, and the employees

of each.)

The three important exceptions are

those risks that the U.S. Government

affirmatively accepts under the Act.

They are: (1) The risk otherwise borne

by the U.S. commercial launch industry

of catastrophic losses and unlimited

liability associated with commercial

launch activities, up to the statutory

limit of $1.5 billion above required

third-party liability insurance, subject to

enactment of legislation, 49 U.S.C.

70113(a); (2) the risk of property damage

or loss to United States Government

launch property or facilities in excess of

required insurance, 49 U.S.C.

701 12(b)(2); and (3) acceptance of

liability for death, bodily injury or

property damage or loss that results

from the willful misconduct of the

United States Government or its agents,

49 U.S.C. 70112(e).

The Office believes that acceptance of

these risks by the United States

Government is necessary in order to

accomplish the goals underlying the

1988 Amendments; that is for the U.S.

commercial launch industry to compete

effectively against foreign launch

services providers that offer certain

financial assurances from their

governments,' and to limit the amount

of liability insurance that must be

obtained to protect launch participants

without, in industry's words, their

"betting the company" on each launch.

Not surprisingly, the linchpin of the

allocation of risk regime in industry's

view has been the United States

Government's agreement to protect

launch participants against the risk of

catastrophic losses and unlimited

liability associated with commercial

launch activities. Pursuant to the 1988

Amendments, the Department seeks to

provide this protection, or so-called

"indemnification," by preparing a

compensation plan that the President

submits to Congress for review and

approval, and, if necessary, enactment

of additional legislative authority

providing for the payment of claims.

Significantly, the 1988 Amendments

do not expressly mandate

indemnification of launch participants

and, unlike the 1988 Price-Anderson

Amendments. Pub. L. 100-408, the

notion of a "contract of

indemnification" does not appear.

Rather the 1988 Amendments lay out a

mechanism by which Congress may

enact legislation to appropriate the

requested funds. Accordingly, it would

be inappropriate to refer to the payment

of excess claims provisions without

recognizing the role Congress must play

in enacting appropriations.

Nevertheless, it is the Office's view that

the 1988 Amendments represent an

undertaking by Congress to allocate to

the United States Government the risk

of certain losses, including damage to

1At the time the 1988 Amendments were

enacted, entrants to the commercial launch industry

expressed deep concern over potentially openended exposure to liability for damages associated

with launch activities that could undermine the

position of United States firms vis-a-vis their

foreign competitors. For example, while customers

of Arianespace benefited from full indemnification

by the French Government for all third-party

liability that exceeded required insurance levels of

400 million French francs (approximately $65

million in 1988), corresponding protection was not

available to customers of emerging commercial

launch services providers in the United States.

Consequently, from a commercial perspective,

foreign launch services providers possessed a

significant competitive advantage over U.S. firms.

Government property in excess of

required Government property

insurance, and excess third-party

claims. In this manner, commercial

launch operators, their customers, and

the contractors and subcontractors of

each may be relieved from some of the

risk associated with commercial launch

activities. In return, the United States

Government is protected from liability

and loss by required insurance at no

cost to the Government

Risk-Based Insurance Requirements

One of the principal features of the

1988 Amendments is the Department's

mandate to establish risk-based

insurance requirements. Under the Act,

the amount of required insurance is

prescribed based on the Department's

determination of the "maximum

probable loss" that would result from

licensed activities.

Before enactment of the 1988

Amendments, section 16 of the Act

prescribed general liability insurance

requirements. It specified that any

person launching a launch vehicle or

operating a launch site under a license

issued by the Department have in effect

liability insurance, at least in the

amount that the Department considered

necessary for the licensed launch or

operation, considering the international

obligations of the United States. 2 These

obligations include, in particular, any

United States obligations as a signatory

to the Liability Convention.

On May 7, 1985, the Office published

an Advance Notice of Proposed

Rulemaking on third-party liability

insurance requirements for commercial

space launch activities (the ANPRM), 50

FR 19280, focusing exclusively on

implementation issues relating to

section 16 of the Act.

The ANPRM reflected the Office's

conclusion that liability insurance

should be adequate to compensate

parties not participating in licensed

launch activities for losses or damages

resulting from those activities. The

Office sought to identify considerations

other than international obligations of

the United States to be taken into

account. Other general issues

highlighted in the ANPRM were: (1)

Whether evidence of insurance

(including significant levels of risk

retention) should be the exclusive

2

Each person who launches a launch vehicle or

operates a launch site under a license issued or

transferred under this Act shall have in effect

liability insurance at least in such amount as is

considered by the Secretary to be necessary for such

launch or operation, considering the international

obligations of the United States. The Secretary shall

prescribe such amount after consultation with the

Attorney General and other appropriate agencies."

49 U.S.C. App. 2615.

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means of demonstrating financial

responsibility; and (2) whether the

Office should require launch services

providers to obtain the maximum

amount of liability insurance

commercially available at reasonable

rates (the standard employed by NASA

in requiring insurance for commercial

payloads launched on the Space

Shuttle), or, alternatively, whether the

Office should conduct an analysis of the

risks arising from a launch and set

appropriate financial responsibility

requirements based upon that analysis.

The ANPRM also sought comments on

whether the Office should vary liability

insurance requirements by vehicle class

and the duration of licensed activities,

and what factors the United States

Government should consider in

deciding whether to seek compensation

from responsible parties for damages for

which the United States may be held

liable under United States or

international law.

Ten private parties submitted

comments in response to the ANPRM.

They included one commercial operator

of a privatized United States expendable

launch vehicle (ELV) launch system,

three entrepreneurial launch firms, two

space insurance brokers, two

government aerospace contractors, and

two law students.

Most of the comments addressed the

amount of liability insurance the Office

should require and the appropriate

standard for making that determination.

Only three of the commenters, the

insurance brokers and an

entrepreneurial launch services

provider, supported utilization of

NASA's approach of requiring that

launch services providers obtain the

maximum amount of insurance

commercially available at reasonable

rates. One insurance broker favored

applying this standard to the actual

launch phase only, arguing that risk

analysis should be employed in setting

requirements for on-orbit liability

coverage. All of the other launch and

aerospace firms that commented favored

the risk analysis approach.

Commenters differed on the issue of

duration of required insurance coverage.

One commenter favored requiring

coverage only for the launch phase,

another preferred the useful life of a

payload, and a third recommended

insurance be maintained as long as a

physical object remains in space. Only

two commenters addressed the question

of whether the Office should distinguish

among the different ELV launch systems

in setting third-party liability insurance

requirements, both favoring making

such distinctions if justified by risk

analysis. In addition to the issues on

which the ANPRM requested comment,

five commenters argued that the United

States Government should indemnify

private launch firms and their

contractors for damages that exceed the

amount of required coverage. One

commenter urged that the United States

either re-interpret its responsibilities

under, or withdraw from, the Liability

Convention.

Following publication of the ANPRM,

and in light of most commenters'

endorsement of insurance requirements

based on an analysis of risk, the Office

developed a risk analysis approach to

determining acceptable levels of public

exposure to hazards associated with

commercial launches, and it began

applying risk analysis techniques on an

application-specific basis. The Office's

risk analysis approach was based upon

extensive studies it had conducted on

the risks associated with commercial

launches and launch operations, and on

the utility of various analytical

techniques for quantifying them. These

studies include a three-volume report,

dated May 1988, entitled "Hazard

Analysis of Commercial Space

Transportation" and an "Assessment of

Third Party Liability Insurance

Associated with Commercial

Expendable Launch Vehicles," each of

which is available from the Office.

At the time the 1988 Amendments

were enacted, the Office was preparing

a rulemaking action to establish risk

analysis as the preferred method for

determining appropriate levels of

insurance for licensed activities. The

need to propose adoption of this

approach became moot. In requiring

maximum probable loss determinations,

Congress effectively codified the

Office's approach by mandating risk

analysis as the basis on which the

Department establishes required levels

of financial responsibility under the

Act.

This rulemaking is intended to

provide definition to the statutory term,

"maximum probable loss," in terms of

the Office's approach to prescribing

insurance requirements for each launch

license issued. "Maximum probable

loss" does not mean maximum possible

loss, that is, a "worst case" scenario

regardless of likelihood. The Office

determines maximum probable loss for

licensed launch activities by analyzing

the known hazards, and the probability

of loss, associated with specific launch

activities. A detailed explanation of

maximum probable loss methodology is

presented in the section -by-section

analysis below.

Implementation Issues Following the

1988 Amendments

In early 1989, the Risk Management

Working Group of the Commercial

Space Transportation Advisory

Committee (COMSTAC) 3 developed

implementation positions on the 1988

Amendments, including a

recommendation that the scope of

required liability insurance coverage be

commensurate with the scope of

potential liability of those persons

involved in providing launch servicesthe licensee, its customer, the U.S.

Government, and the contractors and

subcontractors of each-resulting from

activities carried out under the license.

In its view, potential liability arose with

the licensee's entry upon the launch

complex. Additionally, the waiver of

claims provisions and the so-called

"indemnification" provisions of the Act

were viewed as being equally broad in

scope. The COMSTAC further

recommended that post-launch

protection under the Act remain in

place for at least three years following

ignition of the launch vehicle for flight.

In carrying out its licensing

responsibilities, the Office began issuing

licenses in 1989, authorizing a specific

launch and preparatory launch site

operations associated with the conduct

of that launch. This approach was

intended to satisfy industry's

expectations, including those voiced by

COMSTAC, and be consistent with the

Department's understanding of the 1988

Amendments. Within two years, the

Office issued the first of several operator

licenses issued to date. Under this

approach, the Office licensed and

established financial responsibility

requirements for site operations

associated with the conduct of a

program of commercial launches for a

two-year period.

This approach to licensing reflected

an understanding between the Office

and the U.S. Air Force, as the

Department of Defense (DOD) element

responsible for management of the

Eastern Range, encompassing Cape

Canaveral Air Station, and the Western

Range, encompassing Vandenberg Air

Force Base, to avoid conflicting

insurance and liability requirements

when commercial launch operators

3The COMSTAC, a duly chartered federal

advisory committee consisting of public and private

sector representatives appointed by the Secretary to

advise on matters affecting the commercial space

transportation industry, has taken a very active role

in reviewing and commenting on the Office's

implementation of the 1988 Amendments. Based on

its reviews, the COMSTAC submitted formal

recommendations to the Secretary. These

recommendations are available in the docket for

this proposed rulemaking.

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conduct operations on Air Force ranges

in support of commercial launch

activities under a range use agreement.

Despite this understanding with the Air

Force, certain questions remain between

the Office and the Air Force as well as

other Federal agencies that operate and

manage Federal range facilities.

A September 1992 COMSTAC

resolution reaffirmed COMSTAC's view

that the financial responsibility regime

should be construed broadly so as to

cover all activities conducted by a

licensee on a Federal range. Under this

view, referred to as "gate-to -gate"

licensing, all of a licensee's activities

conducted on a Federal range in support

of its commercial launch operations

would be subject to DOT-determined

financial responsibility requirements

and eligibility for so-called

indemnification. To address this and

other uncertainties associated with the

intended scope of the 1988

Amendments, the resolution

recommended that the Department seek

clarification by legislative means.

October 27-28, 1994 Public Meeting

The Office convened a two-day public

meeting on October 27-28, 1994, to

elicit industry views on, among other

things, a range of issues associated with

implementation of the 1988

Amendments. The meeting concentrated

on licensing issues associated with

commercial launch operations and the

commercial operation of launch sites.

One of the focal points of the meeting

was a discussion of the appropriate

scope of a license authorizing

commercial launch activities and its

relationship to financial responsibility

and allocation of risk requirements.

At the public meeting and in written

comments submitted to the docket,

industry remained fairly consistent in

its view that the Office's licensing

authority should be broadly construed

to address risks associated with the

flight of a launch vehicle and pre-flight

hazardous operations in order to protect

public health and safety. One

commenter suggested that, as a starting

point, it would be useful to look at those

unusually hazardous activities for

which the Government agrees to offer

indemnification under other authority,

such as Public Law 85-804, in

attempting to determine the range of

activities properly encompassed by the

Department's licensing authority.

Two launch services providers and

one DOD element commented that all

pre-launch processing on a Federal

range should be licensed for purposes of

the Act's financial responsibility

requirements and setting the levels of

required insurance. Other commenters

observed that it is no longer sufficient

to limit DOT licensing to activities done

on a Federal range because,

increasingly, launch operators are

engaging in hazardous pre-launch

processing activities off the range, either

to reduce their costs or because they are

not permitted to use Government

facilities where comparable, off-range

commercial services exist. A number of

commenters, including a DOD element,

an insurance broker, a prospective

commercial spaceport operator and two

launch services providers, suggested

that DOT-licensed activities should

include hazardous, as distinct from

ultra-hazardous, operations defined in

terms of risk, not geography, because the

Office's mandate is protection of public

safety. The prospective spaceport

operator also suggested using the license

as a kind of safety net to avoid gaps in

regulatory oversight. In contrast, another

Government agency representative

offered a different approach, noting that

other regulatory regimes would apply to

hazardous operations when conducted

somewhere other than at a Federal

range.

As an example of hazardous

operations requiring licensing, a number

of commenters, including a payload

processing facility, stated that payload

processing, whether conducted on a

Federal range or at a privately operated

facility located off the Federal range,

should be covered by a DOT license.

One launch company noted that

manufacturing is not sufficiently

hazardous as to warrant DOT licensing,

but certain testing is. However, a

prospective spaceport operator noted

that manufacturing may be hazardous

and, if so, should be covered by a DOT

license. Another prospective spaceport

operator stated that licensing matters

should be separated from the issue of

indemnification altogether, and noted

that one could conceive of licensed

activity without indemnification if the

purpose of licensing is protection of

public safety. The commenter suggested

a narrower approach than that of

licensing all activities conducted by a

launch licensee on a Federal range,

noting that material may be stored at the

range for a long time in advance of a

scheduled launch.

Two DOD elements advocated that the

Office establish maximum probable loss

requirements for all commercial

activities conducted on a Federal range

facility. One of the agencies also

indicated that the Office should set

maximum probable loss requirements

any time Government property would

be placed at risk for commercial

purposes, including coverage for

commercial development and

demonstration activities conducted on a

Federal range.

One launch services provider noted

the benefits to the public of requiring

statutory financial responsibility and

allocation of risk requirements, along

with so-called indemnification, in that

third-party recovery for losses need not

depend upon the financial health of a

launch company. For example, without

Government regulation, small start-up

companies with limited financial means

might buy less insurance than the Office

would otherwise prescribe in insurance

requirements.

Another launch services provider

noted that the financial responsibility

requirements should be coextensive

with a license. That is, the Government

should provide indemnification to the

extent activities are covered by a

license. Likewise, according to the

launch services provider, if there is no

indemnification offered by the

Government for an activity then it can

be inferred that the Office has not

licensed that activity. The commenter

noted that this is not clear today.

In a related rulemaking, the Office is

planning to address, more specifically,

such issues as the appropriate scope of

a license to conduct commercial

launches and the activities subject to the

Department's licensing authority. As

part of that rulemaking, the Office

intends to address comprehensively

those comments received at the public

meeting concerning the appropriate

scope of a license and licensable

activities. The instant rulemaking

focuses on implementation of financial

responsibility requirements and the

allocation of risks that attend licensed

launch activities, as those activities are

defined in a license issued by the Office.

The Proposed Regulations

Scope and Objectives

The proposed regulations are

intended to implement the full range of

statutorily-imposed financial

responsibility requirements and carry

out the Department's responsibility

under the Act to protect U.S. interests

when Government property or

personnel is involved in supporting

licensed launch activities. The proposed

regulations also clarify the means by

which the commercial launch industry

and its customers are provided with the

assurances and protections that have

been considered critical to their

survival.

This rulemaking does not address

financial responsibility requirements for

the operation of a launch site. To date,

all U.S. commercial launches have taken

place from U.S. Government facilities.

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The Office believes that this fact will

change in the not too distant future.

Plans for developing state-sponsored

spaceports in five states are under way

and the Office is currently developing

regulations that would apply to

prospective applicants for licenses to

operate launch sites or spaceports. The

Office is also in the process of

developing policies applicable to the

appropriate implementation of financial

responsibility requirements for launch

site operators, including spaceports,

consistent with the Act. As part of this

effort, the Office requests comments on

the full range of financial responsibility

and risk allocation issues associated

with licensing the operation of a launch

site.

More specifically, under the Act, a

licensee is required to obtain two forms

of insurance (or otherwise demonstrate

financial responsibility) to compensate

for certain claims "resulting from an

activity carried out under the license"-

liability insurance that protects

participants in launch services from

third-party liability and property

insurance that protects Government

property. 49 U.S.C. 70112(a). No

distinction is made in the Act between

the holder of a license to launch a

launch vehicle and the holder of a

license to operate a launch site. As one

commenter pointed out at the October

1994 public meeting, the legislative

history accompanying the 1988

Amendments provides no guidance as

to whether, or how, financial

responsibility and allocation of risk

requirements would apply to a licensed

operator of a launch site.

One view under consideration by the

Office is that the insurance that is

required under a license to conduct

licensed launch activities would be

sufficient to protect United States

interests as well as those of a licensed

launch site operator. This view

presumes that the potentially

catastrophic risks that the 1988

Amendments intended to address are

those associated with hazardous launch

operations, and that the risks attendant

to the industrial activity of managing a

launch site can be managed effectively

through available industrial risk

insurance as a cost of doing business,

and through contractual agreements

between the site operator and its

customers and contractors. Risks to the

launch site operator change when

licensed launch activities are conducted

at the site, and the launch site operator

should be protected as an additional

insured under the launch licensee's

liability policy because of the launch

site operator's involvement in launch

services. With respect to risks associated

with other activities, a launch site

operator can protect itself by requiring

adherence to its own safety procedures

and requirements and through business

decisions regarding the need to obtain

insurance.

At the public meeting, one commenter

representing a prospective spaceport

licensee suggested an approach

consistent with this view. The

commenter noted that site operations

not related to a particular launch may

not be covered by the Act, and that the

launch operator and launch site

operator, rather than the Office, can

allocate responsibilities between

themselves. Launch-specific activities

carried out at the site would be covered

under the Act, in the commenter's view.

However, another commenter at the

public meeting noted that a statesponsored spaceport could serve a

consortium of commercial users, and

the relationship between them may not

be one of prime contractor and

subcontractor. Another prospective

state-sponsored spaceport representative

commented that there is no need for the

Office to license a spaceport operator if

it is under the supervision and oversight

of another Federal agency, such as the

Air Force, and conducting operations as

a subcontractor to the launch company.

Similarly, a DOD element commented

that the Office should review safety

operations of a state-sponsored

spaceport located on a Federal range

facility only for purposes of determining

maximum probable loss.

Additional comments are solicited on

the appropriate implementation of the

financial responsibility and allocation of

risk regime with respect to licensed

launch site operators, including statesponsored spaceports. Comments

should address the requirements that

would apply to an operator of a

commercial launch site located on

private property and that located on or

adjacent to a Federal range facility.

Implementation by the Office of the

financial responsibility and allocation of

risk requirements through license orders

has resulted in some uncertainty and

controversy over the scope of required

insurance as well as the Government's

obligation to cover excess third-party

claims. Some issues result directly from

the terminology used in the Act and

have been voiced by both the Office and

industry in a variety of fora, such as the

October 1994 public meeting and

COMSTAC meetings. Others have been

aired by industry, from time to time,

expressing disagreement with or

concern over the Office's

implementation of the requirements. In

come instances, industry has offered a

view contrary to that held by the Office,

as reflected in license orders. In others,

industry has complained that lack of

clarity leaves both industry and the U.S.

Government vulnerable to unintended

disputes over the appropriate

mechanism for compensating claims.

The proposed regulations, as well as

the Act, acknowledge that the

commercial space industry must bear

certain risks and costs associated with

launch activities. However, the Office

believes these risks and costs to be

reasonable in light of the potential

benefits industry receives. 4 Moreover,

the Office believes that issuing

regulations will result in an additional

benefit to the commercial space

industry. That is, the increased certainty

and clarity that will result from issuance

of final regulations should prove

beneficial to industry by allowing it to

manage risks appropriately, through

insurance and other business decisions

and compete effectively in an

increasingly competitive world market.

At the same time, the Office remains

mindful of the Government's unique

interests and concerns.

In addition to protecting the United

States Government from certain liability

risks, this rulemaking proposal also

recognizes the importance of valuable

national range assets to the continued

growth, vitality, viability and

competitiveness of the U.S. commercial

launch industry. One of the principal

objectives of the statutory requirements

is to ensure that these assets are

protected, and that in the event of

damage or loss, funds are available to

restore the affected launch property to

its present condition and use. Thus,

when Government facilities or

personnel are involved in licensed

launch activities, the Department is

authorized to establish requirements for

proof of financial responsibility and

other assurances necessary to protect

the Government and its executive

agencies and personnel from liability,

death, bodily injury, or property damage

or loss as a result of licensed activities.

However, the Government is not

relieved of liability that results from

willful misconduct of the Government

or its agents.

In protecting the interests of

Government personnel, the statutory

financial responsibility and allocation of

risk requirements also recognize the role

Government contractors and

subcontractors, and their respective

employees, perform in supporting

commercial launch-related operations

on Federal range facilities on behalf of

4 An economic impact assessment has been

prepared and is available in the public docket for

this proposed rulemaking for review and comment.

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Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Proposed Rules

the Government. For this reason, in

establishing financial responsibility and

allocation of risk requirements, the

Department also ensures that their

interests are protected. The Office

solicits views on whether its approach

to protecting Government contractors'

and subcontractors' interests should be

adopted in a final rule.

To facilitate the reader's review of this

proposal, the Office's rationale for

allocating and addressing certain risks is

presented below under appropriate

topic headings, preceding the sectionby-section analysis. This approach

should prove useful to the reader in

understanding how certain risks would

be addressed through both the required

demonstration of financial

responsibility and waivers of claims

among the launch participants. The

section -by-section analysis that follows

describes and discusses specific

provisions of the proposed

implementing regulations which, taken

together, effectuate the intent of the Act.

Protection of Government Personnel

In providing direct support for

commercial launch operations, either

through its agencies or contractors, the

U.S. Government necessarily exposes

itself and certain Government personnel

to potential losses and liabilities.

Accordingly, under the approach the

Office has adopted in the proposed

regulations, certain Government

personnel need to be afforded a variety

of protections through the financial

responsibility and allocation of risk

regime. These protections are necessary

to ensure that the U.S. Government does

not bear any greater risk than it

affirmatively accepts under the statute.

Through the proposed regulations,

risks to Government personnel,

including employees of Government

contractors and subcontractors, posed

by their involvement in licensed launch

activities are addressed as follows:

1. Government personnel, including

employees of the Government, its

agencies, and its contractors and

subcontractors, involved in licensed

launch activities, would be included

within the definition of third parties.

2. Government personnel, including

employees of the Government, its

agencies, and its contractors and

subcontractors, involved in licensed

launch activities, would be named as

additional insured under the required

third-party liability policy.

3. Claims for damage or loss to

property belonging to the Government,

its agencies, contractors and

subcontractors, involved in licensed

launch activities, would be covered

under the required Government

property policy, even if the damage or

loss is caused by Government

personnel, including employees of the

Government, its agencies, and its

contractors and subcontractors,

involved in licensed launch activities,

absent their willful misconduct.

These three forms of protection from

risk are explained below, in order.

1. The proposed regulations would

clarify that Government employees are

included within the definition of third

parties. This is significant because it

means that Government employees'

claims for property damage or bodily

injury would be compensated under the

third-party liability insurance policy (or

other demonstration of financial

responsibility) required of the licensee

up to the limit the Office establishes,

within the statutory ceiling, based upon

the Office's determination of maximum

probable loss. (An explanation of the

Office's risk-basing methodology for

setting insurance requirements is set

forth in the section -by-section analysis,

below.)

The definition of third parties would

also include employees of U.S.

Government contractors and

subcontractors involved in licensed

launch activities to ensure that their

claims would also be covered by the

required third-party liability insurance

policy, in accordance with the statue.

This approach is in accord with the

definition of "third party" contained in

the statute, 49 U.S.C. 70102(11), and the

legislative history which expressly

states that "Government personnel

directly associated with the commercial

launch operations are still classified as

third parties." S. Rep. No. 100-593, 100

Cong., 2d Sess. 8 (1988). This protection

is necessary to minimize the risk the

U.S. Government would otherwise bear

if it were to accept responsibility for

these claims under the Act.

Currently, through a reciprocal waiver

of claims agreement executed by the

Office on behalf of the U.S. Government,

the United States waives and releases

claims it may have against the licensee

and customer and their respective

contractors and subcontractors, and

agrees to be responsible, for property

damage it sustains in excess of required

insurance, and for bodily injury or

property damage sustained by its

employees in excess of required

insurance. 5 The Government is required

5The reciprocal waiver of claims agreement is

used by the Office to implement the Government's

statutory responsibility to waive claims. 49 U.S.C.

70112(b)(2) requires a Government waiver only to

the extent claims exceed the amount of insurance

that is required to protect Government property.

However, under current practice, the agreement

provides that claims for injury or losses suffered by

to extend this waiver of claims and

assumption of responsibility to its

contractors and subcontractors. This

practice would be altered under the

proposed regulations in the following

way. Because claims of Government

employees and employees of

Government contractors and

subcontractors against the other launch

participants would be covered as thirdparty claims under the liability

insurance policy that the licensee

obtains, the U.S. Government would not

be required to assume responsibility for

them as part of the reciprocal waiver of

claims required in 49 U.S.C.

70112(b)(2). This approach deviates

from the current practice of the Office

but, we believe, more precisely reflects

the intent of the statute.

Given that Government personnel are

deemed third parties, their claims

against the other launch participants

would be presented as part of the

successful third-party claims for which

industry would seek payment from the

Government under the payment of

excess claims provision of the statute

(so-called "indemnification"). In

essence, the Government's agreement to

protect launch participants from thirdparty claims in excess of required

insurance would extend to cover the

outstanding claims of its employees,

and Government contractor and

subcontractor employees, after the

limits of the insurance policy obtained

by the licensee have been reached.

An alternative view-that

Government personnel should not be

considered third parties-has been

suggested by representatives of the

commercial space launch industry. This

view suggests that the 1988

Amendments assigned to the United

States Government an assumption of

responsibility and risk for losses

sustained by Government personnel,

including Government employees and

employees of Government contractors

and subcontractors, who are involved in

licensed activities. This assumption of

risk would be in addition to the three

areas of risk the Government has agreed

to accept under the Act, as delineated

above. The Office does not agree.

Considering Government personnel as

third parties enables their claims to be

covered by required third-party liability

insurance under 49 U.S.C.

employees of the Government are waived only to

the extent those claims exceed the required amount

of third-party liability insurance. One reason the

Office has taken this approach is that if Government

employee claims for bodily injury or property

damage were compensated under the property

policy rather than the liability policy, the

Government's waiver of claims for property damage

could be triggered too soon leaving Government

claims for property damage or loss uncompensated.

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701 12(a)(3)(A)(i). Absent this protection

for Government employees, the

Government would be assuming an

unfunded contingent liability for the

successful claims of Government

employees against other launch

participants, without explicit statutory

authority for doing so. This is contrary

to appropriations laws. The Office does

not believe that explicit statutory

authority is provided by the

Government waiver of claims provision

of the Act, which limits the

Government's waiver to excess property

damage claims. 49 U.S.C. 70112(b)(2).

Absent this protection for employees of

Government contractors and

subcontractors, additional costs to

protect Government contractors and

subcontractors from these risks would

likely be passed to the Government,

defeating the statutory directive to

protect the Government from certain

liability risks, at no cost to the

Government.

In the Office's view, this approach is

beneficial to both the U.S. Government

and nongovernmental launch

participants. Nongovernmental launch

participants are protected from claims

by Government personnel, including

employees of the Government's

contractors and subcontractors, for loss

of injury, by means of required liability

insurance and procedures for U.S.

Government payment of excess thirdparty claims, up to $1.5 billion above

the required amount of liability

insurance. The U.S. Government is

protected in the event its personnel, as

well as those operating on behalf of the

Government, are exposed to risk of

property damage or bodily injury

because their claims will be

compensated under the liability policy

the licensee obtains at no cost to the

Government. Considering Government

personnel as third parties is not

intended to supplant the individual

rights of Government employees to file

claims under the Federal Employees'

Compensation Act (FECA), or the rights

of Government contractor employees

under workers compensation laws.

2. Government personnel would be

protected from third-party liability,

absent their willful misconduct. The

statute explicitly requires that the

Government, "executive agencies and

personnel, contractors, and

subcontractors of the Government" be

protected under an insurance policy

required under section 70112(a), "to the

extent of their potential liability for

involvement in launch services, at no

cost of the Government." 49 U.S.C.

701 12(a)(4). Therefore, under the

liability policy, Government personnel

are both protected parties, or additional

insureds, and potential claimants.

3. Under the property policy required

under 49 U.S.C. 70112(a)(1)(B), United

States Government property is protected

from damage from any source as a result

of licensed activities, that is, even if the

damage is caused by Government

personnel, absent their willful

misconduct.

Property Protection for Governm ent

Launch Participants

In addition to protection from thirdparty liability, as explained above,

Government launch participants are

protected from the risk of their own

property losses where their property,

facilities, equipment or personnel, are

used to support commercial launch

operations. In the Office's view, this risk

is allocated primarily to the licensee,

who is required under 49 U.S.C.

701 12(a)(1)(B) to obtain liability

insurance (or otherwise demonstrate

financial responsibility), up to the $100

million statutory ceiling, to compensate

for the maximum probable loss from

claims by the U.S. Government against

a person for damage or loss to

Government property resulting from an

activity carried out under the license.

The Government waives claims for

property damage to the extent those

claims exceed the required amount of

insurance or result from willful

misconduct of the government or its

agents.

This requirement to protect

Government property addresses an

important objective-to assure that

facilities used by commercial launch

operators can be restored promptly to

current launch-ready status. These

facilities are considered critical to U.S.

national security interests and funds

must be readily available to repair them

in the event they are damaged as a result

of commercial launch activities.

Two recurring issues are the scope of

Governmental property that must be

protected by property insurance and the

extent to which Government property

that is either on a Federal range but not

used to support a licensee's launch, or

off the Federal range entirely, is

required to be covered by insurance.

Government property on a Federal range

that is not used for commercial launch

support purposes may include anything

from a U.S. Post Office to launch

vehicles or components that are

intended for use exclusively in

Government launch operations.

The Office's view is that any U.S.

Government property that is on a

Federal range facility is exposed to

damage or loss as a result of licensed

launch activities conducted on that

facility. Accordingly, coverage for all

such property must be provided to

ensure the U.S. Government is fully

compensated. The only exception

would be for a Government payload

where the Government is the customer

for the licensed launch activity. (A

discussion of how different types of

Government property on a Federal range

facility are considered in establishing

insurance requirements for Government

property is presented in the section-bysection analysis accompanying

proposed § 440.7, Determination of

Maximum Probable Loss.)

