Cross-Waiver of Liability, 10143-10150 [E8-2868]

Agencies

• National Aeronautics and Space Administration

[Federal Register Volume 73, Number 38 (Tuesday, February 26, 2008)]
[Rules and Regulations]
[Pages 10143-10150]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-2868]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

14 CFR Part 1266

[NOTICE: (08-014)]
RIN 2700-AB51


Cross-Waiver of Liability

AGENCY: National Aeronautics and Space Administration.

ACTION: Final rule.

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SUMMARY: The National Aeronautics and Space Administration (NASA) is 
amending its regulations which provide the regulatory basis for cross-
waiver provisions used in the following two categories of NASA 
agreements: agreements for International Space Station (ISS) activities 
pursuant to the ``Agreement Among the Government of Canada, Governments 
of Member States of the European Space Agency, the Government of Japan, 
the Government of the Russian Federation, and the Government of the 
United States of America concerning Cooperation on the Civil 
International Space Station'' (commonly referred to as the ISS 
Intergovernmental Agreement, or IGA); and launch agreements for science 
or space exploration activities unrelated to the ISS.

DATES: Effective Date: These amendments become effective April 28, 
2008.

FOR FURTHER INFORMATION CONTACT: Steven A. Mirmina, Senior Attorney, 
Office of the General Counsel, NASA Headquarters, 300 E Street, SW., 
Washington, DC 20546; telephone: 202/358-2432; e-mail: 
steve.mirmina@nasa.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 23, 2006, NASA published a notice of proposed rulemaking 
(NPRM), Cross-Waiver of Liability, 71 FR (Federal Register) 62061 
(October 23, 2006), which discussed the background of Part 1266 and the 
use of cross-waivers in various NASA agreements. The NPRM also 
explained the considerations underlying NASA's proposed amendments to 
Part 1266, which were: (1) To update and ensure consistency in the use 
of cross-waiver of liability provisions in NASA agreements; and (2) to 
address shifts in areas of NASA mission and program emphases that 
warrant an adjustment of the NASA cross-waiver provisions so that they 
remain current.

II. Description of Final Rule and Discussion of Comments

    In this Final Rule, NASA makes clerical edits to the wording in 
sections 1266.100 (Purpose) and 1266.101 (Scope). In sections 1266.102 
(Cross-waiver of liability for agreements for activities related to the 
International Space Station) and 1266.104 (Cross-waiver of liability 
for launch agreements for science or space exploration activities 
unrelated to the International Space Station), NASA generally makes 
clerical changes, adds a new definition of the term ``transfer 
vehicle,'' defines the term ``Party'' in section 1266.102 and revises 
the term's definition in section 1266.104, clarifies the scope of the 
sixth group of potential claims to which the cross-waiver of liability 
shall not apply, and deletes the specific reference to Expendable and 
Reusable Launch Vehicles (ELVs and RLVs, respectively) from section 
1266.104.
    In response to the NPRM of October 23, 2006, NASA received comments 
from four entities: The Boeing Company (Boeing); Marsh USA, Inc. 
(Marsh); United Space Alliance (USA); and the European Space Agency, 
which subsequently withdrew its comments. In general, the commenters 
supported the proposed amendments, but with several suggested changes. 
The commenters also submitted some general questions about the Rule. In 
an effort to provide additional information on its intentions and 
plans, NASA will address these questions in section M in this document.

A. Deleting Section 14 CFR 1266.103

    In the NPRM, NASA proposed deleting section 1266.103, regarding the 
cross-waiver of liability during Space Shuttle (Shuttle) operations, in 
light of direction from President George W. Bush that the Shuttle be 
retired from service by 2010 and the fact that, with the exception of 
the fifth Hubble Servicing Mission, currently scheduled for August 
2008, current mission plans envision no other Shuttle missions 
unrelated to the ISS. Because the ISS cross-waiver in section 1266.102 
covers Shuttle operations for missions to the ISS, NASA determines that 
there is no longer a need to retain the section of Part 1266 requiring 
a separate cross-waiver of liability to be used during Shuttle 
operations. The commenters urged NASA to retain section 1266.103 for as 
long as Shuttle operations continue and prime contracts and 
subcontracts with cross-waiver and indemnity provisions remain in 
place. The commenters contend that although current mission plans 
envision no other non-ISS missions for the Shuttle, those plans could 
change and therefore it would be premature to delete section 1266.103. 
One commenter noted that the Shuttle program ``may be extended for up 
to an additional five years if the options under the current Space 
Program Operations Contract are fully exercised, with unknown missions 
into the future.'' (Marsh at page 2)
    Having reviewed and considered the points raised by the commenters, 
NASA will proceed with the removal of section 1266.103 for several 
legal and policy reasons. With the exception of the fifth Hubble 
Servicing Mission, NASA has stated that the remaining Shuttle flights 
will be dedicated solely to ISS missions.\1\ Since any NASA agreements

[[Page 10144]]

