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F9 DSCOVR launch
A Falcon 9 lifts off from Cape Canaveral February 11. Commercial launch providers like SpaceX will be closely watching how Congress handles issues like launch indemnification in any update of commercial launch law this year. (credit: SpaceX)

Issues in commercial launch law

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On Tuesday afternoon, the Senate Commerce Committee’s newly renamed Subcommittee on Space, Science, and Competitiveness will hold its first hearing of the new Congress, titled, “U.S. Human Exploration Goals and Commercial Space Competitiveness.” At the title suggests, much of the hearing will be devoted to high-profile issues, including NASA’s exploration strategy and the role of commercial partners, such as commercial crew transportation to and from the International Space Station. The hearing will also be the first chaired by Sen. Ted Cruz (R-TX), a politician whose positions—and presidential ambitions—have attracted attention and criticism (see “The limits of Cruz control”, The Space Review, January 26, 2015).

“We need to stop kicking the can down the road and work to find long-term solutions” to issues like launch indemnification, said Rep. Palazzo.

The press release announcing he hearing also hinted at one lesser-known, but still important, issue the hearing may bring up. “The hearing will also examine whether updates are needed to the Commercial Space Launch Act,” the release stated. That’s a reference to proposals to update existing commercial launch law, something that Cruz has previously said would be a priority for him as chairman of the subcommittee.

Cruz hasn’t discussed what those changes would be, but other politicians, as well as key industry officials, discussed potential updates earlier this month at the 18th Annual FAA Commercial Space Transportation Conference in Washington. In those presentations, two key issues came to the forefront that could be included in legislation Cruz and his House counterparts plan to take up later this year.

One deals with the long-running issue of indemnification of commercial launches. Under current law, commercial launch providers are held financially responsible for any third-party damages from their launches up to a level called maximum probable loss (MPL), as determined by the FAA’s Office of Commercial Space Transportation during the launch licensing process. Any third-party losses that exceeded the MPL level, up to a very high level (approaching $3 billion in 2015 dollars) would then be covered by the government.

That indemnification provision has required renewal several times, and each time the industry has sought a long-term extension to avoid the uncertainty that comes with whether the indemnification regime will remain in place and, if not, the potential financial risk commercial launch operators might face, versus more favorable legal regimes in other nations. The last extension passed in January 2014, actually after the regime ended (temporarily) at the end of 2013; that bill passed primarily because it was used a legislative vehicle for an omnibus spending bill.

Although that bill extended the indemnification regime through the end of 2016, launch indemnification is likely to be a topic for any commercial launch bill that comes up this year as it provides a better opportunity to get another extension passed. And, again, industry will likely seek a long-term extension of the bill.

“We need to stop kicking the can down the road and work to find long-term solutions,” said Rep. Steven Palazzo (R-MS), chairman of the space subcommittee of the House Science Committee, in a speech at the conference February 4.

Palazzo, in his comments, noted that the indemnification regime had been extended six times since it was created more than 25 years ago, typically a few years at a time. He suggested he was seeking a way to provide a much longer extension of launch indemnification in any commercial launch legislation his committee takes up.

“I am certainly interested in this and will continue to discuss this with my friends on the other side of the aisle,” he said. “I hope my Democratic colleagues and I can find a way to build a sustainable, consistent long-term solution for the indemnification regime.”

“Certainly it would not be our intent to have a burdensome of regulations imposed right at the start,” Nield said of the FAA’s plans should the learning period expire.

In recent years, some Democratic members of the House Science Committee have raised questions about the indemnification regime. “Much has changed since the risk-sharing, liability, and indemnification regime was established in 1988,” said Rep. Eddie Bernice Johnson (D-TX), ranking member of the committee, in December 2013 when the House debated, and ultimately passed, a one-year extension (which the Senate changed to three years.) At the time, Johnson and others wanted the shorter extension to allow time for a more detailed review of the indemnification system, including how to calculate MPL levels and also minimize risk to the government.

In a speech at the FAA conference February 5, Rep. Donna Edwards (D-MD), ranking member of the space subcommittee, mentioned launch indemnification in passing as one of the key issues for a commercial launch update, but didn’t go into specifics. “We have to tackle a number of very complex issues that we have been wrestling with over at least the last couple of Congresses, including launch indemnification for one,” she said.