It is also the Office's view that

Government range facility assets that are

not on the launch facility from which

the launch takes place, but are

identified as being exposed to damage

or loss as a result of licensed launch

activities, should also be covered by the

required property insurance. For

example, a licensed launch at Cape

Canaveral Air Station, Florida, could

expose Government assets on

neighboring Kennedy Space Center

(KSC) to damage or loss. Under the

proposed regulations, the Office would

include these assets in determining

appropriate insurance levels for

Government property and prescribe that

property at KSC be covered. The Office

believes that this approach is necessary

and reasonable to carry out the statutory

mandate of protecting Government

range assets exposed to risk from

commercial launch activities. Similarly,

a licensed launch conducted at a

commercially operated launch site or

spaceport situated on, or adjacent to, a

Federal range facility, would expose the

Federal range facility to risk of damage

or loss. Accordingly, insurance to

protect the Federal range facility placed

at risk would be required even if there

were no Government involvement in

supporting licensed launch activities

conducted at the commercial launch

site.

In the Office's view, Government

property that is involved in licensed

launch activities but is located at a site

that is remote from the launch site

would be covered by the third-party

liability insurance protection required

of the licensee because risk to that

property should be no greater than the

risk posed to other third-party property.

Government property meeting this

description would include, for example,

remote Government tracking stations

and other support facilities located

downrange from the Federal range

facility at which the launch takes place.

Accordingly, Government property

that is not located on the Federal range

facility from which the launch takes

place or not located at a neighboring

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Federal range facility would be included

under the third-party liability insurance

protection required of the licensee. This

would include any unrelated

Government property located outside of

a Federal range facility, such as a U.S.

Post Office building.

It has been suggested that the

additional cost of covering all

Government property, wherever located,

would be prohibitive. However, the

Office views the U.S. Government as

situated similarly to any other third

party for purposes of calculating

maximum probable loss for property

damage claims off the range, subject to

the limited exception noted above for

nearly Federal range facility assets

located in close proximity to, or

adjacent to, a Federal range. This is

because the probability of damaging

unrelated government property away

from the launch site is no different from

that of damaging private property off the

launch site. The Office does not believe

that this coverage should increase the

cost of liability insurance or expand the

risks covered by the policy.

In summary, all Government property

on a Federal range facility, whether or

not involved in licensed launch

activities, must be covered by the

required Government property

insurance policy (or other

demonstration of financial

responsibility). Federal range facility

assets adjacent to or in close proximity

to the launch site where licensed launch

activities take place would also be

covered by required property insurance.

Government property located away from

the Federal range facility that is used to

support licensed launch activities, such

as downrange tracking stations, are not

covered by the required Government

property insurance policy, nor is

Government property that is located off

the Federal range facility and totally

unrelated to licensed launch activities.

Instead, with respect to these

Government assets, the Government is a

third party and its claims for loss or

damage would be covered under the

required third-party liability insurance

policy (of other demonstration of

financial responsibility), up to the limits

required by the Office.

Some of the confusion surrounding

the required coverage of Government

property results from the manner in

which licensees have satisfied the

financial responsibility requirements for

protecting Government property. Some

licensees have obtained two types of

policies to address Government

property. One policy typically provides

coverage for United States Government

property, including property of United

States Government contractors and

subcontractors, that the licensee utilizes

or otherwise has in its care, custody or

control at the site where licensed launch

activities take place. The second policy

provides third-party liability coverage

for all other property, including

Government property located elsewhere

on the Federal range facility. In the first

policy, the United States and its

contractors and subcontractors are the

named insureds; in the second policy,

the additional insureds are the same

parties as those protected in satisfying

the third-party liability insurance

requirement. This approach

accommodates certain customary

insurance practices in covering property

losses but is not required by the Office.

However, where a licensee elects to

protect certain Government property

under its third-party liability insurance

policy, coverage cannot be allowed to

limit or dilute the availability of

insurance proceeds to cover third-party

liability claims. To avoid this

possibility, some licensees have

submitted a liability insurance

certificate indicating two levels of

coverage, i.e., one amount to cover

claims for damage to Government

property that is not in the licensee's

care, custody or control and another

amount for "other' third-party liability,

claims.

The proposed regulations would

continue the Office's current practice,

implemented through license orders, of

requiring coverage for property of

Government contractors and

subcontractors under the Government

property policy. The Office's rationale

for doing so includes the following

considerations. Absent certain

protections for Government contractors

and subcontractors, the Government

would bear greater risk and incur greater

expense than is contemplated under the

statute's risk and incur greater expense

than is contemplated under the statute's

risk allocation regime. Section

701 12(b)(2) of the Act requires the

Secretary of Transportation to enter into

reciprocal waivers of claims under the

licensee, its customer, and the

contractors and subcontractors of each,

"for the Government, executive agencies

of the Government involved in launch

services, and contractors and

subcontractors involved in launch

services. * * *" The waiver applies

only to the extent that claims are more

than the amount of Government

property insurance or other

demonstration of financial

responsibility required under 49 U.S.C.

70112(a)(1)(B). By waiving claims "for"

its contractors and subcontractors

involved in launch services, the

Government passes certain rights and

responsibilities to its contractors and

subcontractors, consistent with those

the Government accepts, including the

waiver of claims for property damage

above required insurance. In light of the

waiver the Government undertakes on

behalf of its contractors, the

Government would necessarily assume

greater risk or costs if the Government's

contractors and subcontractors were not

also protected by required Government

property insurance. If there were no

insurance protection provided by the

licensee for property of Government

contractors and subcontractors involved

in launch services, those parties would

be likely to seek compensation for their

losses from the Government. Thus, the

Government would be accepting the risk

of property losses in excess of required

insurance, plus, ad a practical matter,

responsibility for property losses

incurred by its contractors and

subcontractors. Alternatively,

Government contractors and

subcontractors could purchase property

insurance protection, as a licensee has

suggested; however, the cost would

likely be passed through to the

Government as an allowable cost under

a contract with the Government. This is

contrary to the statutory directive that

the Government be afforded certain

protections at no cost to the

Government.

In determining to adopt this approach

in the proposed regulation, the Office

also considered whether coverage for

property of Government contractors and

subcontractors could be provided under

the third-party liability insurance

protection the licensee is required to

obtain. This approach is contrary to the

definition of "third party" contained in

the statute at 49 U.S.C. 70102(11) and

was not further considered.

There is one important distinction in

the requirement to protect property of

Government contractors and

subcontractors in the Office's view,

however. That is, with respect to the

Government and its agencies, all

Government property on a Federal range

facility must be protected. With respect

to Government contractors and

subcontractors, only property on a

Federal range facility belonging to those

contractors and subcontractors involved

in licensed launch activities must be

covered under the property policy.

Government contractors and

subcontractors that do not support

licensed launched activities or whose

property is located away from a Federal

range facility would be protected as

third parties under the liability policy,

and their claims for injury, damage or

loss would be compensated by the

required third-party liability policy. For

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example, a food concessionnaire located

on a Federal range facility would be

considered a third party for purposes of

insurance and risk allocation.

One licensee has noted its

disagreement with the Office's

requirement. In the licensee's view,

requiring this coverage is contrary to the

statute and legislative history. The

licensee has sought clarification of the

Office's requirements to avoid the

potential for duplicative, or possibly

unnecessary, coverage under the

liability and property policies.

The Office disagrees with the

licensee's contention for the reasons

explained above. The U.S. Government

utilizes contractors and subcontractors

in carrying out certain activities at

Federal range facilities. Accordingly, for

purposes of risk allocation and

protection of the U.S. Government, its

contractors and subcontractors stand in

the shoes of the Government and its

agencies involved in launch services.

The Office believes that any other view

would defeat reasonable

implementation of the Amendments.

The Office believes that a variety of

risk management approaches to

protecting Government property may be

acceptable as long as the statutory

objectives are achieved; that is,

providing for the compensation of

property damage sustained by the

United States, its agencies involved in

launch services, and its contractors and

subcontractors, resulting from activities

carried out under the license and

ensuring that policy proceeds will be

made available to the Government to

effect needed repairs in the event of any

damage resulting from licensed launch

activities. These objectives can best be

met through a non-fault, nonsubrogation, comprehensive all-risk

type of property policy that would

compensate the U.S. Government on

behalf of itself and Government launch

participants, as additional insureds, in

the event of any occurrence resulting in

property damage, regardless of fault,

absent willful misconduct by the

Government or its agents. In order to

satisfy statutory objectives, the policy

must respond to damage caused by

Government launch participants, as well

as Government personnel, i.e.,

employees of the Government and its

contractors and subcontractors. An

exception may be allowed where

insurance is not available because of a

policy exclusion that is determined by

the Secretary of Transportation to be

usual for the type of insurance involved.

In those instances, the Secretary,

following consultation with other

interested Federal agencies, may waive

claims for property damage from the

first dollar of loss. In all other

circumstances, coverage must be

provided to protect U.S. Government

property from any damage incurred

during or as a result of licensed launch

activities, regardless of fault, absent

willful misconduct by the Government

or its agents.

Government Customer

When the licensee's customer is a

United States Government agency, the

agency is treated the same as any

nongovernmental customer for purposes

of determining the appropriate amount

of property insurance required of the

licensee and in terms of the U.S.

Government's waiver of claims or

property damage or less above the

required amount of property insurance

under 49 U.S.C. 70112(b)(2). That is, a

Government payload is not covered by

the required Government property

insurance and the United States

Government agency-customer accepts

responsibility for property damage to

the payload. For other purposes, the

government agency customer is an

agency of the United States involved in

licensed activities. This is an important

distinction because employees of a U.S.

Government agency are third parties

and their claims against other launch

participants for bodily injury or

property damage are covered by the

third-party liability policy required

under 49 U.S.C. 70112(a)(1)(A), even

when the agency that employs them is

involved in the launch as the customer.

The basis for the Office's distinction is

grounded in appropriations law. An

agreement on the part of the United

States Government to be responsible for

claims of its employees for injury or

damage from the first dollar of loss,

other than employee claims

compensated under FECA, would be an

unfunded contingent liability which, in

the Office's view, is not statutorily

sanctioned. Rather, through statutorilymandated insurance insurance

protections, waiver of claims

requirements and payment of excess

claims provisions, Congress has limited

the unfunded contingent liability the

U.S. Government may accept. The

Office believes its approach to

protecting the U.S. Government when it

is a customer of commercial launch

services providers is consistent with the

limit of risk the Government has agreed

to accept under the statute.

To summarize the Office's view of the

statutory allocation of risk regime,

whereas nongovernmental parties

involved in licensed launch activities

accept responsibility for property

damage or loss they sustain and for

injury or loss sustained by their

employees, the United States

Government is covered on both

accounts by insurance secured by the

licensee. Should the loss exceed the

amount of required insurance that a

licensee has secured to cover such

claims, then the Government assumes

responsibility for loss of or damage to its

property (and property of its contractors

and subcontractors) in accordance with

required reciprocal waivers of claims

under 49 U.S.C. 70112(b)(2). Should the

loss exceed the required insurance a

licensee has secured to cover third-party

liability, then the Government, in effect,

assumes limited responsibility for losses

above that amount sustained by

Government personnel by agreeing to

pay excess third-party claims. At the

same time, nongovernmental parties are

effectively protected from claims for

Government property losses by required

insurance and the Government's waiver

of claims in excess of insurance; and

from third-party claims, including

claims of Government personnel, by

required liability insurance and by

procedures for U.S. Government

payment of third-party claims up to $1.5

billion in excess of insurance.

Section-by-Section Analysis

Part 440, Subpart A-Financial

Responsibility for Licensed Launch

Activities

Section 440.1 -Scope; Basis

Proposed § 440.1 identifies the

activities to which the Office's proposed

financial responsibility and allocation of

risk requirements would apply as all

commercial space launch activities that

are authorized to be carried out under

a launch issued by the Office.

Section 440.3-Definition

Section 440.3 defines terms used in

part 440 that are not otherwise defined

in 14 CFR Ch. III. Terms defined in

§ 401.5 of the Commercial Space

Transportation Licensing Regulations

have the same meaning for purposes of

this part unless otherwise indicated.

Some of the terms, as defined in the

proposed regulation, are selfexplanatory and required no additional

elaboration. Other terms are discussed

below.

The term "contractors and

subcontractors" is defined in this

section to address parties intended to be

covered by the phrase "contractors and

subcontractors involved in launch

services" in 49 U.S.C. 70112 and 70113.

This is important because these

contractors and subcontractors have

certain responsibilities and enjoy

certain benefits under the statute

relating specifically to the requirements

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for insurance (or other form of financial

responsibility), reciprocal waivers of

claims and the U.S. Government's

payment under certain circumstances of

successful third party claims in excess

of required liability insurance.

As used in the Act, the term

"contractors and subcontractors" is

generally modified by the phrase,

"involved in launch services." The term

"launch services" is defined by the Act

to include "(A) activities involved in the

preparation of a launch vehicle and

payload for launch; and (B) the conduct

of a launch." 49 U.S.C. 70102(5). When

this term is coupled with "contractors

and subcontractors" for purposes of

sections 70112 and 70113 of the statute,

a literal reading could narrowly limit

the group of covered contractors and

subcontractors to service providers

involved strictly in on-site launch

preparatory and support activities. The

Office does not believe that this

interpretation is consistent with the

overall objective of the financial

responsibility and payment of excess

claims provisions of the statute, which

is to ensure financial protection and an

equitable sharing of risks among the

parties exposed to potentially

catastrophic losses from a launch

accident. The group of covered parties

should not be limited only to the most

obvious and visible launch participants

that are engaged in preparing the launch

vehicle and payload for launch and

conducting the launch at the launch

range. This group should also

encompass, for example, the

manufacturer that produces a

component part for installation in the

launch vehicle or payload, or the

supplier that delivers a piece of

equipment or other physical object used

to prepare for or conduct a launch, as

well as the contractor that constructs or

refurbishes a launch pad specifically for

licensed launch activities. In other

words, to the extent a third-party loss is

attributable to the direct or direct

involvement of contractors or

subcontractors who have provided

goods or services in connection with

licensed launch activities, the required

insurance should cover their resulting

liability. It is important to note that the

statute addresses claims that result from

an activity carried out under a license.

Third-party claims that do not result

from licensed activities are not

addressed by the financial responsibility

requirements of the statute. For

example, third-party claims that arise

during the manufacture of a component

part would not be covered by required

insurance.

Accordingly, the term "contractors

and subcontractors" as set forth in

proposed § 440.3 would include all

contractors and subcontractors at any

tier that participate in or contribute to

the conduct of licensed launch

activities, including suppliers of

property and services and component

manufactures of a launch vehicle or

payload. The Office requests comments

on the practical ability to protect all of

these parties through required

insurance.

The definition of the term "customer"

in proposed § 440.3 is intended to

respond to concerns that the protections

afforded "the customer" under the

statutory allocation of risk regime be

available not only to the party that

actually contracts with the commercial

launch services provider and

prospective licensee, but also to the

intended beneficiary or recipient of

launch services when the latter party is

different from the former. For example,

this situation typically arises in the

context of "turnkey" contracts for on

orbit delivery of a satellite. Under this

type of arrangement, the ultimate

owner/operator of the satellite contracts

with a satellite manufacturer to produce

the satellite and secure launch services

to deliver the satellite to a prescribed

orbit. The satellite manufacturer

purchases launch services directly from

a commercial launch services provider,

and transfers title to the satellite only

after successful completion of the

launch and on-orbit tests to confirm that

the satellite is functioning properly. For

this reason, the term "customers" also

includes a person to whom the procurer

of launch services conditionally sells,

leases, assigns, or otherwise transfers its

rights in the payload or a part thereof.

Another example is the purchaser of an

interest in the satellite, e.g.,

transponders, from the party that owns

the satellite whether that party has

purchased launch services directly or

has contracted for on-orbit delivery on

a "turnkey" basis. Another example is

the customer who has placed its

property on board the payload in order

to receive an on-orbit service, such as

microgravity experiments. The Office

believes that these parties should be

viewed as "customers" in order to

enable U.S. commercial launch services

providers to compete with foreign

operators, consistent with one of the

objectives of the 1988 Amendments.

The proposed definition of "customer"

therefore includes the person who

enters into a launch services agreement

with the licensee, as well as any person

to whom the customer has,

conditionally or otherwise, sold, leased,

assigned or otherwise transferred any of

its rights in the payload to be launched.

The term "customer" does not

include the ultimate beneficiary of the

payload services, as opposed to launch

services, because doing so could

theoretically include any person who

uses a television or makes a longdistance telephone call, and goes

beyond the intended scope of the Act.

When the licensee's customer is a

U.S. Government agency, it is not

intended that the agency be treated any

differently from a nongovernmental

customer with respect to the payload.

Thus, as discussed in greater detail in

the accompanying supplementary

information under the heading,

"Government Customer," and in the

analysis of § 440.17 of the proposed

regulations, the Government payload is

not covered by required Government

property insurance and the U.S.

Government agency involved accepts

responsibility for property damage to

the payload. For other purposes, the

Government customer is an agency of

the United States involved in licensed

launch activities and, as such, it is a

named insured in required insurance

and its employees are deemed third

parties.

A definition of the term "Government

personnel" has been included in

proposed § 440.3 for purposes of

identifying those employees of the

Government and its contractors and

subcontractors entitled to protection

and coverage by required insurance.

A definition of the term "hazardous

operations" is included to add clarity to

the list of information required by the

Office to perform a determination of

maximum probable loss. The definition

proposed is consistent with the Office's

study, "Hazard Analysis of Commercial

Space Transportation," prepared in May

1988, and is intended to capture

activities that create a potential for an

accident that would result in damage or

injury.

The term "liability" refers to any legal

obligation, whether arising under

United States, international or foreign

law, to pay claims for bodily injury or

property damage resulting from licensed

launch activities.

The term "licensed launch activities"

is intended to reflect the activities

subject to the Department's authority

under the Act to license the launch of

a launch vehicle. For purposes of

applying the proposed regulations, it

focuses specifically on activities

authorized to be conducted under a

particular license issued by the Office.

The term "maximum probable loss"

(or MPL) refers to the Office's

determination, in the form of a dollar

amount, of the greatest potential losses

for bodily injury and property damage

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that can reasonably be expected to occur

as a result of licensed launch activities.

The Office determines the value of the

maximum probable loss attributable to

licensed launch activities by analyzing

the known hazards, the consequences

(amount of loss), and probability of loss

associated with such activities. It does

not mean maximum possible loss, that

is, a "worst case" scenario regardless of

likelihood. Rather, assessing maximum

probable loss employs risk analysis

methodology. The analysis takes into

account the characteristics of one or

more launches in similar circumstances,

the proximity of persons and property

on and around the launch site and the

likelihood of injury and damage within

an established probability threshold. (A

more elaborate explanation of the

Office's methodology for determining

the value of maximum probable loss is

provided in the section -by-section

analysis accompanying § 440.7.)

Through risk analysis, the Office

determines two results: the probability

an undesirable event will occur and the

consequences (measured as the amount

of loss) of that event. The Office then

compares these results to a threshold

probability of occurrence selected by the

Office in order to determine whether the

results are reasonable to expect, or

probable, and therefore warrant

financial protection against their

occurrence. Typically, the larger, or

more catastrophic, the potential loss or

damage, the less likely it is to occur.

The threshold probability is the

probability value selected by the Office

at and below which loss or damage that

can be reasonably expected to occur is

measured. Loss or damage that has a

likelihood of occurring that is equal to

or greater than the threshold probability

is considered probable. Accordingly,

insurance to protect against that amount

of damage or loss is required. Loss or

damage that has a likelihood of

occurring that is less than the threshold

probability is not reasonably likely to

occur and is therefore considered

improbable. Accordingly, insurance to

protect against such loss or damage is

not required. In summary, maximum

probable loss is the dollar value

determined by the Office as the upper

bound of loss that can reasonably be

expected to result from licensed launch

activities. Loss or damage exceeding the

upper bound would result from events

that are so very unlikely as to be

unreasonable to expect. That is, they are

not sufficiently probable.

Currently, the Office utilizes two

different threshold probabilities in

determining third-party and

Government property maximum

probable loss. The threshold probability

used for determining third-party MPL,

exclusive of Government personnel, is

on the order of one in ten million. The

threshold probability for determining

Government property MPL and thirdparty MPL for Government personnel is

on the order of one in one hundred

thousand. The thresholds are defined to

accommodate the difficulty of setting

precise bounds on risks that, by

definition, are somewhat remote.

The Office's selection of on the order

of one in ten million as the threshold

probability (the probability of

occurrence) for determining third-party

MPL is based upon the Government's

experience in supporting launch

activities at Federal ranges. Because of

the stringent safety requirements used at

Federal range facilities, the general

public in the vicinity of the range has

little chance of being adversely affected

by a launch event. As a result, the

likelihood of a third-party casualty

resulting from a launch from a Federal

range should be no greater than on the

order of one in one million. If the Office

used one in one million as the threshold

probability for determining third-party

MPL, no third-party loss would

reasonably be expected to occur, the

MPL would be zero, and no third-party

liability insurance would be required.

The Office does not believe that this was

the result Congress intended in adopting

maximum probable loss as the basis for

setting financial responsibility

requirements. Accordingly, the Office's

view is that the Act requires a

reasonable and measurable amount of

financial responsibility by licensees and

has selected the very low threshold of

on the order of one in ten million

probability of occurrence as the

threshold probability that achieves this

result. The MPL determination using

this threshold signifies that there is less

than on the order of a one in ten million

chance that claims for third-party losses

would exceed the required amount of

insurance. Stated another way, the

insurance requirement set by the Office

is the maximum magnitude of loss such

that there is less than on the order of

one in ten million chance of exceeding

this amount.

The Office utilizes on the order of one

in one hundred thousand as the

threshold probability for determining

Government property insurance

requirements because Federal range

facilities, by their very nature and

intended purpose, will be exposed to

hazardous activities and may suffer

some damage. Thus, the Government

appropriately accepts greater risk than

third parties and the MPL is determined

using the higher threshold probability.

This assumption of some amount of risk

may, in part, account for the lower

statutory ceiling on insurance

requirements and the Government's

waiver of claims for damage above the

amount of required insurance.

Similarly, Government personnel,

including employees of Government

contractors and subcontractors, accept

greater risk than the general public or

other third parties through their

exposure to or involvement in

hazardous operations. For this reason,

the third-party MPL determination

includes risks to Government personnel

measured at the probability threshold of

on the order of one in one hundred

thousand, rather than on the order of

one in ten million.

In the Office's experience, this

approach results in insurance

requirements that are reasonable, within

the statutory ceiling for required

insurance, and adequate to protect U.S.

Government interests.

The proposed definition of the term

"third party" reflects the definition

contained in 49 U.S.C. 70102(11).

However, the Office's definition of

"third party" clarifies the statutory

definition by expressly including as

third parties United States Government

personnel, including employees of

Government contractors and

subcontractors, to the extent that they

are directly involved in providing

launch support or launch services for

licensed launch activities. The purpose

of the definition is to ensure that

liability insurance, or other form of

acceptable financial responsibility,

required under § 440.5(b) of the

proposed regulations is available to

cover the claims of Government

personnel, as well as persons not

involved in licensed launch activities,

who are injured or otherwise sustain a

loss as a consequence of those activities.

Government personnel who contract

personally and directly with a licensee

or other nongovernmental launch

participant to provide a service are not

considered Government personnel for

purposes of these regulations when

performing that service. In addition, the

proposed definition would expressly

exclude employees of other launch

participants because their claims for

injury or loss are not intended to be

included in the Office's determination

of required third-party liability

insurance. Responsibility for employee

losses is assumed by each employer

under the reciprocal waiver of claims

required under § 440.17 of the proposed

regulations, and those employee claims

are not eligible for payment by the U.S.

Government in the event of excess thirdparty claims.

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The term "United States" is intended

to refer to the United States Government

in its entirety and as the collective sum

of its various parts.

Section 440.5-General

Although issuance of a license

constitutes legal authorization to carry

out the activities specified therein,

certain conditions must be satisfied for

the licensee to proceed with authorized

activities.

Section 440.5(a), as proposed, would

establish the fundamental requirement

that authorization to conduct licensed

launch activities pursuant to a license

issued by the Office is contingent upon

the licensee's demonstration of financial

responsibility and compliance with risk

allocation requirements as set forth in

proposed regulations. In addition to

insurance required by this part, a

licensee may be required by other

agencies of the United States

Government to obtain other types of

liability or property insurance covering

activities involving United States

launch property, launch services or

personnel. Other insurance

requirements may include workers

compensation, unemployment

insurance, employer's liability,

comprehensive automobile liability,

environmental liability, or insurance

required by Federal, State or local

environmental protection laws and

regulations. These other insurance

requirements are not set forth in license

orders issued by the Office; however,

licensees are not relieved of the

requirement to comply with them.

In addition, as further explained in

the section -by-section analysis

accompanying § 440.15(b), the financial

responsibility requirements prescribed

under the proposed regulations would

preempt those provisions in agreements

between the licensee and the United

States, or any agency thereof, involving

United States launch property or launch

services that address financial

responsibility, allocation of risk, and

related matters covered by 49 U.S.C.

70112 and 70113. The objective of this

preemption is to avoid duplicative

requirements, but not to relieve the

licensee of contractual or legal

obligations intended to address interests

other than those served by the statute.

Section 440.5(b) would codify the

Office's existing practice of setting the

required amount of financial

responsibility in license orders. As a

procedural matter, the Office has relied

on the issuance of license orders to

supplement the license and prescribe

specific terms, conditions and

limitations, including financial

responsibility requirements, on a caseby-case basis. Many of these terms and

conditions would now be set forth in

rules of general applicability. The

amount of financial responsibility that

must be obtained would continue to be

set forth in a license order. The license

order would generally be issued

concurrently with the license, although

there may be circumstances when it

would follow issuance of the license.

The Office may also revise financial

responsibility requirements in a

subsequent license order in the event of

a change in exposed property or risks

affecting the required amount of

coverage. In any event, to the extent the

license order reflects the Office's

determination of maximum probable

loss, the timing of its issuance would be

subject to the provisions of proposed

§ 440.7.

Propose § 440.5(c) states the

fundamental principle that evidence of

financial responsibility provided by the

licensee is no substitute for actual

financial responsibility of the licensee.

In the event the licensee fails to obtain

or maintain insurance or financial

responsibility in amounts and according

to the terms and conditions prescribed,

the licensee would bear the risk and be

liable for claims resulting from licensed

launch activities that would otherwise

have been covered. In addition, in the

event of a defense raised, or exclusion,

to coverage under the policy that

relieves the insurer from compensating

claims, the licensee would remain

responsible for satisfying the claim. The

only exception to this fundamental

principle provided under the statue is

where the Secretary of Transportation

specifically determines that an

exclusion is usual for the type of

insurance involved, and the United

States Government agrees to provide for

paying claims from the first dollar of

loss. As explained in the section-bysection analysis accompanying § 440.19,

a policy exclusion would be considered

"usual" only if insurance covering the

excluded risk is not commercially

available at reasonable rates. The

licensee is required to submit a

certification to that effect when

demonstrating compliance with

financial responsibility requirements.

No final determination is made by the

Department unless and until an

occasion arises when the Department is

called upon to prepare a compensation

plan covering excluded claims. If it then

becomes evident that insurance was, in

fact, available at commercially

reasonable rates, the Government need

not pay claims from the first dollar of

loss and the licensee remains

responsible for the liability.

Failure by the licensee to comply with

these requirements may result in

suspension or revocaton of the license

and also subjects the licensee to other

penalties as provided in section 405.7 of

this chapter.

Section 440.7-Determination of

Maximum Probable Loss

Section 440.7, as proposed, describes

the Office's procedures for assessing and

issuing a determination of maximum

probable loss (MPL) on which financial

responsibility requirements are based.

Section 440.7(a) would provide that a

determination of maximum probable

loss resulting from licensed launch

activities forms the basis of the financial

responsibility order issued by the

Office.

Section 440.7(b) would provide the

timing for the Office's issuance of the

MPL determination, consistent with the

Act. The Act provides that MPL

determinations must be made no later

than 90 days after a licensee or

transferee requires it and has submitted

all of the information needed to make a

determination. In practice, the Office

begins the risk analysis required for the

MPL determination during the 180-day

license application review period. Doing

so enables the Office to issue financial

responsibility requirements

concurrently with a license so as not to

delay commencement of licensed

launch activities.

On a very few occasions, the Office

has been unable to issue the MPL

determination concurrently with the

license. This result may occur for

several reasons. In order to conduct the

analyses, the Office requires from the

applicant information described in

Appendix I to the proposed regulations

and may also request information from

Federal range facilities involved in

proposed launch activities or exposed to

risk of damage or loss as a result of

proposed activities. Incomplete

information, either from the applicant or

from the Federal range facility, can

extend the amount of time necessary for

the Office to complete and issue the

MPL determination. Typically, a

delayed determination results from

submission by the applicant of

incomplete information on which to

perform the necessary risk analyses.

Until the Office has complete and

sufficient information the 90-day period

does not begin. A delayed determination

as a result of incomplete information is

not untimely. In addition, the Act

requires that the Office consult with

heads of other appropriate Federal

agencies in issuing financial

responsibility requirements. The

Office's practice has been to share its

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MPL analyses with affected Federal

agencies and request comments within

three weeks. The Office's experience has

shown that three weeks may not be

sufficient for other Federal agencies to

complete their reviews and issuance of

the MPL determination may necessarily

be delayed.

Accordingly, proposed § 440.7(b)

would provide that the Office notify a

licensee or transferee of any delays in

issuing the MPL determination beyond

the statutory 90-day period. The Office

intends that this provision would be

invoked only in circumstances beyond

the Office's control, such as protracted

consultation with other Federal

agencies.

Proposed § 440.7(c) refers to

Appendix I to the proposed regulations

which prescribes information

requirements for issuing a maximum

probable loss determination. Appendix I

is intended to be a comprehensive list

of information requirements, some of

which could be waived by the Office if,

as a result of consultation with the

applicant, the Office finds that the

information is not necessary in light of

the particular launch proposal. Once

information is provided, the person

requesting the MPL determination is

responsible for reporting any changes

that could affect the outcome of the risk

analyses.

As provided in proposed § 440.7(d),

the Office may amend or adjust its

maximum probable loss determination

to reflect any new information relevant

to an accurate assessment of risk. In lieu

of submitting duplicative information, a

person requesting a MPL determination

who has previously been issued one

may certify that there has been no

change from information previously

submitted. This provision is intended to

reduce the regulatory burden on

licensees who conduct similar launch

activities under separate licenses.

An MPL determination must

accompany every license authorizing

launch activities and is therefore

typically performed in conjunction with

the Office's review of a license

application. Section 440.7(e) would

address the situation in which the

Office is requested to issue a

determination of maximum probable

loss resulting from activities that are not

the subject of a specific license

application. A determination made

under this section would not be

governed by the 90-day requirement set

forth in § 440.7(b).

