Florida and Virginia Push for Commercial Launch Insurance Reform

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WASHINGTON — Florida and Virginia, ordinarily competitors for space business, have become allies in a little-heralded legislative push to better protect state-operated spaceports from catastrophic events such as launch failures.

The initiative appears to have been motivated, at least in part, by the October explosion of an Orbital ATK Antares rocket that damaged state-owned property at NASA’s Wallops Flight Facility on Virginia’s eastern shore.

Language tucked into the U.S. House-passed Spurring Private Aerospace Competitiveness and Entrepreneurship (SPACE) Act of 2015 (H.R. 2262), a commercial space bill approved in a May 21 floor vote, urges state spaceports to “seek to take proper measures to secure their investments and the safety of third parties from potential damages that could be suffered from commercial launch activities.”

Couched softly in a Sense of Congress clause that is not legally binding, the directive could motivate launch providers to include state-owned property in federally mandated insurance policies they must carry for commercial launches regulated by the Federal Aviation Administration, spaceport officials from Florida and Virginia say.

The FAA regulates commercial launches and determines how much insurance rocket operators must carry to protect against possible damages to federal property and third parties. States are not included in either category. In the United States, a launch may be classified as commercial even if the rocket is carrying government property. The cargo Orbital ATK and SpaceX send to the International Space Station for NASA under contracts worth a combined $3.5 billion are a case in point.

Space Florida, the state’s aerospace economic development agency, has been “actively engaged with the discussion” with Congress to provide better protection for state-owned spaceport assets, Jim Ball, a retired NASA manager now consulting for Space Florida, said in a May 21 interview. “If you look at the whole intent of the Commercial Space Launch Act and some of … the benefits of states providing infrastructure, then it seemed like state spaceport authorities ought to get due consideration in that law in the liability regime.”

The Republican majority on the House Science Committee, which wrote the SPACE Act, made clear in its accompanying bill report that the legislation would do no such thing.

“This provision should not be interpreted by any federal agency to broaden the scope of the third-party liability insurance or third-party risk sharing regime to cover state and local launch facilities,” the report says.

What would have been legally binding is a bipartisan amendment offered, but then quickly withdrawn, by a pair of freshman lawmakers from Virginia during the May 13 committee markup of the four bills later consolidated into the SPACE Act.

The amendment from Reps. Barbara Comstock (R-Va.) and Don Beyer (D-Va.) would have tweaked the Commercial Space Launch Act to require the insurance the FAA sets for commercial launch operators to cover claims by “the United States Government and State and municipal governments against a person for damage or loss to Government or State and municipal property resulting from an activity carried out under the license.”

Had that language been the law of the land on Oct. 28, when the Antares rocket exploded seconds after liftoff from Wallops, Virginia and Orbital ATK would not be arguing over responsibility for $13 million in damages to state-owned property caused by the accident.

According to Dale Nash, executive director of the Virginia Commercial Space Flight Authority, the October blast damaged state assets including: the Transporter Erector Launcher used to haul Antares to the pad and raise it vertical; the concrete launchpad itself; and the pad’s cryogenic plumbing.

Emergency contributions from NASA, Orbital ATK and Virginia have since whittled the outstanding cost of repairs to about $2 million. NASA and Virginia are leaning on Orbital ATK of Dulles, Virginia, for the remainder.

Though just a fraction of the $90 million Virginia spent on the pad — and an even smaller slice of the $1.9 billion NASA contract that brought Orbital ATK to the pad in the first place — the $13 million has loomed large as a wake-up call for some state officials.

Absent inclusion in the insurance policies of their launch customers, state-operated spaceports could have no choice but to take out their own coverage. That, according to Nash, would be prohibitively expensive.

The cost would be “more than my entire annual operating budget,” estimated Nash, who previously ran Alaska’s state spaceport in Kodiak Island.

The Virginia Commercial Spaceflight Authority gets about $16 million a year from the state.

Orbital ATK, spokeswoman Jennifer Bowman wrote in a May 29 email, would consider any alternative insurance scheme, “as long as it makes sense from a business perspective.”

Meanwhile, the head of Spaceport America, home port of commercial suborbital space-tourism liner Virgin Galactic, lauded Congress’ progress on reworking aging commercial spaceflight legislation, but stopped short of declaring that spaceport property should be protected under corporate launch insurance policies.

“The continued support for and stability of these state projects will greatly impact the commercial and government space programs that rely on them,” Spaceport America Chief Executive Christine Anderson wrote in a May 29 statement. “Equally important is the freedom for state authorities that manage spaceport projects to experiment with various approaches to risk management.”

The legislative outlook for the House’s SPACE Act is cloudy. The Senate Commerce, Science and Transportation Committee approved its own bipartisan U.S. Commercial Space Launch Competitiveness Act on May 20, and that bill measure that makes no mention of insurance at state-operated spaceports.