Launch indemnification extension goes down to the wire

The federal commercial launch indemnification regime—which protects commercial launch operators against third-party losses that exceed levels they must insure against—expires tomorrow, with no sign that an extension will make it through Congress in time. In November, the House passed legislation that extended the indemnification regime by two years, to December 31, 2014. However, the Senate has not yet acted on that bill, and other efforts, including proposed amendments to the Senate’s version of the defense authorization bill, also failed. The Senate will be in session again this afternoon, but the current schedule only mentions a couple of nominations, although with time likely reserved to address any effort to avert the “fiscal cliff.”

So what happens if launch indemnification isn’t extended? There are commercially licensed launches coming up in early 2013, including the first test launch of Orbital Sciences Corporation’s Antares rocket in February and the next SpaceX Falcon 9 cargo mission to the ISS in late February or early March. During a commercial space panel at a space law colloquium this fall in Washington, I asked Mat Dunn, director of legislative affairs for SpaceX, what a failure to extend indemnification would mean for the company. “I think the immediate effect would be that insurance rates would probably go up, and that would be negative for the industry from a cost perspective,” he said, adding it may deter some other companies interested in performing launches. SpaceX, though, would perform its launches regardless of the status of the indemnification extension, he said. “We’re prepared to execute our launches for our customers if the provision is extended or not.”

2 comments to Launch indemnification extension goes down to the wire

  • A M Swallow

    Replace this by a proper insurance system. The launch company pays a premium to the Federal Government and is given protection for 2 years. Once the new law is passed the only things that need adjusting are the starting level and the price.

  • AM Swallow, they already have a proper insurance system, they’re required to have insurance up to a specific (and quite high) level. Replacing the current commercial launch indemnification with another insurance program is a step in the wrong direction. If indemnification isn’t reinstated, the companies will continue being able to launch, but will pay more for bigger commercial insurance policies.

    The point of indemnification is to help make American space launchers competitive with international launchers. As the GAO found, “the United States provides less commercial space launch indemnification for third party losses than China, France, and Russia”, i.e. almost the entire remainder of worldwide commercial launchers.

    The objective here is not to internalize an externality, it’s to subsidize a domestic industry against similarly subsidized international competitors.

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