Methodology for Determining Maximum

Probable Loss

The Office derives the value of the

maximum probable loss that may result

to third parties and Government

property from licensed launch activities

through case-by-case risk analyses. The

Office considers factors ranging from the

kinds of hazardous operations, as

defined in proposed § 440.9, to be

conducted under a license, to the

number of third parties that may be

exposed to risk in the event of a launch

accident. Failure modeling techniques,

the Office's experience in preparing

numerous MPL determinations, and

engineering judgment all play roles in

the final determination. A more

complete description of the Office's

approach to hazard analysis and risk

analysis techniques appears in a study,

entitled "Hazard Analysis of

Commercial Space Transportation,"

released by the Office in May 1988. A

copy may be obtained from the Office

upon request. In addition, the Office is

preparing a comprehensive description

of its procedural methodology for

determining maximum probable loss in

a separate report to be made available to

the public. A brief summary of the

Office's approach to determining MPL is

presented below to explain the

underlying rationale for the information

requirements referenced in proposed

§ 440.7(c) and listed in appendix I to

part 440.

In addition to information required

from the applicant, the office obtains

certain information from the Federal

range facility in order to assess properly

the value of Government property

exposed to risk. This information is not

reflected in regulatory requirements.

Typically, this information consists of

identification of facilities the Federal

range facility has authorized for use by

the licensee and the value of those

facilities, other range facilities that the

Federal range facility identifies as

exposed to risk as a result of the

licensee's proposed launch activities

due to their proximity to the licensee's

hazardous operations, the number of

Government personnel that the Federal

range facility believes would be exposed

to risk, and range-required risk

mitigation measures.

Much of the information required to

complete the MPL determination is

provided as part of the application to

conduct a launch. However, because

any person can request a maximum

probable loss determination at any time,

information requirements for obtaining

a determination are included as part of

this proposed regulation. The proposed

information requirements are not

intended to place an additional or

duplicative burden on prospective

licensees and can be satisfied by

specific reference to the license

application.

Appendix I describes the full range of

information required from an applicant

to complete the MPL determination. In

certain circumstances, not all of the

information would be required and the

Office will advise the applicant

accordingly during pre-application

consultation. For example, where a

launch from an isolated location would

not expose any identifiable Government

property to risk, the Office would waive

those information requirements directed

at assessing risk to Federal range facility

assets. A launch proposal may involve

vehicles and risks similar to those

previously considered by the Office and

the Office may waive information

requirements it believes would be

unnecessary or duplicative in light of

existing analyses. Where the Office can

determine, on the basis of the launch

proposal, that certain risks need not be

considered in order to calculate MPL,

the Office will waive the requirements

that pertain to those risks.

The complexity of the MPL analysis

will depend upon the risks that attend

a specific launch proposal. At its most

complicated, a complex launch vehicle

involving hazardous operations and

flight paths that expose people and

property on and off-range to risk, the

Office is able to employ a variety of risk

analysis tools, such as computer models

that estimate impact probabilities,

potential property damage and casualty

expectations. For all proposals,

government property and third-part

losses are considered in separate MPL

analyses.

The Office's objective is to determine

the value of the maximum magnitude of

loss that is sufficiently probable to

warrant financial responsibility

protection. That is, within the stated

probability thresholds, as defined in

proposed § 440.3, the Office must

establish a maximum value of loss. By

corollary, the maximum magnitude of

loss within the probability threshold

drives the MPL value. This means that

the Office need not consider every

single accident scenario that falls within

the threshold probability. Those having

relatively minimal damage

consequences need not be individually

considered. Rather, the office's focus is

on finding the maximum value of loss

that would result from an accident that

is within the specified threshold

probability of occurrence. The Office

does so by identifying specifically the

hazardous activities to be conducted

under a license, Government and thirdparty property placed at risk by those

activities, and the number of third

parties placed at risk. Then, the Office

identifies a range of accident or failure

scenarios and estimates the probability

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of occurrence for each scenario. The

Office then estimates the value of loss

for various accident scenarios.

The Office utilizes several

methodologies, in order of preference, to

estimate the probability of occurrence of

the different scenarios. The order of

preference begins with actual

experience or existing models, and

descends to expert probability analysis

as the second best alternative, followed

by professional engineering judgment.

Estimating the value of loss for each

accident scenario is done similarly,

using different methodologies in an

order of preference. Actual experience is

most reliable and is used wherever it

exists and is directly applicable to a

launch proposal. For pre-flight licensed

launch activities, the Office uses

estimates that are informed by facility

damage tables developed for the Federal

range facilities, building design

specifications, and engineering

judgment. Computer models, such as

the Facility Damage and Personnel

Injury (DAMP) programs, may be used

to estimate damage during and

immediately following vehicle life-off.

For third-party casualties, the Office

develops an Expectation of Casualty

figure for off-range population and

Government personnel at risk.

As noted above, low loss scenarios

need not be considered unless a

possible accident scenario involves

losses that, when combined, may be

significant in determining the value of

the maximum probable loss. However,

in many instances, accident scenarios

are mutually exclusive. For example, a

pre-flight accident that destroys the

launch vehicle means there will be no

launch, and there is no need to

aggregate the damage from a pre-flight

accident of this nature and a postlaunch accident in determining the

maximum value of loss.

In summary, the Office performs a

detailed estimate of property damage

and casualties for the different accident

scenarios that fall within the threshold

probability of occurrence in order to

determine the maximum value of loss.

The MPL value becomes the amount

associated with the most costly accident

scenario falling within the threshold

probability of occurrence.

Government Property

The Office's maximum probable loss

determination for Government property

damage takes into account U.S.

Government property situated on a

Federal range facility, wherever located.

As noted above in the Supplementary

Information, the Office includes as part

of its determination Government range

assets on adjacent Federal range

facilities that are exposed to risk of

damage or loss as a result of licensed

launch activities.

The Office historically has not

considered temporarily placed or

"transient" Government property,

including launch vehicles and payloads,

in calculating the maximum probable

loss determination. The Office bases its

approach on several considerations.

First, the Federal range facility is

responsible for maintaining a schedule

of launch activities. The Government is

therefore aware of upcoming

commercial launch activities and, by

exposing its transient or movable

property to the possibility of damage or

loss due to commercial launch

activities, accepts certain risks. Second,

readily movable property may no longer

be present at the time the licensee

ultimately conducts licensed launch

activities. If that property were included

in the MPL determination, the licensee

may be unfairly burdened with too great

an insurance requirement. One

alternative would be to adjust, either

upward or downward, the amount of

property insurance that would be

required just prior to commencing

licensed activities. This approach is

arguably contemplated by the statue,

which provides for the Secretary to

amend the maximum probable loss

determination when new information so

warrants. However, last minute

adjustments to the MPL determination

due to the Government's action of

placing its property at risk, could prove

administratively burdensome for both

the Office and the licensee, whose

launch could be delayed by having to

demonstrate additional financial

responsibility due to last minute

changes in requirements. Third,

including transient or Government

property temporarily located on the

Federal range, such as launch vehicles

and payloads, could readily drive the

MPL value above the $100 million

statutory ceiling for required insurance.

Although the Act contains provisions

whereby the Department is directed to

review annually the statutory ceilings

on required insurance and report to

Congress proposed adjustments to

conform with changed liability

expectations and the insurance market,

the Office views the $100 million

statutory ceiling on the Government

property insurance requirement as a

clear indication that Congress did not

intend for these Government assets,

which typically cost in excess of $100

million each, to be included as part of

the range assets on which the MPL

determination is based.

The Office makes an important

distinction between transient, movable

property that is not included in the MPL

determination and property that has

been placed in a storage facility on the

Federal range. The latter is included in

the MPL determination. The rationale

for the Office's distinction is that certain

facilities are intended, by design, to

house Government property on a

temporary or long-term basis. However,

where Government property has been

stored in a facility not designed or

intended for storage, thereby exposing

the property to additional risk, the

Office believes it would be unreasonable

to impose the cost of this additional risk

on the licensee. The Office therefore

excludes the stored property from its

MPL determination. In addition, to the

extent this stored property, such as

rocket motors or explosives, may

contribute to the possible extent of

damage to Government facilities, the

Office does not factor the additional

losses that may be attributed to that

property in determining the MPL value.

In taking the approach of excluding

certain transient, movable Government

property, the Office is aware that failure

to include it could expose the

Government to greater risk of loss.

However, the Office believes that its

approach reflects the intent underlying

the comparatively low statutory ceiling

on the Government property insurance

requirement, and is reasonable in light

of the Government's assumption of risk

in placing property on the Federal range

facility in a manner that exposes it to

damage or loss from commercial launch

activities. For these reasons, the Office

believes that its approach is the better

one. Nevertheless, it is important to bear

in mind that, whether or not the value

of certain property is included in

making the MPL determination, damage

or loss to any Government property,

whether fixed or movable, located on

the Federal range facility must be

covered by the insurance policy the

licensee obtains under 49 U.S.C.

70112(a)(1)(B). Comments are requested

on the Office's approach to considering

non-fixed Government property in

determining Government property

insurance requirements.

Current Replacement Value

In determining maximum probable

lose for Government property, the Office

bases its findings on the current

replacement value of the property. The

notion of current replacement value

takes into account the current use and

function of a Government facility, not

its originally intended use. For example,

the current replacement value for a

facility that was originally built to

support engineering operations but is no

longer needed for that purpose and is

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now used as an excess storage facility

would most likely be lower than its

original construction cost, even if a

launch accident meant its total loss. The

Office's rationale is that the cost of

restoring property to its original use

when the Government itself has chosen

not to maintain the property in its

original condition imposes an unfair

cost on the licensee. The reverse

situation may also occur, whereby

restoring property to its current use may

cost more than restoring it to its original

use. This could occur where property

has been up-graded or modified to

support another purpose than originally

intended. In that event, the Office

believes that it is fair and appropriate to

require insurance that covers the

maximum probable loss to the

property's current value, up to the

statutory ceiling. In all circumstances,

the Office consults with Federal range

authorities in valuing Government

property.

Third-Party Property Damage

Under the proposed regulations,

third-party property includes all

property owned by persons or entities

other than the licensee and its customer,

and the contractors, subcontractors, and

employees of each, involved in licensed

launch activities, the Government's

contractors and subcontractors involved

in licensed launch activities, and the

Government (except for property located

on a Federal range facility). It includes

the personal property belonging to

Government personnel involved in

licensed launch activities, and all offrange private and public property other

than property on nearby or adjacent

Federal range facilities for which

Government property insurance

coverage is required.

The risk analysis performed to

determine the value of third-party

property maximum probable loss

utilizes three approaches to estimating

property values: (1) Specific

determinations, (2) averaging, and (3)

setting an upper bound or ceiling. The

Office selects the appropriate

methodology to use on a case-by-case

basis, taking into account such factors as

the availability of information, the

launch site, and the range of risks to

third parties presented by a particular

launch proposal. The Office may use all

three methods of estimating third-party

property losses in one MPL

determining, depending upon the type

and amount of property exposed to loss

or damage as a result of licensed launch

activities. In all instances, the Office

utilizes a conservative approach to

ensure the adequacy and sufficiency of

its MPL determination and third-party

liability financial responsibility

requirement.

The first estimation methodology,

specific determinations, entails

obtaining actual property values and

determining the likelihood and

consequences of an accident affecting

that property. This method is typically

used for very high-value property in the

area that would be most exposed to risk.

The second method, averaging, can be

accomplished in several ways. One way

is to average estimated property values

in a homogeneous area through such

means as county or city tax assessment

records. Another is to assume that an

accident will occur in the high-value

part of the risk area and determine the

average of the high-value property

exposed to risk. This conservative

approach assures that the MPL

determination will be sufficient to cover

losses to this high-value property. The

third method, setting an upper bound,

also yields a conservative result. This

approach utilizes the Office's

experience by considering the nature

and size of the area exposed to risk, e.g.,

urban, suburban, rural, industrial, farm,

or some combination, and comparing it

to third-party property considered at

risk in past MPL analyses and to know

values of Government property placed

at risk. Setting an upper bound involves

a qualitative assessment of the value of

third-party property at risk and is based

on the Office's extensive experience in

assessing risk.

Third-Party Casualties

The Office must also consider thirdparty casualties in determining

maximum probable loss to third parties.

Doing so requires an analysis of the

number of persons exposed to risk and

assigning a value of life. Department

guidance issued in 1993 for preparing

economic evaluations suggests using

$2.5 million as the value of life in

estimating one's willingness to pay for

safety measures in order to reduce one's

probability of death. However, the

Office is mindful of the distinction

between the value of life used for

purposes of estimating the cost of safety

requirements in regulations and for

seeking damages in civil litigation.

Accordingly, the Office utilizes the

somewhat higher figure of three million

dollars as the value of a life to assure a

conservative, but reasonable, result.

The Office requests comments on the

appropriate means of assessing the

value of third-party property and the

value of life for purposes of determining

maximum probable loss to third parties.

In their comments, commenters are

requested to consider the impact on

insurance requirements that could result

from a change in methodology.

Section 440.9-Insurance Requirements

for Licensed Launch Activities

This section would establish in a

regulation financial responsibility

requirements in the form of insurance as

a condition of every license issued by

the Office authorizing commercial space

launch activities. A licensee would also

be allowed to demonstrate an equivalent

amount of financial responsibility

through means other than insurance.

Proposed § 440.9(b) would establish

the requirement that a licensee obtain a

policy of liability insurance to pay

claims of third parties for bodily injury

or property damage resulting from

licensed launch activities. In accordance

with 49 U.S.C. 70112(a)(4), the parties

protected under the insurance policy as

insureds, or additional insureds, are the

United States, its agencies, and its

contractors and subcontractors, and

their respective personnel, involved in

licensed launch activities; and the

licensee, the customer, and their

respective contractors and

subcontractors involved in licensed

launch activities. Because Government

personnel, as defined in proposed

§ 440.3, are included within the

proposed definition of "third party,"

Government personnel may be both

third-party claimants whose claims are

compensable by required liability

insurance, as well as additional

insureds.

Under proposed § 440.9(c), the

amount of required insurance is based

on the Office's determination of

maximum probable loss from thirdparty claims resulting from licensed

launch activities. As provided by

statute, the amount of coverage required

by the Office may not exceed $500

million, or the maximum liability

insurance available on the world market

at reasonable cost. It should be noted

that the maximum limit on insurance

applies to the aggregate of claims for any

particular launch, as provided by 49

U.S.C. 70112(a)(3). A policy may cover

more than one launch. However, the

amount of insurance prescribed by the

Office in a license order must be

available to cover the total of third-party

claims resulting from each launch event.

For example, if a licensee intends to

conduct a series of launches under an

operator license and third-party claims

resulting from the first launch are

compensated by the liability policy, the

amount of coverage for each succeeding

launch must be the amount required by

the license order. Coverage may not be

reduced by the amount of claims paid

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as a result of previous launch activities

conducted under the same license.

Section 440.9(d) would establish in a

regulation the requirement that a

licensee must obtain a policy of

insurance to compensate for damage to

or loss of property at a Federal range

facility that is owned, leased or

occupied by, or in the care, custody or

control of, the United States, its

agencies, and its contractors and

subcontractors involved in licensed

launch activities, that results from

licensed launch activities. The

maximum probable loss determination

to support this requirement focuses on

valuable national assets located at

Federal range facilities that are put at

greatest risk by licensed activities;

however, all Government property (and

that of its agencies, contractors and

subcontractors involved in licensed

launch activities) at a Federal range

facility must be protected. This would

include Government range facilities

surrounding or adjacent to the proposed

launch site. The Office's experience in

administering financial responsibility

requirements to protect Government

property has been previously described

in the supplementary information

accompanying this proposal under the

heading, "Property Protection for

Government Launch Participants." The

Office does not object to any reasonable

approach on the part of a licensee that

is taken to meet this requirement as long

as the ultimate objective is achieved,

that is, providing for the compensation

of property damage sustained at Federal

range facilities by the United States, its

agencies, contractors and subcontractors

involved in licensed launch activities,

resulting from activities carried out

under a license. However, the Office

believes that, at a minimum, naming the

U.S. Government and its agencies,

contractors and subcontractors,

involved in licensed launch activities,

as additional insureds is necessary to

accomplish this objective. Comments

are requested on whether the

Government should also be named the

loss payee and be responsible for

administering payment of insurance

proceeds to its contractors and

subcontractors.

Under proposed § 440.9(e), the

amount of required insurance would be

based on the Office's determination of

maximum probable loss attributable to

property damage claims of the United

States, its agencies involved in launch

services, and its contractors and

subcontractors involved in licensed

launch activities; however, the amount

would not exceed $100 million. As

noted in the analysis accompanying

proposed § 440.9(c), the maximum limit

on insurance applies to the aggregate of

claims for any particular launch.

Covered claims are those against a

person, including Government

employees, for damage or loss to

Government property, including the

property of Government contractors and

subcontractors, resulting from licensed

launch activities. In this respect, the

named insureds are different from those

on the liability policy.

Section 440.9(f) would provide that,

in lieu of obtaining policies of

insurance, the licensee may demonstrate

financial responsibility in an alternative

form-such as insurance purchased

from a risk retention group authorized

under the Risk Retention Amendments

of 1986, surety bonds, letters of credit,

or some combination-that reflects

substantially the same terms and

conditions of the requirements set forth

in these regulations. Whatever the form

of financial responsibility proposed in

lieu of insurance, the licensee must

demonstrate that it meets the

requirements for financial

responsibility.

Section 6 of the 1988 Amendments to

the Commercial Space Launch Act

provides special incentives to certain

satellites affected by National Security

Decision Directive 254. This directive,

issued by President Reagan in August

1986, following the Challenger accident,

essentially ended NASA's role in

launching commercial and foreign

satellites. Section 6 of the 1988

Amendments provides that if certain

eligibility criteria are met, the

requirement that the licensee obtain

property insurance covering loss of or

damage to United States Government

property does not apply. The Office

believes that there are no remaining "eligible satellites" that have not been

launched or otherwise accounted for

and no provision is made in the

proposed rulemaking to cover them.

Comments are requested as to whether

this provision may be properly omitted

in final regulations.

Section 440.11-Duration of Coverage;

Modifications

Proposed § 440.11(a) would specify

when financial responsibility must be in

place. Section 440.11(a), as proposed,

would provide that required insurance

coverage or other form of financial

responsibility must attach upon

commencement of licensed launch

activities, and remain in full force and

effect until the later of: (i) The

completion of licensed launch activities,

as defined by the Office in a regulation,

or (ii) until risk resulting from licensed

launch activities to third parties and

Government property is sufficiently

small, as determined by the Office

through the risk analysis conducted to

determine maximum probable loss, that

financial responsibility is no longer

necessary. The duration of financial

responsibility requirements for a

particular launch is specified by the

Office in a license order.

The statutory requirement for a

licensee to obtain insurance or

otherwise demonstrate financial

responsibility refers to providing

compensation for claims "resulting from

an activity carried out under the

license." 49 U.S.C. 70112(a)(1). Based

upon this language, the Office's view is

that insurance requirements attach upon

commencement of licensed launch

activities but do not necessarily cease

upon completion of a licensed launch,

defined for orbital launches as the point

when any remaining fuel is emptied

from the upper stage, the vehicle tank is

vented and otherwise "safed," and the

upper stage is no longer subject to the

operator's control. Hazard analyses

performed by the Office to determine

maximum probable loss have shown

that the greatest exposure for which

insurance is typically required exists at

the time of lift-off and flight, and that

there is virtually no quantifiable risk to

third parties or to United States

Government property after completion

of a nominal launch. The Office has

found that thirty days is an appropriate

amount of time in which to determine

whether an orbital launch has been

nominal or whether an anomaly has

occurred that could affect risks to third

parties or the Government. For this

reason, historically, the Office has

provided in license orders applicable to

orbital launches that insurance coverage

is required to attach upon

commencement of licensed activities

and remain in force "for a period of

thirty (30) days following payload

insertion into orbit." For suborbital

launches, insurance has been required

to be maintained at least until motor

impact and payload recovery. However,

in the event of a launch anomaly, the

Office may amend the license order to

require that the licensee maintain

insurance until the Office determines

that risks to third parties and

Government property are sufficiently

small that insurance is no longer

needed.

When the licensee is no longer

required to maintain insurance under

the license, both the Government's

waiver of excess property damage

claims under § 440.17(c), and the

Government payment of excess thirdparty claims provisions under § 440.19,

would apply from the first dollar of loss.

However, it is important to note that the

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Act requires that the third-party claim

result from the licensed activity in order

for the Government payment of excess

third-party claims provision to apply.

When that nexus no longer exists,

neither does the Government's

acceptance of the risk of such claims. In

every instance, a factual determination

would be required as to whether a

sufficient nexus exists between the

licensed activity and the third-party

claim. In terms of business planning, it

has been the Office's experience that for

nominal launches, licensees may

procure insurance for periods of time in

excess of thirty days in accordance with

individual risk management practices

because the premium rate difference to

cover any additional period of time

tends to be negligible.

As noted in the preceding

Supplementary Information, questions

have arisen over time with respect to the

appropriate scope of a license

authorizing pre- and post-flight ground

operations and associated requirements

for insurance coverage. As to pre-flight

activities, the Office intends to address

the question of the appropriate scope of

a license authorizing launch activities in

a separate rulemaking. With respect to

post-launch ground operations, the

Office believes that damage to

Government property or property of

Government contractors and

subcontractors, as well as to third

parties, could occur during clean-up

and from removal of launch-related

equipment and material and that

insurance should remain in place to

protect against such claims. In this

regard, it is significant to note that the

Act requires financial responsibility to

protect against claims "resultingfrom an

activity carried out under license"

(emphasis supplied) (49 U.S.C.

701 12(a)(1)). Comments are requested

on the proposed duration of required

insurance with respect to ground

operations, including clean-up and

removal of launch-related equipment

from the launch site. Comments are also

requested on the extent to which

insurance should be required to

compensate claims of third-parties and

the Government for short-term

environmental damage, or alternatively,

whether clean-up or short-term

environmental damage to Government

property should be charged to the

licensee as a direct cost.

The Office is also requesting

comments on the extent to which

insurance to protect against claims for

long-term environmental or property

damage should be required, its

availability, and mechanisms for

assuring adequate coverage has been

obtained. The Office is aware that longterm environmental damage risks are

typically excluded from launch

insurance coverage because of, among

other things, the difficulties of insuring

against claims that may not arise until

long after the risk period (generally

launch plus a number of days) is

concluded. Commenters should address

whether such claims should be included

in determining maximum probable loss

for licensed launch activities and

whether the existing statutory ceilings

are adequate if such claims are

included. In considering the issue,

commenters are requested to suggest

mechanisms for ensuring that funds are

available to address long-term

environmental damage that results from

commercial launch activities.

Commenters are also requested to

address whether and the extent to

which insurance to protect against

property damage that results from

orbital debris long after a launch has

been completed should be required.

Section 440.11(b), as proposed, would

provide that the licensee may not

replace, cancel, change or withdraw the

insurance or other form of financial

responsibility required, or in any way

modify it to reduce the limits of liability

or the extent of coverage, and that any

form of financial responsibility may not

be permitted to expire prior to the time

specified by the Office in a license

order, unless the Office is notified in

advance and expressly approves of the

modification. The purpose of this

requirement is to ensure that the

licensee has adequate coverage in place

that meets the requirements of the

applicable license order.

Section 440.13-Standard Conditions of

Coverage

Proposed § 440.13(a) identifies the

terms and conditions that must be

included in any insurance policy

obtained to satisfy the requirements of

proposed § 440.9. With some

modification, the proposed terms and

conditions of insurance coverage have

been required by the Office in license

orders issued on a case-by-case basis in

order to carry out the office's

responsibilities under the statute, and to

the Office's knowledge, have not been

difficult to obtain.

Section 440.13(a)(1) would provide in

a regulation that any required policy of

insurance must provide that bankruptcy

or insolvency of the insured (licensee)

or any additional insured does not

relieve the insurer of any of its

obligations under the policy. This

requirement is commonly found in

liability insurance policies. Its presence

is desirable because under common law,

if an insurance agreement were

construed as only an agreement to

indemnify against loss, under certain

circumstances the insurer could avoid

payment of third-party claims altogether

where the insured was declared

insolvent. This condition is intended to

remove any doubt that the policy

insures against liability to pay damages

and is not merely an agreement to

indemnify against loss.

Section 440.13(a)(2), as proposed,

would provide that the policy limits for

any required insurance policy apply

separately to each occurrence and in the

aggregate with respect to claims

resulting from licensed activities

associated with a particular launch.

This provision would further the intent

of 49 U.S.C. 70112(a)(3), which

prescribes insurance ceilings applicable

to "the total claims related to one

launch, * * *" As noted above, where

insurance is obtained by a licensee for

a number of launches under an operator

license, the limits of the policy must be

available for each licensed launch and

may not be reduced due to claims

resulting from a prior occurrence.

Proposed § 440.13(a)(3) would state

that any required policy of insurance

must provide for the payment of claims

from the first dollar of loss, without

regard to any deductible, to the policy

limits, except in the limited

circumstances allowed in the regulation.

The Office discourages the use of a

deductible because of the clear statutory

mandate to ensure comprehensive

protection for all insureds from liability

for third-party claims and prompt

restoration of United States range assets.

If this coverage entails additional cost to

the licensee, it is not unreasonable

relative to the policy objectives

underlying the statute. Risk retention

arrangements between the licensee and

its insurer may be used as a means of

reducing the policy premium.

Nevertheless, the Office understands

that licensees may desire a small

deductible amount from their coverage

in order to reduce policy premiums and

the Office has included a provision in

the proposal that would allow the

reasonable use of deductible amounts.

However, to ensure that statutory

objectives are achieved, a deductible

would be allowed only if the amount of

the deductible is placed in a an escrow

account established to cover claims

resulting from licensed launch activities

or if the licensee can demonstrate to the

office that it has that amount readily

available to it, with no prior liens or

obligations on the funds. The Office

believes that use of a deductible is

appropriate only for comparatively

small sums and should not be used as

a means of avoiding insurance.

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Comments are requested on whether the

proposed approach is reasonable. Where

Government property is concerned,

commenters should bear in mind the

objective that proceeds must be made

immediately available to restore

Government property to its prior

condition and use, and that any delays

(e.g., in the event assets must be

liquidated to pay claims) would be

counter to the statute. The Government

may also be exposed to claims by its

contractors and subcontractors for their

property damage where insurance

proceeds are not immediately available

to cover those loses. Any inability to

obtain promptly full payment of such

claims could expose the Government to

administrative and legal expenses the

Government seeks to avoid through

required insurance.

Section 440.13(a)(4), as proposed,

limits the defenses available to the

insurer to avoid paying claims under the

policy. It states that a required policy of

insurance must provide that the actions

of the insured or any additional insured

shall not result in invalidation of the

policy; however, an insured or

additional insured itself may be denied

coverage under a policy for claims

against it in the event of any breach or

violation by it of any warranties,

declarations, or conditions contained in

the policy. Action by the insured

includes nonpayment of the policy

premium. Thus, although the Office

views the licensee as ultimately

responsible for paying additional

insureds under the policy as a result of

the licensee's nonpayment of the

premium.

As a general rule, liability and

property insurance policies issued by

insurance underwriters contain certain

standard exclusions of coverage as well

as particular exclusion depending on

the activities for which insurance is

sought. Proposed §440.13(a)(5)

acknowledges that the insurance

policies required under § 440.9 may

contain certain exclusion from coverage.

Those exclusion must be specified.

In the event of a claim for property

damage or bodily injury that is not

covered by insurance, the liability for

such damage and injury would

ordinarily fall on the licensee or

additional insured in the absence of

some form of indemnification. The

Secretary of Transportation is

empowered, under 49 U.S.C.

70113(a)(2), to provide for payment of

third-party claims that are the subject of

insurance policy exclusions that "are

usual for the type of insurance

involved" and for which insurance is

therefore not available to cover the

claim. 49 U.S.C. 70113(a)(2). In

addition, under 49 U.S.C. 70112(b)(2),

the Secretary may, following

interagency consultation, waive claims

for property damage not covered by

required property insurance by reason

of exclusions that are "usual for the type

of insurance involved" such that

insurance is not available. 49 U.S.C.

701 12(b)(2). As a result, a claim that is

not compensated by insurance because

it falls within an insurance exclusion

determined by the Office to be usual

would essentially permit first-dollar

payment by the United States

Government without regard to the

thresholds provided, respectively, in 49

U.S.C. 701 13(a)(1) and 701 12(b)(2).

However, in determining what may be

considered usual exclusions for the type

of insurance involved, the Office is

necessarily mindful of the direction

from Congress that first-dollar payments

by the United States for such exclusions

should not be an inducement for

insurers to begin restricting the scope of

coverage in their insurance contracts

with licensees. Moreover, payments for

claims excluded from third-party

liability coverage, like payments

generally of third-party claims in excess

of required insurance under 49 U.S.C.

70113, are subject to certain conditions

including Congressional approval of a

compensation plan and appropriation of

funds.

There are no identical exclusions

found in each and every policy.

Variations exist among U.S., London,

continental European and other

overseas insurance markets. Moreover,

exclusions may be added by an insurer

depending on the particular market and

types of risks involved, or can often be

"bought out" by an endorsement or by

a separate policy. Also, exclusions may

be added or existing exclusions

modified as a result of judicial

interpretations the insurance market

neither intended nor anticipated in

setting its premium rates. Based on

insurance market conditions and loss

experience, future exclusions may vary

from customary or usual exclusions

today. Consequently, the proposed

regulations define a usual exclusion as

one for which coverage is not

commercially available at reasonable

rates. Licensees must certify at the time

they demonstrate compliance with

insurance requirements that insurance

covering the excluded risks is

unavailable at reasonable rates in order

for the United States Government to

provide for payment of claims from the

first dollar of loss. However, the

licensee's certification does not finally

resolve that a particular exclusion will

be deemed to be "usual." That is, in the

event the Office determines that

insurance was available at reasonable

rates the Secretary need not provide for

payment of claims from the first dollar

of loss. Comments are requested on

other appropriate criteria for

determining whether an exclusion may

be considered "usual."

Proposed §§ 440.13(a)(6)-416.13(a)(8)

would prescribe, in regulations,

additional insurance requirements that

have been customarily imposed by the

Office in license orders in carrying out

its statutory mandate.

Comments are requested on any other

terms and conditions that would be

appropriate to require in rules of general

applicability.

Section 440.15-Demonstration of

Compliance

As proposed, § 440.15(a) would

require the licensee to demonstrate that

it has complied with the insurance and

allocation of risk requirements under

the proposed regulations no later than

thirty days before commencing licensed

launch activities. However, a license

order may require a licensee to

demonstrate compliance in less than

thirty days where the license or license

order is issued less than thirty days

before the licensee intends to commence

licensed launch activities. It is strongly

recommended that licensees submit

required documentation demonstrating

compliance with these requirements

well in advance of the thirty-day period

to ensure that the Office has adequate

opportunity to review the submission

and confirm compliance by the time the

licensee wishes to commence licensed

activities. It has been the Office's

experience that thirty days is a

reasonable length of time to address any

issues that arise as a result of the

licensee's submission. Where a licensee

uses a form of financial responsibility

other than insurance to demonstrate

compliance, the Office require sixty

days to review the submission and

ensure its sufficiency.

Section 440.15(b) would establish in a

regulation that once the licensee has

fully demonstrated compliance with

part 440 financial responsibility and

allocation of risk requirements, these

requirements preempt any conflicting or

inconsistent requirements in any

agreements the licensee may have

previously entered into with other

agencies of the United States concerning

access to or use of United States launch

property or launch services. This

express preemption is necessary

because there has been a significant

amount of confusion in the past

concerning the effect of similar or

additional insurance requirements

imposed by agreements governing

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access to United States launch facilities.

