Third Party Indemnification Back on the Congressional Docket – UPDATE

Third Party Indemnification Back on the Congressional Docket – UPDATE

UPDATE, November 21, 2013:  Senator Nelson’s bill is S. 1753. Like the House bill, it is bipartisan, with three Republican co-sponsors (Thune, Rubio and Cruz) and three Democrats in addition to Nelson (Feinstein, Heinrich and Warner.)

ORIGINAL STORY, November 20, 2013: Extending the FAA’s authority to indemnify commercial space launch companies against certain third party claims for damages from launch failures is back on the congressional docket.  Congress extended the authority for only one year last time and must act before December 31 if it is to continue.

A bipartisan bill, H.R 3547, was introduced in the House today to grant another one-year extension.  The bill was introduced by the top Republicans and Democrats on the House Science, Space and Technology Committee and its Space Subcommittee following a hearing this morning on commercial space activities:  Rep. Lamar Smith (R-TX), Rep Eddie Bernice Johnson (D-TX), Rep. Steve Palazzo (R-MS) and Rep. Donna Edwards (D-MD).

On the other side of Capitol Hill, Senator Bill Nelson (D-FL) reportedly plans to introduce his own version of the bill today.  Nelson chairs the Science and Space Subcommittee of the Senate Commerce, Science and Transportation Committee and his bill would grant a three-year extension, to the end of 2016.

Johnson and Edwards, the top Democrats on the House committee, said in a statement that a one-year extension would give the committee time to conduct more hearings into the issue.  Committee chairman Smith and subcommittee chairman Palazzo said in the same statement that a longer term would have been preferable.

Congress created the third party indemnification provision in 1988 and has renewed it periodically since then.  Industry often calls for long term extensions or even making it permanent, but so far Congress has granted the authority for shorter periods in order to preserve its ability to reexamine whether indemnification is still necessary.   At today’s hearing, Satellite Industry Association President Patricia Cooper called for making the provision permanent or extending it for least 10 years.   Stuart Witt, CEO and General Manager of the Mojave Air and Space Port, argued for making it permanent.

Under the provision, a three tier system is establishing for paying claims for damages to third parties (basically the general public) in the event of a commercial space launch accident.   The launch services company would have to pay the first $500 million, the government would pay the next tier of claims (originally $1.5 billion, but that is adjusted for inflation and was $2.7 billion in 2012), and the company is responsible for claims above that amount. 

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