for Shuttle missions to the ISS would already be covered by section 
1266.102, which governs cross-waivers of liability for agreements for 
activities related to ISS, there is no longer a need to retain section 
103.
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    \1\ See, for example, the Written Statement of Michael D. 
Griffin, Administrator, National Aeronautics and Space 
Administration, Before the Senate Commerce, Science and 
Transportation Committee--Subcommittee on Space, Aeronautics, and 
Related Sciences, November 15, 2007.
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    Indeed, for future missions, retention of section 103 could 
potentially result in less-than-fully reciprocal waivers of liability 
among users involved in Shuttle launch activities (since the scope of 
``Protected Space Operations'' under section 103 is broader than the 
scope of ``Protected Space Operations'' under section 102). Under 
section 103, the cross-waiver encompasses parties to any NASA agreement 
for Shuttle launch services; however, the cross-waiver established by 
the IGA, and implemented by section 102, encompasses only parties to 
agreements for ISS activities. If NASA were to prolong the use of 
cross-waivers under section 103 for non-ISS Shuttle missions, while 
parties to agreements for Shuttle missions to the ISS remain bound by 
cross-waivers under section 102, parties to agreements for the non-ISS 
missions would be waiving claims against ISS participants but, 
conversely, ISS participants would not necessarily be waiving claims 
against them. The potential for less than fully reciprocal waivers has 
existed since the Rule first went into effect in 1991, but has resulted 
in no actual conflicts. This is due primarily to the fact that the 
Shuttle was rapidly transitioned from performing orbital missions on a 
cooperative or reimbursable basis to being dedicated almost exclusively 
to ISS assembly. However, the potential existence of less-than-fully 
reciprocal waivers should not continue. Section 309 of the Space 
Act,\2\ codified at 42 U.S.C. Sec.  2458c, confirms and clarifies the 
authority of the NASA Administrator to conclude reciprocal cross-
waivers in cooperative agreements. To reduce the potential for 
inconsistency among NASA mission agreements containing cross-waiver 
provisions of differing scope, NASA has decided to remove section 103.
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    \2\ The National Aeronautics and Space Act of 1958, as amended, 
42 U.S.C. 2451, et seq.
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    Although NASA has stated that, with the exception of the Hubble 
Servicing Mission, the Shuttle is to be used solely for servicing the 
ISS (and, thus, all NASA agreement cross-waivers for ISS Shuttle 
missions will be based on the provisions of section 102), the question 
remains: what would NASA do if the Agency is subsequently authorized to 
use the Shuttle for an activity unrelated to the ISS? In this 
hypothetical case, the provisions of section 104, which provide the 
regulatory basis for cross-waivers of liability for launch agreements 
for science or space exploration activities unrelated to the ISS, could 
be utilized.
    NASA is mindful of the concerns raised by industry relative to 
maintaining stability in Shuttle contracts. In this regard, for as long 
as Shuttle operations continue and prime contracts and subcontracts 
remain in place, the risk allocation provisions of those contracts, 
like all other provisions of those contracts, will continue to be 
operative. With respect to NASA's implementation of changes to the NASA 
procurement regulations, the Proposed Rule provided that, ``To be made 
fully effective, the cross-waivers required by this Part will 
necessitate concomitant changes to NASA procurement regulations. NASA 
plans to implement these changes as expeditiously as possible after 
this Proposed Rule becomes final.'' In response to the NPRM, NASA was 
asked whether there is a schedule for implementation of the changes to 
the corresponding clauses in the NASA Federal Acquisition Regulation 
(FAR) Supplement (NFS) to reflect the current revisions to 14 CFR 1266. 
NASA plans to alter the NASA procurement regulations, i.e., the NFS, 
soon after this Rule becomes final.

B. Defining the Term ``Party'' in Section 1266.102

    NASA received the comment that the term ``Party'' in section 
1266.102 was not defined and that a definition was necessary to apply 
the cross-waiver requirements to NASA ISS contractors. The comment 
suggested that the term ``Party'' be defined as follows: `` `Party' 
means a person or entity that signs an agreement involving the ISS.''
    NASA agrees that defining the term ``Party'' in section 1266.102 
would add clarity to the Rule. Thus, NASA will define the term 
``Party'' in 1266.102 as follows: ``The term `Party' means a party to a 
NASA agreement involving activities in connection with the ISS.'' The 
definition will be placed in subsection 1266.102(b)(1) in order to make 
parallel the order of definitions in section 1266.102 and in section 
1266.104. The definition of the term ``Partner State,'' which was 
formerly located in 1266.102(b)(1), will be moved to a new subsection 
1266.102(b)(8).

C. Tailoring the Scope of the Cross-waiver

    NASA received the comment that subsections 1266.102(a) and 
1266.104(a) contain a misleading sentence: ``Provided that the waiver 
of claims is reciprocal, the parties may tailor the scope of the cross-
waiver clause in these agreements to address the specific circumstances 
of a particular cooperation.'' The commenter contended that this 
sentence is not clear and could lead to inconsistent waivers in NASA 
agreements.
    NASA understands the concern and will strike the sentence proposed 
in the NPRM. As background, the authority to tailor cross-waiver 
provisions is a feature of certain framework agreements between the 
U.S. and other countries for cooperation in the exploration and use of 
outer space. These international agreements cover a wide range of 
activities, ranging from launching missions into outer space to simple 
terrestrial activities (e.g., exchanges of data). For a simple 
terrestrial data exchange, it is not necessary to utilize a cross-
waiver provision as extensive as what would be needed in an agreement 
to launch a spacecraft and, thus, in the context of a framework 
agreement, the sentence is appropriate. However, for purposes of this 
Rule, which addresses high-risk launches to, and operations in, outer 
space, NASA agrees with the commenters on the need for consistent 
cross-waivers in this specific area.

D. Relocating the Sentence Regarding the Term ``Related Entity''

    NASA received the comment that the following sentence was misplaced 
in subsection 1266.102(b)(2)(iii): ``The term `related entity' may also 
apply to a State, or an agency or institution of a State, having the 
same relationship to a Partner State as described in paragraphs 
(b)(2)(i) through (b)(2)(iii) of this section or otherwise engaged in 
the implementation of Protected Space Operations as defined in 
paragraph (b)(3)(iv) of this section.'' The comment pointed out that 
the sentence may have been erroneously inserted into subparagraph 
(b)(2)(iii) before the final sentence of that subparagraph ``* * * The 
term `contractors' and `subcontractors' include suppliers of any 
kind.'' The comment suggested that it should follow subparagraph (iii) 
as a separate statement or subparagraph. NASA agrees with the comment 
and has revised the Rule as suggested. The sentence defining 
contractors and subcontractors to include suppliers serves as a general 
clarification of the term ``related entity'' and should stand alone, 
thus, applying to all three subsections, rather than being included as 
part of one of the subsections as formerly drafted. NASA will also make 
a corresponding change in subsection 1266.104(b)(2).