As stated above in the section-bysection analysis accompanying

§ 440.5(c), the object of this preemption

is to avoid imposing duplicative and

inconsistent obligations on the licensee,

but not to relieve the licensee of

contractual or legal obligations intended

to address interests other than those

served by the statute. The Office

evidences its determination that a

licensee has fully complied with part

440 requirements in a letter issued to

the licensee.

Under the proposal § 440.15(c) would

establish requirements for a licensee to

provide the Office with proof of

insurance. It is extremely important for

the Office to secure adequate assurance

that the licensee has obtained the

insurance required under the

regulations. However, the Office

believes that it is unnecessary and

impractical to review each policy

constituting part of an insurance

submission to ensure compliance.

Accordingly, proposed § 440.15(c) and

(d) would provide for certain

certifications and representations from

the licensee and its insurer,

respectively. The licensee must certify

that it has obtained insurance in

conformance with the part 440

regulations and the applicable license

order. In addition, the licensee must file

with the Office one or more certificates

of insurance evidencing coverage, as

prescribed by the Office, under

currently effective and properly

endorsed policies applicable to licensed

launch activities. A certificate of

insurance must specify any policy

exclusions or limitations in detail, in

accordance with proposed

§ 440.13(a)(5a). In addition, the licensee

would be required to certify that

insurance is not commercially available

at reasonable rates in order for the

exclusion to be found usual for the type

of insurance and the United States

Government to provide for payment of

claims from the first dollar of loss. The

licensee would also be required to

submit duly executed waiver of claims

agreements, signed by the licensee and

its customer. The licensee's

certifications must be signed by a duly

authorized officer of the licensee and

may be submitted in one document.

Section 440.15(d), as proposed, would

specify certain insurance certificate

requirements. Each certificate of

insurance must be signed by the insurer

and accompanied by a signed opinion of

the insurer stating that the policy

obtained by the licensee complies with

the requirements set forth in part 440.

Section 440.15(e) would further

require the licensee to maintain, and

make available for inspection by the

Office upon request, all required

policies of insurance and other

documents necessary to demonstrate

compliance with part 440 requirements.

Although this section essentially

imposes a mandatory recordkeeping

requirement upon the licensee, the

Office believes that the maintenance

and administration of these records by

the licensee is consistent with the

Office's regulatory authority to monitor

compliance with the license. Moreover,

it is considerably less burdensome and

time-consuming for both the Office and

the licensee than requiring submittal of

all the policy documents to the Office.

Proposed § 440.15(f) recognizes that

the licensee may propose to satisfy

financial responsibility requirements in

a form other than insurance. A licensee

may do so, provided it otherwise

satisfies regulatory requirements. In

practice, licensees have furnished

insurance in order to meet the financial

responsibility requirements prescribed

by the Office pursuant to the statue.

Under existing insurance market

conditions, third-party liability

insurance is obtainable to prescribed

limits at reasonable cost. A presentation

by the Risk Management Working Group

of the COMSTAC at its meeting on May

18, 1995, projected market capacity as

sufficient to satisfy launch insurance

demand in 1995. In addition, property

insurance, where required, may be

accommodated within the licensee's

existing property and casualty insurance

program and is therefore easily

obtained.

While the Act does state that a

licensee may demonstrate financial

responsibility in a form other than

insurance, it does not specify what other

forms of financial responsibility would

be acceptable. A number of alternatives

are possible and the Office necessarily

will examine any proposal for

demonstrating financial responsibility

through alternative means on a case-bycase basis to determine whether it

otherwise satisfies the requirements for

demonstrating financial responsibility.

Section 440.17-Reciprocal Waiver of

Claim s Requirements

This section, as proposed, establishes

requirements for reciprocal waivers of

claims among launch participants.

These requirements are additional

conditions of a license.

Proposed § 440.17(b) would

implement 49 U.S.C. 70112(b)(1), which

requires the licensee to implement

reciprocal waivers of claims with its

contractors and subcontractors, its

customers, and the contractors and

subcontractors of its customer, whereby

each party agrees to be responsible for

loss or damage it sustains. Parties to a

waiver of claims agreement waive two

types of claims: Claims for their own

property damage, and claims they may

have against another launch participant

as a result of losses for property damage

or bodily injury sustained by their

employees, resulting from licensed

launch activities.

49 U.S.C. 70112(b)(2) requires the

Secretary of Transportation, for the

United States, its agencies involved in

licensed launch activities, and its

contractors and subcontractors, to enter

into reciprocal waivers of claims with

the licensee, its customer, and their

respective contractors and

subcontractors involved in launch

services. In the Office's view, the

purpose of this provision is to establish

the Government's waiver of claims

against the private sector launch

participants and acceptance of

responsibility for property damage that

exceeds the level of Government

property insurance obtained by the

licensee under 49 U.S.C. 70112(a)(1)(B).

The approach taken in proposed

§ 440.17(c), of requiring a formal threeparty agreement among the United

States, the licensee and its customer,

deviates from the form suggested by a

literal reading of the Act. However, the

Office believes that this approach is the

most desirable and efficient one to

effectuate the overall purpose of the

statutory reciprocal waiver of claims

requirements: To limit the universe of

potential claims that could arise out of

licensed launch activities, and to

eliminate the need for each participant

in licensed launch activities to obtain

separate liability insurance protection

against such claims. This approach has

also proved manageable for the launch

services industry in executing

agreements with customers and the U.S.

Government.

Section 440.17(c), as proposed, would

require that the licensee, its customer

and the Department of Transportation

on behalf of the U.S. Government enter

into a three-party agreement as set forth

in appendix II to part 440. The form of

the Agreement for Waiver of Claims and

Assumption of Responsibility

(Agreement) presented in Appendix II

deviates from the current practice of the

Office and is intended to clarify the

scope of the waiver that the United

States provides when it is involved in

licensed launch activities, and the

waiver it requires in return. Simply put,

the Department of Transportation, on

behalf of the United States, its agencies

involved in licensed launch activities,

and its contractors and subcontractors,

would agree to waive claims against the

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licensee, its customer and the

contractors and subcontractors of the

licensee and its customer, and accept

responsibility for losses to property of

the Government launch participants,

only to the extent that such claims

exceed the level of insurance the

licensee must obtain under § 440.9(d).

As a reciprocal undertaking, the

licensee and its customer each would

waive claims against the other party and

the United States and its agencies

involved in licensed launch activities,

and against the contractors and

subcontractors of each of those parties,

and accept responsibility for damage to

its own property and losses sustained by

its own employees, respectively.

Whereas other parties to the threeparty reciprocal waiver of claims

agreement would agree to waive and

accept responsibility for claims for

property damage or bodily injury

sustained by its employees, the U.S.

Government need not do so. Because

Government personnel are third parties,

their claims for bodily injury or

property damage would be compensated

by the third-party liability insurance the

licensee is required to obtain. Claims in

excess of required insurance would

become eligible for payment by the

Government under the payment of

excess claims provisions of the statute.

49 U.S.C. 70113. Although the approach

reflected in the proposed form of

Agreement is not currently reflected in

existing license orders, the Office

believes it more accurately reflects the

allocation of risks intended by the

statute and correctly responds to the

Government's inability under

appropriations law to accede to

unfunded contingent liability, unless so

authorized.

In addition, under the proposed from

of the Agreement, the licensee and its

customer would further agree to extend,

or flow down, the waiver obligations to

their respective contractors and

subcontractors, and all three principals

to the Agreement-including the

Department-would agree to indemnify

the other parties from claims by their

contractors and subcontractors arising

out of the indemnifying party's failure

properly to implement or extend the

waiver.

One launch company has objected to

the indemnification provisions required

under the three-party reciprocal waiver

of claims agreement currently employed

by the Office and included in this

proposal for all interparty waiver of

claims agreements. In the launch

company's view, this provision is not

required by statute and adds liability

and risk over and above that imposed by

a breach of contract remedy, which the

launch company believes would be the

appropriate remedy for failure to flow

down the cross-waiver requirement.

The Office's view is that a contractual

undertaking to indemnify another party

for one's own failure to implement

properly the agreements flow-down

requirements is preferable. It would

provide a strong incentive for parties to

be attentive to the flow-down

requirement. This is significant because

of the limitation on the Office's ability

to monitor each licensee's and

customer's cross-waivers with their

myriad contractors and subcontractors.

It would also provide a ready remedy

for parties who sustain loss because of

another party's failure to flow down the

cross-waiver requirement.

In those situations where the

licensee's customer is a Government

agency, the provisions applicable to the

customer are the same as those for an

agency involved in licensed launch

activities for purposes of the reciprocal

waiver of claims requirement. However,

because the Government property

insurance requirement does not cover

the Government payload, the

Government waives claims for property

damage and assumes responsibility for

damage or loss to the payload from the

first dollar of loss.

Some concern has been expressed

within the commercial space launch

industry over the assumption of

responsibility for employee losses

required of signatories to the waiver of

claims agreement. In the Office's view,

this is a risk that can be effectively

managed without imposing

unreasonable economic burdens on

launch participants.

The assumption of responsibility by

nongovernmental launch participants

for their own employees' losses

represents a mutual undertaking by each

entity to cover losses of its employees.

Although employees of

nongovernmental launch participants

would not be "third parties" whose

claims are compensated under the

liability insurance required under the

proposed regulations, launch

participants could protect themselves by

ensuring that their general liability

policies would respond to compensate

such claims. The Office believes that a

variety of measures may be utilized by

launch participants to manage the

mandatory assumption of responsibility.

At the same time, the objective of the

risk allocation scheme-to limit the

need for each launch participant to

obtain broad liability coverage to protect

itself from the universe of potential

third-party claims-would be realized.

The Office requests comments on its

approach to implementing the waiver of

claims and assumption of responsibility

requirements of the Act. In doing so,

commenters should bear in mind that

there is no indication in the Act or its

legislative history that employees of

nongovernmental launch participant,

unlike employees of Government launch

participants, are intended to be

included in the definition of "third

parties" for purposes of these

regulations. Nor is there any indication

that the Government would agree to pay

their claims as excess third-party claims

(so-called "indemnification") to the

extent employees' claims exceed

required insurance. Moreover,

considering employees of launch

participants as third parties under the

statutory definition would run counter

to the assumption of responsibility for

their loses mandated by the statute.

Also, if such employees were included

as "third parties," the amount of thirdparty liability coverage the licensee

would be required to obtain would

likely increase significantly.

It is important to note that not all

private participants in licensed launch

activities are necessarily expected to

accede to the reciprocal waiver of

claims scheme in order to effect its

purpose. Only those participants who

have their personnel or property

involved in licensed launch activities,

and who may make claims against other

participants as a result of loss or damage

sustained by their personnel or property

in the event of an accident, should be

expected to enter into reciprocal

waivers of claims. If all participants

having personnel or property involved

in licensed launch activities have

acceded to the reciprocal waiver

scheme, they would be foreclosed from

making any claims against each other.

A question has been raised by a

payload company as to the Office's

requirements when multiple customers

contract with a launch operator for

launch services or there is more than

one customer's payload on the launch

manifest for a single launch. In those

cases, executing a single waiver of

claims agreement that includes each

customer as a party to the agreement, or

executing separate but appropriately

modified agreements, would serve to

ensure all parties have been included

and protected as intended.

There has been some question as to

the meaning and appropriate

implementation of the provision in 49

U.S.C. 70112(b)(2), which requires the

Secretary to enter into reciprocal

waivers of claims "for" the

Government's contractors and

subcontractors involved in launch

services. The Office has interpreted this

provision to mean that contractors and

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subcontractors of the United States are

intended to be included as beneficiaries

of the waiver of claims by the licensee,

the customer and their respective

contractors and subcontractors; and that

the United States, through its

appropriate agencies involved in

licensed activities, is responsible for

protecting their interests.

The proposed form of Agreement set

forth in Appendix II to the proposed

regulation continues the current

practice of excluding from the waiver

and assumption of responsibility claims

for bodily injury or property damage

resulting from willful misconduct of the

parties. It also continues the current

practice of requiring that parties waive

claims, regardless of fault. Questions

have been raised as to whether claims

resulting from gross negligence are also

excluded from the intended scope of the

waiver. The Office believes that carving

out an exception for gross negligence

from the reciprocal waiver of claims

could result in parties attempting, in

effect, to nullify or avoid required

waivers of claims by alleging sufficient

evidence of gross negligence to

withstand legal challenge, thereby

defeating one of the purposes of the

Agreement. The Office has not elected

to do so in the proposed form of

Agreement.

The Office believes its approach is

consistent with the statutory intent of

requiring launch participants to enter

into a no-fault waiver of claims

agreement in order to eliminate the need

for additional insurance to protect

against claims for damage caused by a

party to the launch to any other party

to the launch and to limit the total

universe of claims resulting from a

launch. Comments are solicited from the

public on the proposed Agreement

implementing 440.1 1(b), which is set

out in Appendix II to the proposed

regulation. If differs from the form that

currently accompanies financial

responsibility license orders but more

closely conforms to the Office's view of

the objectives of the statutory waiver

requirements. A part to the Agreement

wishing to modify its form may petition

the Associate Administrator under the

procedures set forth in 404.3 of the

Regulations.

Section 440.19-United States Payment

of Excess Third-Party Liability Claims

Payment by the United States of

successful claims of third parties

resulting from licensed launch

activities, as provided in 49 U.S.C.

70113, is subject to appropriations laws

or enactment of other legislative

authority providing for the payment of

claims submitted as part of a

compensation plan prepared by the

Office. The total amount of excess thirdparty claims that may be paid by the

United States will not be greater than

$1,500,000,000 (as adjusted for inflation

occurring after January 1, 1989) above

the amount of insurance required under

§ 440.9(c). However, to the extent a

third-party claim results from the

willful misconduct of a launch

participant, the Government is not

required to provide for payment of the

claim. The statute limits this exception

to willful misconduct by a licensee or

transferee; however, the Office believes

that any launch participant's willful

misconduct relieves the Government

from providing for payment of thirdparty claims against that launch

participant under 49 U.S.C. 70113(a)(2).

In the event a successful claim is not

covered by required insurance due to a

policy exclusion that is found to be

usual because insurance is not

commercially available at reasonable

cost, the Government would pay such

claims from the first dollar of loss up to

$1,500,000,000 (as adjusted for inflation

occurring after January 1, 1989), again,

subject to appropriate legislative action.

Excluded from the statutory

obligation of the Secretary of

Transportation to provide for payment

of successful third-party claims are

claims against contractors and

subcontractors of the United States and

its agencies involved in licensed

activities. It has been suggested that this

exclusion was inadvertent, and the

Office believes that this is the better

view. On the other hand, the Office is

mindful of the availability of

Government indemnification that may

benefit such contractors and

subcontractors pursuant to statutes

other than 49 U.S.C. Subtitle IX.

However, provision of this protection by

the Government to its contractors and

subcontractors may be made only under

certain narrow circumstances, and is not

routinely done. Where it is not done, a

Government contractor or subcontractor

would be required to purchase liability

insurance to protect itself from thirdparty claims in excess of the liability

policy obtained by the licensee, and

would pass the cost through to the

Government as an allowable cost under

the contract. Therefore, absent

legislative clarification, the Office is of

the view that the United States would

afford its contractors and subcontractors

the protections offered to other launch

participants under the payment of

excess claims provisions of the statute,

after the limits of the liability policy

obtained by the licensee have been

reached. However, this approach is not

intended to interfere with or encumber

the Government's enforcement of

contractual rights and remedies with

respect to its contractors. Public

comment is sought as to whether this

interpretation of 49 U.S.C. 70113 is in

keeping with the overall risk allocation

scheme of the Act.

Under proposed § 440.19(d), the

Government would pay claims from the

first dollar of loss upon expiration of the

prescribed period of time for which the

licensee is responsible for maintaining

financial responsibility. Industry

representatives have suggested that the

Government's obligation to pay claims

remains for three years following the

launch event. However, the statutory

payment of excess claims provision is

limited to a successful claim of a third

party against a launch participant "resulting from an activity carried out

under the license * * * for death,

bodily injury or property damage or loss

resulting from an activity carried out

under the license." The statute further

limits payment of excess claims "to the

extent the total amount of successful

claims related to one launch" exceeds

the required amount of third-party

liability insurance and is not more than

$1,500,000,000 above that amount. 49

U.S.C. 70113(a). The Office believes that

these provisions may be intended as a

limitation on the claims that would be

eligible for so-called indemnification by

the Government. The Office requests

comments on the nexus that must exist

between a third-party claim and the

licensed launch activity in order for the

claim to be eligible for payment by the

Government.

Proposed § 440.19(e) would establish

procedural conditions for invoking the

Government's payment of excess thirdparty claims provisions of the Act,

including notice and participation or

assistance in the defense by the United

States of any claim or lawsuit by a third

party arising out of licensed launch

activities. This is consistent generally

with the Government's usual practice

for responding to similar claims.

Some industry representatives, as

well as the COMSTAC, have

recommended that the statutory

provisions for Government payment of

excess third-party claims should be

memorialized in a contract between the

United States Government and the

intended beneficiaries of these

provisions, similar to the

indemnification agreements the Nuclear

Regulatory Commission is required to

enter into on behalf of the United States

under the 1988 Price-Anderson

Amendments, Pub. L. 100-408, to

protect licensed operators of nuclear

reactors from catastrophic losses. The

Office believes that 49 U.S.C. 70113

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does not constitute or establish an

indemnification obligation on the part

of the United States like that set forth in

the Price-Anderson regime which,

among other things, expressly requires a

contractual undertaking and specifies

necessary contractual provisions. 42

U.S.C. 2210. In contrast, 49 U.S.C.

70113 is largely procedural in nature.

Any payment that the Secretary

proposes be made under the statute is

contingent on Congressional approval of

a compensation plan and appropriation

of funds or other legislative authority.

Accordingly, the recommendation to

reflect the Government's agreement for

payment of excess claims in a contract

is not included in this proposal.

As provided the statute and proposed

section 440.19(f), in the event of

catastrophic losses, the Office would

prepare a compensation plan specifying

the total amount of claims, suggesting

sources of funding that may be available

to pay the claims, and proposing any

legislation necessary to authorize

appropriation of funds and otherwise

implement the plan. In addition, as

provided by the Act, the Office is

authorized to withhold payment of a

claim that has not been decided by a

Federal court if the Office finds the

amount is unreasonable.

The Office welcomes comments from

the public on appropriate

implementation of 49 U.S.C. 70113

payment provisions. Comments would

assist the Office in developing a future

rulemaking that would address, more

specifically, the mechanism for seeking

payment by the Government of excess

third-party claims.

Statutory Authority for This Proposed

Rule

This proposal is issued pursuant to 49

U.S.C. Subtitle IX, ch. 701-Commerical

Space Launch Activities, sections

70101-70119, formerly the Commercial

Space Launch Act of 1984 (CSLA), as

amended (49 U.S.C. App. 2601-2623).

In 1988, Congress amended the CSLA by

replacing general insurance

requirements with a detailed financial

responsibility and allocation of risk

regime for licensed operations. The

provisions, referred to as the 1988

Amendments, include procedures

whereby the United States Government

requires risk-based insurance to

compensate for third-party liability and

Government property damage claims,

waives certain claims for its property

damage and, subject to an appropriation

law or other legislative authority, agrees

to provide for payment of third-party

claims in excess of required liability

insurance. In addition, the 1988

Amendments require launch

participants to enter into reciprocal

waivers of claims in which the parties

agree to absorb certain losses and the

nongovernmental launch participants

agree to be responsible for claims of

their employees for damage or loss.

The Office has been implementing the

1988 Amendments on a case-by-case

basis, through license orders issued

with each license authorizing

commercial space launch activities.

Based upon its experience, the Office

proposes to standardize requirements

into rules of general applicability,

wherever practicable.

Under 49 U.S.C. Subtitle IX, ch. 701,

the Secretary is responsible for licensing

and otherwise regulating commercial

space launches and the commercial

operation of launch sites carried out

within the United States or by its

citizens. In doing so, the Secretary is

charged with protecting public health

and safety, safety of property, and

United States national security and

foreign policy interests, and must

ensure compliance with international

treaty obligations of the United States,

including the United Nations Treaties

on Outer Space. The Secretary is also

responsible for establishing

requirements for proof of financial

responsibility and other assurances

necessary to protect the Government

and its agencies and personnel from

certain losses as a result of licensed

activities involving Government

facilities or personnel. 49 U.S.C.

70112(e).

The Associate Administrator for

Commercial Space Transportation of the

Federal Aviation Administration was

delegated the Secretary's authority for

carrying out the Secretary's

responsibilities under the statute,

effective November 15, 1995. The

Commercial Space Transportation

Licensing Regulations set forth in 14

CFR Ch. III apply to regulatory activities

administered by the Office.

Paper Work Reduction Act

14 CFR part 440, as proposed,

contains information collection

requirements. In accordance with the

Paperwork Reduction Act of 1995, 44

U.S.C. 3501 et seq., the information

collection requirements associated with

this rule are being submitted to the

Office of Management and Budget for

review. The required information will

be used to determine appropriate levels

of financial responsibility and to

determine whether licensees have

complied with financial responsibility

requirements as set forth in regulations

and in a license order issued by the

Office. The information to be collected

includes data required for determining

maximum probable loss, the three-party

cross-waiver of claims agreement and

evidence of insurance or other form of

financial responsibility. Launch

licensees must demonstrate financial

responsibility at least 30 days before

commencing licensed launch activities.

The frequency of required submissions

may depend upon the frequency of

licensed launch activities; however, a

license may authorize more than one

launch. Respondents are all licensees

authorized to conduct licensed launch

activities. In addition to the licensee, its

customers and the contractors and

subcontractors of each are required to

enter into reciprocal waiver of claims

agreements. Estimated Average Burden

Hours Per Respondent: 261 hours.

The Office considers comments by the

public on the proposed collection of

information in order to evaluate the

accuracy of the Office's estimate of the

burden of the proposed collection of

information, the quality, utility and

clarity of the information to be

collected, and possible ways to

minimize the burden of the collection.

In submitting comments to OMB,

commenters should keep in mind that

OMB is required to make a decision

concerning the collection of information

contained in the proposed regulations

between 30 and 60 days after

publication of this document in the

Federal Register.

Comments on the proposed

information collection requirements

should be submitted to: Office of

Management and Budget, Washington,

DC 20503, Attention: Desk Officer for

the Federal Aviation Administration,

U.S. Department of Transportation. It is

requested that comments sent to OMB

also be sent to the rulemaking docket for

this proposed action, Room 612, Federal

Aviation Administration, U.S.

Department of Transportation, 800

Independence Avenue, SW.,

Washington, DC 20591.

Impact Analyses

Proposed changes to Federal

regulations must undergo several

economic analyses. First, Executive

Order 12866 directs that agencies shall

propose or adopt a regulation only upon

a determination that the benefits of the

intended regulation justify its costs.

Second, the Regulatory Flexibility Act

of 1980 requires agencies to analyze the

economic effect of regulatory changes

on small entities. Third, the Office of

Management and Budget (OMB) directs

agencies to assess the effect of

regulatory changes on international

trade. In addition, under regulatory

policies and procedures of the

Department of Transportation (44 FR

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11034; February 26, 1979), this

proposed rule is considered significant

because there is substantial public

interest in the rulemaking. This rule has

been reviewed by OMB under Executive

Order 12866.

Economic Impacts

Executive Order 12866 directs that

each Federal agency proposing to adopt

a regulation may do so only upon a

reasoned determination that the benefits

of the intended regulation justify its

costs. The Office has prepared a detailed

analysis of the economic effects that

would be associated with the proposed

rule. Its findings are set forth in an

economic impact assessment, copies of

which are available from the FAA Rules

Docket. As part of its analysis, the Office

considered alternatives, taking into

account that the principal requirements

of the proposed rule are mandated by

statute.

Under the 1988 Amendments, as

implemented by the Office in

regulations, required insurance would

be available to compensate third parties,

including certain Government

personnel, who may suffer bodily injury

or property damage as a result of

licensed launch activities. Additionally,

required insurance protects all launch

participants from third party claims and

provides cost savings to each participant

by relieving them of the need to obtain

separate liability insurance covering

those risks. Potential costs of litigation

should be eliminated as a result of

required cross-waivers of claims among

launch participants. There is a

reallocation of expected costs of claims

of $20,000 over a four-year period from

the U.S. commercial space launch

industry to the United States, as a

consequence of the Government's

payment of excess third-party claims

under the Act, up to a $1.5 billion

exposure for liability. Additional costs

to the Government to administer

requirements imposed under the 1988

Amendments and the proposed

regulations are expected to have an

upper limit of $673,000 over four years.

Impacts on Sm all Entities

The Regulatory Flexibility Act of 1980

(RFA) was enacted by Congress to

ensure that small entities are not

unnecessarily or disproportionately

burdened by Federal regulations. The

Office analyzed the economic impact of

the proposed regulations on small

commercial entities, as part of its

economic impact assessment. For

purposes of the analysis, the Office

utilized the Standard Industrial

Classification codes and size standards

for business entities relating to space

vehicles, which define small entities as

those comprised of fewer than 1000

employees. 13 CFR 121.601. Because the

commercial launch industry is evolving

new ways of doing business, the Office

also considered as small commercial

entities those firms offering or planning

to offer commercial space transportation

services that have not had long-term

relationships with the U.S. Government

as a contractor-manufacturer of

expendable launch vehicles or

components, or have not received rights

to use government-developed launch

vehicles. These are few in number.

The economic impacts on small

commercial entities resulting from the

1988 Amendments to the Act are largely

benefits. The Office's analysis reveals

only non-quantifiable costs to

commercial entities as a result of the

proposed regulations. They include

minimal paperwork costs and costs that

may result from having to obtain

insurance in advance of licensed launch

activities to demonstrate compliance

with financial responsibility

requirements. Neither of these costs

would have a disproportionate impact

on small commercial entities. Based

upon the Office's economic impact

assessment, the Office has determined

that the proposed rule would not have

a significant economic impact on a

substantial number of small entities.

International Trade Impact Assessment

The impact of the proposed rule on

international trade is expected to be

beneficial. The proposal rule would

codify in regulations the financial

responsibility and allocation of risk

requirements imposed under the 1988

Amendments to the Commercial Space

Launch Act of 1984, codified at 49

U.S.C. Subtitle IX, ch. 701. One of the

primary objectives of the 1988

Amendments was to enable U.S. launch

services providers to compete more

effectively with foreign competitors.

Customers may enjoy enhanced

understanding of the benefits and

responsibilities that attend licensed

launch activities carried out within the

United States or by its citizens. By

clarifying the U.S. Government's

agreement, subject to appropriations

laws or other additional legislative

authority, to provide for the payment of

excess third-party claims above required

insurance, the proposed regulations may

enable U.S. companies to negotiate more

effectively with foreign customers who

must choose between U.S. and other

competing launch services providers.

Federalism Implications

The proposed regulations would not

have substantial direct effects on the

states, on the relationship between the

Federal government and the states, or on

the distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 12612,

it is determined that the proposed

regulation does not have sufficient

federalism implications to warrant the

preparation of a Federalism Assessment.

List of Subjects in 49 CFR Part 440

Armed forces; Claims; Federal

building and facilities; Government

property; Indemnity payments;

Insurance; Reporting and recordkeeping

requirements; Rockets; Space

transportation and exploration.

Proposed Regulation

In consideration of the foregoing, the

Office of the Associate Administrator for

Commercial Space Transportation

proposes to amend the Commercial

Space Transportation Licensing

Regulations, 14 CFR Ch. III, as follows:

1. Subchapter C of Chapter III, Title

14, Code of Federal Regulations, would

be amended by adding a new part 440

to read as follows:

PART 440-FINANCIAL

RESPONSIBILITY

Subpart A-Financial Responsibility for

Licensed Launch Activities

Sec.

440. 1 Scope; Basis.

440. 3 Definitions.

440. 5 General.

440. 7 Determination of maximum probable

loss.

440. 9 Insurance requirements for licensed

launch activities.

440. 11 Duration of coverage; modifications.

440. 13 Standard conditions of insurance

coverage.

440. 15 Demonstration of compliance.

440. 17 Reciprocal waiver of claims

requirement.

440. 19 United States payment of excess

third-party liability claims.

Authority: 49 U.S.C. 70101 70119; 49 CFR

1.47.

§440.1 Scope; Basis.

This part sets forth financial

responsibility and allocation of risk

requirements applicable to commercial

space launch activities that are

authorized to be conducted under a

launch license issued pursuant to this

subchapter.

§ 440.3 Definitions.

(a) For purposes of this part-

(1) Bodily injury means physical

injury, sickness, disease, disability,

shock, mental anguish, or mental injury

sustained by any person, including

death.

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(2) Contractors and subcontractors

means those entities that are involved at

any tier, directly or indirectly, in

licensed launch activities, and includes

suppliers of property and services, and

the component manufacturers of a

launch vehicle or payload.

(3) Customer means the person who

procures launch services from the

licensee, and any person to whom the

customer has sold, leased, assigned, or

otherwise transferred its rights in the

payload (or any part thereof) to be

launched by the licensee, including a

conditional sale, lease, assignment, or

transfer of rights.

(4) Federal range facility means a

Government-owned installation at

which launches take place.

(5) Financial responsibility means

statutorily required financial ability to

meet liability as required under 49

U.S.C 70101-70119.

(6) Government personnel means

employees of the United States, its

agencies, and its contractors and

subcontractors, involved in launch

services for licensed launch activities.

Employees of the United States include

members of the Armed Forces of the

United States.

(7) Hazardous operations means

activities, processes, and procedures

that, because of the nature of the

equipment, facilities, personnel, or

environment involved or function being

performed, may result in bodily injury

or property damage.

(8) Liability means a legal obligation

to pay claims for bodily injury or

property damage resulting from licensed

launch activities.

(9) License means an authorization to

conduct licensed launch activities,

issued by the Office under this

subchapter.

(10) Licensed launch activities means

the launch of a launch vehicle as

defined in a regulation or license issued

by the Office and carried out pursuant

to a license.

(11) Maximum probable loss (MPL)

means the greatest dollar amount of loss

for bodily injury or property damage

that is reasonably expected to result

from licensed launch activities;

(i) Losses to third parties, excluding

Government personnel, that are

reasonably expected to result from

licensed launch activities are those

having a probability of occurrence on

the order of no less than one in ten

million.

(ii) Losses to Government property

and Government personnel that are

reasonably expected to result from

licensed launch activities are those

having a probability of occurrence on

the order of no less than one in one

hundred thousand.

(12) Office means the Associate

Administrator for Commercial Space

Transportation of the Federal Aviation

Administration, U.S. Department of

Transportation.

(13) Property damage means partial or

total destruction, impairment, or loss of

tangible property, real or personal.

(14) Regulations means the

Commercial Space Transportation

Licensing Regulations, codified at 14

CFR Ch. III.

(15) Third party means.

(i) Any person other than:

(A) The United States, its agencies,

and its contractors and subcontractors

involved in launch services for licensed

launch activities;

(B) The licensee and its contractors

and subcontractors involved in launch

services for licensed launch activities;

and

(C) The customer and its contractors

and subcontractors involved in launch

services for licensed launch activities.

