The Federal Aviation Administration must update its assessment of federal...

The Federal Aviation Administration must update its assessment of federal liability risk from commercial space launches, the Government Accountability Office said in a report. The U.S. provides less commercial space launch indemnification for third-party losses than China, France and Russia, the report said (http://xrl.us/bniqmo). Indemnification coverage is limited in the U.S. by the Commercial Space Launch Act Amendments (CSLAA), it said. Estimating probable losses from a rare catastrophic event is difficult, “and insurance industry officials and risk modeling experts said that FAA’s method is outdated,” it said. The agency hasn’t had outside experts or risk modelers review the appropriateness of its method, the report said. The planned increase in manned commercial launches and re-entries raises some issues “that have implications for the federal government’s indemnification policy for third party liability,” according to insurance officials and experts interviewed, GAO said. The amount and price of insurance that could be provided “could change quickly if a large loss were to occur, according to insurance industry representatives.” GAO said launch companies and customers it contacted “believe that ending federal indemnification could lead to higher launch prices for U.S.-based launch companies, making them less price competitive than foreign launch companies.” They said a gap in federal indemnification is the lack of coverage of on-orbit activities -- “that is, activities not related to launch or reentry, such as docking with the ISS [international space station] and relocating a satellite from one orbit to another.” Although the actual effects on competition of eliminating CSLAA indemnification are unknown, “several launch companies and customers with whom we spoke said that in the absence of CSLAA indemnification, increased risk and higher costs would directly affect launch companies and indirectly affect their customers and suppliers,” GAO said.