House hearing today to examine launch indemnification

The space subcommittee of the House Science Committee is holding a hearing at 10 am Eastern today on the launch indemnification program, which is due for renewal this year. The program requires commercial launch providers to take financial responsibility (typically through insurance) for any third-party damages from a launch up to the “Maximum Probable Loss”, or MPL, calculated by the FAA’s Office of Commercial Space Transportation when it awards the launch license. Any damages that exceed the MPL by up to approximately $2.7 billion would be indemnified by the government; damages above that level would revert to the launch provider. In practice, there has never been a third-party claim in over 20 years of US commercial launch activity that has required a government payment (I’m hard-pressed to think of any third-party claim from an FAA-licensed commercial launch.)

This indemnification regime comes up for debate every three to five years, as industry lobbies for it to be made permanent in order to remain competitive with launch providers in other nations, while Congress debates whether it should expose the government to any liability, however slim (the hearing charter notes that the FAA estimates the odds of an accident resulting in third-party losses above the MPL at less than 1 in 10 million.) The outcome, in the past, has been a short-term extension, usually done at close to the last minute: in 2009 the indemnification regime was extended by a bill signed into law on December 28th, just three days before it was set to expire, after passing the Senate by unanimous consent the previous week.

Today’s hearing includes George Nield, the associate administrator for commercial space transportation at the FAA; an official from GAO; and representatives from industry who will likely advocate for an extension of the indemnification regime. The hearing, according to the charter, will examine whether the indemnification regime should be continued and if any changes should be made regarding what it covers and the balance of risk-sharing between the industry and government.