Page 1

U.S. Department of Transportation

FEDERAL AVIATION

ADMINISTRATION

FINAL REGULATORY IMPACT ANALYSIS

FINAL RULE

[CFR Part 440 Waivers of Claims]

OFFICE OF AVIATION POLICY AND PLANS

ECONOMIC ANALYSIS DIVISION

Carole Gaelick

January 2016
Page 2

Table of Contents

I. Introduction/Discussion of the Final Rule....................................................................................4

II. Assumptions................................................................................................................................6

III. Cost Savings...............................................................................................................................7

IV. Costs ........................................................................................................................................12

IV. Net Benefits.............................................................................................................................14
Page 3

Executive Summary

This final rule will amend the Code of Federal regulations to be less burdensome for 

those entities signing a reciprocal cross-waiver of claims agreement, including commercial space

launch licensees and permittees, the U. S. Government, and the customers who fly payloads on 

the launches. The rule will amend 14 CFR part 440 in the following ways:

1. Incorporate the reciprocal waivers of claims requirements into the regulatory text.

2. The only customers who will have to sign the cross-waiver with the Government and the 

licensee or permittee will be those who are in a direct contractual relationship with a 

licensee or permittee. Currently, all customers to the launch are required to sign the crosswaiver with the government and the licensee or permittee. The responsibility to 

implement a waiver of claims agreement with customers not in a direct contractual 

relationship with the licensee or permittee will shift from the licensee or permittee to the

appropriate first-tier customer.

3. Customers will waive claims against all customers involved in the launch or re-entry 

including those signing a different set of cross-waivers. Currently, if a customer is added 

to the launch after the cross-waiver has been signed all parties have to sign again.

4. The FAA will add a template to Appendix C to part 440, for the Waiver of Claims and 

Assumption of Responsibility for Permitted Activities with No Customer. Currently the 

only waiver of claims form in part 440 for permittees is for those with at least one 

customer.

These changes will result in cost savings to the licensee or permittee, government and 

customers and minimal cost to the first-tier customer. Most of these cost savings will result 

because there will be no more requests from licensees that the FAA waive the requirement that 
Page 4

part 440 customers sign cross-waivers with the FAA and licensee or permittee, because part 440 

customers will no longer be required to sign the cross-waivers.

Minimal costs will be incurred by the first-tier customers who will be responsible for 

extending the cross-waiver provisions to their customers, because they currently do extend crosswaivers to their contractors and subcontractors.

The FAA requested but did not receive comments on the analysis and estimates presented 

in the NPRM, so the final analysis and cost savings of the NPRM are determined to be accurate 

and are presented without change in this Regulatory Evaluation. These cost savings are presented 

in the table below. The tables in this report may not add due to rounding error.

Cost Savings from the Final Rule

Average 7% 

Present 

Value 

Cost 

Savings

3% 

Present 

Value 

Cost 

Savings

Government Cost Savings $138,440 $97,232 $118,092

Licensee Cost Savings 

 No Longer Requesting Waivers $136,282 $95,716 $116,251

 No Longer Obtaining Part 440 Customers’ Signatures $17,035 $11,965 $14,531 

Cost Savings from Allowing Signatures on Different Set of Cross-Waivers $365 $256 $311 

Total Estimated Cost Savings $292,121 $205,169 $249,185

Note: Totals may not add due to rounding error

I. Introduction/Discussion of the Final Rule

U.S. regulations require the U.S. Government, a licensee or permittee, and customers of a 

licensee or permittee to enter into a reciprocal waiver of claims agreement (cross-waiver 

agreement) in order to fulfill a statutory requirement. The current rule results in unnecessary 

burden for several reasons.

First, the licensee or permittee is required to obtain signatures of all customers, including

customers of customers (part 440 customers) on the cross-waiver agreement. The licensee or 
Page 5

permittee may not know the identity of all the part 440 customers, making the requirement more 

complex. The FAA has issued waivers to the cross-waiver requirement for several launches that 

contained payloads owned by entities such as NanoRacks, LLC, which arranged to carry student 

experiments on a locker insert to put into an experimental locker on board the International 

Space Station. NanoRacks and each student who placed a payload on board the NanoRacks 

insert qualified as customers under the FAA's definitions, and would therefore have had to sign 

the cross-waiver, if the FAA had not issued a waiver to the cross-waiver requirement. This final 

rule will no longer require a licensee or permittee to obtain signatures of its part 440 customers 

on the cross-waiver. This will save the cost of the licensee or permittee having to identify its part 

440 customers to obtain signatures, and/or the cost of obtaining a waiver to the cross-waiver 

requirement. Under the final rule, first-tier customers will be responsible for extending the crosswaiver requirements to its customers. The cost to the first-tier customer will be minimal, 

because the first-tier customer could modify existing templates and will already be familiar with

its customers.