[[Page 10145]]

E. Clarifying ``This Agreement'' Versus ``the Agreement''

    NASA received the comment that the use of the term ``this 
Agreement'' was confusing in subsection 1206.102(c)(4)(ii) in the 
parenthetical language to the second exception of the cross-waiver, 
i.e., ``Claims made by a natural person, his/her estate, survivors or 
subrogees (except when a subrogee is a Party to this Agreement or is 
otherwise bound by the terms of this cross-waiver)* * *'' (italics 
added) The term ``this Agreement'' appears in a related context in 
subsection 1206.104(c)(4)(ii). The comment queried whether the word 
``Agreement'' should be capitalized and whether it should be a defined 
term.
    NASA understands the source of this confusion and will correct both 
sections to read ``the agreement'' rather than ``this Agreement,'' as 
recommended by the comment. It may be useful in this context to recall 
a principal purpose of this Rule. Rather than prescribing standard text 
to be inserted automatically into a NASA agreement, the regulation 
instead provides the regulatory basis for cross-waiver clauses to be 
incorporated into NASA agreements either related to the ISS (section 
102) or for launch agreements involving science or space exploration 
activities unrelated to the ISS (section 104). As such, when a specific 
cross-waiver is incorporated into a NASA agreement, several conforming 
changes will need to be made to the text as it appears in this Rule. 
For one, references in the Rule to ``the agreement'' (referring to a 
NASA agreement in which a cross-waiver provision will be inserted) will 
need to be changed to ``this Agreement'' in the text of the agreement 
itself. It seems unnecessary to define the term ``the agreement,'' 
because it should be evident that the agreement being referred to is 
the Space Act agreement containing the cross-waiver. In this context, 
it may also be useful to clarify that the agreements to which this Rule 
applies are agreements concluded pursuant to NASA's authority under 
sections 203(c)(5) and (c)(6) of the Space Act. These agreements do not 
include procurement contracts governed by the Federal Acquisition 
Regulations System, 48 CFR Part 1 et seq.

F. Defining the Terms ``ELV'' and ``RLV''

    Another comment NASA received recommended that the definition of 
``launch vehicle'' found in 1266.104(b)(4) be amended to specifically 
include ELVs and RLVs. After further consideration, NASA has determined 
that the proposed change is unnecessary. The term ``launch vehicle'' is 
defined as ``an object or any part thereof intended for launch, 
launched from Earth, or returning to Earth which carries payloads or 
persons or both.'' ELVs and RLVs are already included in this 
definition. A fundamental premise of NASA cross-waivers of liability is 
that they are to be broadly construed to achieve the desired objectives 
of furthering space exploration, use, and investment. One way to 
further this goal is to avoid unnecessary, narrow delineations in 
terminology. For example, the term ``Expendable Launch Vehicles'' 
should encompass Evolved Expendable Launch Vehicles (EELV). An EELV is 
one type of ELV. Similarly, ELVs and RLVs, for that matter, are types 
of launch vehicles. Thus, there appears to be no compelling reason why 
ELVs and RLVs should be separately defined.
    Indeed, the comment prompted reexamination of the title to section 
1226.104 which, at the Proposed Rule stage, was ``Cross-waiver of 
liability for science and space exploration agreements for missions 
launched by Expendable Launch Vehicles or Reusable Launch Vehicles.'' 
In order to streamline the Rule and avoid unnecessary, narrow 
delineations in terminology, NASA has decided to delete the reference 
in section 1266.104 to whether vehicles launching science or space 
exploration missions are expendable or reusable. Two factors led to 
this conclusion: (1) NASA would utilize the same cross-waiver for 
science or space exploration missions unrelated to the ISS, 
irrespective of the type of vehicle selected to launch the mission into 
orbit; and (2) NASA has no current plans to develop a fully reusable 
launch vehicle. Although the Shuttle has both expendable and reusable 
components, technically the vehicle is neither an Expendable nor a 
fully Reusable Launch Vehicle. Vehicles being developed in the 
Constellation program will utilize a mix of reusable and expendable 
components. Thus, the title of section 1266.104 has been changed to 
``Cross-waiver of liability for launch agreements for science or space 
exploration activities unrelated to the International Space Station.'' 
This formulation closely parallels the title to section 1266.102 
``Cross-waiver of liability for agreements for activities related to 
the International Space Station.'' Deletion of the reference to the 
specific type of vehicle used to launch a science or space exploration 
mission into orbit necessitates a corresponding change to the 
definition of ``Party'' in section 104, as is explained in section G.

G. Revising the Term ``Party'' in Section 1266.104

    As mentioned in the previous section, NASA will alter the 
definition of the term ``Party'' to reflect the deletion of the 
reference to ELVs and RLVs from section 104 and clarify the Rule's 
application. Thus, NASA will revise the definition proposed in the NPRM 
as follows: ``The term `Party' means a party to a NASA agreement for 
science or space exploration activities unrelated to the ISS that 
involve a launch.''
    Secondly, in response to the NPRM, NASA received a comment which 
suggested that the definition of the term ``Party'' in section 1266.104 
be revised from ``a party to a NASA agreement* * *'' to read ``person 
or entity.'' While the rationale for the comment is not entirely clear, 
it appears that the comment may be confusing the term ``Party'' with 
subsequent references to ``persons'' or ``entities'' referenced later 
in the Rule, i.e., in the terms of the actual cross-waiver found in 
subsection (c)(1) ``This cross-waiver shall apply only if the person, 
entity, or property causing the damage is involved in Protected Space 
Operations and the person, entity, or property damaged is damaged by 
virtue of its involvement in Protected Space Operations'' (emphasis 
added). The terms are distinct. A ``Party'' is a defined term--a party 
to a NASA agreement. However, entities other than parties to NASA 
agreements could potentially be injured by a particular activity. For 
this reason, the cross-waiver is carefully constructed to identify 
those within its scope. The terms ``persons'' or ``entities'' are 
descriptive and generic; they refer to persons (real or juridical) who 
may be involved in or brought into Protected Space Operations by virtue 
of their activities.

H. Clarifying the Duration of ``Protected Space Operations''

    NASA received the identical comment from Boeing, Marsh, and USA 
that, in subsection 1266.104(b)(6), NASA should not proceed with 
removal of the following sentence: ``Protected Space Operations begins 
at the signature of the agreement and ends when all activities done in 
implementation of the agreement are completed.'' All three commenters 
asserted that this change should be rejected, because ``[t]his 
restricts the scope of cross-waivers for the protection of NASA ELV or 
RLV contractors and sub-contractors.'' (See USA comments at page 5, 
Marsh comments at page 4, and Boeing comments at page 2.)

