Liability Limitation in Commercial Human Spaceflight: Benefits for Entrepreneurship, Partnership, and Policy

Abstract

Prospective commercial spaceflight operators suffer from excessive exposure to liability—for damage claims by private spaceflight participants (SFPs) for damages sought in relation to flight-related mishaps. An additional major concern involves constraint of collaboration between startup spaceflight operator ventures and established aerospace companies. This obstacle arises from potential for SFPs to seek damages not only from operators but also from large, established companies that have acted as manufacturers and suppliers and which have “deep pockets” of financial resources. Beyond this, it is clearly in NASA’s interest to have the option of purchasing services from commercial providers who have commercial as well as government customers. More customers might well mean lower costs paid by NASA for transportation services, thereby expanding the nation’s ability to maintain a robust and balanced space program, in the face of limited resources. SFPs are not included in the government-mandated cross-waivers arrangement applying to cargo, because current Federal legislation deals only with non-human cargo and the employees of the business parties who handle cargo-related operations. Operator liability associated with risk to SFPs (i.e., private citizens rather than U.S. Government employees), has not been limited effectively. Provision in Federal law for informed consent by SFPs may to some degree protect operators and vehicle manufacturers/suppliers with respect to the duty to warn. It does not, however, reliably protect against strict liability or negligence. State laws passed following the enactment of Federal statutory language addressing this issue— intended to strengthen the liability protection accorded to operators by SFP informed consent—still do not protect against court challenges. Tools available to limit business liability include: government-mandated cross-waivers of liability, government indemnification of operators, liability protection of operators based on the SFP’s informed consent, caps on maximum allowable liability claims, and private insurance coverage. Possible approaches to use of these tools include: state government legislation, Federal legislative preemption of state law, and Federal designation of launching state jurisdiction and governing state law. Given the complex mix of issues affecting commercial spaceflight liability, a dual strategy of simultaneously pursuing insurance and legislative initiatives could prove to be an effective approach. Desirable outcomes of dialogue could be greater ability of spaceflight operators to identify risks and insurance needs, as well as clearer specification by insurers of the kinds of insurance products they would make available and the premiums to be charged for such policies. A legislative initiative could involve crafting a proposal that selects optimally among the available tools and approaches for operator liability limitation, as well as taking into account Congressional committee jurisdiction.