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In his June 6th testimony, AIA’s Vice President for Space, Frank Slazer, told the House Subcommittee on Space and Aeronautics that it is critical Congress renew the Commercial Space Launch Act’s indemnification provision before the end of the year. He warned that without such a renewal the provision will lapse with potentially bleak consequences for the space launch industrial base.
Slazer reminded the Subcommittee that “U.S. space launch capabilities are essential to our nation’s security and its ability to lead in space exploration. To sustain this capability, a healthy U.S. space launch industrial base is needed… Unfortunately, our nation’s space launch industrial base has lost nearly its entire commercial market share in recent years, while simultaneously struggling to adapt to reduced demand by the U.S. government.”
Slazer further noted that “despite the dismal recent trend for U.S. launchers, new investments by U.S. industry – including many AIA member companies - are enabling the emergence of new domestic space launch capabilities…These new systems have the potential to increase the U.S. share of the commercial launch market, opening up new markets and creating jobs.” Many of these U.S. launch providers compete with entrenched international launch providers that receive a host of benefits and incentives from their domestic governments – including generous third party indemnification coverage.
The U.S. indemnification regime for FAA licensed commercial launch already requires the industry to obtain private insurance up to the maximum probable loss, and only allows for an appropriation request from Congress to cover losses above the maximum probable loss in the event of a court judgment. Slazer testified that “FAA’s launch indemnification program has been in place for over twenty years – providing critical risk management and now enabling the emergence of a new U.S. commercial launch market, benefiting the broader U.S. space industry, U.S. technological leadership, and ultimately, our nation’s security - without costing U.S. taxpayers a dime.”
“For the U.S. to take a purely laissez-faire approach to commercial launch businesses which are competing against Russian, European and other competitors who operate under more favorable risk management frameworks, amounts to unilateral disarmament when we are already at a pricing disadvantage. Even if U.S. firms could insure for the additional risk exposure commercially, it would add costs that their competitors do not face, making U.S. commercial launch sales even more difficult.”
Slazer also highlighted that “Our rationale for continued indemnification support is not narrowly focused on its benefits just for industry – it also provides benefits for the U.S. Government…Without a renewal of the regime, our nation’s space industrial base could be foregoing business that could help spread the fixed cost of space launch capabilities between government and commercial customers – resulting in savings that could be passed on to the taxpayer.”
“AIA sees continuing FAA’s launch indemnification as a very low risk way to support our nation’s vital space launch industrial base with substantial upside potential to enable new markets, create jobs, and assure U.S. space leadership. U.S. industry is investing capital and innovative ideas to create this new future and the U.S. government has helped foster these new initiatives. It would be a shame if these efforts were to founder due to the lack of a level playing field with foreign competitors.”
Slazer testified alongside FAA Associate Administrator for Commercial Space Transportation Dr. George Nield, Director of Financial Markets and Community Investment for GAO Alicia Cackley, and Vice President of Defense and Intelligence at DigitalGlobe Alison Alfers.
Congress has until December 31 to renew the indemnification provision of the Commercial Space Launch Act. AIA’s Space Legislative Action Team has conducted nearly a dozen meetings with committee and member staff on Capitol Hill to advocate for an expedient renewal of the indemnification provision. AIA will continue these advocacy efforts until a renewal is passed.