[[Page 10146]]

    NASA accepts these suggestions and will retain the sentence in the 
Final Rule. The proposed deletion had been grounded in recognition 
that, as a general matter, the cross-waiver in any NASA agreement 
becomes effective, like all terms of any agreement unless otherwise 
specified, at the time the agreement itself becomes effective and ends 
upon termination or expiration of the agreement. However, the sentence 
is useful in clarifying that the obligations of the agreement's cross-
waiver will survive expiration or termination of the agreement itself, 
since Protected Space Operations does not end until all activities done 
in implementation of the agreement are completed. Although NASA 
agreements typically include a ``Continuing Obligations'' clause 
recognizing that certain obligations of the parties, including those 
related to liability and risk of loss, shall continue to apply after 
expiration or termination of the agreement, it is useful to retain this 
express acknowledgement in the text of the waiver itself.

I. Defining the Term ``Transfer Vehicle''

    In subsection 1266.104(b)(6)(i), ``Protected Space Operations'' is 
defined to include: ``Research, design, development, test, manufacture, 
assembly, integration, operation, or use of launch or transfer 
vehicles, payloads, or instruments, as well as related support 
equipment and facilities and services.'' (Emphasis supplied.) One 
comment recommended that the term ``transfer vehicle'' required 
definition. The comment contended that a clarification would enhance 
understanding of the Rule and its applicability to other vehicles being 
developed under the Constellation program and otherwise. In the current 
definition section, the term ``launch vehicle'' (defined as ``an object 
or any part thereof intended for launch, launched from Earth, or 
returning to Earth which carries payloads or persons, or both'') 
addresses vehicles that operate between the Earth and space, but does 
not address vehicles intended to operate solely in outer space.
    NASA agrees that defining the term ``transfer vehicle'' would add 
clarity to the Rule. Moreover, as a logical corollary of defining 
transfer vehicles, NASA has decided to clarify the Rule's application 
to landers. NASA's planned successor to the Shuttle, the Orion 
spacecraft, would feature, for its lunar landing missions, a Lunar 
Surface Access Module (LSAM). In NASA's view, when the LSAM or any 
transfer vehicle is launched, it would be a payload and, thus, within 
the existing definition of Protected Space Operations. The term 
``payload'' is broadly defined to include ``all property to be flown or 
used on or in a launch vehicle.'' However, when a lander or transfer 
vehicle becomes operational, it could no longer be considered a 
``payload'' but, rather, a space vehicle.
    NASA will insert the following new definition of ``transfer 
vehicle'' in subsection 1266.104(b)(9): ``The term `transfer vehicle' 
means any vehicle that operates in space and transfers payloads or 
persons or both between two different space objects, between two 
different locations on the same space object, or between a space object 
and the surface of a celestial body. A transfer vehicle also includes a 
vehicle that departs from and returns to the same location on a space 
object.'' Pursuant to this definition, a ``transfer vehicle'' would 
include a lander that had become operational, since landers operate 
between a space object and the surface of a celestial body. Before it 
becomes operational, the lander would be considered a payload. For 
purposes of this Rule, it is not necessary to define the precise point 
when the LSAM becomes operational, because it would be within Protected 
Space Operations at launch as a payload and then, subsequently, as a 
transfer vehicle. In either case, it would fall within the definition 
of Protected Space Operations.
    Since NASA does intend that this Rule apply to current and future 
NASA mission agreements, including vehicles still to be developed under 
the Constellation program, the definition of Protected Space Operations 
will be amended to include a reference to transfer vehicles, since 
operational transfer vehicles would be neither launch vehicles nor 
payloads. Thus, the Final Rule makes minor changes to the definition of 
``Protected Space Operations'' in both subsections 1266.102(b)(6) and 
1266.104(b)(6) for accuracy and consistency.
    For subsection 1266.102(b)(6), the definition of ``Protected Space 
Operations'' will be changed from ``* * * all launch vehicle 
activities, ISS activities, and payload activities on Earth, in outer 
space, or in transit between Earth and outer space in implementation of 
the IGA * * *'' to ``all launch or transfer vehicle activities, ISS 
activities, and payload activities on Earth, in outer space, or in 
transit between Earth and outer space in implementation of the IGA * * 
*'' with the addition of the words ``or transfer'' between the words 
``launch'' and ``vehicle.'' As the term ``transfer vehicle'' has been 
used but not defined in section 1266.102, NASA will create a new 
subsection 1266.102(b)(7) adding the above definition of ``transfer 
vehicle'' to the ISS section of this Rule.
    For subsection 1266.104(b)(6), the definition of ``Protected Space 
Operations'' will be changed from: ``* * * all ELV or RLV activities 
and payload activities on Earth, in outer space, or in transit between 
Earth and outer space in implementation of an agreement for launch 
services * * *'' to ``* * * all launch or transfer vehicle activities 
and payload activities on Earth, in outer space, or in transit between 
Earth and outer space in implementation of an agreement for launch 
services * * * .''

J. Capitalizing the Word ``Agreement'' in Subsection 1266.104(b)(6)(ii)

    NASA received the comment that the word ``Agreement'' in subsection 
1266.104(b)(6)(ii) should not be capitalized. NASA agrees with the 
comment and will remove the initial capital letter in the following 
sentence: ``The term `Protected Space Operations' excludes activities 
on Earth that are conducted on return from space to develop further a 
payload's product or process for use other than for activities within 
the scope of an Agreement for launch services.'' The term ``Agreement'' 
in that sentence will be changed to lowercase--this provision parallels 
the definition of the term ``Protected Space Operations'' of section 
1266.102 in regard to ISS products or processes. Removal of the 
capitalization of the word ``Agreement'' is also elaborated above, in 
section E, and the reader is referred to that section for further 
discussion.

K. Rewording the Sixth Exception to the Cross-waiver

    In NASA's experience, the wording of the sixth exception to the 
cross-waiver has occasionally raised questions on the part of NASA's 
agreement partners and contractors regarding the purpose and scope of 
the exception. Subsections 1266.102(c)(4)(vi) and 1266.104(c)(4)(vi) 
had each provided that, notwith-standing the other provisions of the 
section, the cross-waiver of liability shall not be applicable to 
``Claims by or against a Party arising out of or relating to the other 
Party's failure to meet its contractual obligations set forth in the 
Agreement.''
    The Final Rule seeks to clarify the exception. The purpose of the 
exception is to avoid any interpretation that the cross-waiver would be 
a defense to a claim arising from a party's failure to perform any 
obligation set forth in an agreement. The waiver cannot be used by a 
party as a means of shielding itself

[[Page 10147]]

from claims for nonperformance. To clarify this point, NASA will 
replace the current formulation found in the sixth exception to the 
cross-waiver with the following: ``(vi) Claims by a Party arising out 
of or relating to another Party's failure to perform its obligations 
under the agreement.''

