Report: commercial spaceports confused about insurance

Anew report recommends that the Federal Aviation Administration do more to assist commercial spaceports in determining their insurance requirements, but stops short of calling for regulatory changes regarding coverage for facilities not owned by the federal government.

The report, prepared by the U.S. Government Accountability Office under a provision of the Commercial Space Launch Competitiveness Act signed into law one year ago, said that operators of launch sites licensed by the FAA are often puzzled about whether and how their facilities are covered by insurance in the event of an accident.

The request for the report came out of the aftermath of the October 2014 Antares launch failure at the Mid-Atlantic Regional Spaceport (MARS) on Wallops Island, Virginia, that caused $15 million in damage to the launch site. Orbital Sciences Corp. and the Virginia Commercial Space Flight Authority, which operates MARS, disputed who was liable for damages to the pad. Ultimately, each paid $5 million, with NASA contributing an additional $5 million by increasing the value of an existing contract with the authority.

In interviews with nine of the 10 FAA-licensed spaceports, the GAO found that many of them had experienced problems getting property and liability insurance. Five of the nine, according to the report, “reported encountering difficulties in obtaining these kinds of insurance for commercial space launches or expressed concerns about their affordability.”

One example came from one of the three spaceports that has hosted launches licensed or permitted by the FAA in the last five years — MARS, Mojave Air and Space Port in California and Spaceport America in New Mexico — but not specifically identified. When it attempted to purchase coverage, the report said, “insurance providers either declined to provide quotations, provided quotations exceeding or similar to the site’s launch fees, or included substantial deductibles.”

The GAO report also found uncertainty among launch site operators about whether they needed coverage. Some said they were not sure if they were considered “involved parties” in launches, thus requiring them to obtain insurance, or “third parties” that would be covered by the insurance the launch provider is required to carry under federal law.

The GAO recommended in its report that the FAA do a better job communicating with spaceports insurance requirements. “FAA has not issued guidance to spaceport operators to clarify when it considers them third parties and when it considers them involved parties,” the report stated, adding that agency officials told them that such guidance “has not been a high priority” for them.

The report, though, did not recommend a change in policy on insurance for spaceports, citing a lack of consensus on the topic. Spaceport operators and other industry stakeholders, including launch providers and insurers, were split on whether the current approach should be continued. They also disagreed that, if it should be changed, whether the responsibility for procuring insurance belonged to the launch operator or the spaceport.

The GAO report was limited to spaceports licensed by the FAA, and did not include launch sites on federal ranges, like Cape Canaveral Air Force Station in Florida and Vandenberg Air Force Base in California, that can also host commercial launches. Space Launch Complex 40 at Cape Canaveral, one such facility, was damaged in the Sept. 1 SpaceX Falcon 9 pad explosion, and neither the Air Force nor SpaceX has disclosed the extent of the damages.

In the case of MARS, the pad was repaired and hosted the return to flight of the Antares on Oct. 17, this time with an insurance policy in place. “We are covered by insurance up to what we believe the maximum possible damage is,” Dale Nash, executive director of the Virginia Commercial Space Flight Authority, said at a pre-launch press conference Oct. 15. “We have that in our agreements with Orbital ATK and with the concurrence of NASA.”

A congressional watchdog agency says the FAA needs to do a better job communicating with commercial spaceports about insurance requirements.