Editorial: Don’t Delay on Extending Launch Indemnification

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With the busy holiday season fast approaching, and a load of unfinished legislative business on its plate, Congress is running thin on time to renew the U.S. commercial space transportation liability regime that for more than two decades has protected domestic launch providers from effectively having to bet the company every time they loft a payload for a commercial customer. The current risk-sharing regime, which indemnifies U.S. launch service providers against third-party liability claims in excess of $500 million, expires Dec. 31.

The House of Representatives, at the request Rep. Bart Gordon (D-Tenn.), chairman of the House Science and Technology Committee, approved a one-line bill Oct. 20 that renews the indemnification provision of the Commercial Space Launch Act Amendments of 1988 for another three years. The traditionally slower-moving Senate should quickly follow suit so the president can sign the legislation into law.

It is worth noting that American taxpayers have never had to shell out to cover a single claim against launch service providers in spite of what once was a very active U.S. industry — particularly in the late 1990s. In fact, there haven’t been any claims, a testament to the lengths launch providers, their government regulators and U.S. launch range operators go to ensure the safety of the general public.

As a condition for granting a commercial launch license, the Federal Aviation Administration (FAA) requires U.S. launch service providers to buy up to $500 million in liability insurance to cover all parties involved with the launch — including the U.S. government — against claims by uninvolved third parties who suffer damage or injury as a result of an accident.

Under the indemnification provision, damages awarded beyond that initial $500 million would be covered by the government, capped at $1.5 billion and subject to congressional appropriation. Responsibility for damages in excess of that amount reverts to the launch service provider, or whichever party is found liable.

It’s true that the U.S. commercial launch industry is a shell of what it was a decade ago at the height of the telecommunications boom; the vast majority of U.S. launches these days are conducted on behalf of the Pentagon or NASA, a circumstance that in most instances shields the launch provider from third-party claims. But while down, U.S. companies are not quite out: Boeing in the last year or so has lofted satellites for commercial imagery providers DigitalGlobe and GeoEye, as well as for the government of Italy, aboard its Delta 2 rocket, while Space Exploration Technologies Corp. (SpaceX) launched a satellite for Indonesia. Lockheed Martin, meanwhile, is preparing to launch an Intelsat communications satellite that, while commercial, is carrying a dedicated U.S. military experiment. The Pentagon is increasingly interested in such hosted-payload arrangements with commercial satellite operators, and the sensitivity of the technologies involved could in some cases preclude launching on non-U.S. rockets.

Extending the current liability regime also is important for Virgin Galactic, XCOR Aerospace and other firms building suborbital spacecraft to carry paying passengers to the edge of space. The same goes for Orbital Sciences Corp. and SpaceX, both of which are under contract to provide a combined 20 space station resupply flights for NASA under commercially structured agreements that confer no immunity against third-party liability claims.

Allowing indemnification to lapse could force U.S. firms to take out costly insurance policies, making them even less competitive at a time when commercial satellite operators are clamoring for more launch capacity. The recent bankruptcy of Sea Launch has left only two primary providers of commercial launches to geostationary orbit, the operating location of most commercial satellites.

The U.S. commercial launch industry would like to see Congress make the indemnification provision permanent and eliminate the $1.5 billion cap on third-party damage claims the government would pay in the event a federally licensed launch goes horribly wrong. Both ideas are worth considering; the first should be noncontroversial. But it is too late in the current legislative session to meddle with the existing regime. Congress needs to find the path of least resistance to getting indemnification extended as soon as possible.