L. Clarifying the Scope of the Cross-waiver in Section 1266.104(c)(1)

    In reviewing the NPRM, NASA noticed a minor omission in the wording 
of the cross-waiver in 1266.104(c)(1) that occurred during the editing/
publication process. The words ``whatever the legal basis for such 
claims'' were inadvertently omitted from the first part of the 
sentence. Thus, they will be returned to the text to ensure that the 
waiver in 1266.104(c)(1) closely parallels the ISS waiver in 
1266.102(c)(1). Thus, that part of the sentence in its entirety will 
read: ``The cross-waiver shall apply to any claims fordamage, whatever 
the legal basis for such claims, against: * * *.'' This change is a 
clarification and not a substantive change. The sentence previously 
stated that ``the cross-waiver shall apply to any claims for damage 
against: * * *.'' The modification underscores that the words ``any 
claims for damage'' mean any claims, whatever their legal basis.

M. Responding to General Questions Received

    Although NASA has no obligation to respond to questions received in 
response to the NPRM, NASA appreciates the opportunity to answer the 
questions that were submitted and provide additional explanation 
regarding certain aspects of the Rule.
1. Will NASA extend this Rule to neighboring launch vehicle or launch 
site operators?
    NASA received the following question: Since NASA is expanding the 
scope of the cross-waiver in section 104 to address comanifested 
payloads on the same vehicle, ``* * * why not extend the cross-waivers 
to all NASA contractors/subcontractors involved in ELV or RLV 
activities on the same launch site?'' (USA comments at page 2)
    As background, launch operators of different launches often work in 
close proximity at a single launch site. For example, when launch 
operator A launches from one launch pad, launch operator B may be 
within the impact limit lines or a hazard area created by the launch. 
Nonetheless, for security or mission assurance reasons, launch operator 
B may wish to keep some of its personnel working at the second launch 
pad, even during the launch of launch operator A's launch vehicle.
    The Federal Aviation Administration (FAA) has studied thoroughly 
the issue of neighboring launch operators. In the above example, the 
FAA considers that the launch operators are engaged in activities in 
support of separate launches. Furthermore, the launch operators share 
no privity of contract for the launch that is about to take place. 
``For these reasons, the FAA treats them as `the public' with respect 
to each other.'' \3\ In the regulations which govern licensing and 
safety requirements for operation of a launch site (14 CFR 420.5), the 
FAA defines the ``public'' as ``people and property that are not 
involved in supporting a licensed launch, and includes those people and 
property that may be located within the boundary of a launch site, * * 
* and any other launch operator and its personnel.'' To ensure 
consistency, NASA will utilize the same approach, particularly in light 
of the possibility that an FAA-licensed commercial launch and a NASA 
program launch could occur at the same site. Thus, absent any 
contractual relationship between the launch operators for the separate 
launch activities at issue (and, thus, absent any effective cross-
waiver), NASA will consider neighboring launch operators to be members 
of the public with respect to each other. As a result, any claims by or 
against them would be outside the scope of the cross-waiver.
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    \3\ See Department of Transportation, Federal Aviation 
Administration, Licensing and Safety Requirements for Launch, 
Supplemental Notice of Proposed Rulemaking, Federal Register: July 
30, 2002 (Volume 67, Number 146) at page 49475.
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2. Are individual employees waiving their claims?
    In both subsections 1266.102(c)(1)(iv) and 1266.104(c)(1)(iv), the 
Rule provides that the cross-waiver shall apply to any claims for 
damage, whatever the legal basis for such claims, against ``* * * the 
employees of any of the entities identified in paragraphs (c)(1)(i) 
through (c)(1)(iii) of this section.'' NASA received the following 
questions: ``Does this language mean that employees of an entity (or 
their survivors) cannot sue another Party? Doesn't this say that, by 
virtue of employment, the employee waives rights that it otherwise 
would have?'' (USA comments at page 3)
    The answer to both questions is ``no.'' The quoted language in no 
way affects the rights of any employee (or the employee's survivors) to 
present a claim for damage. By its terms, the language states that it 
is limited to claims against employees of the entities listed in 
subsections (c)(1)(i) through (c)(1)(iii) (emphasis added). Claims of 
or by an individual are not extinguished. In fact, claims of an 
individual are specifically excluded from the cross-waiver's scope by 
virtue of subsection (c)(4)(ii), which provides: This cross-waiver 
shall not be applicable to ``* * * claims made by a natural person, 
his/her estate, survivors or subrogees * * * '' Thus, no individual 
employee's claims are barred under the Rule's language. This was the 
case under the original Rule published in 1991, and it remains so.
3. Will this Rule apply to the COTS program?
    NASA was asked whether the cross-waiver will apply to NASA's 
Commercial Orbital Transportation Services (COTS) program. Announced on 
January 18, 2006, COTS is a NASA program that provides financial and 
other assistance to selected commercial launch companies with the goal 
of fostering a competitive market for resupplying the International 
Space Station.
    First, NASA's cross-waiver Rule states explicitly that the cross-
waiver will not be applicable when 49 U.S.C. Subtitle IX, Chapter 701 
is applicable. See subsections 1266.102(c)(6) and 1266.104(c)(6). 49 
U.S.C. Subtitle IX, Chapter 701 is popularly referred to as the 
Commercial Space Launch Act.
    Second, on August 18, 2006, NASA's Exploration Systems Mission 
Directorate announced that Space Exploration Technologies (SpaceX) and 
Rocketplane Kistler (RpK) were each winners for Phase I of the COTS 
program. NASA executed a funded agreement under the Space Act with each 
of the companies. For launch and re-entry, the agreements recognize 
that the cross-waiver and insurance requirements of the FAA license and 
permit process will govern the allocation of risks and liability of the 
U.S. Government, including NASA. However, both agreements also require 
the COTS participant to demonstrate rendezvous, proximity operations, 
docking or berthing, or other activities that are related to, or which 
could affect, the ISS. Thus, to the extent that the FAA licenses or 
permits do not apply to activities under the agreements, such as during 
on-orbit activities, and to the extent that such activities are related 
to the ISS, the provisions of this Rule regarding NASA's cross-waiver 
for ISS activities will apply. At such time as it becomes possible for 
NASA to acquire from a commercial provider the delivery to and return 
of crew and cargo from the ISS, NASA would contract for such

