{"id":1388,"date":"2018-06-19T09:38:40","date_gmt":"2018-06-19T13:38:40","guid":{"rendered":"http:\/\/groundbasedspacematters.com\/?p=1388"},"modified":"2018-06-19T09:38:40","modified_gmt":"2018-06-19T13:38:40","slug":"u-s-space-launch-and-reentry-indemnification","status":"publish","type":"post","link":"https:\/\/groundbasedspacematters.com\/index.php\/2018\/06\/19\/u-s-space-launch-and-reentry-indemnification\/","title":{"rendered":"U.S. Space Launch and Reentry &#8220;Indemnification&#8221;"},"content":{"rendered":"<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1314\" data-permalink=\"https:\/\/groundbasedspacematters.com\/index.php\/2018\/05\/21\/yes-you-do-need-insurance-to-launch-your-rocket\/north-korea-2692779_1280-2\/\" data-orig-file=\"https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?fit=485%2C728&amp;ssl=1\" data-orig-size=\"485,728\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}\" data-image-title=\"north-korea-2692779_1280\" data-image-description=\"\" data-image-caption=\"\" data-medium-file=\"https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?fit=200%2C300&amp;ssl=1\" data-large-file=\"https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?fit=485%2C728&amp;ssl=1\" class=\"alignnone size-medium wp-image-1314 alignleft\" src=\"https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?resize=200%2C300&#038;ssl=1\" alt=\"\" width=\"200\" height=\"300\" srcset=\"https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?resize=200%2C300&amp;ssl=1 200w, https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?resize=266%2C400&amp;ssl=1 266w, https:\/\/i0.wp.com\/groundbasedspacematters.com\/wp-content\/uploads\/2018\/05\/north-korea-2692779_1280-1.jpg?w=485&amp;ssl=1 485w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/>As a lawyer, I am required to use quotation marks when discussing the so-called &#8220;indemnification&#8221; offered by the Commercial Space Launch Act at 51 USC ch. 509 (Ch. 509).\u00a0 For those unfamiliar with the FAA&#8217;s financial responsibility requirements, they come in three parts.\u00a0 First, when a launch or reentry operator gets its FAA license to launch or reenter, Ch. 509\u00a0 requires the operator to enter into reciprocal waivers of claims with its customers, contractors, and the government.\u00a0 The waivers, however, are\u00a0 a topic for another day.<\/p>\n<p>Chapter 509 also requires the FAA to set financial responsibility requirements, which the operator usually satisfies by buying insurance for any damage the operator&#8217;s launch or reentry may cause to people not involved in launch or reentry (aka &#8220;third parties&#8221;) or to government property .\u00a0 The third prong of the regime contains a mechanism for Congress to vote on whether to come up with the money to pay for damages that exceed the operator&#8217;s insurance limits.<\/p>\n<p>51 USC 50915 contains a set of instructions for both the Secretary of Transportation and Congress.\u00a0 If damages arising out of a licensed launch or reentry exceed the amount of required insurance, the FAA and the Secretary shall recommend a compensation plan for the President to submit to Congress.\u00a0 Among other things, the plan must contain the dollar amount in excess of the licensee&#8217;s required insurance, but not more than $1.5 billion&#8211;as adjusted for inflation&#8211;above whatever insurance the FAA required.\u00a0\u00a0 Calculations as of a couple years ago had that inflation adjusted amount as reaching $2.7 billion.<\/p>\n<p>The Senate must consider the plan within 60 days. Another series of instructions follow, this time charging the Senate and its committees with meeting deadlines for consideration of the compensation plan, and setting limits on times allowed for debate.<\/p>\n<p>All of this looks like Congress contemplates speedy resolution of the question.\u00a0 However, the question itself, we must remember, is whether to make the funds available in the first place.\u00a0 Indeed, everyone likes to call this &#8220;indemnification&#8221; because it sounds like the government&#8217;s got your back if things get really awful.<\/p>\n<p>But.\u00a0 When we look at how the dictionary defines &#8220;indemnification&#8221;&#8211;and we&#8217;ll use <a href=\"https:\/\/dictionary.law.com\/Default.aspx?selected=936\"><strong>a legal dictionary<\/strong><\/a>&#8211;we see that true indemnification is pretty fabulous.\u00a0 To indemnify means<\/p>\n<blockquote><p>to guarantee against any loss which another might suffer. Example: two parties settle a dispute over a contract, and one of them may agree to pay any claims which may arise from the contract, holding the other harmless.<\/p><\/blockquote>\n<p>It is immediately obvious that Congress offering to vote on whether to cover any damages an operator may owe is no guarantee, even if it has set highly detailed procedures in place for the Senate.\u00a0 After all, Congress might vote not to authorize or appropriate the necessary funds.\u00a0 This explains the need for quotation marks:\u00a0 Chapter 509 does not offer indemnification in the true sense of the word.<\/p>\n<p>Nonetheless, this provision has been very popular with industry.\u00a0 Congress initially passed it with a sunset provision, meaning the offer to vote on the money would only last a few years.\u00a0 Since it passed in 1988, that provision has been renewed every time it has come up for consideration and will not sunset again until September 30, 2025.\u00a0 Why is it so popular?\u00a0 I don&#8217;t know and never have figured it out.\u00a0 Congress makes payment of those excess claims depend on its own actions, namely passage of a resolution.\u00a0 This means there is no <em>requirement<\/em> for the government to pay for damages above insurance.\u00a0 Section 50915 does require the FAA, the Secretary, and the President to present a compensation proposal to Congress, so perhaps forcing the Executive Branch to ask for the money is better than nothing.\u00a0 As far as I can tell, given the lack of a legal requirement, the decision at the end of the day will be made for reasons of policy and politics.<\/p>\n<p>Suppose, for example, that a foreign operator launched from the United States.\u00a0 The foreign launch operator would require an FAA launch license, and the FAA would require the foreign operator to buy insurance to cover the maximum probable loss the operator could cause.\u00a0 Let&#8217;s figure $100 million for third party damages.\u00a0 If the foreign operator had such a bad accident that its damages exceeded $1 billion, duly adjudicated by a court of law, the Executive Branch would have to put together a compensation plan for presentation to both Houses of Congress.\u00a0 Congress, however, might not want to cover the losses of a foreign operator, and could choose not to.\u00a0 This approach leaves room for that kind of political decision-making.\u00a0 But it offers no guarantees either.\u00a0 To anyone.<\/p>\n<p>&nbsp;<\/p>\n<div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>As a lawyer, I am required to use quotation marks when discussing the so-called &#8220;indemnification&#8221; offered by the Commercial Space&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-1388","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - 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