SPACE.com -- Rocket Industry Fights to Keep Legal Cushion

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	Rocket Industry Fights to Keep Legal Cushion By Frank Sietzen, Jr. Special to SPACE.com posted: 07:01 pm ET 28 April 2000

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WASHINGTON A provision of a U.S. law that protects the commercial rocket industry from third-party lawsuits when a launch accident occurs will expire in December unless Congress acts to save it.

"We had sought a five-year extension [of the insurance provision] last year but won only a one-year renewal. That will sunset December 31^st," Esta Rosenberg of the Federal Aviation Administrations Office of Chief Counsel told SPACE.com Wednesday.

How Rocket Insurance Works

Rocket insurance is intended to protect launch participants and the federal government from risk of catastrophic losses and potentially unlimited liability associated with commercial launch activities. Want to learn more?

The provision -- contained in the Commercial Space Launch Act -- stipulates the federal government pays up to $1.5 billion for third-party claims resulting from deaths, injuries or damage to property should a U.S.-made commercial launch vehicle fail disastrously in flight. The same law requires launch providers to buy $500 million worth of insurance against third-party risk, and another $100 million to insure against damage to federal property such as rocket pads and launching facilities. If excessive claims were filed against the commercial firm in the aftermath of an accident, the provision of the law would be triggered.

Without such excess insurance, rocket-launching companies could be wiped out should a space vehicle someday stray off course and harm civilians or their property.

The excess amount, between $500 million and the $1.5 billion, would insure commercial space businesses against the most extreme types of disasters during launch.

On paper at least, such insurance would seem a good risk. In the 11 years since the first commercially licensed space launch, there has been no damage to any space launch facility. In fact, there has never been a third-party liability claim filed against a rocket company.

But Rosenberg, whose agency regulates and licenses commercial space rockets, said that the mixed record of successful launches, plus the uncertainty of finding companies to write such massive insurance policies makes the governments role in providing the indemnification crucial to a stable U.S. commercial space industry.

"It would be difficult to know if this kind of liability insurance would even be available, and at an affordable cost [to industry]," Rosenberg said.

Then again, the record of space launches -- which saw a high number of failures of U.S. and Russian boosters in 1999 -- also works against making such disaster insurance available and affordable.

"As a result of the changing market, there is an uncertain demand for launch services," said Pamela L. Meredith, an attorney who specializes in commercial space law in Washington, D.C.

"The availability of federal funds in the event of an accident is the key to stability of this industry," Meredith told SPACE.com. "Access to third-party liability insurance in the marketplace is problematic at best," she added.

Rosenberg also suggested that the new reusable launch vehicles now under development might find liability insurance unaffordable at any price, given the high risks associated with their development and lack of any form of successful track record for insurers to review. "This includes claims against both a licensed launch and reentry as well," she said.

Congress gave the Federal Aviation Agency (FAA) the ability to license and regulate reentry craft last year. Such provisions will encompass both future reusable rockets, as well as possible privately developed shuttlecraft returning commercial or scientific products from space platforms or space stations.

The rocket launch business was fraught with other risks as well, Meredith said. These included increased reliance on foreign technology, the consolidation of the space industry and lack of Wall Street willingness to fund new space-vehicle designs such as the VentureStar single-stage rocket project. Such new generations of launching craft would fly to orbit and return without dropping off boosters or rocket stages. Craft of this type, if proved operational, might drastically reduce the cost of sending people and payloads into space.

All of which requires a healthy U.S. commercial space launch industry -- with liability protection in the event of disaster. "We hope to see the provisions for excess-liability indemnification in the bills before the [Congressional] session ends," Rosenberg predicted.

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