Editorial | Another Pointless Lapse in Launch Indemnification

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For the second year in a row, the U.S. Congress has allowed the longstanding law that shields domestic launch services providers against catastrophic damage claims to lapse. The law, originally enacted in 1988, requires the government to indemnify commercial launch providers against third-party damage claims that exceed $500 million, up to $1.5 billion. 

The chances that the government would actually have to make a payout following a catastrophic commercial launch accident are infinitesimal. But indemnification is nonetheless necessary; otherwise, commercial launch providers, who are required to purchase up to $500 million in coverage, would risk losing their business on any given launch. Without indemnification, which helps ensure that a provider will be around to fulfill its contracts, U.S. companies would be at a competitive disadvantage to European, Russian and Chinese companies — all of which enjoy this protection their governments.

Congress agrees, at least in principle. Yet for some reason, lawmakers lately cannot bring themselves to extend the indemnification regime for more than a year at a time. The result is predictable: The House and Senate must scramble at the end of each legislative year to keep the law from expiring, and not always successfully, as the last two years have demonstrated.

As a practical matter, this hasn’t been a huge issue in recent years given the dearth of U.S. commercial launch activity. But this business has returned, as Space Exploration Technologies Corp.’s (SpaceX) Jan. 6 launch of the Thaicom 6 telecommunications satellite — SpaceX’s second fully commercial launch in a month — from Cape Canaveral Air Force Station, Fla., attests. 

The Thaicom 6 mission was indemnified by virtue of the fact SpaceX applied for, and received, its launch license while the law was in effect. But lapses in the law, however brief, are both unsettling and completely unnecessary.

The House and Senate are pushing bills that would extend indemnification for one year and three years, respectively. The one-year deal is being pushed by some key House Democrats, who say they want to do their due diligence, such as holding hearings, before granting a longer extension. 

Given Congress’ track record of getting things done of late, however, one can easily envision the exact same situation unfolding a year from now, with no new information to help break the cycle. If advocates of a one-year extension prevail, those seeking a longer term should take the initiative in calling for hearings with an eye toward making indemnification a permanent part of the commercial launch regulatory landscape. 

Should compelling evidence emerge over time that indemnification is an anachronism, that can be addressed in future legislation. But clearly that time is not here yet, or even around the corner. Congress can and should find better things to do than be bothered with this matter year after year.