Launch Indemnification Regime to be Extended — But for How Long?

Congress wants to extent a cost-sharing agreement between industry and the federal government to cover losses from commercial launch accidents beyond its expiration date at the end of the year. The main question seems to be how long of an extension will be passed.

Legislators in the House have introduced a bi-partisan measure, H.R. 3547, to extend the protections by one year. Over in the Senate, Bill Nelson (D-FL) has introduced S. 1753 to extend the indemnification regime by three years.

Under the system, commercial launch providers must cover third-party losses up to $500 million. The government will step in to pay any losses from $500 million to $1.5 billion. Anything above that level reverts back to the company.

“The commercial space industry offers improvements to the quality of life for every person on the planet. America has always been a nation of innovators and explorers,” said House Science Committee Chairman Chairman Lamar Smith (R-Texas). “We must remain on the forefront of new discoveries and technologies.  While a longer extension would have been preferable, this bipartisan compromise bill will at least provide temporary stability to our commercial space industry by protecting companies against third party liability costs.  This important protection is similar to what other nations provide and enables our space industry to remain competitive.”

The Commercial Spaceflight Federation is backing Nelson’s three-year extension.

“The arrangement struck in the Commercial Space Launch Act was that launch companies would be required to buy very comprehensive insurance that would protect the public and the government, and the government would in turn step in in the extremely unlikely case that the insurance were insufficient,” said CSF President Michael Lopez-Alegria in a press release. “At no cost to the taxpayers, government risk-sharing provides the necessary certainty for our industry to be competitive internationally and to continue to create high-tech jobs in the U.S.”

In testimony before the House Subcommittee on Space on Wednesday, Mojave Air and Space Port CEO and General Manager Stu Witt urged legislators to go further.

“There is certainly a motivation [for commercial launch companies] to be rigorous,” he said. “For 20 years, the government has not been placed at risk. If a program that is put in place is working that well, I would [need] a compelling reason to change it. I would extend it indefinitely.”