[Federal Register Volume 62, Number 128 (Thursday, July 3, 1997)]
[Proposed Rules]
[Pages 36028-36030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17452]
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DEPARTMENT OF TRANSPORTATION
14 CFR Part 440
[Docket No. 28635; Notice 96-8B]
RIN 2120-AF98
Financial Responsibility Requirements for Licensed Launch
Activities
AGENCY: Federal Aviation Administration (FAA), Associate Administrator
for Commercial Space Transportation, DOT.
ACTION: Notice of reopened comment period.
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SUMMARY: The FAA is soliciting additional comments on notice no. 96-8
(61 FR 38992; July 25, 1996), which proposed financial responsibility
and allocation of risk requirements for launch activities carried out
under an FAA license. An additional 30-day comment period on the notice
of proposed rulemaking is provided for this purpose.
DATES: Comments must be received by August 4, 1997.
ADDRESSES: Comments should be mailed in triplicate to the Federal
Aviation Administration, Office of Chief Counsel, Attention: Rules
Docket (AGC-200), Docket No. 28635, Room 915G, 800 Independence Avenue,
SW., Washington, DC 20591. Comments must reference Docket No. 28635.
Comments may also be submitted electronically to the Rules Docket by
using the following Internet address: 9-nprm-cmts@faa.dot.gov.
Commenters wishing to receive acknowledgement of receipt of their
comments must include a pre-addressed, stamped postcard on which the
following statement is made: ``Comments to Docket No. 28635.'' The
postcard will be date-stamped and mailed to the commenter. Copies of
materials relevant to this rulemaking, including copies of all public
comments, are kept by the Rules Docket Technician, Room 915G, at the
above address. The docket may be examined Monday through Friday, except
Federal holidays, between the hours of 8:30 a.m. and 5:00 p.m.
An electronic copy of the notice of proposed rulemaking (NPRM) may
be downloaded from the FAA regulations section of the Fedworld
electronic bulletin board service (703) 321-3339, the Federal
Register's electronic bulletin board service (202) 512-1661 or the
FAA's Aviation Rulemaking Advisory Committee Bulletin Board service
(202) 267-5948. A modem and suitable communications software is
required.
Internet users may reach the FAA's web page at http://www/faa/gov
or the Federal Register's web page at http://www.access.gpo.gov/
su__docs for access to recently published rulemaking documents.
Any person may obtain a paper copy of the NPRM by submitting a
request to the FAA, Office of Rulemaking, ARM-1, 800 Independence
Avenue, SW., Washington, DC 20591 or by calling (202) 267-9680.
Communications must identify the notice and docket number.
Persons interested in being placed on the mailing list for future
Notices of Proposed Rulemaking should request from the FAA Office of
Rulemaking a copy of Advisory Circular No. 11-2A, notice of proposed
rulemaking distribution system, that describes the application
procedure.
FOR FURTHER INFORMATION CONTACT: Ms. Esta M. Rosenberg, Attorney-
Advisor, Regulations Division, Office of the Chief Counsel, Federal
Aviation Administration, Department of Transportation, Washington, DC
(202) 366-9305.
[[Page 36029]]
SUPPLEMENTARY INFORMATION:
Background
On July 25, 1996, the FAA's Associate Administrator for Commercial
Space Transportation (AST) published an NPRM entitled, ``Financial
Responsibility Requirements for Licensed Launch Activities''. A 60-day
comment period was provided for the public to submit comments and
information. The comment period closed on September 23, 1996. In
addition, during the open comment period, a technical corrections
notice was published August 26, 1996 (61 FR 43814). The NPRM solicited
comments on AST's approach to implementing and assuring compliance with
financial responsibility requirements for licensed launch activities.
Comments were also requested on the proper allocation of certain risks
associated with those activities. Requirements for financial
responsibility and allocation of risk are part of a comprehensive
scheme mandated by 49 U.S.C. Subtitle IX, ch. 701 (formerly, the
Commercial Space Launch Act of 1984, as amended (CSLA)), to protect
launch participants from potentially unlimited liability or
catastrophic losses.
In response to industry requests that more time be provided for
comment development, the comment period was reopened October 2, 1996,
for an additional 60-day comment period (61 FR 51395). The second
comment period closed on December 2, 1996.
Following review and consideration of comments received, AST
intended to codify financial responsibility requirements in a final
rule. However, shortly after the close of the comment period, a launch
vehicle failure at Cape Canaveral Air Station resulted in some property
damage to the facility. Although the launch was not FAA-licensed and
therefore not subject to CSLA requirements for financial responsibility
and allocation of risk, the resultant damage has led to greater
scrutiny--by both the Government and the U.S. commercial launch
industry--on the scope of required insurance coverage and related
issues.
Following this event, the FAA provided additional clarification to
launch licensees of the agency's existing requirements for liability
insurance coverage. Licensees were notified, in writing, of the
agency's longstanding requirements that claims of Federal Government
employees and employees of Federal Government contractors and
subcontractors (referred to collectively in this Notice as Government
personnel) for injury, damage or loss must be covered by third-party
liability insurance. Based upon their reactions, it has become apparent
to the agency that the commercial launch industry was not aware of
AST's interpretation. In this respect, licensees incorrectly believed
that the NPRM proposed a change to existing practice that would not be
implemented until issuance of a final rule. To avoid self-insuring this
risk, licensees have procured additional liability coverage that would
respond to claims of Government personnel.