Second, under the current rule, when a new customer is added to the launch after 

signatures have been obtained on the cross-waiver, all the signatures have to be obtained again.

The final rule changes to the rule language will resolve this so that a customer added at the last 

minute could sign a new and separate waiver of claims without all the other customers having to 

sign again. This will save the potential cost to the parties to the cross-waiver of re-signing the 

cross-waiver when a customer is added after the initial set of signatures.

Third, the Code of Federal Regulations (CFR) does not currently contain a template for 

Waiver of Claims and Assumption of Responsibility for Permitted Activities with No Customer.

This rule will add such a template. This will save the permittee who has no customer the costs 
Page 6

involved in modifying the cross-waiver agreement in Appendix C to pertain to a permittee with 

no customer.

The FAA made changes to the proposal in issuing this final rule that do not affect the 

regulatory evaluation, as they are corrections that maintain the intent of the proposal. For 

instance, the language in the proposal inadvertently would not have ensured contractors and 

subcontractors of part 440 customers would be in the waiver scheme. It has always been the 

FAA’s intention to ensure these contractors and subcontractors continue to be included in the 

waiver scheme. In addition, the FAA adds language to preserve the statutory requirements that 

all customers (including part 440 customers) waive claims against all the other parties involved 

in the licensed activity. Further the FAA removes permittees from the indemnification scheme 

reserved by statute for licensees only. These omissions are corrected in the final rule. 

II. Assumptions

The following assumptions apply to the analysis.

 Ten year time horizon

 2013 dollars

 Without the rule the FAA would issue 4 partial waivers to the reciprocal cross waiver 

requirement per year

 Without the rule the licensee would have to obtain some signatures from part 440

customers on launches unless waivers have been issued; however, the costs of obtaining 

these signatures have not been quantified

 Slight discrepancies in tables are due to rounding 

 The following wage rates are used in the calculations:
Page 7

Hourly Wage Rates 2013 Dollars

Hourly 

wage

Employee 

Benefit 

Total 

Burdened 

Hourly 

Rate

Private Sector

Non-Scheduled Air Transportation Management 

(1)(2) $58.24 $9.90 $68.14 

Government

Federal GS13-5 (DC)(3) $48.35 $17.53 $65.88 

Federal GS14-5 (DC)(3) $57.13 $20.71 $77.84 

Federal GS15-5 (DC)(3) $67.21 $24.36 $91.57 

Benefit factor

Benefit factor Private (4)(5) 17%

Fringe Benefit Factor Federal (6)(7) 36.25%

(1)http://www.bls.gov/oes/current/naics4_481200.htm#11-0000

(2) Industry Non-scheduled Air Transportation General and Operations Managers Occupation code - 11-1021

(3)http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2013/general-schedule/washington-baltimorenorthern-virginia-dc-md-va-wv-pa-hourlyovertime-rates-by-grade-and-step/

(4) Memorandum on Estimating Total Costs of compensation Based on Wage Rates or Salaries, U.S. Department of 

Transporation, January 30, 2014.

(5) Wage multiplier for salaried employees

(6) http://www.whitehouse.gov/sites/default/files/omb/memoranda/fy2008/m08-13.pdf

(7) Percent of position's basic pay.

The final rule will amend the CFR in three ways that will lead to cost savings as discussed 

below.

III. Cost Savings

The final rule will provide cost relief to launch operators, customers and the Federal 

Government. These cost savings are estimated in this section.

1. Amend § 440.17 and appendices B and C so that any customer not contracting directly 

with a licensee or permittee will not have to sign a waiver directly with the licensee or 

permittee or the FAA.
Page 8

Six times in the last year and a half, upon request from the licensee, the FAA has waived, 

in part, the requirement that a launch operator enter into a reciprocal waiver of claims with each 

customer. Three of these waivers have been issued to SpaceX and three to Orbital Sciences, 

Corp. (OSC) for missions in which NASA is a customer. 