(ii) Government personnel, as defined

in this section, are third parties. For

purposes of these regulations,

employees of other launch participants

identified in paragraphs (a)(15)(i)(B) and

(C) of this section are not third parties.

(16) United States means the United

States Government, including its

agencies.

(b) Except as otherwise provided in

this section, any term used in this part

and defined in 49 U.S.C. 70101-70119,

or in § 401.5 of this chapter shall have

the meaning contained therein.

§ 440.5 General.

(a) No person shall commence or

conduct launch activities that require a

license unless that person has obtained

a license and fully demonstrated

compliance with the financial

responsibility and allocation of risk

requirements set forth in this part.

(b) The Office shall prescribe the

amount of financial responsibility a

licensee is required to obtain, and any

additions to or modifications of the

amount, in a license order issued

concurrently with or subsequent to the

issuance of a license.

(c) Demonstration of financial

responsibility under this part shall not

relieve the licensee of ultimate

responsibility for liability, loss, or

damage sustained by the United States

resulting from licensed launch

activities, except to the extent that:

(1) Liability, loss, or damage sustained

by the United States results from willful

misconduct of the United States or its

agents, including Government

personnel;

(2) Covered claims by third parties for

bodily injury or property damage arising

out of any particular launch exceed the

amount of financial responsibility

required under § 440.9(c) of this part

and do not exceed $1,500,000,000 (as

adjusted for inflation occurring after

January 1, 1989) above such amount,

and are payable pursuant to 49 U.S.C.

70113 and § 440.19 of this part;

(3) Covered claims for property loss or

damage exceed the amount of financial

responsibility required under § 440.9(e)

of this part; or

(4) The licensee has no liability for

claims by third parties for bodily injury

or property damage arising out of any

particular launch that exceed

$1,500,000,000 (as adjusted for inflation

occurring after January 1, 1989).

(d) A licensee's failure to comply with

the requirements in this part may result

in suspension or revocation of a license,

and subjects the licensee to civil

penalties as provided in part 405 of this

chapter.

§440.7 Determination of maximum

probable loss.

(a) The Office shall determine the

maximum probable loss (MPL) from

claims by a third party for bodily injury

or property damage, and the United

States, its agencies, and its contractors

and subcontractors for covered property

damage or loss, resulting from licensed

launch activities. The maximum

probable loss determination forms the

basis for financial responsibility

requirements issued in a license order.

(b) The Office issues its determination

of maximum probable loss no later than

ninety days after a licensee or transferee

has requested a determination and

submitted all information required by

the Office to make the determination.

The Office shall consult with Federal

agencies that are involved in, or whose

personnel or property are exposed to

risk of damage or loss as a result of,

licensed launch activities before issuing

a license order prescribing financial

responsibility requirements and shall

notify the licensee or transferee if timely

issuance of the MPL determination is

not possible due to interagency

consultation.

(c) Information requirements for

obtaining a maximum probable loss

determination are set forth in Appendix

I to this part. Any person requesting a

determination of maximum probable

loss shall submit information in

accordance with Appendix I

requirements, unless the Office has

waived requirements. In lieu of

submitting required information, a

person requesting a maximum probable

loss determination may designate and

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certify certain information previously

submitted for a prior determination as

complete, valid, and equally applicable

to its current request. The requester is

responsible for the continuing accuracy

and completeness of information

submitted under this part and shall

promptly report any changes in writing.

(d) The Office shall amend a

determination of maximum probable

loss required under this section at any

time prior to completion of licensed

launch activities as warranted by

supplementary information provided to

or obtained by the Office after the MPL

determination is issued. Any change in

financial responsibility requirements as

a result of an amended MPL

determination shall be set forth in a

license order.

(e) The Office may make a

determination of maximum probable

loss at any time other than as set forth

in paragraph (b) of this section upon

request by any person.

§440.9 Insurance requirements for

licensed launch activities.

(a) As a condition of each launch

license, the licensee shall comply with

insurance requirements set forth in this

section and in a license order issued by

the Office, or may otherwise

demonstrate the required amount of

financial responsibility.

(b) The licensee shall obtain and

maintain in effect a policy or policies of

liability insurance, in an amount

determined by the Office under

paragraph (c) of this section, that

protects the following persons as

additional insureds to the extent of their

respective potential liabilities against

claims by a third party for bodily injury

or property damage resulting from

licensed launch activities:

(1) The licensee, its customer, and

their respective contractors and

subcontractors;

(2) The United States, its agencies,

and its contractors and subcontractors;

and

(3) Government personnel.

(c) The Office shall prescribe for each

licensee the amount of insurance

required to compensate the total of

third-party claims for bodily injury or

property damage resulting from licensed

launch activities in connection with any

particular launch. The amount of

insurance required is based upon the

Office's determination of maximum

probable loss; however, it will not

exceed the lesser of:

(1) $500 million; or

(2) The maximum liability insurance

available on the world market at a

reasonable cost, as determined by the

Office.

(d) The licensee shall obtain and

maintain in effect a policy or policies of

insurance, in an amount determined by

the Office under paragraph (e) of this

section, that covers claims by the United

States, it agencies, and its contractors

and subcontractors for property damage

or loss resulting from licensed launch

activities. Property covered by this

insurance shall include all property

owned, leased, or occupied by, or

within the care, custody, or control of,

the United States, its agencies, and its

contractors and subcontractors, at a

Federal range facility. Insurance shall

protect the United States, its agencies,

and it contractors and subcontractors.

(e) The Office shall prescribe for each

licensee the amount of insurance

required to compensate claims for

property damage under paragraph (d) of

this section resulting from licensed

launch activities in connection with any

particular launch. The amount of

insurance is based upon a determination

of maximum probable loss; however, it

will not exceed $100 million.

(f) In lieu of a policy of insurance, a

licensee may demonstrate financial

responsibility in another manner

meeting the terms and conditions

applicable to insurance as set forth in

this part. The licensee shall describe in

detail the method proposed for

demonstrating financial responsibility

and how it assures that the licensee is

able to cover claims as required under

this part.

§440.11 Duration of coverage;

modifications.

(a) Insurance coverage required under

§ 440.9, or other form of financial

responsibility, shall attach upon

commencement of licensed launch

activities, and remain in full force and

effect until the later of completion of

licensed launch activities as defined by

the Office in regulations, or until risk to

third parties and Government property

as a result of licensed launch activities

is sufficiently small, as determined by

the Office through the risk analysis

conducted to determine MPL, that

financial responsibility is no longer

necessary. The required duration of

financial responsibility shall be

specified in a license order, and may be

amended in the event a launch anomaly

results in additional risks to third

parties or Government property.

(b) Financial responsibility required

under this part may not be replaced,

canceled, changed, withdrawn, or in

any way modified to reduce the limits

of liability or the extent of coverage, nor

expire by its own terms, prior to the

time specified in a license order, unless

the Office is notified in advance and

expressly approves the modification.

§440.13 Standard conditions of insurance

coverage.

(a) Insurance obtained under § 440.9

shall comply with the following terms

and conditions of coverage:

(1) Bankruptcy or insolvency of an

insured, including any additional

insured, shall not relieve the insurer or

any or its obligations under any policy.

(2) Policy limits shall apply separately

to each occurrence and to the total

claims arising out of licensed launch

activities in connection with any

particular launch.

(3) Except as provided herein, each

policy shall pay claims from the first

dollar of loss, without regard to any

deductible, to the limits of the policy. A

licensee may obtain a policy containing

a deductible amount if the amount of

the deductible is placed in an escrow

account or otherwise demonstrated to

the unobligated, unencumbered funds of

the licensee, available to compensate

claims at any time claims may arise.

(4) Policies shall not be invalidated by

any action or inaction of the licensee or

any additional insured, including

nonpayment by the licensee of the

policy premium, and shall insure the

licensee and each additional insured

regardless of any breach or violation of

any warranties, declarations, or

conditions contained in the policies by

the licensee or any additional insured

(other than a breach of violation by the

licensee or an additional insured, and

then only as against that licensee or

additional insured).

(5) Exclusions from coverage shall be

specified.

(6) Insurance shall be primary without

right of contribution from any other

insurance that is carried by the licensee

or any additional insured. Each policy

shall expressly provide that all of its

provisions, except the policy limits,

operate in the same manner as if there

were a separate policy with and

covering the licensee and each

additional insured.

(7) Each policy shall be placed with

an insurer of recognized reputation and

responsibility that is licensed to do

business in any State, territory,

possession of the United States, or the

District of Columbia.

(8) Except as to claims resulting from

the willful misconduct of the United

States or its agents, the insurer shall

waive any and all rights of subrogation

against each of the parties protected by

required insurance.

(b) [Reserved]

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§440.15 Demonstration of compliance.

(a) A licensee must submit evidence

of financial responsibility and

compliance with allocation of risk

requirements under this part, as follows,

unless a licensee order specifies fewer

days due to the proximity of the

licensee's intended date for

commencement of licensed launch

activities:

(1) The three-party cross-waiver of

claims agreement required under

§ 440.17(c) of this part shall be

submitted at least 30 days before

commencement of licensed launch

activities;

(2) Evidence of insurance shall be

submitted at least 30 days before

commencement of licensed launch

activities; and

(3) Evidence of financial

responsibility in a form other than

insurance, ad provided under § 440.9(f)

of this part, shall be submitted at least

60 days before commencement of

licensed launch activities.

(b) Upon a complete demonstration of

compliance with financial responsibility

and allocation of risk requirements

under this part, the requirements shall

preempt any provisions in agreements

between the licensee and an agency of

the United States governing access to or

use of United States launch property or

launch services for licensed launch

activities which address financial

responsibility, allocation of risk and

related matters covered by 49 U.S.C.

70112, 70113.

(c) A licensee must demonstrate

compliance as follows:

(1) The licensee shall provide proof of

insurance required under § 440.9 by:

(i) Certifying to the Office that it has

obtained insurance in compliance with

the requirements of this part and any

applicable license order;

(ii) Filing with the Office one or more

certificates of insurance evidencing

insurance coverage by one or more

insurers under a currently effective and

properly endorsed policy or policies of

insurance, applicable to licensed launch

activities, on terms and conditions and

in amounts prescribed under this part,

and specifying policy exclusions;

(iii) In the event of any policy

exclusions or limitations of coverage

that may be considered usual under

§ 440.19(c) of this part, or for purposes

of implementing the Government's

waiver of claims for property damage

under the Act, certifying that insurance

covering the excluded risks is not

commercially available at reasonable

cost; and

(iv) Submitting to the Office, for

signature by the Department on behalf

of the United States Government, the

duly executed waiver of claims and

assumption of responsibility agreement

required by § 440.17(c) of this part.

(2) Certifications required under this

section shall be signed by a duly

authorized officer of the licensee.

(d) Certificate(s) of insurance required

under paragraph (c)(1)(ii) of this section

shall be signed by the insurer issuing

the policy and accompanied by an

opinion of the insurer that the insurance

obtained by the licensee complies with

the specific requirements for insurance

set forth in this part and any applicable

license order.

(e) The licensee shall maintain, and

make available for inspection by the

Office upon request, all required

policies of insurance and other

documents necessary to demonstrate

compliance with this part.

(f) In the event the licensee

demonstrates financial responsibility

using means other than insurance, as

provided under § 440.9(f) of this part,

the licensee shall provide proof that it

has met the requirements set forth in

this part and in a license order issued

by the Office.

§440.17 Reciprocal waiver of claims

requirements.

(a) As a condition of each launch

license, the licensee shall comply with

reciprocal waiver of claims

requirements as set forth in this section.

(b) The licensee shall implement

reciprocal waivers of claims with its

contractors and subcontractors, its

customer(s) and the customer's

contractors and subcontractors, under

which each party waives and releases

claims against the other parties to the

waivers and agrees to assume

responsibility for property damage it

sustains and for bodily injury or

property damage sustained by its own

employees resulting from licensed

launch activities, regardless of fault.

(c) For each licensed launch in which

the U.S. Government, its agencies, or its

contractors and subcontractors is

involved in licensed launch activities or

where property insurance is required

under § 440.9(d) of this part, the

Department of Transportation, the

licensee, and its customer shall enter

into a three-party reciprocal waiver of

claims agreement in the form set forth

in Appendix II to this part. If the

licensee's customer is an agency of the

U.S. Government, the Agreement shall

be modified to reflect that, for purposes

of the Agreement, the customer is a

Government agency involved in

licensed launch activities except that

the government customer waives claims

and accepts responsibility for damage or

loss to its property.

(d) The licensee, its customer, and the

United States but only to the extent

provided in legislation, shall agree in

any waiver of claims agreements

required under this part to indemnify

another party to the agreement from

claims by the indemnifying party's

contractors and subcontractors arising

out of the indemnifying party's failure

to implement properly the waiver

requirement.

§440.19 United States payment of excess

third-party liability claims.

(a) The United States shall pay

successful claims (including reasonable

expenses of litigation or settlement) of a

third party against the licensee, the

customer, and the contractors and

subcontractors of the licensee and the

customer, and the contractors and

subcontractors of the United States and

its agencies involved in licensed launch

activities to the extent provided in an

appropriation law or other legislative

authority providing for payment of

claims in accordance with 49 U.S.C.

70113, and to the extent the total

amount of such claims arising out of any

particular launch:

(1) Exceeds the amount of insurance

required under § 440.9(b); and

(2) Is not more than $1,500,000,000

(as adjusted for inflation occurring after

January 1, 1989) above that amount.

(b) Payment by the United States

under paragraph (a) of this section shall

not be made for any part of such claims

for which the bodily injury or property

damage results from willful misconduct

by the party seeking payment.

(c) The United States shall provide for

payment of claims by third parties for

bodily injury of property damage that

are payable under 49 U.S.C. 70113 and

not covered by required insurance

under § 440.9(b), without regard to the

limitation under paragraph (a)(1) of this

section, because of an insurance policy

exclusion that is usual. A policy

exclusion is considered usual only if

insurance covering the excluded risk is

not commercially available at

reasonable rates. The licensee must

submit a certification in accordance

with § 440.15(c)(1)(iii) of this part for

the United States to cover such claims.

(d) Upon the expiration of the policy

period prescribed in accordance with

§ 440.11(a), the United States shall

provide for payment of claims that are

payable under 49 U.S.C. 70113 from the

first dollar of loss up to $1,500,000,000

(as adjusted for inflation occurring after

January 1, 1989).

(e) Payment by the United States of

excess third-party claims under 49

U.S.C. 70113 shall be subject to:

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(1) Prompt notice by the licensee to

the Office that the total amount of

claims arising out of licensed launch

activities exceeds, or is likely to exceed,

the required amount of financial

responsibility. For each claim, the

notice must specify the nature, cause,

and amount of the claim or lawsuit

associated with the claim, and the party

or parties who may otherwise be liable

for payment of the claim;

(2) Participation or assistance in the

defense of the claim or lawsuit by the

United States, at its election;

(3) Approval by the Office of any

settlement, or part of a settlement, to be

paid by the United States; and

(4) Approval by Congress of a

compensation plan prepared by the

Office and submitted by the President.

(f) The Office will:

(1) Prepare a compensation plan

outlining the total amount of claims and

meeting the requirements set forth in 49

U.S.C. 70113;

(2) Recommend sources of funds to

pay the claims; and

(3) Propose legislation as required to

implement the plan.

(g) The Office may withhold payment

of a claim if the Office finds that the

amount is unreasonable, unless it is the

final order of a United States Court.

Appendix I-Information Requirements

for Obtaining a Maximum Probable

Loss Determination for Licensed

Launch Activities

Any person requesting a maximum

probable loss determination shall submit the

following information to the Office, unless

the Office has waived a particular

information requirement under 14 CFR

440.7(c):

I. General Information

A. Mission description.

1. A description of mission parameters,

including:

a. Launch trajectory;

b. Orbital inclination; and

c. Orbit altitudes (apogee and perigee).

2. Flight sequence.

3. Staging events and the time for each

event.

4. Impact locations.

5. Identification of the launch range

facility, including the launch complex on the

range, planned date of launch, and launch

windows.

6. If the applicant has previously been

issued a license to conduct launch activities

using the same launch vehicle from the same

launch range facility, a description of any

differences planned in the conduct of

proposed activities.

B. Launch Vehicle Description.

1. General description of launch vehicle

and its stages, including dimensions.

2. Description of major systems, including

safety systems.

3. Description of rocket motors and type of

fuel used.

4. Identification of all propellants to be

used and their hazard classification under

the Hazardous Materials Table, 49 CFR

172.101.

5. Description of hazardous components.

C. Payload.

1. General description of the payload,

including type (e.g., telecommunications,

remote sensing), propellants, and hazardous

components or materials, such as toxic or

radioactive substances.

D. Flight Termination System.

1. Identification of any flight termination

system (FTS) on the launch vehicle,

including a description of operations and

component location on the vehicle.

II. Pre-flight Processing Operations

A. General description ofpre-flight

operations including vehicle processing

consisting of an operational flow diagram

showing the overall sequence and location of

operations, commencing with arrival of

vehicle components at the launch range

facility through final safety checks and

countdown sequence, and designation of

hazardous operations, as defined in 14 CFR

440.3. For purposes of these information

requirements, payload processing, as

opposed to integration, is not a hazardous

operation.

B. For each hazardous operation, including

but not limited to fueling, solid rocket motor

build-up, ordnance installation, ordnance

checkout, movement of hazardous materials,

and payload integration:

1. Identification of location where each

operation will performed, including each

building or facility identified by name or

number.

2. Identification of facilities adjacent to the

location where each operation will be

performed and therefore exposed to risk,

identified by name or number.

3. Maximum number of third-party

personnel, including but not limited to

Government personnel, who may be exposed

to risk during each operation. For

Government personnel, identification of his

or her employer.

4. Identification of launch range facility

policies or requirements applicable to the

conduct of operations.

Il1. Flight Operations

A. Identification of launch range facilities

exposed to risk during launch vehicle lift-off

and flight.

B. Identification of accident failure

scenarios, probability assessments for each,

and estimation of risks to third parties and

Government property due to property

damage or bodily injury. Scenarios shall

cover the range of launch trajectories,

inclinations and orbits for which

authorization is sought in the license

application. The estimation of risks for each

scenario shall take into account the number

of third parties at risk as a result of lift-off

and flight of a launch vehicle (on-range, offrange, and down-range) and specific, unique

facilities exposed to risk.

C. On-orbit risk analysis assessing risks

posed by a launch vehicle to operational

satellites.

D. Reentry risk analysis assessing risks to

third parties as a result to reentering debris

or reentry of the launch vehicle or its

components.

E. Trajectory data as follows: Nominal and

3-sigma lateral trajectory data in x, y, z and

X, Y, Z coordinates in one-second intervals,

data to be pad-centered with x being along

the initial launch azimuth and continuing

through impact for suborbital flights, and

continuing through orbital insertion or the

end of powered flight for orbital flights.

F. Tumble-turn data for guided vehicles

only, as follows: For vehicles with gimbaled

nozzles, tumble turn data with zeta angles

and velocity magnitudes stated. A separate

table is required for each combination of fail

times (every two to four seconds), and

significant nozzle angles (two or more small

angels, generally between one and five

degrees).

G. Identification of debris lethal areas and

the projected number and ballistic coefficient

of fragments expected to result from flight

termination, initiated either by command or

self-destruct mechanism, for lift-off, land

overflight, and reentry.

IV. Post-flight Processing Operations

A. General description of post-flight

ground operations including overall

sequence and location of operations for

removal of vehicle components and

processing equipment from the launch range

facility and for handling of hazardous

materials, and designation of hazardous

operations.

B. Identification of all facilities used in

conducting post-flight processing operations.

C. For each hazardous operation:

1. Identification of location where each

operation is performed, including each

building or facility identified by name or

number.

2. Identification of facilities adjacent to

location where each operation is performed

and exposed to risk, identified by name or

number.

3. Maximum number of third-party

personnel, including but not limited to

Government personnel, who may be exposed

to risk during each operation. For

Government personnel, identification of his

or her employer.

4. Identification of launch range facility

policies or requirements applicable to the

conduct of operations.

Appendix II-Agreement for Waiver of

Claims and Assumption of

Responsibility

THIS AGREEMENT is entered into this

day of - , by and among

[Licensee] (the "Licensee"), [Customer] (the

"Customer") and the Department of

Transportation, on behalf of the United States

Government (collectively, the "Parties"), to

implement the provisions of section 440.7(c)

of the Commercial Space Transportation

Licensing Regulations, 14 CFR Ch. III (the

"Regulations").

In consideration of the mutual releases and

promises contained herein, the Parties hereby

agree as follows:

1. Definitions

"Customer" means the above-named

Customer on behalf of the Customer and any

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person to whom the Customer has sold,

leased, assigned, or otherwise transferred its

rights in the payload (or any part thereof) to

be launched by the licensee, including a

conditional sale, lease, assignment, or

transfer of rights.

"License" means License No. issued

on - , by the Associate Administrator

for Commercial Space Transportation,

Federal Aviation Administration, Department

of Transportation, to the Licensee, including

all license orders issued in connection with

the License.

"Licensee" means the Licensee and any

transferee of the Licensee under 49 U.S.C.

Subtitle IX, ch. 701.

"United States Government" means the

United States, its agencies involved in

Licensed Launch Activities, and its

contractors and subcontractors involved in

Licensed Launch Activities.

Except as otherwise defined herein, terms

used in this Agreement and defined in 49

U.S.C. Subtitle IX, ch. 701 Commercial

Space Launch Activities, or in the

Regulations, shall have the same meaning as

contained in 49 U.S.C. Subtitle IX, ch. 701,

or the Regulations, respectively.

2. Waiver and Release of Claims

(a) Licensee hereby waives and releases

claims it may have against Customer,

Customer's Contractors and Subcontractors,

and the United States Government, for

Property Damage it sustains and for Bodily

Injury or Property Damage sustained by its

own employees, resulting from Licensed

Launch Activities, regardless of fault.

(b) Customer hereby waives and releases

claims it may have against Licensee, its

Contractors and Subcontractors, and the

United States Government, for Property

Damage it sustains and for Bodily Injury or

Property Damage sustained by its own

employees, resulting from Licensed Launch

Activities, regardless of fault.

(c) The United States Government hereby

waives and releases claims it may have

against Licensee and Customer, and against

their respective Contractors and

Subcontractors, for Property Damage it

sustains, to the extent that claims it would

otherwise have for such damage exceed the

amount of insurance or demonstration of

financial responsibility required under

section 440.9(e) of the Regulations, 14 CFR

§ 440.9(e), regardless of fault.

3. Assumption of Responsibility

(a) Licensee and Customer shall each be

responsible for Property Damage it sustains

and for Bodily Injury or Property Damage

sustained by its own employees, resulting

from Licensed Launch Activities, regardless

of fault.

(b) The United States Government shall be

responsible for Property Damage it sustains,

to the extent that claims it would otherwise

have for such damage exceed the amount of

insurance or demonstration of financial

responsibility required under section 440.9(e)

of the Regulations, 14 CFR § 449.9(e),

regardless of fault.

4. Extension of Assumption and Waiver

(a) Licensee shall extend the waiver and

release of claims and the requirement of the

assumption of responsibility as set forth in

paragraphs 2(a) and 3(a), respectively, to its

Contractors and Subcontractors by requiring

them to waive and release all claims they

may have against Customer, Customer's

Contractors and Subcontractors, and the

United States Government, and to agree to be

responsible, for Property Damage they

sustain and for Bodily Injury or Property

Damage sustained by their own employees,

resulting from Licensed Launch Activities,

regardless of fault.

(b) Customer shall extend the waiver and

release of claims and the requirement of the

assumption of responsibility as set forth in

paragraphs 2(b) and 3(a), respectively, to its

Contractors and Subcontractors by requiring

them to waive and release all claims they

may have against Licensee, the Licensee's

Contractors and Subcontractors, and the

United States Government, and to agree to be

responsible, for Property Damage they

sustain and for Bodily Injury or Property

Damage sustained by their own employees,

resulting from Licensed Launch Activities,

regardless of fault.

5. Indemnification

(a) Licensee shall hold harmless and

indemnify Customer and its directors,

officers, servants, agents, subsidiaries,

employee and assignees, or any of them, and

the United States Government and its

directors, officers, servants, agents,

subsidiaries, employee and assignees, or any

of them, from and against liability, loss or

damage arising out of claims that Licensee's

Contractors and Subcontractors may have for

Property Damage sustained by them and for

Bodily Injury or Property Damage sustained

by their employees, resulting from Licensed

Launch Activities.

(b) Customer shall hold harmless and

indemnify Licensee and its directors, officers,

servants, agents, subsidiaries, employees and

assignees, or any of them, and the United

States Government and its directors, officers,

servants, agents, subsidiaries, employees and

assignees, or any of them, from and against

liability, loss or damage arising out of claims

that Customer's Contractors and

Subcontractors, or any person on whose

behalf Customer enters into this Agreement,

may have for Property Damage sustained by

them and for Bodily Injury or Property

Damage sustained by their employees,

resulting from Licensed Launch Activities.

(c) To the extent provided in advance in an

appropriation law or to the extent there is

enacted additional legislative authority

providing for the payment of claims, the

United States shall hold harmless and

indemnify Licensee and Customer and their

respective directors, officers, servants, agents,

subsidiaries, employees and assignees, or any

of them, from and against liability, loss or

damage arising out of claims that any person

on whose behalf the Department enters into

this Agreement may have for Property

Damage sustained by them, resulting from

Licensed Launch Activities.

6. Assurances under 49 U.S.C. 70112(e)

Notwithstanding any provision of this

Agreement to the contrary, Licensee shall

hold harmless and indemnify the United

States Government and its agencies, servants,

agents, employees and assignees, or any of

them, from and against liability, loss or

damage arising out of claims for Bodily

Injury or Property Damage, resulting from

Licensed Launch Activities, regardless of

fault, except to the extent that: (i) As

provided in section 7(b) of this Agreement,

claims result from willful misconduct of the

United States Government or its agents; (ii)

claims for Property Damage sustained by the

United States Government exceed the

amount of insurance or demonstration of

financial responsibility required under

section 440.9(e) of the Regulations (14 CFR

§ 440.9(e)); (iii) claims by a Third Party for

Bodily Injury or Property Damage exceed the

amount of insurance or demonstration of

financial responsibility required under

section 440.9(c) of the Regulations (14 CFR

§ 440.9(c)), and do not exceed $1,500,000,000

(as adjusted for inflation after January 1,

1989) above such amount, and are payable

pursuant to the provisions of 49 U.S.C. 70113

and section 440.19 of the Regulations (14

CFR § 440.19); or (iv) Licensee has no

liability for claims exceeding $1,500,000,000

(as adjusted for inflation after January 1,

1989).

7. Miscellaneous

(a) Nothing contained herein shall be

construed as a waiver or release by Licensee,

Customer or the United States Government of

any claim by an employee of the Licensee,

Customer or the United States Government,

respectively, including a member of the

Armed Forces of the United States, for Bodily

Injury or Property Damage, resulting from

Licensed Launch Activities.

(b) Notwithstanding any provision of this

Agreement to the contrary, any waiver,

release, assumption of responsibility or

agreement to indemnify herein shall not

apply to claims for Bodily Injury or Property

Damage resulting from willful misconduct of

any of the Parties, the Contractors and

Subcontractors of any of the Parties, and the

directors, officers, agents and employees of

any of the foregoing.

(c) In the event that more than one

customer is involved in Licensed Launch

Activities, references herein to Customer

shall apply to, and be deemed to include,

each such customer severally and not jointly.

(d) The Agreement shall be governed by

and construed in accordance with United

States Federal law.

In Witness Whereof, the Parties to this

Agreement have caused the Agreement to be

duly executed by their respective duly

authorized representatives as of the date

written above.

Licensee

By:

Its:

Customer

By:

Its:

Department of Transportation

By:

Its: Associate Administrator for Commercial

Space Transportation, Federal Aviation

Administration

39020
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Proposed Rules 39021

Issued in Washington, DC., this 17th day

of July 1996.

Patti Grace Smith,

ActingAssociate Administratorfor

Corn m ercial Space Transportation, Federal

Aviation Administration.

[FR Doc. 96 18532 Filed 7 24 96; 8:45 am]

BILLING CODE 4910-13-M

Z iL

AIM

39023

Thursday

July 25, 1996

Part IV

Environmental

Protection Agency

Cyanazine; Notice of Final Determination

to Terminate Special Review of

Cyanazine; Notice of Voluntary

Cancellation and Cancellation Order of

Cyanazine Product Registrations; Notice
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Notices

ENVIRONMENTAL PROTECTION

AGENCY

[OPP-30000/60B; FRL-5385-7]

Cyanazine; Notice of Final

Determination to Terminate Special

Review of Cyanazine; Notice of

Voluntary Cancellation and

Cancellation Order of Cyanazine

Product Registrations

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of Final Determination to

Terminate Special Review; Notice of

Voluntary Cancellation.

SUMMARY: This Notice announces the

conclusion of the Special Review of

cyanazine and EPA's acceptance of

requests for the voluntary cancellation

of cyanazine registrations. EPA is

concluding the Special Review because

the registrants have agreed to

voluntarily modify the terms and

conditions of the cyanazine registrations

so that use of the pesticide will not

cause unreasonable adverse effects on

the environment. The registrants have

agreed to voluntarily amend their

registrations and phase out cyanazine

use by gradually reducing application

rates, implementing additional

protective use restrictions during the

phaseout, and voluntarily cancelling

cyanazine registrations effective

December 31, 1999. EPA is accepting

these voluntary cancellations of

technical and end use pesticide

products containing cyanazine pursuant

to agreements by the registrants.

FOR FURTHER INFORMATION CONTACT: By

mail: Joseph E. Bailey, Review Manager,

Special Review and Reregistration

Division (7508W), Office of Pesticide

Programs, Environmental Protection

Agency, 401 M St., S.W., Washington,

DC 20460. Office location, telephone

number, and e-mail address: Special

Review Branch, 3rd Floor, Crystal

Station, 2800 Jefferson Davis Highway,

Arlington, VA 22202, Telephone: 703-

308-8173, e-mail:

bailey.joseph @epamail.epa.gov. For a

copy of documents in the public docket,

to request information concerning the

Special Review, or to request indices to

the Special Review public docket,

contact the Public Response and

Program Resources Branch, Field

Operations Division (7506C), Office of

Pesticide Programs, Environmental

Protection Agency, 401 M St., SW.,

Washington, DC 20460, Telephone: 703-

305-5805.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Regulatory Background

This Notice of Final Determination

concludes the Special Review of

cyanazine which began in November

1994 when EPA issued the Notice of

Initiation of Special Review of atrazine,

simazine, and cyanazine (58 FR 60412,

November 23, 1994) (FRL-4919-5). The

Agency initiated the Special Review

based upon concerns that cyanazine

may pose a risk of inducing cancer in

humans from dietary, occupational, and

residential exposure.

