CONGRESSWOMAN ELISE STEFANIK
On Tuesday, November 13, 2012, the House is scheduled to consider H.R. 6586, a bill to extend the application of certain space launch liability provisions through 2014, under suspension of the rules. The bill was introduced on November 9, 2012, by Rep. Steven Palazzo (R-MS) and referred to the House Committee on Science, Space and Technology.
The bill would extend the authority to carry out the current U.S. policy to provide federal payment, subject to appropriation—known as indemnification—for a portion of claims by third parties not covered by the launch/reentry operator’s insurance policy for injury, damage, or loss that result from a commercial launch-related incident. Currently, the authority would expire at the end of this year, December 31, 2012. The program has been extended five times, and H.R.6586 would extend the current regime for two years, until December 31, 2014.
According to the House Committee on Science, the commercial space transportation risk-sharing and liability regime, which was established in the Commercial Space Launch Amendments Act of 1988 (PL 100-657), requires all commercial launch operators to purchase a fixed amount of insurance to cover any injuries or property damage to the uninvolved public, or “third parties.” The launch indemnification program was created to provide a structured risk-sharing regime to address third-party liability to protect the uninvolved public and property. As part of its commercial licensing process, FAA requires launch companies to purchase third-party liability coverage from the insurance market at a level calculated by the agency to be the maximum probable loss. As a consequence of these calculations, FAA’s decision sets the threshold at which federal coverage begins, up to a maximum limit of $2.7 billion. According to the bill’s sponsor, “Since the program’s inception, over 200 commercial licensed launches have been flown without one federal dollar being paid out in damages.”
As a part of this program, the government agrees to assume a portion of liability above the level of coverage purchased by the launch/reentry vehicle operator. If federal coverage were ever to be triggered, it would require the Administration to request federal indemnification, and a separate bill appropriating funding to be passed by Congress.
Since establishing the risk-sharing and liability regime over 200 launches have been licensed without any claims for federal coverage for loss of life, serious injuries, or significant property damage to the general public.
The ability of the government to assume some financial responsibility for losses to third parties allows a developing space launch industry to continue to grow.
CBO estimates that implementing H.R. 6586 would not impact direct spending or revenues.