While avoiding the cost that would be incurred by the licensee in obtaining all the 

customers’ signatures, the process of obtaining this waiver from the FAA has added cost for the 

government (both NASA and the FAA) and the licensee. Assuming the FAA will issue waivers 

at the same rate without the final rule that it is currently issuing them (6 every year and a half),

then 4 waivers will be issued per year in the future. In the past, it has taken FAA staff 11 to 52 

hours to review and grant a request for waivers received from launch operators. NASA spends 10

to 20 hours compiling materials and preparing a letter to send to the licensee confirming that 

NASA has agreements in place with all of its customers that conform to NASA’s cross-waiver 

requirements in 14 CFR 1266. The table below indicates the hours spent and the associated wage 

rates by the government in the waiver process and the table following that shows total 

government costs.
Page 9

Federal Government Per Waiver cost 

Calculations

Low High

FAA Attorney Review

GS 13-5 Hours 6 40

GS 13-5 Cost $395 $2,635

GS 15-5 Hours 4 10

GS 15-5 Cost $366 $916 

Office of Commercial 

Space Review

GS 15-5 Hours 1 2

GS 15-5 Cost $92 $183 

Total FAA Cost $853 $3,734

NASA tasks

GS 14-5 Hours 10 20

GS 14-5 Cost $778 $1,557

Total Govt Cost $1,631 $5,291

Government Cost Savings if Waivers No Longer Requested

Year

Number Of 

Waivers Low High Average

7% Present 

Value 

Average 

Cost 

Savings

3% Present 

Value 

Average 

Cost 

Savings

1 4 $6,524 $21,164 $13,844 $12,939 $13,441

2 4 $6,524 $21,164 $13,844 $12,091 $13,049

3 4 $6,524 $21,164 $13,844 $11,301 $12,669

4 4 $6,524 $21,164 $13,844 $10,562 $12,300

5 4 $6,524 $21,164 $13,844 $9,871 $11,942

6 4 $6,524 $21,164 $13,844 $9,224 $11,594

7 4 $6,524 $21,164 $13,844 $8,621 $11,257

8 4 $6,524 $21,164 $13,844 $8,057 $10,928

9 4 $6,524 $21,164 $13,844 $7,530 $10,610

10 4 $6,524 $21,164 $13,844 $7,037 $10,301

Total Cost Savings $65,240 $211,640 $138,440 $97,232 $118,092

Note: Totals may not add due to rounding error.
Page 10

Companies provided cost estimates to request the FAA waive cross-waiver requirements 

with all customers. Three waivers have been issued to SpaceX and three to OSC by the date of 

this writing. One company provided estimates for the hours used the first time it was issued a 

waiver, then for a stand-alone mission and for several missions under CRS. The estimated hours 

used to obtain a waiver for the several missions was the lowest and to be conservative we used 

this in our average. We have weighted each company’s response by 50%. The table below 

indicates the average estimated cost (50 hours) the industry incurs when obtaining a waiver from 

the FAA. At a burdened hourly rate of $68.14 the total cost per waiver is $3,407 (50 times 

$68.14). 

Licensee Cost Savings of No Longer Having to Request Waivers 

Year

Number Of 

Waivers

Cross 

Waivers 

Savings

7% 

Present 

Value Cost 

Savings

3% Present 

Value Cost 

Savings

1 4 $13,628 $12,737 $13,232 

2 4 $13,628 $11,903 $12,846 

3 4 $13,628 $11,125 $12,471 

4 4 $13,628 $10,397 $12,109 

5 4 $13,628 $9,717 $11,756 

6 4 $13,628 $9,080 $11,414 

7 4 $13,628 $8,486 $11,081 

8 4 $13,628 $7,932 $10,758 

9 4 $13,628 $7,412 $10,445 

10 4 $13,628 $6,927 $10,141 

Total Cost Savings $136,282 $95,716 $116,251 

Note: Totals may not add due to rounding error

For some missions, licensees may obtain signatures of part 440 customers on the crosswaiver. Based on discussion with a launch operator, we estimate that on average operators spend 

about 100 hours per mission on this task. At a weighted wage rate of $68.14 per hour, this will

result in $6,814 cost per mission. Based on feedback provided by this launch operator, we are 
Page 11

aware that there have been at least 5 launches 1over the past 20 years where part 440 customers 

have had to sign waivers. If we make the conservative assumption that this trend will continue, 

we estimate that launch operators will save the cost of obtaining signatures for part 440

customers on an average of 0.25 launches per year. This will result in cost savings of $1,704 per 

year (or $17,035 over ten years).

Licensee Cost Savings of No Longer Having to Obtain 

Part 440 Customers’ Signatures

Year

Average 

Number of 

Missions

Signature 

Savings

7% 

Present 

Value 

Cost 

Savings

3% 

Present 

Value 

Cost 

Savings

1 0.25 $1,704 $1,592 $1,654

2 0.25 $1,704 $1,488 $1,606

3 0.25 $1,704 $1,391 $1,559

4 0.25 $1,704 $1,300 $1,514

5 0.25 $1,704 $1,215 $1,469

6 0.25 $1,704 $1,135 $1,427

7 0.25 $1,704 $1,061 $1,385

8 0.25 $1,704 $991 $1,345

9 0.25 $1,704 $927 $1,306

10 0.25 $1,704 $866 $1,268

Total Cost 

Savings $17,035 $11,965 $14,531

Note: Totals may not add due to rounding error

2. Amend the CFR to so that customers that sign a cross-waiver waive claims against all 

other customers involved in the licensed activity, including customers signing a separate 

cross-waiver. 