[[Page 10148]]

services consistent with applicable procurement regulations, including 
the cross-waiver requirements of the NASA FAR Supplement (NFS), as 
discussed above in section A.
4. Does the term ``related entity'' include related legal entities of a 
contractor or subcontractor?
    NASA received a question from USA regarding the scope of the term 
``related entity.'' In subsections 1266.102(b)(2) and 1266.104(b)(2), 
given that the term ``related entity'' includes a contractor or 
subcontractor at any tier, the submitter asked, ``Does the reference to 
a `contractor or subcontractor' include the related legal entities of 
the contractor or subcontractor? For example, is a subsidiary able to 
sue another `party' since such entity is not the `entity' that actually 
has a contract that would incorporate the cross-waiver?'' (USA comments 
at page 2)
    Absent additional facts, under NASA's original cross-waiver 
regulation from 1991, there is nothing to indicate that an entity's 
parent or subsidiary would fall within the scope of the term ``related 
entity.'' The term ``related entity'' is defined under sections 102 and 
104 of the Rule as, ``a contractor or subcontractor of a Party at any 
tier; a user or customer of a Party at any tier; or a contractor or 
subcontractor of a user or customer of a Party at any tier.''
    However, the structure of the space launch industry has undergone 
significant change since the Rule was first published in 1991. Many 
contractors in the space business are utilizing alternative forms of 
business relationships. For example, USA is NASA's prime contractor for 
Shuttle and ISS operations. Established in 1996 as a limited liability 
company (LLC), USA is owned by The Boeing Company and Lockheed Martin 
Corporation in equal share. USA's primary business is operating and 
processing NASA's Shuttle fleet and the ISS at the Johnson and Kennedy 
Space Centers. This work is currently defined by the Space Program 
Operations Contract between NASA and USA. The contract runs from 
October 1, 2006, through September 30, 2010, which is the currently 
scheduled termination date for Shuttle operations. The contract 
includes five, one-year options that could extend the contract through 
Fiscal Year 2015--options intended for ISS operations and Shuttle close 
out activities. A second example of the changing nature of the space 
launch business can be seen in United Launch Alliance (ULA), which is a 
joint venture between Boeing and Lockheed Martin. ULA operates space 
launch systems for U.S. Government customers using the Atlas V, Delta 
II, and Delta IV launch vehicles.
    Considering this evolving launch industry structure, there are 
foreseeable circumstances in which a party's parent or subsidiary may 
be considered a ``related entity.'' For example, where a parent or 
subsidiary corporation has loaned equipment to a NASA contractor or 
subcontractor and the equipment is subsequently damaged as a result of 
activities under a NASA agreement, there may well be a contractual 
arrangement between the companies under which the equipment transfer 
occurred. If no actual contract exists, such a loan of equipment 
alternatively could be construed as a bailment. In either circumstance, 
the parent or subsidiary could be considered a lower-tier NASA 
contractor or subcontractor and, thus, within the current definition of 
``related entity.'' Under such circumstances, assuming that the 
entities causing and sustaining the damage were thereby engaged in 
activities within the scope of ``Protected Space Operations,'' a claim 
of the parent or subsidiary would be waived.
    In essence, USA's question relates to the circumstances in which a 
party involved in activities pursuant to a NASA agreement should extend 
the cross-waiver to parents, subsidiaries, and other related legal 
entities. The answer to the question is found in the terms of the 
cross-waiver clause. While section (c)(1) of the clause contains the 
terms of the waiver, section (c)(2) of the clause obligates the party 
agreeing to the terms of section (c)(1) to extend those terms to the 
party's related entities. Whether a party is obliged to extend the 
cross-waiver to parents or subsidiaries will always depend on the 
specific facts of the cooperation. A related entity may be a parent, 
subsidiary, shareholder, partner, joint venture participant, or the 
like, if that entity is involved in Protected Space Operations under a 
NASA agreement. What makes a parent or subsidiary company a related 
entity is not its legal or corporate affiliation with a party, but 
rather its actions in becoming involved in Protected Space Operations 
under a NASA agreement. If a parent or subsidiary is not involved in 
Protected Space Operations, then there is no obligation for a party to 
extend (or ``flow down'') the cross-waiver to them. In such a 
circumstance, if a parent or subsidiary were not involved in Protected 
Space Operations and yet were to suffer damage as a true third party, 
then its claims for damage would not be barred by the cross-waiver.

List of Subjects in 14 CFR Part 1266

    Space transportation and exploration.

III. The Amendment

0
In consideration of the foregoing, the National Aeronautics and Space 
Administration revises Part 1266 of Title 14, Code of Federal 
Regulations, to read as follows:

PART 1266--CROSS-WAIVER OF LIABILITY

Sec.
1266.100 Purpose.
1266.101 Scope.
1266.102 Cross-waiver of liability for agreements for activities 
related to the International Space Station.
1266.103 [Reserved]
1266.104 Cross-waiver of liability for launch agreements for science 
or space exploration activities unrelated to the International Space 
Station.

    Authority: 42 U.S.C. 2458c and 42 U.S.C. 2473 (c)(1), (c)(5) and 
(c)(6).


Sec.  1266.100  Purpose.

    The purpose of this Part is to ensure that consistent cross-waivers 
of liability are included in NASA agreements for activities related to 
the ISS and for NASA's science or space exploration activities 
unrelated to the ISS that involve a launch.


Sec.  1266.101  Scope.

    The provisions at Sec.  1266.102 are intended to implement the 
cross-waiver requirement in Article 16 of the intergovernmental 
agreement entitled, ``Agreement Among the Government of Canada, 
Governments of Member States of the European Space Agency, the 
Government of Japan, the Government of the Russian Federation, and the 
Government of the United States of America concerning Cooperation on 
the Civil International Space Station (IGA).'' Article 16 establishes a 
cross-waiver of liability for use by the Partner States and their 
related entities and requires that this reciprocal waiver of claims be 
extended to contractually or otherwise-related entities of NASA by 
requiring those entities to make similar waivers of liability. Thus, 
NASA is required to include IGA-based cross-waivers in agreements for 
ISS activities that fall within the scope of ``Protected Space 
Operations,'' as defined in Sec.  1266.102. The provisions of Sec.  
1266.102 provide the regulatory basis for cross-waiver clauses to be 
incorporated into NASA agreements for activities that implement the IGA 
and the memoranda of understanding between the United States and its 
respective international partners. The provisions of Sec.  1266.104 
provide the regulatory basis for cross-waiver clauses to be 
incorporated into NASA launch agreements for science or

[[Page 10149]]

space exploration activities unrelated to the ISS.


