GAO Report Analyzes FAA Oversight of Commercial Space Travel

Last month the Government Accountability Office (GAO) published a study exploring the developments in the commercial space launch industry. The study was published in response to a Congressional request for GAO to “examine the changes in the commercial space launch industry [that have occurred since Space Launch Amendments Act of 2004] and the [Federal Aviation Administration’s] (FAA) oversight of the industry.”

As many ETW readers are less familiar with space travel than our other, more earthbound transportation modes, we will provide a quick recap. After the Apollo Program (which successfully landed a man on the moon) ended in 1972, the space program moved in a less glamorous but more utilitarian direction with the launch of the Space Shuttle Program in 1981 (it was later discontinued in 2011). A couple years later, the federal government also opened up the ability for the private sector to engage with the space launch industry. In 1984, Executive Order 12465 and the Commercial Space Launch Act enabled private innovation in the commercial space launch industry.

Since 1984, both the Act and the commercial space launch industry have been amended and have evolved. In 2004, the Act was amended to give FAA “specific responsibility of overseeing of overseeing the public safety aspects of space tourism, but the act prohibited DOT from regulating the safety of crew and spaceflight participants in 2012, except in response to high-risk events, serious injuries, or fatalities.” This moratorium was extended to September 30, 2015.

The NASA Reauthorization Act of 2005 anticipated the approaching end of the Space Shuttle Program, and created the commercial resupply service (CRS) program, which allows NASA to create contractual arrangements with commercial launch providers to carry cargo and crew to the International Space Station (ISS). Currently, Space Exploration Technologies Corporation (Elon Musk’s SpaceX) and Orbital ATK have CRS contracts. In 2014 NASA put out a Request for Proposals for a “follow-on” CRS contract. A number of private companies have been developing technology that could be considered, including Blue Origin, Boeing, Paragon Space Development Corporation, Sierra Nevada Corporation, SpaceX, and United Launch Alliance.

Within the confines of the moratorium, FAA’s two primary vehicles to regulate the space launch industry are licensing and insurance. FAA is responsible, among other things, for licensing launch and reentry operations, reviewing applications for permits, reviewing safety approvals. According to GAO, “the federal government provides a conditional payment claims in excess of the required insurance mandated by license,” referred to as indemnification. Under current law, this policy expires December 2016.

In its FY 2016, the FAA requested a 9 percent increase in funding and an additional 13 full time equivalent staff positions over its FY 2015 appropriations for the Office of Commercial Space Transportation. The request specifically indicated that additional staff was needed to “conduct [commercial space] license and permit determinations within the legally mandated time periods.” In the last 26 years, FAA has licensed 237 launches. According to GAO, as of July of this year, six companies held 17 launch licenses.

In the context of this federal role, it’s also important to note that the U.S. commercial space launch industry has dramatically expanded in recent years. According to the report, “the number of orbital launches conducted by U.S. companies increased from zero in 2011 to 11 in 2014.” With this background, the FAA currently faces the challenges of whether to allow the regulatory moratorium to expire, whether to extend indemnification, and how to handle the increased workload related to increased licensing and permitting.

The GAO interviewed experts from six out of the nine active commercial space launch companies, who all recommended that the moratorium be extended to allow the “space tourism industry and industry standards more time to develop and because of changing technologies.” The report noted that FAA commented that their official position is that the moratorium should be allowed to expire, but that FAA has no intention of immediately introducing any new regulations. Similarly, representatives from four companies said that the expiration of indemnification might lead to higher launch prices.

The GAO concluded that, “if Congress does not extend the regulatory moratorium beyond September 2015, FAA will need to determine whether and when to regulate the safety of crew and spaceflight participants.” In addition, in order for Congress to appropriate the Federal Aviation Administration (FAA)’s requested additional “16 percent increase in staff for its commercial space launch activities to keep pace with industry growth,” FAA needs to provide a clearer justification for its additional staffing needs.

On August 5 of this year, the Senate passed the U.S. Commercial Space Launch Competitiveness Act (S. 1297). This bill extends indemnification until December 21, 2020 and extends the moratorium until the end of September 2020. Earlier this year, the House of Representatives passed the Spurring Private Aerospace Competitiveness and Entrepreneurship Act of 2015 (SPACE Act of 2015, H.R. 2262). This bill extended both the regulatory moratorium and indemnification until the end of December 2025.

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