Under the CFR, if a new customer is added to the cross-waiver after all the signatures are 

obtained, currently all parties have to re-sign the cross-waiver with all the names of all the 

parties on the cross-waiver. The FAA will amend the CFR to allow a customer who is added 

 

1 This represents only the one launch operator. Without the final rule, the number of launches where part 440

customers will sign the cross-waiver will likely exceed 0.25 per year.
Page 12

later to sign a new and separate waiver of claims with the Government and licensee or permittee, 

while still waiving claims against all of the other customers on a launch who have signed a 

separate waiver of claims.

The FAA has identified that once in the past 6 years a customer was added to the crosswaiver after signatures were obtained. A customer was added to SpaceX Flight 003-D2. The 

original waiver contained signatures from the FAA, SpaceX and Space Services Inc. TAGHeuer 

was added and all the parties had to re-sign the waiver for the launch. For the reentry of the 

flight, only the FAA and SpaceX had to re-sign the waiver. The FAA assumes that one instance 

of re-signing could be avoided over the ten year period following the rule publication. The FAA 

estimates that each re-signing entity required 1 hour to review the new cross-waiver and re-sign.

These cost savings are minimal and might amount to less than $400 over ten years, based on 

each of the signatories saving one hour.

3. Amend the CFR to add a template of a cross-waiver to part 440 for permittees with no 

customers to use.

A template will allow permittees with no customers to avoid the cost of modifying the 

waiver of claims form found in Appendix C to part 440 for permittees with customers. This will 

result in minimal cost savings.

IV. Costs

Although the final rule will no longer require signatures of part 440 customers on crosswaiver agreements with the licensee or permittee and the government, all customers will still 

have to enter into a waiver of claims agreement. The responsibility to implement cross-waivers 

with customers who are not in a direct contractual relationship (i.e., part 440 customers) with the 

licensee or permittee will shift under the final rule, from the licensee or permittee to the
Page 13

appropriate first-tier customer. Additionally, under the final rule, first-tier customers will have to 

indemnify other parties to the cross-waiver and their respective entities against claims its 

customers might bring were it not to extend the cross-waiver requirements correctly. So rather 

than the licensee or permittee obtaining signatures of part 440 customers on the cross-waiver, the 

first-tier customer will have to implement a cross-waiver with its customers (the part 440

customer). This will be a new requirement on the first-tier customer.

The FAA expects the costs the first-tier customer will incur will be minimal because the 

first-tier customer could modify the templates provided in Appendices B and C to part 440 and 

add it to the contract that it has with its customers. Furthermore, customers are all currently 

required to extend the FAA cross-waiver obligations to their respective contractors and 

subcontractors.

The hourly burdened wage rate for a lawyer is $92.39, based on Bureau of Labor 

Statistics 2including a 17% employee benefit factor. Estimating that a lawyer will spend two 

hours to add cross-waiver provisions to the contract template, the cost will be $185 for each part 

440 customer.

The FAA does not know how many first-tier customers will extend cross-waiver 

requirements to their customers because we do not know how many first-tier customers fly 

hosted payloads. The only entities that the FAA is aware of currently that fly hosted payloads are 

NASA and the Air Force although we understand companies such as SpaceFlight, Inc. may have 

future plans to fly hosted payloads.

Some licensees, customers and the U.S. Government may also have to modify verbiage 

on templates used to extend cross-waiver obligations to their contractors and subcontractors to 

account for the new language.

 

2 Lawyers, Occupation Code, 231011, http://www.bls.gov/oes/2013/may/naics4_551100.htm
Page 14

IV. Net Benefits

The final rule will result in cost savings to government and industry as indicated below 

and minimal costs to first-tier customers.

Cost Savings from the Proposed Rule

Average

7% 

Present 

Value 

Cost 

Savings

3% 

Present 

Value 

Cost 

Savings

Government Cost Savings $138,440 $97,232 $118,092

Licensee Cost Savings 

 No Longer Requesting Waivers $136,282 $95,716 $116,251

 No Longer Obtaining Part 440 Customers’ Signatures $17,035 $11,965 $14,531 

Cost Savings from Allowing Signatures on Different Set of CrossWaivers $365 $256 $311 

Total Estimated Cost Savings $292,121 $205,169 $249,185

Note: Totals may not add due to rounding error