Sec.  1266.102  Cross-waiver of liability for agreements for activities 
related to the International Space Station.

    (a) The objective of this section is to implement NASA's 
responsibility to flow down the cross-waiver of liability in Article 16 
of the IGA to its related entities in the interest of encouraging 
participation in the exploration, exploitation, and use of outer space 
through the International Space Station (ISS). The IGA declares the 
Partner States' intention that the cross-waiver of liability be broadly 
construed to achieve this objective.
    (b) For the purposes of this section:
    (1) The term ``Party'' means a party to a NASA agreement involving 
activities in connection with the ISS.
    (2)(i) The term ``related entity'' means:
    (A) A contractor or subcontractor of a Party or a Partner State at 
any tier;
    (B) A user or customer of a Party or a Partner State at any tier; 
or
    (C) A contractor or subcontractor of a user or customer of a Party 
or a Partner State at any tier.
    (ii) The terms ``contractor'' and ``subcontractor'' include 
suppliers of any kind.
    (iii) The term ``related entity'' may also apply to a State, or an 
agency or institution of a State, having the same relationship to a 
Partner State as described in paragraphs (b)(2)(i)(A) through 
(b)(2)(i)(C) of this section or otherwise engaged in the implementation 
of Protected Space Operations as defined in paragraph (b)(6) of this 
section.
    (3) The term ``damage'' means:
    (i) Bodily injury to, or other impairment of health of, or death 
of, any person;
    (ii) Damage to, loss of, or loss of use of any property;
    (iii) Loss of revenue or profits; or
    (iv) Other direct, indirect, or consequential damage.
    (4) The term ``launch vehicle'' means an object, or any part 
thereof, intended for launch, launched from Earth, or returning to 
Earth which carries payloads or persons, or both.
    (5) The term ``payload'' means all property to be flown or used on 
or in a launch vehicle or the ISS.
    (6) The term ``Protected Space Operations'' means all launch or 
transfer vehicle activities, ISS activities, and payload activities on 
Earth, in outer space, or in transit between Earth and outer space in 
implementation of the IGA, MOUs concluded pursuant to the IGA, and 
implementing arrangements. It includes, but is not limited to:
    (i) Research, design, development, test, manufacture, assembly, 
integration, operation, or use of launch or transfer vehicles, the ISS, 
payloads, or instruments, as well as related support equipment and 
facilities and services; and
    (ii) All activities related to ground support, test, training, 
simulation, or guidance and control equipment and related facilities or 
services. ``Protected Space Operations'' also includes all activities 
related to evolution of the ISS, as provided for in Article 14 of the 
IGA. ``Protected Space Operations'' excludes activities on Earth which 
are conducted on return from the ISS to develop further a payload's 
product or process for use other than for ISS-related activities in 
implementation of the IGA.
    (7) The term ``transfer vehicle'' means any vehicle that operates 
in space and transfers payloads or persons or both between two 
different space objects, between two different locations on the same 
space object, or between a space object and the surface of a celestial 
body. A transfer vehicle also includes a vehicle that departs from and 
returns to the same location on a space object.
    (8) The term ``Partner State'' includes each Contracting Party for 
which the IGA has entered into force, pursuant to Article 25 of the IGA 
or pursuant to any successor agreement. A Partner State includes its 
Cooperating Agency. It also includes any entity specified in the 
Memorandum of Understanding (MOU) between NASA and the Government of 
Japan to assist the Government of Japan's Cooperating Agency in the 
implementation of that MOU.
    (c)(1) Cross-waiver of liability: Each Party agrees to a cross-
waiver of liability pursuant to which each Party waives all claims 
against any of the entities or persons listed in paragraphs (c)(1)(i) 
through (c)(1)(iv) of this section based on damage arising out of 
Protected Space Operations. This cross-waiver shall apply only if the 
person, entity, or property causing the damage is involved in Protected 
Space Operations and the person, entity, or property damaged is damaged 
by virtue of its involvement in Protected Space Operations. The cross-
waiver shall apply to any claims for damage, whatever the legal basis 
for such claims, against:
    (i) Another Party;
    (ii) A Partner State other than the United States of America;
    (iii) A related entity of any entity identified in paragraph 
(c)(1)(i) or (c)(1)(ii) of this section; or
    (iv) The employees of any of the entities identified in paragraphs 
(c)(1)(i) through (c)(1)(iii) of this section.
    (2) In addition, each Party shall, by contract or otherwise, extend 
the cross-waiver of liability, as set forth in paragraph (c)(1) of this 
section, to its related entities by requiring them, by contract or 
otherwise, to:
    (i) Waive all claims against the entities or persons identified in 
paragraphs (c)(1)(i) through (c)(1)(iv) of this section; and
    (ii) Require that their related entities waive all claims against 
the entities or persons identified in paragraphs (c)(1)(i) through 
(c)(1)(iv) of this section.
    (3) For avoidance of doubt, this cross-waiver of liability includes 
a cross-waiver of claims arising from the Convention on International 
Liability for Damage Caused by Space Objects, which entered into force 
on September 1, 1972, where the person, entity, or property causing the 
damage is involved in Protected Space Operations and the person, 
entity, or property damaged is damaged by virtue of its involvement in 
Protected Space Operations.
    (4) Notwithstanding the other provisions of this section, this 
cross-waiver of liability shall not be applicable to:
    (i) Claims between a Party and its own related entity or between 
its own related entities;
    (ii) Claims made by a natural person, his/her estate, survivors or 
subrogees (except when a subrogee is a Party to the agreement or is 
otherwise bound by the terms of this cross-waiver) for bodily injury 
to, or other impairment of health of, or death of, such person;
    (iii) Claims for damage caused by willful misconduct;
    (iv) Intellectual property claims;
    (v) Claims for damage resulting from a failure of a Party to extend 
the cross-waiver of liability to its related entities, pursuant to 
paragraph (c)(2) of this section; or
    (vi) Claims by a Party arising out of or relating to another 
Party's failure to perform its obligations under the agreement.
    (5) Nothing in this section shall be construed to create the basis 
for a claim or suit where none would otherwise exist.
    (6) This cross-waiver shall not be applicable when 49 U.S.C. 
Subtitle IX, Chapter. 701 is applicable.


