An obscure, yet important, provision in federal law that supports the commercial space transportation industry is launch indemnification. As previously noted here, the law requires commercial launch companies to be financially responsible—usually through insurance—for third-party losses in the event of a launch accident up to a “maximum probable loss” (MPL) amount determined in the launch licensing process. Losses above that, up to about $2.7 billion in current-year dollars, would be covered by the federal government before reverting back to the launch provider. In practice, there’s never been an accident with third-party losses that have exceeded the MPL, but the industry feels having indemnification in place is important to protect the industry and keep it competitive with launch service providers in other nations.
The indemnification provision needs to be renewed through legislation on a regular basis, and it’s set to expire at the end of the year unless renewed. However, with two and a half months to go, legislation to extend indemnification has not been introduced in either the
House or Senate, let alone passed. Since Congress has a full slate of work ahead of it when it returns for a lame-duck session after the November elections, there is a risk that the provision could expire, although people in industry as well as on Capitol Hill believe that some kind of extension will pass before year’s end.
Congress’s focus last month on big issues, like a continuing resolution to keep the government funded into next year, meant they didn’t get to “smaller, parochial bills” like launch indemnification, said Greg Rasnake, who handles legislative and media issues for the FAA’s Office of Commercial Space Transportation. He was speaking at a meeting of the Business and Legal Working Group of the Commercial Space Transportation Advisory Committee (COMSTAC) on Tuesday in Washington. He noted that launch indemnification is not the only legal provision in this situation: “there are other programs that always face sort of an end-of-the-year extension that needs to occur.” He added that committees in the House and Senate are both looking at some kind of indemnification legislation, but nothing so far has been introduced.
At the meeting of the full COMSTAC the next day, Ed Feddeman, staff director of the space subcommittee of the House Science Committee, sounded optimistic that some kind of indemnification extension will get through Congress before the end of the year. “We’re all keenly aware the indemnification needs to be renewed before the end of this year,” he said, adding that he has been discussing the issue both with Democratic staff on the committee as well as his counterparts in the Senate. “I am optimistic that we will have a bill through before Congress adjourns at the end of this year.”
While the specifics of the indemnification bill are still being negotiated, Feddeman said it would likely be a “simple extension with perhaps a couple of minor bells and whistles hung on the side.” Those “bells and whistles” would likely involve studies on indemnification and whether it’s needed, something freshman Republican members of his committee have been asking, he said. (It’s a question that has been asked before and examined, such as in this 2006 study by The Aerospace Corporation, with the conclusion that it is needed.) The extension, he said, could be as short as one year, and probably no longer than three years.
One sticking point, he suggested, might be in the Senate. “They have some other provisions that I think they want to hang on the bill,” he said, adding that he wasn’t familiar with exactly what they might be proposing. One possibility that has raised concerns in the industry is that the Senate may seek to revisit the extension of the so-called “learning period” that limits the FAA’s ability to enact regulations regarding the safety of commercial spaceflight participants. That period (sometimes called a moratorium, although there are exceptions in the event of a serious accident) was included in the 2004 Commercial Space Launch Amendments Act and would have expired this December, but the FAA reauthorization bill passed earlier this year extended it to October 2015.
“I know there are some who see a nexus between the issues” of launch indemnification and the extension of the learning period, Feddeman said. “Our members perhaps do not.” However, discussion at a hearing earlier this year of a potential backlash in the event of an commercial human spaceflight accident may have raised a concern among some in Congress, he suggested. “Some others also heard that same note, though, and I think we’re having to talk through that between now and the end of this year.”