When EPA initiated this Special

Review, E.I. duPont de Nemours and

Company ("DuPont") and Ciba Geigy

Corporation ("Ciba") were the only

registrants of cyanazine products. On

August 2, 1995, DuPont voluntarily

proposed to amend its cyanazine

registrations to incrementally reduce

cyanazine maximum application rates

in 1997, 1998, and 1999, and to

terminate the production of cyanazine

for use in the United States by the end

of 1999. DuPont proposed that after

December 31, 1999, the registrant would

not release for shipment any cyanazine

formulated end use products for use in

the United States. EPA would authorize

distribution and sale through September

30, 2002, of any existing stocks of

cyanazine formulated end use products

that were released for shipment on or

before December 31, 1999. It also would

authorize use of these products in

accordance with the product labels

through December 31, 2002. DuPont

would modify the labels of cyanazine

formulated end use products released

for shipment by the registrant after July

25, 1996, to specify the maximum

application rates during the phaseout

and to inform the public of the existing

stocks provisions. It also would modify

cyanazine labels to require use of

application equipment with enclosed

cabs for applicators beginning in 1998.

Cyanazine technical products released

for shipment by DuPont after July 25,

1996, would bear labels subjecting any

end use products made from those

technical products to the terms and

conditions described in this paragraph.

Finally, DuPont requested that EPA

accept the voluntary cancellation of all

registered DuPont cyanazine products

effective on December 31, 1999. DuPont

also waived any right to challenge EPA's

final action on the Special Review or the

terms and conditions upon EPA's final

acceptance of the proposed

amendments. On August 2, 1995, EPA

accepted DuPont's proposal to amend

the cyanazine registrations.

On November 8, 1995, EPA

announced receipt of a request from

Ciba to voluntarily cancel its only

product containing cyanazine (60 FR

56333) (4984-1). The cancellation order

for Ciba's sole product containing

cyanazine was effective February 6,

1996.

After EPA initiated Special Review,

Griffin Corporation ("Griffin") filed an

application to register certain cyanazine

pesticide products and subsequently

agreed to the same terms and conditions

of registration that were proposed by

DuPont. EPA granted Griffin's

applications and issued conditional

registrations subject to those same terms

and conditions.

On March 1, 1996, EPA issued a

Notice of Preliminary Determination to

Terminate Special Review and a Notice

of Receipt of Requests for Voluntary

Cancellation of cyanazine registrations

(61 FR 8186) (5352-6). In this Notice,

EPA explained that it was proposing to

terminate the Special Review of

cyanazine because, based upon the

modified terms and conditions of the

cyanazine registrations, the use of

cyanazine will not cause any

unreasonable adverse effects on the

environment. The complete terms and

conditions to amend cyanazine

registrations that were agreed to by the

registrants were provided in the Notice.

In the same Notice, EPA announced

receipt of requests from DuPont and

Griffin to voluntarily cancel their

registrations pursuant to section 6(f) of

the Federal Insecticide, Fungicide, and

Rodenticide Act (FIFRA) (7 U.S.C.

section 136d(f)). The requested

voluntary cancellations would take

effect on December 31, 1999.

The cyanazine product registrations

that are subject to the modified terms

and conditions of registrations as agreed

to by DuPont and Griffin, including

voluntary cancellation effective on

December 31, 1999, are listed below by

registration number and product name.

Registra- Product Name

tion No.

352-470

352-475

352-495

352-500

352-577

1812-364

DuPont Bladex (R)4L Herbicide

DuPont Cyanazine Technical

DuPont Bladex (R)90 DF

Herbicide

DuPont Extrazine (R)II

4L Herbicide

DuPont Extrazine (R)II

DF Herbicide

Griffin Cyanazine Technical

39024
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Notices

Registra- Product Name

tion No.

1812-365 Griffin Cynex DF

1812-366 Griffin Cynex 4L Herbicide Liquid

1812-367 Griffin Cynex Extra 4L

1812-368 Griffin Cynex Extra DF

B. Legal Background

1. Summary of Special Review

Process. Special Review is a decisionmaking process designed to help EPA

determine whether the Agency should

initiate formal procedures, such as

involuntary cancellation or suspension

of a pesticide registration or the

imposition of modified terms and

conditions of registration because use of

the pesticide may cause unreasonable

adverse effects on the environment (40

CFR 154.1(a)).

EPA announces its decision to initiate

the process by publishing a Notice of

Special Review. EPA may initiate a

Special Review if a pesticide use under

the existing terms and conditions of

registration meets or exceeds the risk

criteria specified in the regulations at 40

CFR 154.7. In the initial Notice, EPA

solicits comments concerning the risks

and benefits of the uses that are subject

to Special Review (40 CFR 154.25).

In response to the Notice of Special

Review, the public may submit

comments pertinent to whether the use

of a pesticide product as currently

registered meets or exceeds the risk

criteria as currently registered; whether

any additional restrictions on the use of

the product, in accordance with a

pending application or amendment,

would cause it to meet or exceed the

risk criteria; whether the risks caused by

use of the product are unreasonable; and

what regulatory action EPA should take

(40 CFR 154.26).

The regulations governing Special

Review contemplate that EPA may

terminate the process if the pesticides'

registrants are willing and able to

voluntarily eliminate any unreasonable

adverse effects without formal

proceedings by voluntarily modifying

the terms and conditions of registration

or voluntarily cancelling registrations.

Section 154.1(a) of the regulations states

that the issuance of a Notice of Special

Review means that the Agency expects

to initiate a formal proceeding unless

"the Agency's initial determination was

erroneous .... the risks can be reduced

to acceptable levels without the need for

formal proceedings, or ... the benefits

of the pesticide's use outweigh the

risks."

If EPA determines that the risks can

be reduced to acceptable levels because

the registrants are able and willing to

modify the terms and conditions of

registration, then it will issue a Notice

of Preliminary Decision to Terminate

Special Review. This Notice explains

EPA's basis for concluding that the

measures agreed to by the registrants

will reduce risks to an acceptable level

and responds to significant comments

received in response to the initial Notice

of Special Review. It also solicits public

comments on EPA's position to

terminate Special Review and its

proposed resolution of risk concerns (59

FR 12188; March 27, 1985).

One of the risk reduction measures

that a registrant may agree to is a

voluntary cancellation under FIFRA

section 6(f). This provision authorizes

EPA to cancel a registration based upon

the request of the registrant without

regard for whether the pesticide poses

an unreasonable risk of adverse effects.

Other possible risk reduction measures

that a registrant may agree to are

modifications of the use of the pesticide

that will reduce risk to an acceptable

level, such as requiring the use of

respirators or reducing the amount of

pesticide that may be used. Registrants

generally agree to incorporate such

voluntary risk reduction measures into

the terms and conditions of their

registration to insure future compliance.

Sometimes registrants are unable or

unwilling to voluntarily amend the

existing terms and conditions of

registration so that the products in

question do not cause unreasonable

adverse effects. If this occurs, the

regulations contemplate that the Agency

will issue a Notice of Preliminary

Determination to Terminate Special

Review and, among other things, will

describe the regulatory measures that

the Agency intends to initiate following

termination of the process (40 CFR

154.31).

After the close of the comment period

for a Notice of Preliminary

Determination, EPA issues a Notice of

Final Determination. This Notice

includes the Agency's final

determination and a discussion of the

reasons for that determination, any

comments submitted by the Secretary of

Agriculture or the Scientific Advisory

Panel, any significant public comments

submitted in response to the Notice of

Preliminary Determination, and

instructions to registrants, applicants for

registration, and other interested

persons with respect to procedures that

will be used to implement the final

determination (40 CFR 154.33).

Following termination of Special

Review, the Agency may either return

the pesticide to the regular registration

process or initiate formal proceedings.

These formal proceedings include

cancellation under FIFRA section 6(b),

suspension under FIFRA section 6(c),

denial of a registration application

under FIFRA section 3(c)(6), or change

of classification under FIFRA section

3(d)(2). A more detailed description of

the Special Review Process may be

found at 40 CFR part 154 and 61 FR

8187-8.

2. Voluntary Cancellation Process.

FIFRA section 6(f)(1)(D) authorizes the

Administrator to approve or deny a

request for voluntary cancellation (7

U.S.C. section 136d(f)(10(D)). Unlike an

involuntary cancellation under FIFRA

section 6(b), FIFRA does not require the

Administrator to make a finding that use

of the pesticide may generally cause

unreasonable adverse effects on the

environment to approve a voluntary

cancellation request. If a registrant

wishes to voluntarily cancel its

registration, it may do so at any time

under section 6(f), by submitting a

request to EPA (7 U.S.C. section

136d(f)(1)(A)). The statute also contains

provisions governing the publication of

a notice of such a request which ensures

that users and others will have adequate

notice of the voluntary cancellation and

time to submit their own applications to

assume the registrations (7 U.S.C.

section 136d(f)(1)). FIFRA does not

require EPA to conduct a hearing on

whether a voluntary cancellation

request should be granted.

II. Summary of Notice of Preliminary

Determination

In the Preliminary Determination,

EPA reviewed the risks and benefits of

phasing out and eventually cancelling

cyanazine registrations pursuant to the

terms and conditions of registration

agreed to by DuPont and Griffin. It

concluded that the phaseout and

cancellation will eventually reduce risk

to zero when the product may no longer

be used. Prior to cancellation, EPA

noted that progressive restrictions on

the maximum amount of cyanazine that

may be applied per acre, combined with

closed cab requirements and depletion

of existing stocks will progressively

reduce risk (61 FR at 8200).

EPA also discussed the benefits of

cyanazine use under the terms and

conditions of the phaseout and

cancellation. It determined that the

gradual phaseout will lessen the

economic impact to growers who have

used cyanazine when compared to an

immediate cancellation. The phaseout

should allow growers sufficient time to

find suitable alternative weed control

strategies to replace cyanazine, causing

39025
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Notices

little disruption to agricultural

production. The phaseout also makes it

unnecessary to recall and dispose of

unused product because it provides

advance notice of the ultimate

cancellation and prohibition of use to

distributors and growers.

Based upon the assessment of risks

and benefits in light of the terms and

conditions agreed to by DuPont and

Griffin, EPA concluded that the use of

cyanazine during the phaseout would

not pose any unreasonable adverse

effects.

Il. Response to Public Comments

A. Analysis Required by Special Review

Regulations

Griffin, citing 40 CFR 154.1(a), asserts

that after EPA initiates Special Review

it is prohibited from taking further steps

to "cancel or alter a product registration

if the record establishes that 'the

Agency's initial determination was

erroneous ... or that the benefits of the

pesticide's use outweigh the risks."'

The Agency disagrees with Griffin's

characterization of this Special Review

regulation. The regulation, cited in part

by the commenter, reads:

The purpose of the Special Review process

is to help the Agency determine whether to

initiate procedures to cancel, deny, or

reclassify registration of a pesticide product

because uses of that product may cause

unreasonable adverse effects on the

environment in accordance with section

3(c)(6) and 6 of [FIIFRA]. The process is

intended to ensure that the Agency assesses

risks that may be posed by pesticides and the

benefits of use of those pesticides in an open

and responsive manner. The issuance of a

Notice of Special Review means that the

Agency has determined that one or more uses

of a pesticide may pose significant risks and

that, following completion of the Special

Review process, the Agency expects to

initiate formal proceedings seeking to cancel,

deny, reclassify, or require modifications to

the registration of the product(s) in question

unless it has been shown during the Special

Review that the Agency's initial

determination was erroneous, that the risks

can be reduced to acceptable levels without

the need for formal proceedings, or that the

benefits of the pesticide's use outweigh the

risks (40 CFR 154.1(a)).

This provision describes the actions

that EPA believes may be necessary after

termination of Special Review

depending upon the circumstances. It

does not establish mandatory

procedures that restrict the Agency's

options once Special Review is initiated

as the commenter seems to suggest.

Rather it describes possible steps that

the Agency may consider taking after it

terminates Special Review.

The regulation describes the steps that

EPA expects to initiate after termination

of Special Review as "formal

proceedings" to "cancel, deny,

reclassify, or require modifications" to

product registrations. The regulation

contemplates that "formal proceedings"

likely would not be appropriate if the

Agency determines that one of the

following occurs: (1) The decision to

initiate Special Review is erroneous, (2)

the risks cannot be reduced to

acceptable levels without a formal

proceeding, or (3) the benefits outweigh

the risks. Based upon this language, it

is clear that the term "formal

proceedings" means involuntary, EPAinitiated proceedings such as the

issuance of a Notice of Intent to Cancel

under FIFRA section 6(b) or the

required modification of the terms and

conditions of a registration and does not

include other measures that the

registrants agree to such as voluntary

cancellations under FIFRA section 6(f)

or voluntary modifications to product

registrations. If any one of the three

circumstances specified in the rule

exists, then formal involuntary

proceeding would be unnecessary

because the risk/benefit balance would

not justify such an action.

Griffin's assertion that the regulation

prohibits EPA from taking steps to

cancel or alter a registration if the

Agency's initial risk determination is

erroneous or if the benefits outweigh the

risks would produce an absurd result.

Both the statute and the regulations

contemplate that registrants may

address unreasonable risks by amending

their registrations to reduce risk or even

by requesting voluntary cancellation of

their registrations. Griffin's

interpretation would effectively prevent

EPA from accepting such risk reduction

measures once it has initiated Special

Review and force it to initiate

unnecessary measures such as a FIFRA

section 6(b) cancellation. Such an

interpretation of 154.1(a) is inconsistent

with the meaning of the regulation and

with congressional intent underlying

FIFRA's voluntary cancellation

provision.

EPA has determined that the risks

posed by cyanazine can be reduced to

acceptable levels without formal

proceedings because of the voluntary

cancellation and phaseout agreed to by

both DuPont and Griffin. As a result, it

does not need to initiate formal

cancellation or other involuntary

proceedings upon completion of the

Special Review. Instead, EPA will

return the cyanazine registrations to the

regular registration process.

B. Applicability of Rulemaking

Provisions of the Administrative

Procedure Act (A PA)

Griffin claims that the Special Review

process constitutes rulemaking under

the APA and that EPA must comply

with the APA's notice and comment

requirements when it conducts a

Special Review. It also alleges that EPA

violated APA rulemaking requirements

in a number of instances by failing to

provide background information that

was not cited in any Special Review

Notice and by failing to respond to

comments on various aspects of the

Agency's risk assessment and on

alternative methods of addressing risks

posed by cyanazine usage.

EPA has always taken the position

that Special Review does not constitute

APA rulemaking but instead is an

informal information gathering

mechanism for assessing whether the

use of specific pesticides causes

unreasonable adverse effects on the

environment based upon the terms and

conditions of registration. As noted in

the regulations, Special Review is

designed to help EPA decide whether to

initiate a formal proceeding to cancel or

reclassify an existing registration or

deny an application for a registration

(40 CFR 154.1(a)).

The APA imposes notice-andcomment requirements only upon

"legislative" rules. See generally

Comm unity Nutrition Institute v. Young,

818 F.2d 943 (D.C. Cir. 1987).

Legislative rules generally "create law,"

Gibson Wine Co. v. Synder, 194 F.2d

329, 331 (D.C. Cir. 1952) and "grant

rights, impose obligations, or produce

other significant effects on private

interests." Batterton v. Marshall, 648

F.2d 694, 701-02 (D.C. Cir.1980); see

also American Hospital Ass'n v. Bowen,

834 F.2d 1037, 1045 (D.C. Cir. 1987).

Courts also give some deference to an

agency's characterization of its

statement although that characterization

is not determinative. Community

Nutrition, 818 F.2d at 946.

Based upon these standards, it is clear

that the Special Review process is not

legislative rulemaking. Termination of

Special Review does not itself grant a

new right or create a new legal

obligation. Following the termination of

Special Review, EPA may affect private

rights but only by taking further steps to

initiate an involuntary adjudicative

process or by implementing voluntary

risk reduction measures. Accordingly,

the Special Review process does not

create a new law and thus, is not a

legislative rule requiring notice and

comment.

39026
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Notices

The Ninth Circuit rejected an

argument similar to that proposed by

Griffin in a challenge to EPA's

consideration of permit applications for

storm water discharges under the Clean

Water Act. Natural Resources Defense

Council, Inc. v. EPA, 966 F.2d 1292,

1309 (9th Cir. 1992). NRDC argued that

EPA's decision to approve or disapprove

a group application was a rule of

"general applicability" and thus subject

to APA's notice and comment

requirements. Id. The court rejected this

argument. It first observed that

"rulemaking ordinarily involves 'broad

judgments, legislative in nature rather

than the resolution of a particular

dispute of facts."' Id. (citation omitted).

The court held that EPA's decision on

the permit application was "essentially

a factual determination," not

rulemaking, because it focused on a

specific factual question regarding

whether the application adequately

identified a second group that would be

subject to more extensive data

requirements. Id. The court also

explicitly noted that EPA was not

engaged in rulemaking even though the

decision on the permit applications

might affect a large number of

applicants.

The principal case that Griffin relies

upon, Waste Management, Inc. v. EPA,

669 F. Supp. 536 (D.D.C. 1987), does not

support the conclusion that Special

Review constitutes rulemaking. In

Waste Management, EPA was engaged

in issuing a regulation governing ocean

incineration. EPA decided to

temporarily freeze all applications for

ocean incineration permits until the

final regulation was promulgated but it

did not make any specific factual

determinations regarding specific

permit applications. The court held that

this temporary freeze constituted APA

rulemaking.

In contrast to the circumstances in

Waste Management, EPA is utilizing the

cyanazine Special Review to analyze the

risks and benefits of cyanazine under

the terms and conditions of registration.

This analysis is preparatory either to

initiating proceedings to address any

unreasonable risk or implementing

voluntary risk reduction measures and

does not itself impose any limitations

upon existing registrations. See, 40 CFR

154.1(a). Such preliminary factual

determinations are not rulemaking

under the APA.

C. Risk/Benefit Comments Beyond

Scope of Agency Determination

1. Scope of Agency determination. A

number of comments address matters

beyond those at issue in the Agency's

Final Determination. The regulations

governing Special Review do not require

the Agency to consider such immaterial

comments.

As EPA stated in the Notice of

Preliminary Determination, the issue is

whether the modified terms and

conditions agreed to by the registrants "will eliminate any unreasonable

adverse effects posed by cyanazine

registrations" (61 FR at 8200). Where

the registrants agree to modify the terms

and conditions of registration, the

controlling issue is whether the use of

cyanazine pursuant to the modifications

poses any unreasonable adverse effects.

If EPA determines that use pursuant to

the modified registrations continues to

cause unreasonable adverse effects

despite the modifications, then it

terminates Special Review and initiates

other involuntary mechanisms to

address the risk. On the other hand, if

EPA determines that the use pursuant to

the modified registrations eliminates

any unreasonable adverse effects, then

additional involuntary proceedings are

unnecessary and the Agency would

terminate Special Review and return the

registrations to the registration process.

The regulations specifically require

EPA to respond in the Notice of Final

Determination to "significant public

comments submitted on the Notice of

Preliminary Determination" (40 CFR

154.33(a)(3)). Significant comments

concern a matter that is at issue in the

proceeding or that is probative of a

matter at issue; in other words, those

that raise matters material to EPA's

Preliminary Determination. At this

point, the only issue is whether the

modified terms and conditions agreed to

by the registrants will eliminate any

unreasonable adverse effects caused by

the use of the products and the Agency

will respond only to comments that

address that issue.

This interpretation of § 154.33(a)(3),

which governs responses to significant

comments, is consistent with other

Special Review regulations. As

discussed in Unit III.A. of this

document, the regulations contemplate

that EPA will likely terminate Special

Review and not impose any involuntary

actions upon a pesticide registration if

the registrant agrees to modify the terms

and conditions of registration to reduce

risk to an acceptable level.

Some of the comments indicate a

fundamental misunderstanding of the

nature of Special Review. EPA review

focuses on the risks and benefits of a

pesticide that result from the use of the

pesticide under the terms and

conditions of the existing registrations.

At this point, the registrants have agreed

to amend the terms and conditions that

control the use of the pesticide and EPA

has accepted those amendments. Terms

and conditions of registration that

governed the use of cyanazine before

EPA accepted the amendments no

longer exist and therefore have no effect

upon the risks and benefits associated

with the use of cyanazine. Similarly,

hypothetical alternative terms and

conditions of registration suggested by

commenters do not address the issue of

the risks and benefits associated with

the use of cyanazine under the modified

terms and conditions agreed to by the

registrants. Thus comments pertaining

to previous terms and conditions of

registration or to hypothetical

alternative arrangements, and the risks

or benefits associated with such terms

and conditions, are immaterial to the

Agency's decision to terminate the

cyanazine Special Review.

2. Specific comments. Some

commenters focus on issues that EPA

raised in the initial Notice of Special

Review and that concern the risks or

benefits of cyanazine usage under the

old terms and conditions of registrations

that existed at the time Special Review

was initiated. These issues do not

address whether cyanazine usage poses

any unreasonable adverse effects under

the new terms and conditions agreed to

by the registrants in 1995. For example,

Griffin comments that EPA erroneously

decided to initiate Special Review based

upon a flawed risk assessment and

provides a lengthy critique of that initial

risk assessment. While such comments

were material to the Agency's initial

Notice of Special Review, they do not

concern the issue now before the

Agency - whether cyanazine poses any

unreasonable adverse effects under the

new terms and conditions of

registration.

Griffin and other commenters claim

that the benefits of cyanazine use may

be higher than EPA first estimated in the

Notice of Special Review, asserting that

the Agency did not calculate the relative

costs of cyanazine and alternative

pesticides correctly and did not

recognize that cyanazine is

"significantly superior" to alternatives.

These claims are immaterial to the

Agency's decision to terminate Special

Review. EPA has decided to terminate

the process because the benefits of

continued use under the new terms and

conditions of registration outweigh the

risks. At this point it is inconsequential

whether the benefits outweigh the risks

by a greater margin than EPA earlier

calculated because greater benefits

would only provide more support for

the decision to terminate Special

Review without initiating formal

proceedings.

39027
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Notices

Some additional commenters discuss

alternative terms and conditions of

registrations that might yield an

acceptable risk/benefit balance. At this

point, however, such alternatives are

immaterial because the agreed upon

modifications already insure that

cyanazine usage does not pose any

unreasonable adverse effects. Given the

registrants' agreement to these

modifications, it is unnecessary for EPA

to address these issues.

The comments directed towards the

old terms and conditions of cyanazine

registration appear to be directed at the

decision of the registrants to voluntarily

amend their cyanazine registrations

rather than the Agency's decision to

terminate Special Review. The

termination of Special Review will not

prevent interested persons from

applying for registrations with terms

and conditions different from those

currently in effect. Such an application

may be filed at any time, even after the

current registrations are cancelled. If the

application otherwise fulfills the

prerequisites for registration, the

Agency would consider the risks and

benefits of use under the proposed

terms and conditions and pursuant to

FIFRA and the regulation including 40

CFR 154.35. An applicant may contest

the decision to deny an application as

specified in FIFRA section 3(c)(6).

D. Response to Material Risk/Benefit

Comments

Griffin also addresses the economic

impact of the phaseout and voluntary

cancellations and concludes that "EPA's

conclusions concerning the economic

impact of the phase-out and registration

cancellations likely are correct." In

reaching this conclusion, the

commenter relied in part upon the data

that EPA used to determine cyanazine

application rates as summarized in

Table 5 of the Preliminary

Determination. It also utilized

additional application rate data that it

obtained independently.

Based upon the information

underlying Table 5, EPA agrees that its

conclusions with respect to the

economic impact of the modified terms

and conditions of registration are

correct. The Agency has not analyzed

the additional data utilized by Griffin

because the comment states that it

supports rather than contradicts the

Agency's preliminary economic

determination.

E. Secretary of Agriculture and

Scientific Advisory Panel

The Special Review regulations

require the Agency to respond to any

comments submitted by the Secretary of

Agriculture or the Scientific Advisory

Panel (40 CFR 154.33(a)(2)) but neither

submitted comments. The regulations

require EPA to refer proposals to initiate

involuntary proceedings such as a

FIFRA section 6(b) cancellation to those

bodies. The regulations, however, do

not impose such a requirement where,

as here, the registrants have accepted

voluntary modifications of the terms

and conditions of their registrations

followed by voluntary cancellations.

IV. Decision Regarding Special Review

EPA has decided to terminate the

cyanazine Special Review. This

decision is based upon EPA's

determination that the use of cyanazine

on cotton, field and sweet corn, and

sorghum in accordance with the

voluntary cancellation and phaseout

agreed to by the cyanazine registrants

does not cause any unreasonable

adverse effects.

The new terms and conditions of

registration will gradually lower and

then eliminate the risks caused by

cyanazine. Maximum application rates

will be reduced in 1997, 1998, and

1999, and applicators will be required to

use closed cab equipment beginning in

1998. Risks will eventually be reduced

to zero when the use prohibition takes

effect in 2002. The requirement that

cyanazine applicators use closed cabs to

apply the pesticide beginning in 1998

also will reduce occupational exposure

to the substance. While there will be

some exposure to cyanazine during the

phaseout, exposure and thus, risks will

decline as application rates drop and

existing stocks are depleted.

The phaseout of cyanazine will lessen

the economic impact to growers who

have used cyanazine to control weeds.

The phaseout should allow growers

sufficient time to replace cyanazine

with alternative weed control practices

so that there will be little disruption to

agricultural production. Another likely

benefit of the incremental phaseout is

depletion of existing stocks of cyanazine

so there will be little unused product to

recall and dispose of after the

cancellations take effect. Furthermore,

the costs, time and uncertainties

associated with an involuntary

cancellation proceeding are avoided.

For all these reasons, EPA has

decided that the implementation of the

terms and conditions of the cyanazine

voluntary cancellation and phaseout

will prevent any unreasonable adverse

effects which might otherwise be caused

by the use of cyanazine on corn, cotton,

and sorghum.

V. Decision Regarding Voluntary

Cancellation and Use of Existing Stocks

A. Voluntary Cancellation/Cancellation

Order

EPA accepts the voluntary

cancellation of all cyanazine products as

requested by the cyanazine registrants

in accordance with FIFRA section 6(f).

Both of the cyanazine registrants,

DuPont and Griffin, have requested

voluntary cancellations as terms and

conditions of their registrations. EPA

has not received any applications to

assume the existing registrations of

cyanazine under the new terms and

conditions of registration. Consequently,

EPA accepts the voluntary cancellations

effective December 31, 1999 and orders

the cancellations to take effect on

January 1, 2000. Those products for

which EPA accepts the voluntary

cancellation are listed by product

registration number and product name

in Unit I.A. of this Notice. When the

voluntary cancellations take effect on

December 31, 1999, the Agency will

issue an order confirming the

cancellations.

B. Existing Stocks

For any cyanazine formulated end use

products that are released for shipment

by a registrant on or before December

31, 1999, EPA authorizes the continued

sale and distribution of such products in

the channels of trade in accordance with

their labels through September 30, 2002.

EPA authorizes the continued use of

such existing stocks in accordance with

their labels through December 31, 2002.

EPA prohibits the use of cyanazine

products after December 31, 2002. EPA

is not establishing any existing stocks

provisions for technical cyanazine

products (DuPont Registration Number

352-475 and Griffin Registration

Number 1812-364); however, any

technical or formulated end use

cyanazine product may be exported

pursuant to FIFRA sections 3 and 17.

VI. Availability of Public Docket

EPA established a public docket, OPP30000/60, for the cyanazine Special

Review. This public docket includes

this Notice and any other Notices

associated with the cyanazine Special

Review and EPA's decision to terminate

the cyanazine Special Review. This

docket also contains documents not

considered Confidential Business

Information that are pertinent to the

cyanazine Special Review and copies of

written comments or other material

submitted to EPA by any person outside

the government in response to the

cyanazine Special Review. The docket is

available for inspection from 8 a.m. to

39028
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Notices 39029

4:30 p.m., Monday through Friday,

excluding legal holidays. The public

docket is located in Rm. 1132 of the

Public Response and Program Resources

Branch, Field Operations Division

(7506C), Office of Pesticide Programs,

Environmental Protection Agency,

Crystal Mall #2, 1921 Jefferson Davis

Highway, Arlington, VA 22202.

List of Subjects

Environmental protection.

Dated: July 17, 1996.

Lynn R. Goldman,

AssistantA dm inistratorfor Prevention,

Pollution and Toxic Substances.

[FR Doc. 96 18921 Filed 7 24 96; 8:45 am]

BILLING CODE 6560-50-F

Mmm

Z iL

AIM

39031

Thursday

July 25, 1996

Part V

Environmental

Protection Agency

40 CFR Part 51

Inspection/Maintenance Flexibility

Amendments (Ozone Transport Region);

Final Rule
39032 Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Rules and Regulations

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 51

[FRL-5541-3]

RIN 2060-AG 11

Inspection/Maintenance Flexibility

Amendments (Ozone Transport

Region)

AGENCY: Environmental Protection

Agency.

ACTION: Supplemental final rule.

SUMMARY: Today's action revises the

motor vehicle Inspection/Maintenance

(I/M) requirements by adding a special

low enhanced performance standard for

qualified areas in Ozone Transport

Regions (OTR). This additional

performance standard applies to certain

attainment, marginal and moderate

areas in the OTR. The purpose of this

action is to allow OTR qualifying areas

the flexibility to implement a broader

range of I/M programs than is currently

permitted.

EFFECTIVE DATE: This rule will take effect

on September 23, 1996.

ADDRESSES: Materials relevant to this

rulemaking are contained in the Public

Docket No. A-95-08. The docket is

located at the Air Docket, Room M-1500

(6102), Waterside Mall SW, Washington,

DC 20460. The docket may be inspected

between 8:30 a.m. and 12 noon and

between 1:30 p.m. until 5:30 p.m. on

weekdays. A reasonable fee may be

charged for copying docket material.

Electronic copies of the preamble and

the regulatory text of this rulemaking

are available on the Office of Air Quality

Planning and Standards (OAQPS)

Technology Transfer Network Bulletin

Board System (TTN BBS) and the Office

of Mobile Sources' World Wide Web

cite, http://www.epa.gov/OMSWWW/.

FOR FURTHER INFORMATION CONTACT:

Leila Cook, Office of Mobile Sources,

National Vehicle and Fuel Emissions

Laboratory, 2565 Plymouth Road, Ann

Arbor, Michigan, 48105. Telephone

(313)741-7820.

SUPPLEMENTARY INFORMATION:

I. Table of Contents

I. Summary of Rule

III. Authority

IV. Public Participation

A. Increased Flexibility

B. Clarification of 200,000 Population

Requirement

C. Duplicate Requirements

D. Emission Reduction Credits

E. Comparability of Basic Programs

F. Effectiveness of RSD

G. Retests for RSD Failures

H. OBD Tests

I. Other Comments

V. Economic Costs and Benefits

VI. Administrative Requirements

A. Administrative Designation

B. Reporting and Recordkeeping

Requirement

C. Regulatory Flexibility Act

D. Unfunded Mandates Act

E. Small Business Regulatory

Enforcement Fairness Act

IL Summary of Rule

Under the Clean Air Act as amended

in 1990 (the Act), 42 U.S.C.7 401 et seq.,

the U.S. Environmental Protection

Agency (EPA) published in the Federal

Register on November 5, 1992 (40 CFR

part 51, subpart S) rules related to plans

for Motor Vehicle Inspection and

Maintenance (I/M) programs (hereafter

referred to as the I/M rule; see 57 FR

52950). Today, EPA is revising this rule

to provide greater flexibility to certain

Ozone Transport Region (OTR) areas.