Sec.  1266.103  [Reserved].


Sec.  1266.104  Cross-waiver of liability for launch agreements for 
science or space exploration activities unrelated to the International 
Space Station.

    (a) The purpose of this section is to implement a cross-waiver of 
liability between the parties to agreements for NASA's science or space 
exploration

[[Page 10150]]

activities that are not related to the International Space Station 
(ISS) but involve a launch. It is intended that the cross-waiver of 
liability be broadly construed to achieve this objective.
    (b) For purposes of this section:
    (1) The term ``Party'' means a party to a NASA agreement for 
science or space exploration activities unrelated to the ISS that 
involve a launch.
    (2) (i) The term ``related entity'' means:
    (A) A contractor or subcontractor of a Party at any tier;
    (B) A user or customer of a Party at any tier; or
    (C) A contractor or subcontractor of a user or customer of a Party 
at any tier.
    (ii) The terms ``contractor'' and ``subcontractor'' include 
suppliers of any kind.
    (iii) The term ``related entity'' may also apply to a State or an 
agency or institution of a State, having the same relationship to a 
Party as described in paragraphs (b)(2)(i)(A) through (b)(2)(i)(C) of 
this section, or otherwise engaged in the implementation of Protected 
Space Operations as defined in paragraph (b)(6) of this section.
    (3) The term ``damage'' means:
    (i) Bodily injury to, or other impairment of health of, or death 
of, any person;
    (ii) Damage to, loss of, or loss of use of any property;
    (iii) Loss of revenue or profits; or
    (iv) Other direct, indirect, or consequential damage.
    (4) The term ``launch vehicle'' means an object, or any part 
thereof, intended for launch, launched from Earth, or returning to 
Earth which carries payloads or persons, or both.
    (5) The term ``payload'' means all property to be flown or used on 
or in a launch vehicle.
    (6) The term ``Protected Space Operations'' means all launch or 
transfer vehicle activities and payload activities on Earth, in outer 
space, or in transit between Earth and outer space in implementation of 
an agreement for launch services. Protected Space Operations begins at 
the signature of the agreement and ends when all activities done in 
implementation of the agreement are completed. It includes, but is not 
limited to:
    (i) Research, design, development, test, manufacture, assembly, 
integration, operation, or use of launch or transfer vehicles, 
payloads, or instruments, as well as related support equipment and 
facilities and services; and
    (ii) All activities related to ground support, test, training, 
simulation, or guidance and control equipment and related facilities or 
services. The term ``Protected Space Operations'' excludes activities 
on Earth that are conducted on return from space to develop further a 
payload's product or process for use other than for the activities 
within the scope of an agreement for launch services.
    (7) The term ``transfer vehicle'' means any vehicle that operates 
in space and transfers payloads or persons or both between two 
different space objects, between two different locations on the same 
space object, or between a space object and the surface of a celestial 
body. A transfer vehicle also includes a vehicle that departs from and 
returns to the same location on a space object.
    (c)(1) Cross-waiver of liability: Each Party agrees to a cross-
waiver of liability pursuant to which each Party waives all claims 
against any of the entities or persons listed in paragraphs (c)(1)(i) 
through (c)(1)(iv) of this section based on damage arising out of 
Protected Space Operations. This cross-waiver shall apply only if the 
person, entity, or property causing the damage is involved in Protected 
Space Operations and the person, entity, or property damaged is damaged 
by virtue of its involvement in Protected Space Operations. The cross-
waiver shall apply to any claims for damage, whatever the legal basis 
for such claims, against:
    (i) Another Party;
    (ii) A party to another NASA agreement that includes flight on the 
same launch vehicle;
    (iii) A related entity of any entity identified in paragraphs 
(c)(1)(i) or (c)(1)(ii) of this section; or
    (iv) The employees of any of the entities identified in paragraphs 
(c)(1)(i) through (c)(1)(iii) of this section.
    (2) In addition, each Party shall extend the cross-waiver of 
liability, as set forth in paragraph (c)(1) of this section, to its own 
related entities by requiring them, by contract or otherwise, to:
    (i) Waive all claims against the entities or persons identified in 
paragraphs (c)(1)(i) through (c)(1)(iv) of this section; and
    (ii) Require that their related entities waive all claims against 
the entities or persons identified in paragraphs (c)(1)(i) through 
(c)(1)(iv) of this section.
    (3) For avoidance of doubt, this cross-waiver of liability includes 
a cross-waiver of claims arising from the Convention on International 
Liability for Damage Caused by Space Objects, which entered into force 
on September 1, 1972, where the person, entity, or property causing the 
damage is involved in Protected Space Operations and the person, 
entity, or property damaged is damaged by virtue of its involvement in 
Protected Space Operations.
    (4) Notwithstanding the other provisions of this section, this 
cross-waiver of liability shall not be applicable to:
    (i) Claims between a Party and its own related entity or between 
its own related entities;
    (ii) Claims made by a natural person, his/her estate, survivors, or 
subrogees (except when a subrogee is a Party to the agreement or is 
otherwise bound by the terms of this cross-waiver) for bodily injury 
to, or other impairment of health of, or death of, such person;
    (iii) Claims for damage caused by willful misconduct;
    (iv) Intellectual property claims;
    (v) Claims for damages resulting from a failure of a Party to 
extend the cross-waiver of liability to its related entities, pursuant 
to paragraph (c)(2) of this section; or
    (vi) Claims by a Party arising out of or relating to another 
Party's failure to perform its obligations under the agreement.
    (5) Nothing in this section shall be construed to create the basis 
for a claim or suit where none would otherwise exist.
    (6) This cross-waiver shall not be applicable when 49 U.S.C. 
Subtitle IX, Chapter 701 is applicable.

Michael D. Griffin,
Administrator.
[FR Doc. E8-2868 Filed 2-25-08; 8:45 am]
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