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A key point to remember is that we want to allow the orbiter and its crew the most latitude to recover the vehicle without threat to the public. The expansion of the safety zone extends this capability. On our expendable launch vehicles we place the safety zone closer to the launch site because we destroy any errant missile before it can threaten personnel or property beyond the line. This destroys a missile that cannot achieve its mission no matter how much it recovers. On the Shuttle the crew may still have the opportunity to survive and it is essential we provide every chance possible. The Air Force will jointly work this problem with NASA analyzing the associated risks, and develop a safety criteria that provides the best option for public safety and crew survivability.
On behalf of Jim President of Technology Risk Administrators (TRA), I am submitting the following comments with respect to the Discussion Draft, dated November 30, 1987, of the Commercial Space Launch Act Amendments of 1987. As you know, TRA is in the process of establishing a U.S. Launch Liability Insurance Facility to ensure availability of adequate insurance capacity on a continuing and dependable basis at reasonable cost to cover potential public liability claims and damage to Government property that may result from U.S. commercial space launch activities. It is the consensus of the insurance industry involved in commercial space activities that the establishment of such a facility would best ensure maximum insurance protection during both optimum and minimum insurance market conditions, an objective of significant importance both to the commercial space launch industry as well as the United States Government.
The discussion draft clearly demonstrates a major effort on your part to meet the potentially disabling problem of uninsurable liability risks that the U.S. commercial space launch industry faces. You are to be congratulated on a very professional effort. As you might expect, however, there are several key areas of the draft which we believe require revision. The specific changes which we suggest are interlined in the attached mark-up of the discussion draft. The basic points which these changes reflect are as follows:
Of critical importance to the insurance industry is the wellestablished policy that any Government indemnity program should not conflict with the activities of private insurers. This principle was explicitly reflected in the Price-Anderson Act of 1957 and more recently, and pointedly, in the NASA
Lillian M. Trippett, Esq.
December 4, 1987
Authorization Act (98-361) of 1985, 442 USC 2458b. Specifically, any Government indemnity provided should only apply to the extent that public liability claims cannot be compensated by reasonably-priced private liability insurance. It is clearly not in the public interest to put at risk taxpayer dollars to indemnify or otherwise protect the interests of United States private enterprise where such protection can be obtained on a reasonable basis from private insurance sources. This could, however, be the impact of the provisions of the Discussion Draft, which state that the licensee shall not be required to obtain liability insurance, or otherwise demonstrate financial responsibility, in an amount which exceeds $500 million, in the case of public liability, or $100 million, in the case of damage to Government property. These dollar figures are not necessarily the limits of the private insurance market today, nor may they be in the future, and, therefore, specific dollar limits should not be fixed or prejudged by the proposed bill.
Our second key concern is that the Discussion Draft does not deal with the problem, as highlighted in the recently-approved AIAA position paper, that the responsibility of the U.S. commercial space launch industry for damage to essential Government launch facilities should not exceed insurable levels. To impose such uninsurable risks on the emerging U.S. commercial space launch industry could have a major adverse impact upon its viability and success and, as you know, would place it at a significant disadvantage vis-a-vis foreign launch service providers. The attached mark-up contains a suggested add-on sentence to subparagraph (CX2) on page 5, which would authorize the Secretary of Transportation, on behalf of the United States, to waive any claims against the licensee, etc., for damage to Government property to the extent that the aggregate of such claims exceeds the required insurance or other private financial protection.
Lillian M. Trippett, Esq.
December 4, 1987
The third point deals with what may be a technical correction with respect to the scope of the governmental protection proposed with respect to public liability claims which exceed available private financial protection. The Discussion Draft states that this protection shall not be made available in the event public liability claims are based on negligence or wilfull misconduct. As the concept of public liability, with rare exceptions, is generally based upon various standards of negligence, including wilfull misconduct, this mandatory exclusion of protection in all such cases would, in effect, undercut one of the basic purposes of the proposed bill. Our suggestion is that you utilize the language from Section 2548b(b) of the NASA Authorization Act of 1985, which gave discretion to the Administrator to limit the scope of any governmental protection in the event the claims result from actual negligence or wilfull misconduct.
The above comments reflect serious concerns of Jim Barrett, particularly that provision of the discussion draft which would have the effect of congressionally mandating an artificial limit on private insurance protection. We would appreciate the opportunity of discussing these comments with you and Chairman Nelson prior to introduction of the bill.
cc:(w/attach.) James W. Barrett John Graykowski
You and the other Sponsors of H.R. 3765 have made a very significant contribution to restoring U.S. leadership in space transportation. Your bill would provide essential protection to commercial launch service providers, as well as to the public, in the event injuries or damages resulting from a commercial launch exceed available insurance or other private financial protection. There is little doubt that, without such extraordinary protection, the viability of the U.3. commercial launch industry, particularly at this early stage in its development, will be in jeopardy. The United States cannot afford to miss the promising opportunities in commercial space.
As I know you are aware, a key first step in obtaining broadbased support for H. R. 3765 is to ensure prospective supporters that there is substantial private financial protection available through the world insurance market and, therefore, the Government's responsibility for claims would arise only in the unlikely event of a catastrophic incident where resulting injuries and damages exceed such private financial protection. INTEC, as the largest, and only dedicated, underwriter of space risks, is keenly interested in participating in the challenge of providing such private financial protection. Technology Risk Administrators (RISKTEC), a sister company of INTEC, is in the process of establishing a centrally-managed underwriting facility which would provide, on a cost-effective basis, optimum and dependable insurance protection. I feel confident that this