A more pressing, and perhaps more controversial, issue involves current restrictions on the FAA’s ability to regulate safety for people flying on commercial vehicles. The Commercial Space Launch Amendments Act of 2004 placed that restriction, commonly called the “learning period” in the industry, in order to give companies time to build up experience upon which regulations could be based. The law does allow the FAA to enact regulations in the event of an accident that caused a serious or fatal injury, or an unplanned event that posed a “high risk” of such an injury.

That restriction was initially set to last only eight years, until late 2012, based on the assumption at the time of the bill’s passage that the emerging suborbital spaceflight industry would be flying regularly by then. That wasn’t the case, though, and in early 2012 a provision in an FAA reauthorization bill extended the deadline, this time to October 1, 2015. As that new deadline looms, the industry has been pressing for another extension.

In his comments, Palazzo sounded open to another extension, linking it with launch indemnification as two issues that required long-term rather than stopgap solutions. “If the FAA tramples on these companies with regulations based on speculation instead of data, we may never see the promise of commercial human spaceflight realized,” he warned.

The FAA, however, has been opposed to any extension of the learning period. In comments at the conference February 4, George Nield, FAA associate administrator for commercial space transportation, said that the FAA needed the flexibility to develop regulations based in part on government human spaceflight experience. “We have 50 years of history, and although we don’t have the record of companies having paying spaceflight participants on a flight, we certainly have a lot of experience with human spaceflight in general,” he said.

Palazzo, though, anticipated that argument in his earlier remarks. “While it may be true that the US has over 50 years of human spaceflight experience, I don’t think anyone believes a vibrant commercial human spaceflight sector can thrive under those traditional structures,” he said.

Nield said he believed the learning period should expire so his office has the flexibility to be able to enact regulations, but is not planning to immediate start generating them. “I think there’s really a yearning, though, for us to continually improve the safety for the occupants themselves. Certainly it would not be our intent to have a burdensome of regulations imposed right at the start,” he said. “Frankly, I like the flexibility of being able to act quickly if and when there’s a need identified for regulations.”

FAA administrator Michael Huerta also addressed the learning period in his remarks at the conference later the same day, acknowledging that the restriction on regulations could be extended this year. “We need to start a conversation, a thoughtful discussion across government and across industry about risk,” he said. “What we don’t want to have is some kind of framework imposed on us in reaction to something that might happen.”

Huerta argued for a “balance between innovation and regulation,” one where there are some regulations on safety of people flying on commercial vehicles, perhaps based on industry consensus standards. “While it’s far too early for specifics, I don’t think it’s too early to call for a plan,” he said. “We need to start to think about how the industry and government can work together to create standards that will ensure success for this industry in the future.”

While launch indemnification and the learning period will be two major issues likely to be handled in some way in any commercial launch legislation in Congress, there will likely be other issues as well. For example, in her comments at the conference, Edwards brought up the issue of regulating so-called “hybrid” vehicles, those with elements of both aircraft and spacecraft. “Sometimes it’s becoming increasingly difficult to figure out the differences” between them, she said, without elaborating.

“We need to start a conversation, a thoughtful discussion across government and across industry about risk,” Heurta said. “What we don’t want to have is some kind of framework imposed on us in reaction to something that might happen.”

While both Palazzo and Edwards brought up work on commercial launch legislation, they indicated it was not the top priority. Both were focused at the time of the conference on passing a NASA authorization bill for fiscal year 2015. On February 10, the House passed that bill by voice vote. That authorization bill was effectively the same as the one the House approved in June of last year, other than changes to dates.

Palazzo said he was focused on getting that authorization bill passed, urging the Senate to take action on it or the Senate’s own version that could be passed and then conferenced with the House’s bill. That would allow them to move on to a more ambitious multi-year NASA authorization bill, with a commercial launch bill not likely to be taken up until later this year.

The Senate, though, could move more quickly on a commercial launch bill, given Cruz’s stated interest in the law. Tuesday’s hearing could offer insights into both the timeline and contents of such a bill.