Section 182 of the Act is prescriptive

regarding the various elements that are

required as part of an enhanced

Inspection/Maintenance (I/M)

performance standard. It also provides

states with flexibility in meeting the

numerical performance standards for

enhanced or basic I/M programs. States

in the Ozone Transport Region (OTR)

requested additional flexibility in

implementing IM in areas which are in

attainment, which are areas designated

and classified as marginal ozone areas,

or which are designated and classified

as moderate ozone areas under 200,000

in population. These three types of areas

would be exempt from all I/M

requirements but for their location in

the OTR. These areas are included in

the OTR enhanced IM requirements to

help achieve overall attainment and

maintenance goals for the region, which

includes serious and severe ozone

nonattainment areas.

With today's action, EPA is

establishing an additional enhanced IM

performance standard for qualified areas

in the Northeast OTR, hereafter referred

to as the OTR low enhanced

performance standard. The emission

reduction targets for this program are

less than both the low enhanced

performance standard and the basic

performance standard. There are two

qualifications to be eligible for the OTR

low enhanced performance standard.

First, the standard applies only in

attainment areas, marginal ozone

nonattainment areas and certain

moderate ozone nonattainment areas

under 200,000 in an OTR. Moderate

areas of that size that were not

previously required to, or had not in

fact, implemented a basic I/M program

under the pre-1990 Act can take

advantage of the OTR low enhanced

performance standard. The savings

clause in section 182(a)(2)(B)(i) requires

areas that had or were required to have

I/M programs before 1990 to retain

programs of at least that stringency.

Because, as explained below, EPA

believes the Act requires an enhanced

I/M program to be an enhancement over

otherwise applicable I/M requirements,

areas subject to basic I/M or the savings

clause cannot adopt a less stringent

program. Any moderate area with

urbanized areas having a total

population of over 200,000 would also

be required to implement basic I/M

under section 182(b)(4) and therefore is

ineligible for the OTR low enhanced

performance standard. Second, the OTR

low enhanced program must be

supplemented by other measures in

order to achieve emission reductions

equal to or greater than that which

would have occurred had a regular low

enhanced I/M program been

implemented (as defined by 40 CFR

51.351(g), see 60 FR 48029). This is

because the primary goal of the Act in

establishing the OTR provisions and

requiring enhanced I/M in areas with a

population of 100,000 or more in the

OTR was to contribute to regional

attainment. EPA believes that an area

should be able to qualify for the

additional flexibility provided under the

OTR low enhanced standard only if it

achieves, in some other way, the

additional reductions that the otherwise

applicable low enhanced I/M program

would achieve. Thus, the total emission

reductions from the OTR low enhanced

I/M program plus the additional

measures must equal the tonnage

reduction that a regular low enhanced

program would have generated.

However, since local reductions are not

the crucial factor, a state may bubble

surplus reductions from other areas not

required to implement I/M in the state.

For example, a state could implement a

statewide reformulated gasoline (RFG)

program plus an OTR low enhanced

I/M program in subject areas or

statewide and potentially achieve

comparable reductions to a regular low

enhanced program because of the

additional reductions RFG would

achieve in areas not otherwise required

to have RFG. Equality of emission

reductions must be demonstrated over a

time period which aligns with the

attainment deadlines of all OTR areas:

from 2000 through 2007. Note that an I/

M program that meets the OTR low

enhanced performance standard must be

implemented even if other measures

could achieve comparable emission

reductions because the Act specifically
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Rules and Regulations

requires an enhanced I/M program in

metropolitan areas with 100,000

population in the OTR. Also, measures

to fill the gap between OTR low and

regular low enhanced I/M may not be

otherwise required by the Clean Air Act.

The OTR low enhanced performance

standard model program is composed of

the following elements: Annual testing

of 1968 and newer light duty vehicles

and light duty trucks, OBD checks for

1996 and newer vehicles, remote

sensing of 1968-1995 vehicles, catalyst

checks on 1975 and newer vehicles, and

PCV valve checks on pre-1975 vehicles.

These elements collectively satisfy the

Act's requirements for an enhanced I/M

program performance standard. As with

other performance standards, EPA does

not necessarily recommend

implementing this particular program

but rather encourages states to design a

program that will achieve equal or

greater emission reductions than the

performance standard while providing

for the specific needs of the area.

In the proposal, EPA noted that the

emission reduction targets generated by

this model program could not yet be

precisely modeled but EPA estimated

the targets to be less than those for the

basic I/M program standard (which are

approximately 6.3% for HC, 10.8% for

CO, and 0.7% for NOx). EPA expects to

issue draft guidance on remote sensing

credits in the Summer of 1996. As soon

as a final guidance is issued, an analysis

of the emission reduction targets

generated by this model program will be

placed in the docket. Even though the

estimated emission reduction targets for

the OTR low enhanced standard are less

than those for basic I/M, EPA believes

this standard meets the requirement of

the Act for "enhanced" I/M. There are

two important facts to consider in this

regard: first, neither the Act nor the

legislative history specifies that the

emission reduction targets for enhanced

I/M must be greater than basic in all

cases. EPA believes the Act provides the

agency latitude in establishing multiple

performance standards to meet a wide

range of state and local needs and

conditions. Second, the areas eligible to

take advantage of this performance

standard were not required to nor did

they implement I/M programs prior to

1990. So, in all cases, this standard

establishes a program target that is

indeed enhanced relative to what was

present or required for the area before

enactment of the 1990 Clean Air Act

Amendments or is otherwise required

after the 1990 Clean Air Act

Amendments. EPA did not receive any

public comments disagreeing with this

legal interpretation.

As is the case with all performance

standard model programs, EPA does not

necessarily recommend implementation

of the model program, since it is

constrained in composition by law (e.g.,

EPA recommends not testing cars until

they reach 4 years of age and

recommends biennial testing as more

cost-effective; by contrast, all of the

enhanced I/M performance standards

are required by the Act to reflect a

model program that includes annual

testing of all vehicles). In that the

emission reduction targets for the OTR

low enhanced performance standard are

below the basic level, the standard

provides the broadest possible latitude

in program design. For example, some

states in the OTR have existing

decentralized, safety inspection

programs. Comprehensive visual checks

of emission control devices, a gas cap

pressure test, the Act-mandated OBD

check, and the Act-mandated on-road

testing could be added to these

programs which should then meet the

OTR low enhanced standard, as long as

a proper enforcement mechanism was in

place. Many other possibilities exist for

program designs that could also meet

this performance standard.

While the OTR low enhanced

performance standard is less demanding

than the existing performance standard

applicable to the affected areas, today's

action still ensures that enhanced I/M

programs in these areas meet all

statutory criteria for EPA approval. A

state's OTR low enhanced program is

required, under section 182(c)(3)(C) of

the Clean Air Act, to include

computerized analyzers and on-road

testing devices; computerized

equipment and on-road testing devices

are required by the current rule and

apply to the OTR low enhanced

program. A state's OTR low enhanced

program shall also include a regulatory

framework for waivers, if waivers are to

be issued, and an enforcement system

through registration denial, (except for

any program in operation before

November 15, 1990 whose enforcement

mechanism has been demonstrated to be

more effective than registration denial).

Today's amendments leave

requirements in this regard the same as

for other enhanced I/M areas. As

mandated by the Act, in an OTR low

enhanced program, vehicle emissions

shall be tested annually unless biennial

testing will equal or exceed the

reductions that can be obtained from

annual inspections. A program could

combine biennial inspections on the

vehicles equipped with on-board

diagnostic computers (OBD) with

biennial evaporative system checks to

achieve the necessary additional

reductions. The OTR low enhanced

performance standard is based on

centralized inspections of OBDequipped vehicles and on-road remote

sensing testing; EPA believes that this

meets the specific requirement that the

performance standard be based on

centralized testing.

Today's action also establishes quality

assurance requirements for OTR low

enhanced I/M programs that are

commensurate with the emission

reductions which the programs are

intended to achieve. In particular,

current rules require enhanced I/M

programs to be evaluated by conducting

test-only IM240s on a random

representative sample of the fleet (a

minimum of 0.1%) to verify that the

emission reductions are occurring. EPA

believes that the emission reductions

from an OTR low enhanced program are

small enough that this level of effort is

not justified. The routine quality

assurance requirements of the original

I/M rule are also not necessarily

appropriate in light of the low level of

benefits of the program.

This action also modifies the

geographic exclusion rule for counties

within Metropolitan Statistical Areas

(MSAs) in the Ozone Transport Region.

The modification allows states to

exclude counties that comprise less than

1% of the population of the MSA from

program coverage. Inclusion of such a

small fraction of the population is not

worth the significant cost of expanding

geographic coverage of the program to

include such a county.

This action requires that the

implementation date for full testing in

areas opting for the OTR low

performance standard be no later than

the latest date by which full testing can

commence and still achieve sufficient

reductions for all OTR areas to meet the

performance standard by the Act's

attainment and reasonable further

progress deadlines, including the end of

1999 attainment date for serious ozone

nonattainment areas. This will generally

mean a start date no later than January

1, 1999, for annual testing programs,

although EPA will accept field testing

commencing as late as July 1, 1999 if the

full I/M reductions can be achieved by

the serious area attainment deadline.

Note that the performance standard

model program assumes a start date of

January 1, 1999 because EPA believes

Congress intended that the performance

standard be based on at least one

complete annual test cycle. With the

requirement to offset the emissions

difference between OTR low and regular

low enhanced with other measures, this

39033
39034 Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Rules and Regulations

date ensures that attainment in the

region is not impaired.

Today's action also serves to provide

other flexibilities to non-OTR states in

designing quality assurance programs.

The intent is to allow alternative quality

assurance procedures that are as

effective as or better than those

specified in the original I/M rule.

III. Authority

Authority for the action proposed in

this notice is granted to EPA by section

182 of the Clean Air Act as amended (42

U.S.C. 7401, et seq.).

IV. Public Participation

A. Increased Flexibility

All the commenters agreed with

EPA's effort to provide states with

greater flexibility and almost all felt that

the new OTR low enhanced

performance standard was necessary to

meet the unique needs of states within

the Ozone Transport Region.

B. Clarification of 200,000 Population

Requirement

1. Summary of Proposal

The proposal allowed attainment

areas, marginal ozone nonattainment

areas and moderate ozone

nonattainment areas with a 1980 Census

population of less than 200,000 in the

urbanized area to use the new OTR low

enhanced performance standard.

2. Summary of Comments

One commenter asked for clarification

of how the 200,000 urbanized area

population criteria would be applied.

Specifically, the commenter asked

whether the population criteria applied

to urbanized areas within each

Metropolitan Statistical Area (MSA) or

urbanized areas within the entire

attainment or non-attainment area.

3. Response to Comments

Within the OTR, enhanced I/M

programs are required in MSA's with

populations of 100,000 or more.

However, the OTR, like the rest of the

country, is also subject to the basic I/M

requirements that an urbanized area

with a population of 200,000 or more

that is classified as moderate ozone

nonattainment must implement a basic

I/M program. Thus, moderate ozone

areas in the OTR with an MSA

population of greater than 100,000 but

an urbanized area population of less

than 200,000 are eligible for the OTR

low enhanced performance standard. In

contrast, moderate ozone areas with

MSA populations of greater than

100,000 and urbanized area populations

of greater than 200,000 must meet the

basic performance standard. If a state

within the OTR falls into this later

category which has to implement a basic

I/M program in the urbanized area (with

a population of 200,000 or more) it can

still implement an OTR low enhanced

program in any portion of the MSA

which falls into an urbanized area with

a population of less than 200,000.

C. Duplicate Requirements

1. Summary of Proposal

The proposal did not exempt states

that implement an OTR low enhanced

performance program from most of the

general requirements for enhanced I/M

programs in the original I/M rule.

2. Summary of Comments

Two commenters addressed this

issue. The first felt that the inclusion of

on-road testing and OBD testing in the

OTR low enhanced performance

standard is duplicative of the on-road

and OBD testing requirements in the

original rule, 40 CFR 51.351 (b) and (c).

The second commenter felt that several

sections of the I/M rule dealing with

data collection and data analysis and

reporting, 40 CFR 51.365 and 51.366,

should not be applicable to OTR low

enhanced programs.

3. Response to Comments

The Clean Air Act requires OBD as

part of any basic or enhanced

performance standard. Additionally,

RSD is required as part of any enhanced

I/M performance standard. Section

51.351(b) requires that on-road testing of

either 0.5% of the subject vehicle

population or 20,000 vehicles

(whichever is less) be included in any

enhanced I/M performance standard.

The OBD requirements were reserved by

EPA in the original I/M rule and are

expected to be published in 1996. EPA

cautions commenters to remember that

performance standards merely establish

the minimum target a certain program

must meet. They do not conclusively

establish the elements of the program.

Thus, the § 51.351(h)(6) establishment

of RSD and OBD as the exhaust

emission test types under the OTR low

enhanced performance standard is not a

duplication of §§ 51.351 (b) and (c)

because these are separate standards

which OTR low areas do not otherwise

have to meet.

EPA agrees with the comment that

certain portions of sections 51.365 and

51.366 regarding data collection,

analysis and reporting are inapplicable

to OTR low enhanced performance

states. Certain "high" enhanced

program elements, such as evaporative

system checks, will not apply in an OTR

low enhanced program. However, the

Clean Air Act and the I/M rule require

each state to report emissions

reductions achieved, based on data

collected during the inspection and

repair of vehicles. Furthermore,

depending on the program design which

these areas elect to implement, varying

types of data and reporting might or

might not apply. Obviously a state

cannot collect, analyze and report data

which its program does not generate.

Therefore, while the data collection and

reporting requirements of sections

51.365 and 51.366 must still apply to

OTR low enhanced areas, states need

only submit program-applicable data

and reports.

D. Emission Reduction Credits

1. Summary of Proposal

The preamble for the proposal

acknowledged that EPA had not

finalized emission reduction credits for

the OTR low enhanced performance

standard because EPA is still in the

process of finalizing the credits for RSD.

However, the preamble did note that

EPA expected these benefits to be less

than those achieved by the basic

performance standard.

2. Summary of Comments

Several commenters noted that it is

difficult for a state to finalize an OTR

low enhanced program until EPA issues

emission reduction credits for the

program.

3. Response to Comments

EPA is preparing to issue a draft

guidance on RSD credits in the Summer

of 1996. After the draft guidance is

issued, EPA will take public comments

before issuing final guidance. While

EPA cannot give a specific date by

which final guidance will be issued,

stakeholders can be assured that EPA

realizes the importance of issuing RSD

credits and is working to issue them as

soon as possible.

E. Comparability of Basic Programs

1. In the proposal, EPA stated that the

emission reductions from the new OTR

low enhanced performance standard

will actually be less than the emission

reductions obtained from a basic I/M

program. EPA noted that the Act in no

way prohibits the creation of multiple

enhanced performance standards to

meet a wide variety of state and local

needs and conditions. In fact, the Clean

Air Act does not require emission

reductions targets for enhanced I/M

programs to be greater than those for

basic programs. Furthermore, all the

areas eligible to use the OTR low

enhanced performance standard were
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Rules and Regulations

not required and did not implement I/

M programs before 1990. Thus, the OTR

low enhanced performance standard is

an enhancement for these areas

compared to what was required and

present before the 1990 amendments to

the Act.

2. Summary of Comments

One commenter believes that any

existing basic program in an attainment

or marginal non-attainment area should

meet the OTR low enhanced

performance standard. This commenter

did not believe that existing programs

should have to be supplemented to meet

the new performance standard.

3. Response to Comments

From an emission reduction point of

view, any existing basic program that

meets the basic performance standard

will also meet the emission reduction

targets established by the OTR low

enhanced performance standard. The

only changes existing programs will

have to make is to include any element

which is required for an enhanced

program which it currently does not

include; for instance, OBD checks and

0.5% on-road testing.

F. Effectiveness of RSD

1. Summary of Rule

The performance standard created by

today's action requires RSD testing of

1968 to 1995 vehicles beginning in

1999.

2. Summary of Comments

One commenter was very concerned

that RSD testing will actually increase

consumer inconvenience if RSD has a

high false failure rate. If this is the case

and the state requires retests for vehicles

that fail the RSD test, many consumers

may be needlessly required to go to a

test station to get another emission test.

3. Response to Comments

The goal of this action is to increase

flexibility to the states so that they can

design an I/M program which they feel

is most effective for their area and

convenient for their citizens. This

performance standard merely

establishes the target level of emission

reductions that an OTR low enhanced

program must achieve and in no way

mandates the type of test a state must

implement. Thus, states concerned

about false failures need not rely heavily

on RSD testing. States may implement

any type of test they choose so long as

it meets the emission reduction target of

the OTR low enhanced performance

standard. The requirement to perform

on-road testing on at least 0.5% of the

fleet remains, although RSD is not

required for this purpose.

G. Retests for RSD Failures

1. Summary of Proposal

The OTR low enhanced performance

standard requires RSD testing of 1968-

1995 vehicles with a carbon monoxide

standard of 7.5%. A vehicle must have

two separate readings above 7.5% to

establish a failure thereby requiring a

retest.

2. Summary of Comments

One commenter noted their opinion

that RSD is useful at targeting vehicles

with excess emissions but that RSD

cannot substitute for a traditional tailpipe exhaust test. Therefore, the

commenter believed that RSD must be

used in conjunction with a traditional

exhaust emissions re-test.

3. Response to Comments

EPA agrees with this comment but

again points out that this rule only

establishes a performance standard and

is not guidance or a mandate for RSD

usage. EPA believes that it would be

unwise for states to require emission

related repairs based solely on an RSD

reading. Indeed, EPA believes that states

are aware of this and will perform

confirmatory emission re-tests using

proven methods on vehicles that fail

RSD in order to avoid useless repairs.

H. OBD tests

1. Summary of Rule

Among other requirements, the OTR

low enhanced performance standard

requires a start date of January 1, 1999

and OBD tests on all 1996 and newer

vehicles.

2. Summary of Comments

One state commented that it was

reluctant to require repairs based solely

on OBD test failure in 1999 because of

the relative newness of OBD technology.

The state commented that it preferred to

wait and not require repairs based on

OBD test failure until there is more data

available on OBD's effectiveness at

correctly identifying emission

component failures.

3. Response to Comments

EPA proposed an OBD rule in the

Federal Register on August 18, 1995 (60

FR 43092). Currently, EPA is finalizing

the OBD rule which is expected to be

published in the Summer of 1996. In the

OBD rule, EPA will address the

concerns of this and several other

comments about the novelty of OBD and

the need for a phase-in period prior to

requiring repairs.

L Other Comments

EPA received several other comments

which dealt with I/M issues that were

not specific to this rulemaking. EPA

responded to these unrelated comments

in a response document which it placed

in the docket.

V. Economic Costs and Benefits

Today's revisions provide states

additional flexibility that lessens rather

than increases the potential burden on

states. Furthermore, states are under no

obligation, legal or otherwise, to modify

existing plans meeting the previously

applicable requirements as a result of

today's action.

VI. Administrative Requirements

A. Administrative Designation

It has been determined that this

amendment to the I/M rule is not a

significant regulatory action under the

terms of Executive Order 12866 and has

been waived from OMB review. Any

impacts associated with these revisions

do not constitute additional burdens

when compared to the existing I/M

requirements published in the Federal

Register on November 5, 1992 (57 FR

52950) as amended. Nor do today's

amendments create an annual effect on

the economy of $100 million or more or

otherwise adversely affect the economy

or the environment. It is not

inconsistent with, nor does it interfere

with, actions by other agencies. It does

not alter budgetary impacts of

entitlements or other programs, and it

does not raise any new or unusual legal

or policy issues.

B. Reporting and Recordkeeping

Requirement

There are no information

requirements in this supplemental final

rule which require the approval of the

Office of Management and Budget under

the Paperwork Reduction Act, 44 U.S.C.

3501 et seq.

C. Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act, 5 U.S.C.

605(b), the Administrator certifies that

this action will not have a significant

economic impact on a substantial

number of small entities and, therefore,

is not subject to the requirement of a

Regulatory Impact Analysis. A small

entity may include a small government

entity or jurisdiction. A small

government jurisdiction is defined as "governments of cities, counties, towns,

townships, villages, school districts, or

special districts, with a population of

less than 50,000." This certification is

based on the fact that the I/M areas

39035
39036 Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Rules and Regulations

impacted by this rulemaking do not

meet the definition of a small

government jurisdiction, that is, "governments of cities, counties, towns,

townships, villages, school districts, or

special districts, with a population of

less than 50,000." Furthermore, the

impact created by this action does not

increase the pre-existing burden which

this proposal seeks to amend.

D. Unfunded Mandates Act

Under Section 202 of the Unfunded

Mandates Reform Act of 1995

("Unfunded Mandates Act"), signed

into law on March 22, 1995, EPA must

prepare a budgetary impact statement to

accompany any proposed or final rule

where the estimated costs to State, local,

or tribal governments, or to the private

sector, will be $100 million or more.

Under Section 205, EPA must select the

most cost-effective and least

burdensome alternative that achieves

the objective of the rule and is

consistent with statutory requirements.

Section 203 requires EPA to establish a

plan for informing and advising any

small governments that may be

significantly impacted by the rule.

To the extent that the rules in this

action would impose any mandate at all

as defined in Section 101 of the

Unfunded Mandates Act upon the state,

local, or tribal governments, or the

private sector, as explained above, this

rule is not estimated to impose costs in

excess of $100 million. Therefore, EPA

has not prepared a statement with

respect to budgetary impacts. As noted

above, this rule offers opportunities to

states that would enable them to lower

economic burdens from those resulting

from the currently existing I/M rule.

E. Sm all Business Regulatory

Enforcement Fairness Act

Under section 801(a)(1)(A) of the

Administrative Procedures Act (APA) as

amended by the Small Business

Regulatory Enforcement Fairness Act of

1996, EPA submitted a report containing

this rule and other required information

to the U.S. Senate, the U.S. House of

Representatives and the Comptroller

General of the General Accounting

Office prior to publication of the rule in

today's Federal Register. This rule is

not a "major rule" as defined by section

804(2) of the APA as amended.

List of Subjects in 40 CFR Part 51

Environmental protection,

Administrative practice and procedure,

Air pollution control, Carbon monoxide,

Transportation.

Dated: July 16, 1960.

Fred Hansen,

Actin g A dministrato r.

For the reasons set out in the

preamble, part 51 of title 40 of the Code

of Federal Regulations is amended to

read as follows:

PART 51-[AMENDED]

1. The authority citation for part 51

continues to read as follows:

Authority: 42 U.S.C. 7401 767 1q.

2. Section 51.350 is amended by

revising paragraph (b)(1) and by adding

paragraph (b)(5) to read as follows:

§51.350 Applicability.

(b)* * * (1) In an ozone transport

region, the program shall cover all

counties within subject MSAs or subject

portions of MSAs, as defined by OMB

in 1990, except largely rural counties

having a population density of less than

200 persons per square mile based on

the 1990 Census and counties with less

than 1% of the population in the MSA

may be excluded provided that at least

50% of the MSA population is included

in the program. This provision does not

preclude the voluntary inclusion of

portions of an excluded county. Nonurbanized islands not connected to the

mainland by roads, bridges, or tunnels

may be excluded without regard to

population.

* * * * *

(5) Notwithstanding the limitation in

paragraph (b)(3) of this section, in an

ozone transport region, states which opt

for a program which meets the

performance standard described in

§ 51.351(h) and claim in their SIP less

emission reduction credit than the basic

performance standard for one or more

pollutants, may apply a geographic

bubble covering areas in the state not

otherwise subject to an I/M requirement

to achieve emission reductions from

other measures equal to or greater than

what would have been achieved if the

low enhanced performance standard

were met in the subject I/M areas.

Emissions reductions from non-I/M

measures shall not be counted towards

the OTR low enhanced performance

standard.

* * * * *

3. Section 51.351 is amended by

adding paragraph (h) to read as follows:

§51.351 Enhanced I/M performance

standards.

* * * * *

(h) Ozone Transport Region LowEnhanced Perform ance Standard. An

attainment area, marginal ozone area, or

moderate ozone area with a 1980 Census

population of less than 200,000 in the

urbanized area, in an ozone transport

region, that is required to implement

enhanced I/M under section

184(b)(1)(A) of the Clean Air Act, but

was not previously required to or did

not in fact implement basic IM under

the Clean Air Act as enacted prior to

1990 and is not subject to the

requirements for basic I/M programs in

this subpart, may select the performance

standard described below in lieu of the

standard described in paragraph (f) or

(g) of this section as long as the

difference in emission reductions

between the program described in

paragraph (g) and this paragraph are

made up with other measures, as

provided in § 51.350(b)(5). Offsetting

measures shall not include those

otherwise required by the Clean Air Act

in the areas from which credit is

bubbled. The program elements for this

alternate OTR enhanced IM

performance standard are:

(1) Network type. Centralized testing.

(2) Start date. January 1, 1999.

(3) Test frequency. Annual testing.

(4) Model year coverage. Testing of

1968 and newer vehicles.

(5) Vehicle type coverage. Light duty

vehicles, and light duty trucks, rated up

to 8,500 pounds GVWR.

(6) Exhaust emission test type.

Remote sensing measurements on 1968-

1995 vehicles; on-board diagnostic

system checks on 1996 and newer

vehicles.

(7) Emission standards. For remote

sensing measurements, a carbon

monoxide standard of 7.5% (with at

least two separate readings above this

level to establish a failure).

(8) Emission control device

inspections. Visual inspection of the

catalytic converter on 1975 and newer

vehicles and visual inspection of the

positive crankcase ventilation valve on

1968-1974 vehicles.

(9) Waiver rate. A 3% waiver rate, as

a percentage of failed vehicles.

(10) Compliance rate. A 96%

compliance rate.

(11) Evaluation dates. Enhanced I/M

program areas subject to the provisions

of this paragraph shall be shown to

obtain the same or lower VOC and NOx

emission levels as the model program

described in this paragraph by January

1, 2000, 2003, 2006, and 2007. Equality

of substituted emission reductions to

the benefits of the low enhanced

performance standard must be

demonstrated for the same evaluation

dates.

4. Section 51.353 is amended by

adding paragraph (c)(5) to read as

follows:
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Rules and Regulations

§ 51.353 Network type and program evaluation.

(c) * * *

(5) Areas that qualify for and choose

to implement an OTR low enhanced I/

M program, as established in

§ 51.351(h), and that claim in their SIP

less emission reduction credit than the

basic performance standard for one or

more pollutants, are exempt from the

requirements of paragraphs (c)(1)

through (c)(4) of this section. The

reports required under § 51.366 of this

part shall be sufficient in these areas to

satisfy the requirements of Clean Air

Act for program reporting.

*< < *< *< *

5. Section 51.364 is amended by

adding paragraphs (e) and (f) to read as

follows:

§51.364 Enforcement against contractors,

stations and inspectors.

(e) Alternative quality assurance

procedures or frequencies that achieve

equivalent or better results may be

approved by the Administrator.

Statistical process control shall be used

whenever possible to demonstrate the

efficacy of alternatives.

(f) Areas that qualify for and choose

to implement an OTR low enhanced I/

M program, as established in

§ 51.351(h), and that claim in their SIP

less emission reduction credit than the

basic performance standard for one or

more pollutants, are not required to

meet the oversight specifications of this

section.

6. Section 51.373 is amended by

adding paragraph (f) to read as follows:

§51.373 Implementation deadlines.

(f) Areas that choose to implement an

enhanced I/M program only meeting the

requirements of § 51.351(h) shall fully

implement the program no later than

July 1, 1999. The availability and use of

this late start date does not relieve the

area of the obligation to meet the

requirements of § 51.351(h)(11) by the

end of 1999.

[FR Doc. 96 18922 Filed 7 24 96; 8:45 am]

BILLING CODE 6560-50-P

39037

Reader Aids Federal Register

Vol. 61, No. 144

Thursday, July 25, 1996

CUSTOMER SERVICE AND INFORMATION

Federal Register/Code of Federal Regulations

General Information, indexes and other finding

aids

Laws

Public Laws Update Services (numbers, dates, etc.)

For additional information

Presidential Documents

Executive orders and proclamations

The United States Government Manual

Other Services

Electronic and on-line services (voice)

Privacy Act Compilation

TDD for the hearing impaired

202-523-5227

ELECTRONIC BULLETIN BOARD

Free Electronic Bulletin Board service for Public Law ni

Federal Register finding aids, and list of documents on

inspection. 202-

FAX-ON-DEMAND

You may access our Fax-On-Demand service. You only

machine and there is no charge for the service except fo

distance telephone charges the user may incur. The list

documents on public inspection and the daily Federal R

table of contents are available using this service. The do

numbers are 7050-Public Inspection list and 7051-Table

Contents list. The public inspection list will be updated

immediately for documents filed on an emergency basis

NOTE: YOU WILL ONLY GET A LISTING OF DOCUME

FILE AND NOT THE ACTUAL DOCUMENT. Document

public inspection may be viewed and copied in our offi

at 800 North Capitol Street, N.W., Suite 700. The Fax-O

telephone number is: 301-

FEDERAL REGISTER PAGES AND DATES, JUL

33825-34366 ....................... 1

34367-34712 ...................... 2

34713-35082 ...................... 3

35083-35588 ...................... 5

35589-35914 ...................... 8

35915-36276 ...................... 9

36277-36492 ..................... 10

36493-36608 ..................... 11

36609-36808 ..................... 12

36809-36988 ..................... 15

36989-37198 ..................... 16

37199-37350 ..................... 17

37351-37656 ..................... 18

37657-37806 ..................... 19

37807-38048 .................... 22

38057-38352 .................... 23

38353-38562 .................... 24

38563-39038 .................... 25

CFR PARTS AFFECTED DURING JULY

At the end of each month, the Office of the Federal Register

publishes separately a List of CFR Sections Affected (LSA), which

lists parts and sections affected by documents published since

the revision date of each title.

523-6641 3 CFR

523-5227 Proclamations:

6907 ................................. 35083

6908 ................................. 35587

523-5227 6909 ................................. 38049

523-5227 Executive Orders:

130 10 ............................... 37347

130 11 ............................... 3765 7

523-4534 13012 ............................... 38051

523-3187 Administrative Orders:

523-5229 Memorandum:

July 8, 1996 ..................... 38563

Notices:

July 22, 1996 ................... 38561 puim c Presidential Determinations:

public No. 96-34 of June 26, -275-0920

1996 ............................. 36493

No. 96-35 of June 26,

1996 ............................. 36495

rlong No. 96-36 of June 28, o n 1996 ............................. 35075

of r No. 96-37 of June 29,

Wgister's 1996 ............................. 36989

cument No. 96-38 of June 29,

of 1996 ............................. 3699 1

No. 96-39 of June 6,

1996 ............................. 38053

INTS ON No. 96-40 of June 8,

s on 1996 ............................. 38055

ce located

n-Demand 4 CFR

-713-6 905 28 ..................................... 36809

2 9 ..................................... 3 6 8 0 9

Y 5 CFR

53 0 ................................... 34 7 13

5 3 1 ................................... 3 4 7 13

532 ................................... 36609

53 4 ................................... 34 7 13

55 0 ................................... 34 7 13

5 75 ................................... 34 7 13

5 8 1 ................................... 3 4 7 13

58 2 ................................... 34 7 13

63 0 ................................... 34 7 13

734 ................................... 35088

89 0 ................................... 3 780 7

100 1 ................................. 36993

1660 ................................. 366 10

2634 ................................. 35589

320 1 ................................. 359 15

C h. X X III .......................... 35085

Ch. XXXV ........................ 36993

C h. LXV ........................... 36246

Proposed Rules:

890 ................................... 35973

7 CFR

2 ....................................... 3 7 5 4 4

16 ..................................... 3 7 19 9

29 ......................... 37316, 37351

5 2 ..................................... 3 7 6 6 3

5 8 ..................................... 3 5 5 8 9

210 ..............................37670

225 ..............................37670

301 ......... 35102,35107,36811,

36812, 38353

400 ....................... 34367, 38057

718 ..............................37544

719 ..............................37544

720 ..............................37544

723 ..............................37672

729 ..............................36997

790 ..............................37544

791 ..............................37544

793 ..............................37544

796 ..............................37544

868 ..............................34714

905 ..............................38354

906 ..............................37810

916 ..............................37812

917 ..............................

