Blog Post

Space Launch Risk Redux

Jan 7, 2014 | Molly K. Macauley, Timothy J. Brennan

Indemnification, the nation’s approach to managing some of the risks associated with the launch of privately owned rockets carrying our satellites for telecommunications, Earth observations, supplies for the International Space Station, and other services, is on its way to becoming a new annual rite of winter.  Specifically, the federal government (taxpayer) indemnifies a portion of the financial liability in the event of harms to people and property in the flight path.  As we wrote a year ago, Congress has tended to authorize indemnification for a year at a time.  The US Senate has just agreed on a two-year extension and the House, a one-year extension with language to spend the next year conducting hearings on the provisions.  Among the issues raised are the effects of the indemnification on private and government launch risk management, a peculiar "doughnut hole" where launch companies are indemnified for only a range of losses, and why the government is covering the risk at all. To inform the upcoming debate, we call attention to three key considerations as noted in our last post.