Indemnification for Damages Provisions in Cooperative Agreement Between NOAA and Government of Australia

Questions were raised concerning the propriety of including certain provisions for indemnification of damages in a cooperative agreement to be concluded between the National Oceanic and Atmospheric Administration (NOAA) and the Government of Australia for a weather modification program involving the seeding of hurricanes. Australia views protection from liability for damages as a key issue in the proposed cooperative agreement. However, according to the Department of State, the Australian proposal that the United States provide complete indemnification for all damages in an indeterminate amount is unacceptable as such a committment would violate the Anti-Deficiency Act. GAO held that even though Congress is not legally compelled to make appropriations of funds for the purpose of indemnification of damages to Australia, Congress would be morally committed and has little choice, particularly in view of the effect on foreign relations. Additionally, GAO held that Congress may give a Federal agency contract authority, in the context of a supplemental appropriation bill, to assume liability for damages arising from an international cooperative agreement. However, procedurally, this could be subject to objection as substantive legislation in an appropriation bill. Furthermore, general statutory authority to carry out international programs does not necessarily carry with it authority to agree to settle foreign claims against the United States. GAO also held that it is permissable to purchase private insurance for the project and for the United States to subsequently pay a portion of the premiums in order to protect Australia, if such action is a condition which Australia exacts in return for its participation. However, agreement should provide that the United States assumes no liability beyond the amount of insurance coverage.