At the May 14, 1997, meeting of the Commercial Space Transportation
Advisory Committee (COMSTAC), the Risk Management Working Group
reported industry concerns that fundamental changes in policy were
being implemented by AST in advance of a final rule. The Working Group
Chairman reported that ``the potential effects of these changes on risk
management issues are serious. Industry members do not believe that
they had a sufficient understanding of the FAA`s position to be able
adequately to express their concerns in the first round of comments and
wish to ensure that the FAA fully understands industry's position
before a final rule is issued.'' The COMSTAC adopted a resolution
recommending that the agency issue a supplemental notice of proposed
rulemaking and allow an additional opportunity for public comment.
The agency has determined that it is not necessary to issue a
supplemental notice of proposed rulemaking to allow another opportunity
for industry comment. However, it does find appropriate the reopening
of the comment period on Notice No. 96-8 for 30 days to allow for
submission of additional public comments.
Request for Comments
The agency requests further comments on all aspects of the NPRM
proposed in notice 96-8, ``Financial Responsibility Requirements for
Licensed Launch Activities.'' Persons who filed comments previously may
supplement their earlier views or submit replacement comments that will
be added to the docket.
Commenters are requested to be specific and precise in stating
their objections and concerns with respect to particular provisions in
the NPRM.
The agency would like commenters to address the appropriate means
of implementing statutory requirements for allocation of risks among
launch participants. The NPRM reflects the statutory requirement for
reciprocal waivers of claims among launch participants. As part of the
waiver agreement, private party launch participants agree to assume
responsibility for their employee's losses as required by 49 U.S.C.
70112(b). This requirement is explain at 61 FR 39012. The agency
requests comments on the intended meaning and proper implementation of
this requirement, and its relationship to third-party liability
insurance requirements.
The agency requests comments on the appropriate scope of required
third party liability insurance. In the NPRM, AST proposes to define a
``third party'' as ``(a)ny person other than: (A) (t)he United States,
its agencies, and its contractors and subcontractors involved in launch
services for licensed launch activities; (B) (t)he licensee and its
contractors and subcontractors involved in launch services for licensed
launch activities; and (C) (t)he customer and its contractors and
subcontractors involved in launch services for licensed launch
activities.'' In addition, ``Government personnel, as defined in this
section (Sec. 440.3(a)(6)) 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 (Sec. 440.3) are not
third parties.''
AST's proposed definition is explained at 61 FR 39003 and reflects
current agency practice. This definition has broad implications for
liability insurance requirements, implementation of statutory-based
reciprocal waivers of claims and the agreement to be responsible for
employee losses, as well as provisions for Government payment of excess
claims.
The agency would like commenters to address the following
questions. Are employees of the Federal Government and its contractors
and subcontractors (Government personnel) properly classified as third
parties? If not, how should their claims against other launch
participants for damage, injury, or loss be addressed, particularly in
light of the limits on the Government's ability under appropriations
laws to accede to unfunded contingent liability? From an insurance
perspective, what issues or problems does the proposed definition
present in providing liability insurance coverage for third-party
claims? Should employees of all private party launch participants also
be deemed third parties? If so, how would this affect CSLA-required
liability coverage? If these employees are not third parties, how
should their claims be managed? That is, how should the various launch
participants protect themselves financially from claims by other launch
participants' employees?
[[Page 36030]]
Specific Comments on Costs and Benefits
The results of the FAA's analysis of the economic effects of this
rulemaking were summarized in the NPRM at 61 FR 39015. The NPRM states
that over a four-year period there is a reallocation of expected costs
of claims of $20,000 from the U.S. commercial space launch industry
(benefits) to the United States (costs). This reallocation is a
consequence of the Federal Government's payment under the statute of
third-party claims in excess of required insurance, up to $1.5 billion
exposure for liability.
Because this proposed rule would have long-lasting consequences on
commercial launch activities, the agency is reiterating its need for
specific comments on costs and benefits, with sufficient detail to
determine the economic burdens associated with this proposed
rulemaking. Commenters are encouraged to provide information on
additional costs that would be imposed on the commercial launch
industry, including launch services providers, their customers, and the
contractors and subcontractors of both, as a result of the NPRM. This
additional economic information would help the agency to quantify costs
and benefits associated with this rulemaking and to weight
alternatives. For example, the additional cost of obtaining liability
insurance coverage for claims of Government personnel should be readily
ascertainable and may be offered in support of a commenter's view on
the appropriate allocation of that risk.
Views are also requested on alternative means of achieving the same
level of compliance (i.e., benefits), but at a lower cost. To be useful
to the agency, any usable cost or benefits information must identify
(1) all relevant assumptions, and (2) sources of information whenever
possible.
Additional Comment Period
Because the comment period on notice 96-8 has closed, it cannot be
extended, but must be reopened. To allow industry additional time for a
more thorough review of applicable issues and drafting of responsive
comments, the FAA finds that it is in the public interest to reopen the
comment period. Accordingly, the comment period is reopened through
August 4, 1997. Late-filed comments will be considered to the extent
practicable; however, no further extensions of the comment period are
contemplated.
Issued in Washington, DC, on June 20, 1997.
Patricia G. Smith,
Acting Associate Administrator for Commercial Space Transportation,
Federal Aviation Administration.
[FR Doc. 97-17452 Filed 7-2-97; 8:45 am]
BILLING CODE 4910-13-M