37812

946 ..............................35109

948 ..............................36813

958 ..............................35592

989 ..............................

36814

997 ..............................35594

998 ..............................35594

1106 .............................35596

1230 .............................35597

1240 .............................38355

1400 .............................

37544

1401 .............................37544

1402 .............................37544

1405 .............................37544

1412 .............................37544

1413 .............................37544

1421 .............................37544

1425 .............................37544

1427 .............................37544

1430 .............................37544

1434 .............................37544

1435 .............................37544

1446 .............................37544

1464 .............................37672

1468 .............................37544

1470 .............................37544

1477 .............................37544

1478 .............................

37544

1479 .............................37544

1479 .............................37544

1497 .............................37544

1498 .............................

37544

1493 .............................33825

1703 .............................37813

1910 .............................35916

1924 .............................

35916

1941 .............................35916

1943 .............................35916

1945 .............................35916

1951 .............................35916

1955 .............................35916

1962 .............................35916

1965 .............................35916

1980 .............................35916

Proposed Rules:

1 ................................38567
ii Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Reader Aids

20 ..................................... 38107

210 ................................... 35152

220 ................................... 35152

225 ................................... 35152

226 ................................... 35152

300 ................................... 34379

301 ................................... 38017

318 ................................... 38108

319 ................................... 34379

868 ................................... 35687

956 ................................... 36827

1005 ................................. 37628

1007 ................................. 37628

1011 ................................. 37628

1046 ................................. 37628

1240 ..................... 34385,38407

1280 ................................. 35982

1962 ................................. 37405

8 CFR

103 ................................... 35597

212 ................................... 36610

214 ................................... 35934

217 ................................... 35598

264 ................................... 37673

301 ................................... 35111

Proposed Rules:

207 ................................... 35984

208 ................................... 35984

9 CFR

92 ..................................... 36816

112 ................................... 33840

113 ................................... 33840

201 ....................... 36277,36279

304 ................................... 38806

308 ................................... 38806

310 ................................... 38806

318 ................................... 37675

320 ................................... 38806

327 ................................... 38806

381 ....................... 37675,38806

416 ................................... 38806

417 ................................... 38806

Proposed Rules:

1 ....................................... 34386

3 ........................... 34386,34389

11 ..................................... 34747

92 ..................................... 36520

93 ..................................... 36520

94 ......................... 35987,36520

95 ..................................... 36520

96 ..................................... 36520

98 ..................................... 36520

301 ................................... 35990

304 ................................... 35990

308 ................................... 35990

318 ................................... 35992

319 ................................... 35157

320 ................................... 35990

381 ....................... 35157,35990

391 ................................... 34747

10 CFR

51 ..................................... 37351

53 ..................................... 35935

110 ................................... 35600

205 ..................................... 3511

420 ................................... 35890

430 ................................... 36974

450 ................................... 35890

463 ................................... 35114

784 ................................... 36611

1003 ................................. 35112

1010 ................................. 35085

1021 ................................. 36222

Proposed Rules:

3 4 ..................................... 3 7 0 19

102 1 ................................. 35990

12 CFR

3 1 1 ................................... 3 8 3 5 6

324 ................................... 33842

3 6 7 ................................... 3 5 1 15

1750 ................................. 3560 7

Proposed Rules:

3 2 ..................................... 3 7 2 2 7

205 ................................... 3 7229

20 7 ................................... 3 3 8 74

2 18 ................................... 3 4 74 9

220 ................................... 33874

22 1 ................................... 3 3 8 74

250 ................................... 34 749

32 7 ................................... 3 4 75 1

5 0 2 ................................... 3 8 1 14

5 16 ................................... 3 8 1 14

5 6 2 ................................... 3 8 1 14

5 6 3 ................................... 3 8 1 14

5 6 5 ................................... 3 8 1 14

5 7 4 ................................... 3 8 1 14

6 14 ................................... 3 723 0

70 4 ................................... 3 8 1 1 7

745 ................................... 36663

14 CFR

1 ....................................... 3 4 5 0 8

C h . III ............................... 3 78 14

2 5 ..................................... 3 4 7 16

29 ......................... 33963,36965

39 ........... 33874,34368,34718,

35122,35126,35127,35936,

35938,35940,35942,35944,

35946,36620,36622,36817,

37199,37202,37675,37814

6 1 ..................................... 3 4 5 0 8

71 ............ 33843 33844, 33845,

34720,34721,34722,34723,

35307,36283,36284,36285,

36286,36820,37001,37113,

37204,37205,37352,37677

73 ..................................... 3 5 6 2 3

91 ......................... 34508,36286

9 5 ..................................... 3 7 2 0 6

97 ........... 35623,35624,35626,

37352,37354,37356,37677

1 19 ................................... 3 5 6 2 8

121 ......... 34508,34927,35628,

37222

12 5 ................................... 3 4 50 8

135 .......... 34508,34927,35628

14 1 ................................... 3 4 5 0 8

14 2 ................................... 3 4 50 8

2 1 1 ................................... 3 4 72 4

2 13 ................................... 3 4 72 4

1260 ................................. 38058

Proposed Rules:

25 ........... 35056,37844,38374,

38552

39 ........... 34767,35691,35693,

35695,36307,36308,36310,

36664,36667,36669,37019,

38407

71 ........... 34391,34393,34394,

34395,34396,34397,34398,

34769,35991,36311,36312,

36313,36314,36315,36316,

36317,36520,37113,37230,

37231, 37407, 37408

9 1 ..................................... 3 8 1 1 9

121 .......... 37144, 38119, 38552

12 5 ................................... 3 7 14 4

12 7 ................................... 3 8 1 19

129 ................................... 37144

135 ....................... 37144,38119

440 ................................... 38992

15 CFR

902 ......... 34570,34930,34966,

35145, 35548, 38358

923 ................................... 36965

Proposed Rules:

30 ..................................... 36318

303 ................................... 37845

922 ................................... 33876

16 CFR

Proposed Rules:

303 ................................... 35992

17 CFR

249 ................................... 37357

Proposed Rules:

15 ..................................... 37409

16 ..................................... 37409

17 ..................................... 37409

18 ..................................... 37409

19 ..................................... 37409

240 ....................... 36521, 37701

249 ................................... 37701

18 CFR

154 ................................... 38565

346 ................................... 38567

Proposed Rules:

35 ..................................... 38663

19 CFR

10 ..................................... 33845

12 ..................................... 33845

102 ....................... 33845,37817

134 ....................... 33845,37678

201 ................................... 37818

207 ................................... 37818

Proposed Rules:

134 ................................... 38119

20 CFR

404 ....................... 38361, 38363

21 CFR

14 ..................................... 36624

175 ................................... 37208

176 ................................... 37209

177 ....................... 34370,37210

178 ................................... 33846

184 ................................... 36287

201 ................................... 38046

210 ................................... 37679

211 ................................... 37679

331 ................................... 38046

452 ................................... 34726

500 ................................... 37680

505 ................................... 37680

507 ................................... 37680

508 ................................... 37680

510 ....................... 35949, 37680

520 ................................... 34727

522 ......... 34727,35129,36290,

37682

529 ................................... 34727

558 .......... 34727, 35949, 36291

570 ................................... 37680

801 ................................... 37682

803 ................................... 38346

804 ................................... 38346

807 ................................... 38346

Proposed Rules:

106 ................................... 36154

107 ..............................36154

201 ..............................38047

331 ..............................38047

803 ..............................38348

804 ..............................38348

22 CFR

41 ...............................35628

126 ..............................36625

514 ..............................37002

608 ..............................36820

23 CFR

630 ..............................35629

24 CFR

0 ................................36246

60 ...............................36462

200 ..............................36260

201 ..............................36260

202 ....................... 36260, 36452

203 ......... 35024,36260,36452,

37798

206 ....................... 35014, 36260

221 .......... 36260,36452,37798

233 ..............................36260

234 ....................... 36260, 36452

280 ..............................36260

291 ..............................36260

570 ..............................36456

901 ..............................35633

941 ....................... 35958, 38014

25 CFR

10 ...............................34371

211 ..............................35634

212 ..............................35634

700 ..............................35666

Proposed Rules:

5 ................................36671

11 ...............................35158

12 ...............................35163

21 ...............................33876

45 ...............................34399

152 ..............................34400

169 ..............................37417

171 ..............................35167

256 ..............................

36829

290 ..............................37022

26 CFR

301 ..............................37683

Proposed Rules:

1 ........................... 35696, 36320

31 ...............................36320

27 CFR

18 ...............................37002

30 ...............................

37002

53 ...............................37005

55 ...............................38084

275 ..............................37005

Proposed Rules:

53 ...............................37022

28 CFR

2 ................................38569

42 ...............................34729

82 ...............................38085

552 ..............................38042

571 ..............................38042

Proposed Rules:

16 ...............................37425

17 ...............................36679

31 ...............................

34770
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Reader Aids iii

38 ......................... 37964,37976

58 ..................................... 37426

29 CFR

102 ................................... 38368

1952 ................................. 36824

2509 ................................. 33847

2520 ................................. 33847

2550 ................................. 33847

Ch. XXVI ............. 34002,36626,

37316,37795

Ch. XL ....34002,36626,37316,

37795

4044 ................................. 36968

Proposed Rules:

101 ................................... 35172

102 ................................... 35172

1910 ................................. 37849

1926 ................................. 37849

4001 ................................. 38409

4043 ................................. 38409

4065 ................................. 38409

Ch. XIV ............................ 34405

30 CFR

56 ..................................... 36790

57 ..................................... 36790

256 ................................... 34730

901 ................................... 37382

913 ................................... 37383

925 ................................... 38374

931 ................................... 38376

936 ................................... 38381

948 ................................... 38382

Proposed Rules:

206 ................................... 37865

943 ................................... 38420

946 ................................... 38420

948 ................................... 37023

31 CFR

321 ................................... 37196

356 ................................... 37007

515 ................................... 37385

575 ................................... 36627

Proposed Rules:

356 ................................... 38127

32 CFR

66 ..................................... 38386

706 .......... 35958,36291,36497

Proposed Rules:

651 ................................... 37865

33 CFR

100 ................................... 36292

110 ................................... 36786

116 ................................... 36786

117 ....................... 36786,37211

120 ................................... 37648

127 ................................... 36629

128 ................................... 37648

157 ................................... 36786

158 ................................... 36629

164 ................................... 35064

165 ......... 35130,35132,37211,

37684

179 ................................... 36629

181 ................................... 36786

183 ................................... 36629

334 ................................... 34732

Proposed Rules:

117 ................................... 35702

154 ................................... 34775

155 ................................... 34775

165 ................................... 37714

167 ................................... 35703

34 CFR

646 ................................... 38534

Proposed Rules:

75 ..................................... 37184

206 ................................... 37184

231 ................................... 37184

235 ................................... 27184

369 ................................... 27184

371 ................................... 27184

373 ................................... 27184

375 ................................... 27184

376 ................................... 27184

378 ................................... 27184

380 ................................... 27184

381 ................................... 27184

385 ................................... 27184

386 ................................... 27184

387 ................................... 27184

388 ................................... 27184

389 ................................... 27184

390 ................................... 27184

396 ................................... 27184

610 ................................... 27184

612 ................................... 27184

630 ................................... 27184

637 ................................... 27184

658 ................................... 27184

660 ................................... 27184

661 ................................... 27184

669 ................................... 27184

35 CFR

61 ..................................... 36497

123 ................................... 36497

36 CFR

1 ....................................... 35133

13 ..................................... 35133

222 ................................... 35959

223 ................................... 35960

Proposed Rules:

1190 ................................. 36688

1191 ..................... 36688,37964

37 CFR

2 ....................................... 36825

251 ................................... 37213

38 CFR

1 ........................... 33850,38570

21 ..................................... 36629

Proposed Rules:

1 ....................................... 33878

17 ..................................... 37024

39 CFR

5 ....................................... 36498

7 ....................................... 36498

10 ..................................... 36498

20 ..................................... 36500

3001 ................................. 37316

40 CFR

9 ........................... 33851,34202

51 ..................................... 39032

52 ........... 36292,36501,36502,

37216,37387,37390,37393,

37833,38086,38388,38391,

38571,38574,38577,38582,

38590, 38591, 38594, 38597

55 ..................................... 34202

63 ......................... 34140,36295

70 ..................................... 34733

71 ..................................... 34202

79 ..................................... 36506

80 ............ 35310, 35673, 35960

81 ..................................... 37833

180 ......... 34739,34741,36298,

36299, 37218, 37,395

257 ................................... 34253

261 ....................... 34252, 37397

271 ....................... 34252, 38392

300 ....................... 35137, 35962

372 ................................... 38600

425 ................................... 35680

799 ................................... 37685

Proposed Rules:

50 ..................................... 37427

51 ............ 35994, 36112, 38250

52 ........... 35998,36004,36320,

36534,37030,37232,37428,

37429,37875,38129,38250,

38423, 38664, 38682, 38683

55 ..................................... 36012

61 ..................................... 36326

63 ......................... 36326, 36835

79 ..................................... 36535

80 ..................................... 34775

81 ............ 33879, 36004, 37875

82 ..................................... 37430

86 ..................................... 37715

90 ..................................... 34778

93 ......................... 35994, 36112

136 ................................... 36328

148 ................................... 38684

180 ......... 36329,36331,36689,

37233,37433,38423,38426,

38428

185 ................................... 37233

186 ................................... 37233

260 ................................... 33881

261 ....................... 33881, 38684

262 ................................... 33881

264 ................................... 33881

268 ....................... 33881, 38684

269 ................................... 33881

271 ....................... 33881, 38684

300 ......... 36858,37435,37875,

37877

425 ................................... 35705

430 ................................... 36835

41 CFR

201 ................................... 35685

42 CFR

405 ................................... 35307

413 ................................... 37011

417 ....................... 35307, 38395

431 ....................... 35307, 38395

433 ................................... 38395

440 ................................... 38395

441 ................................... 38395

447 ................................... 38395

456 ................................... 38395

473 ................................... 35307

498 ................................... 35307

Proposed Rules:

410 ................................... 34614

415 ................................... 34614

43 CFR

1820 ................................. 37686

3710 ................................. 37116

Proposed Rules:

1 1 ..................................... 3 7 0 3 1

4700 ................................. 36333

44 CFR

62 ......................... 36513,37687

64 ...............................36514

65 ........... 33852,33854,38091,

38092

67 ......................... 33856,38094

Proposed Rules:

67 ......................... 33882,38129

45 CFR

Proposed Rules:

232 ..............................37236

235 ..............................37236

46 CFR

42 ...............................35963

76 ...............................35138

108 ..............................36786

110 ..............................36786

111 .......... 35927,36608, 36786

112 ..............................36786

113 ..............................36786

161 ..............................36786

167 ..............................35138

514 ..............................35685

Proposed Rules:

10 ......................... 36543,36608

15 ......................... 36543,36608

47 CFR

Ch.I .............................35964

1 ................................3 6 6 2 9

20 ............ 33859,38399,38605

22 ......................... 34375,38399

24 ...............................33850

36 ...............................34375

52 ...............................38605

61 ......................... 36515, 36653

64 ......................... 36629,36653

66 ...............................36654

73 ........... 34368,34743,34744,

35139, 36302, 37840

90 ......................... 34375,38403

Proposed Rules:

Ch.I .............................34405

1 ................................3 7 2 4 1

20 ...............................38687

24 ...............................38693

52 ...............................38687

73 ........... 34406,34407,34784,

34785,35705,37241,37715,

37716, 37717

76 ......................... 34408, 34409

48 CFR

225 ..............................37841

231 ..............................36305

252 ..............................37841

Proposed Rules:

219 ..............................37878

252 ..............................37878

401 ..............................37032

453 ..............................

37032

917 ..............................38701

950 ..............................38701

952 ..............................38701

970 ..............................38701

49 CFR

1 ................................3 4 7 4 5

40 ............ 37015,37222,37693

172 ..............................38642

190 ..............................38403

192 .......... 35139,36825, 38403

193 ..............................

36825
iv Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Reader Aids

195 ................................... 36825 173 ................................... 38702 625 .............................. 34966 663 ..............................34570

198 ................................... 38403 180 ................................... 38702 630 .......... 34746,35971,37842 669 ............................ .34930

199 ................................... 37222 192 ....................... 34410,34413 638 ................................... 34930 670 ..............................

34930

209 ................................... 38644 195 ....................... 34410,34413 641 ................................... 34930 679 ......... 34377,36306,37225,

219 ................................... 37222 383 ................................... 38133 642 ................................... 34785 37226,37403,37404,37700,

225 ................................... 37842 391 ................................... 38133 645 ................................... 34930 37843,38099,38358,38656

233 ................................... 33871 393 ................................... 36691 646 .............................. 34930 680 ..............................

34570

235 ................................... 33871 397 ................................... 36016 647 ................................... 34930 681 ....................... 34570,35145

236 ................................... 33871 571 ......... 36334,36698,38135, 648 ......... 34966,35142,38403, 683 ..............................34570

382 ................................... 37222 38404 685 ..............................

34570

571 .......... 33891,36516,36655 50 CFR 650 ................................... 34966 695 ..............................

35548

575 ................................... 36655 Ch. III ............................... 35548 651 ............................. 34966 697 ..............................

34746

653 ................................... 37222 246 ................................... 35548 652 ................................... 34966 Proposed Rules:

654 ................................... 37222 280 ................................... 35548 653 ................................... 34930 17 ........... 36020,36021,36346,

1150 ................................. 36965 281 ................................... 35548 655 ................................... 34966 37034,38702

1300 ................................. 35139 282 ................................... 35548 657 .............................. 34966 20 ...............................

37994

1305 ................................. 35141 285 ................................... 38656 658 .............................. 34930 229 ..............................

37035

Proposed Rules: 298 ................................... 35548 659 ................................... 34930 300 ..............................

38703

1 ....................................... 33886 299 ................................... 35548 660 ......... 34570,35143,35144, 642 ........................... 34785

8 ....................................... 33886 600 ................................... 37225 36662, 37843 648 .......... 37241, 37436, 38430

171 ................................... 38702 622 ................................... 34930 661 ................................... 34570 679 .......... 35174, 36702, 37041
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Reader Aids v

REMINDERS

The items in this list were

editorially compiled as an aid

to Federal Register users.

Inclusion or exclusion from

this list has no legal

significance.

RULES GOING INTO

EFFECT TODAY

COMMERCE DEPARTMENT

National Oceanic and

Atmospheric Administration

Tuna, Atlantic bluefin fisheries;

published 7-25-96

ENERGY DEPARTMENT

Energy Efficiency and

Renewable Energy Office

Energy conservation:

Federal energy management

and planning programs--

Life cycle cost analyses;

methodology and

procedures; published

6-25-96

ENVIRONMENTAL

PROTECTION AGENCY

Clean Air Act:

State operating permits

programs--

Texas; published 6-25-96

Superfund program:

Toxic chemical release

reporting; community-rightto-know--

Hydrochloric acid; status

modification on list of

toxic chemicals subject

to reporting

requirements; published

7-25-96

FEDERAL

COMMUNICATIONS

COMMISSION

Radio services, special:

Interactive video and data

service licensees--

Mobile service provided

on ancillary basis;

published 6-25-96

Television broadcasting:

Cable television systems--

Equipment costs on

franchise, system,

regional, or company

level; aggregation;

published 6-25-96

GOVERNMENT ETHICS

OFFICE

Public financial disclosure,

conflicts of interest, and

certificates of divestiture for

executive branch officials;

published 6-25-96

Public financial disclosure,

conflicts of interest, and

certificates of divesture for

executive branch officials

Correction; published 7-8-96

TRANSPORTATION

DEPARTMENT

Federal Aviation

Administration

Airworthiness directives:

Fairchild; published 7-15-96

Airworthiness standards:

Normal, utility, acrobatic,

and commuter category

airplanes--

Powerplant instruments;

fuel pressure indication;

published 3-27-96

TRANSPORTATION

DEPARTMENT

Federal Railroad

Administration

Railroad safety enforcement

procedures:

Hazardous materials

regulations, violations

thereof; penalty

guidelines; published 7-

25-96

VETERANS AFFAIRS

DEPARTMENT

Career employment; part-time;

published 7-25-96

COMMENTS DUE NEXT

WEEK

AGRICULTURE

DEPARTMENT

Agricultural Marketing

Service

Onions (sweet) grown in

Washington and Oregon;

comments due by 7-30-96;

published 7-15-96

AGRICULTURE

DEPARTMENT

Animal and Plant Health

Inspection Service

Exportation and importation of

animals and animal

products:

African swine fever; disease

status change--

Spain; comments due by

7-29-96; published 5-29-

96

Plant-related quarantine,

foreign:

Fruits and vegetables;

importation; comments

due by 8-1-96; published

7-2-96

AGRICULTURE

DEPARTMENT

Federal Crop Insurance

Corporation

Crop insurance regulations:

Sugar beets; comments due

by 7-30-96; published 5-

31-96

AGRICULTURE

DEPARTMENT

Farm Service Agency

Program regulations:

Personal property--

Post bankruptcy loan

servicing notices;

comments due by 8-2-

96; published 7-18-96

AGRICULTURE

DEPARTMENT

Food Safety and Inspection

Service

Meat and poultry inspection:

Fee increases; comments

due by 8-2-96; published

7-3-96

AGRICULTURE

DEPARTMENT

Rural Business-Cooperative

Service

Program regulations:

Personal property--

Post bankruptcy loan

servicing notices;

comments due by 8-2-

96; published 7-18-96

AGRICULTURE

DEPARTMENT

Rural Housing Service

Program regulations:

Personal property--

Post bankruptcy loan

servicing notices;

comments due by 8-2-

96; published 7-18-96

AGRICULTURE

DEPARTMENT

Rural Utilities Service

Program regulations:

Personal property--

Post bankruptcy loan

servicing notices;

comments due by 8-2-

96; published 7-18-96

COMMERCE DEPARTMENT

National Oceanic and

Atmospheric Administration

Fishery conservation and

management:

Caribbean, Gulf of Mexico,

and South Atlantic

fisheries; comments due

by 8-2-96; published 7-3-

96

DEFENSE DEPARTMENT

Army Department

Military traffic management:

Motor common carriers of

perishable subsistence

and bulk fuel; cargo

insurance requirements;

comments due by 7-29-

96; published 6-27-96

DEFENSE DEPARTMENT

Federal Acquisition Regulation

(FAR):

Final indirect cost rates;

comments due by 7-29-

96; published 5-28-96

EDUCATION DEPARTMENT

Educational research and

improvement:

Exemplary and promising

programs designation;

conduct standards and

activities evaluation;

comments due by 8-2-96;

published 6-3-96

ENERGY DEPARTMENT

Federal Energy Regulatory

Commission

Electric utilities (Federal Power

Act):

Capacity reservation open

access transmission

tariffs; comments due by

8-1-96; published 5-10-96

ENVIRONMENTAL

PROTECTION AGENCY

Air pollutants, hazardous;

national emission standards:

Nonhandheld new nonroad

phase I small sparkignition engines, class I

and II; carbon monoxide

standard; comments due

by 8-2-96; published 7-3-

96

Air programs; fuels and fuel

additives:

Reformulated gasoline

program; alternative

analytical test methods

use; comments due by 8-

2-96; published 7-3-96

Air quality implementation

plans; approval and

promulgation; various

States:

Alaska; comments due by

7-29-96; published 6-28-

96

Georgia; comments due by

7-29-96; published 6-27-

96

Kentucky; comments due by

7-29-96; published 6-28-

96

Pennsylvania; comments

due by 8-2-96; published

7-16-96

Air quality planning purposes;

designation of areas:

Washington; comments due

by 7-31-96; published 7-1-

96

Hazardous waste:

Hazardous waste

management system--

Contaminated media;

management

requirements; comments

due by 7-29-96;

published 4-29-96

Management facilities; solid

waste management units

(SWMUs), corrective

action; comments due by

7-30-96; published 5-1-96

Pesticides; tolerances in food,

animal feeds, and raw

agricultural commodities:

Dicofol, etc.; comments due

by 7-30-96; published 5-

29-96
vi Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Reader Aids

Pesticide chemicals; various

tolerance actions;

comments due by 7-29-

96; published 5-29-96

FEDERAL

COMMUNICATIONS

COMMISSION

Radio stations; table of

assignments:

California; comments due by

7-29-96; published 6-17-

96

Hawaii; comments due by

7-29-96; published 6-19-

96

New York; comments due

by 7-29-96; published 6-

19-96

South Carolina; comments

due by 7-29-96; published

6-20-96

South Dakota; comments

due by 7-29-96; published

6-20-96

Wisconsin; comments due

by 7-29-96; published 6-

17-96

FEDERAL RESERVE

SYSTEM

Availability of funds and

collection of checks

(Regulation CC):

Miscellaneous amendments;

comments due by 8-2-96;

published 6-3-96

Electronic fund transfers

(Regulation E):

Home banking services

disclosure, new accounts

error resolution and

stored-value cards, etc.;

comments due by 8-1-96;

published 5-2-96

Loan guarantees for defense

production (Regulation V);

comments due by 7-29-96;

published 5-28-96

Securities credit transactions

(Regulations G, T, and U);

comments due by 8-2-96;

published 5-6-96

Securities:

Relations with dealers in

securities under section

32, 1933 Banking Act

(Regulation R); and

miscellaneous

interpretations; comments

due by 8-2-96; published

7-3-96

HEALTH AND HUMAN

SERVICES DEPARTMENT

Food and Drug

Administration

Animal drugs, feeds, and

related products:

Extralabel drug use in

animals; comments due

by 7-31-96; published 5-

17-96

Chlorofluorocarbons and other

ozone-depleting substances,

products containing or

manufactured with; warning

statements; comments due

by 8-1-96; published 5-3-96

Human drugs:

Antibiotic drugs--

Clarithromycin granules

for oral suspension;

comments due by 8-2-

96; published 7-3-96

Current good manufacturing

practice--

Finished pharmaceuticals;

manufacturing, quality

control, and

documentation

requirements; comments

due by 8-1-96;

published 5-3-96

HEALTH AND HUMAN

SERVICES DEPARTMENT

Health Care Financing

Administration

Medicare:

Hospital inpatient

prospective payment

systems and FY 1997

rates; comments due by

7-30-96; published 5-31-

96

INTERIOR DEPARTMENT

Indian Affairs Bureau

BIA rules applicability;

comments due by 8-2-96;

published 6-3-96

Energy and minerals:

Ute Indian Tribe's undivided

tribal assets on Uintah

and Ouray Reservation,

UT; management by Tribe

and Ute Distribution

Corporation; comments

due by 8-2-96; published

6-3-96

Indian Self-Determination and

Education Assistance Act

program:

Contracts, grants, school

construction contracts,

etc.; comments due by 8-

2-96; published 6-3-96

Land and water:

Land records and title

documents; comments

due by 8-2-96; published

6-3-96

INTERIOR DEPARTMENT

Fish and Wildlife Service

Migratory bird hunting:

Early-season regulations

(1996-1997); proposed

frameworks; comments

due by 8-1-96; published

7-22-96

INTERIOR DEPARTMENT

Minerals Management

Service

Royalty management:

Royalty relief for producing

leases and existing leases

in deep water; comments

due by 7-30-96; published

5-31-96

INTERIOR DEPARTMENT

Surface Mining Reclamation

and Enforcement Office

Federal regulatory review:

Permanent program and

abandoned mine land

reclamation plan

submissions; comments

due by 7-29-96; published

5-28-96

Permanent program and

abandoned mine land

reclamation plan

submissions:

West Virginia; comments

due by 7-31-96; published

7-16-96

NATIONAL LABOR

RELATIONS BOARD

Procedural rules:

Attorneys or party

representatives;

misconduct before

agency; comments due by

8-2-96; published 6-17-96

SECURITIES AND

EXCHANGE COMMISSION

Securities:

Executive and director

compensation disclosure;

streamlining and

consolidation; comments

due by 7-29-96; published

6-14-96

TRANSPORTATION

DEPARTMENT

Coast Guard

Federal regulatory review:

Lifesaving equipment;

comments due by 7-31-

96; published 5-20-96

TRANSPORTATION

DEPARTMENT

Omnibus Transportation

Employee Testing Act of

1991:

Workplace drug and alcohol

testing programs--

Drug and alcohol

procedural rules;

update; comments due

by 7-29-96; published

4-29-96

TRANSPORTATION

DEPARTMENT

Federal Aviation

Administration

Airworthiness directives:

de Havilland; comments due

by 7-29-96; published 7-3-

96

Boeing; comments due by

7-29-96; published 6-19-

96

Don Luscombe Aviation

History Foundation;

comments due by 7-31-

96; published 5-29-96

Gulfstream; comments due

by 8-2-96; published 6-24-

96

Israel Aircraft Industries,

Ltd.; comments due by 7-

29-96; published 5-29-96

McDonnell Douglas;

comments due by 7-29-

96; published 6-19-96

SAAB; comments due by 7-

30-96; published 5-31-96

Twin Commander Aircraft

Corp.; comments due by

7-29-96; published 6-6-96

Airworthiness standards:

Special conditions--

Cessna 500, 550, and

S550 airplanes;

comments due by 8-2-

96; published 7-3-96

Class E airspace; comments

due by 7-29-96; published

6-27-96

VOR Federal airways;

comments due by 7-29-96;

published 6-17-96

TRANSPORTATION

DEPARTMENT

Federal Highway

Administration

Motor carrier safety standards:

Practice rules for

proceedings,

investigations, and

disqualifications and

penalties; comments due

by 7-29-96; published 4-

29-96

TRANSPORTATION

DEPARTMENT

Research and Special

Programs Administration

Hazardous materials:

Performance-oriented

packaging standards; final

transitional provisions;

comments due by 8-2-96;

published 6-26-96

TREASURY DEPARTMENT

Bank Secrecy Act:

Currency and foreign

transactions; financial

reporting and

recordkeeping

requirements--

Exemptions from currency

transaction reporting;

comments due by 8-1-

96; published 4-24-96
Federal Register / Vol. 61, No. 144 / Thursday, July 25, 1996 / Reader Aids vii

LIST OF PUBLIC LAWS

Note: No public bills which

have become law were

received by the Office of the

Federal Register for inclusion

in today's List of Public

Laws.

Last List July 24, 1996