State Law Limitations on the Liability of Spaceflight Operators

Vol. 9, No. 1

Rachel A. Yates is a partner with the Rocky Mountain-based law firm of Holland & Hart, where she heads the firm’s aerospace practice. As a trial lawyer, Ms. Yates focuses on the defense of the aerospace industry. She sits on the FAA’s Commercial Space Transportation Advisory Committee.

“Who would like to go to the moon on a space ship?” asked Miss Rose, the second grade teacher, as her class turned a corner in the museum hall. Twenty eager hands waved in the air. “Well, that is just what we are going to do, or nearly going to do,” continued Miss Rose.

So begins Space Ship to the Moon, a 1952 children’s book by E.C. Reichert. Sixty years later, we pose the same question, and eager hands are still waving for the opportunity to travel into space. With the retirement of the Space Shuttle, NASA is encouraging commercial space transportation, in which private industry innovates and tests the technologies and conducts operations to space habitats, such as the International Space Station, in both orbital and suborbital space. In light of international obligations under the Outer Space Treaty (1967) and its companion treaties, the United States government cannot cede all operating authority to private industry, but can provide a well-defined regulatory framework that allows private industry to move into areas historically reserved to the government, such as private launch and re-entry.

The advent of commercial space transportation brings a need for a different legal framework in which to allocate responsibilities. Five states that hope to attract commercial space activities (and their economic benefits) have written laws limiting the liability of spaceflight operators. All five (Virginia, Florida, New Mexico, Texas, and Colorado) have or are developing spaceports intended for commercial traffic. These state legislatures have enacted liability laws as an added incentive to draw aerospace companies into the state. Each has used a similar approach, including requiring a written warning to spaceflight participants as a condition to waivers of, or limitations on, liability. A closer look reveals the subtle differences between the laws and the resulting variations in the protections afforded to the operators and participants.

The state laws fill a void left in the federal regulatory scheme. Under the Commercial Space Launch Amendments Act of 2004 (CSLAA),1 Congress gave general guidance to the Federal Aviation Administration (FAA), which regulates launch and reentry activities for the protection of public safety. The CSLAA recognized that space transportation is inherently risky, but identified a goal of safely opening space to private, commercial, scientific, and cultural enterprises.2 Although it protects the general public through FAA oversight and regulation, Congress took a relatively hands-off approach to protecting the paying passengers on suborbital flights, ensuring only that these passengers (“space tourists”) receive appropriate warnings and information by which to make an informed decision about whether to travel to space. Specifically, to obtain a suborbital launch license or permit, the spaceflight operator must certify that it has informed the participants of the risks of launch and re-entry, including the safety record of the vehicles; that the US government has not certified the launch vehicle as safe (as it might do, for example, with aircraft); and that the operator has complied with FAA regulations.

In response to this statutory directive, the FAA issued regulations specifying how and what information should be given to the spaceflight participant. For example, the operator must present information on the known hazards and risks that could result in a serious injury or death and must provide statistics about the safety record of other crewed vehicles, such as the number of catastrophic failures, the number of vehicle flights, the number of safety-related anomalies or failures, and any corrective actions to fix them.3

The spaceflight participant must be given the opportunity to ask questions orally to better understand these risks and must sign an informed consent acknowledging that she understands the risks and is still participating voluntarily. Although securing informed consent is a condition to the operator receiving its launch license, the informed consent does not have the effect of limiting the liability of the spaceflight operator. Indeed, the only waiver of liability required of the spaceflight participant is one that benefits the federal government.4

As a result, state laws are attempting to fill that gap by providing the spaceflight operator protection from liability. Virginia was the first to enact a comprehensive state law limiting liability for spaceflight operators. The bill covers not only the license or permit holder, but also “any manufacturer or supplier of components, services, or vehicles. . . reviewed by the FAA” as part of the issuance of the license or permit.5 Texas and Colorado laws are similarly broad, and Florida recently amended its statute to encompass manufacturers and suppliers.6 By contrast, New Mexico offers protection only for the license holder.7

All five of the states limit the operator’s liability if specified warnings are given, but, again, the scope of that limitation and the types of warnings vary from state to state. Patterned on typical statutory liability limitations for recreational activities, some states circumscribe liability for injury or death resulting “exclusively” from the “inherent risks” of spaceflight activities.8 Any spaceflight participant hoping to avoid the limitation on liability must demonstrate that the risk causing the injury was not “inherent” in the activity and that it wasn’t the exclusive cause of the injury. Texas and Virginia took a more expansive approach by limiting liability resulting from the “risks” of spaceflight activities, without regard to whether they are either inherent or exclusive.9

Texas offers the broadest protection in terms of the type of activities covered. It limits liability under all mission phases, including preparation of the launch vehicle, the launch, the time between launch and re-entry, preparation for re-entry and actual re-entry, landing, and postlanding recovery.10 The other states protect the spaceflight operator only during launch and re-entry as defined by federal law, which is more restrictive, although it covers what is expected to be the riskiest phases of the mission.11 An attempt by New Mexico to similarly broaden the scope of coverage failed in the 2012 legislature.12

The widest distinction between the five states, however, comes from the exceptions to limited liability. All five state laws agree that liability will not be limited if the spaceflight operator caused the injury through gross negligence or intentional conduct. Following the lead of Florida, both New Mexico and Colorado create a third exception when the spaceflight operator had actual knowledge of, or reasonably should have known of, a dangerous condition on the land or in the facilities or equipment used.13 The intended scope of this additional exception can only be made clear when viewed in the overall context of the statutory schemes and the pre-existing statutory and judicial precedent.

Of course, all spaceflight operators are aware of dangers in the use of their facilities and equipment: it is the reason warnings must be given to the spaceflight participant and an informed consent secured. If that knowledge alone could nullify the limitations on liability, then the entire statutory scheme would be rendered meaningless. Rather, the exception must be read in a way that gives meaning to all parts of the statute. Interpreting the word “condition” as implying a circumstance that is likely to cause the occurrence of an injury allows the statute to be read as a coherent whole. That condition must exist in its own stead and must pre-exist the mission operations, rather than be caused by some negligent activity during a later phase of the mission. Mere negligence in operations is not an exception to the liability limitation because it would swallow the other exceptions that encompass gross negligence and intentional conduct.

The historical laws of each state may provide the best guidance of the scope of this exception. In Florida, for example, the term dangerous condition is used in connection with immunity granted to farmers under certain conditions and is a template for the triad of exceptions under the spaceflight immunity act. “The exemption from civil liability provided for in this section shall not apply if injury or death directly results from the gross negligence, intentional act, or from known dangerous conditions not disclosed by the farmer.”14 The same phrase is used in connection with exceptions to governmental liability for skateboard parks.15

Colorado provides greater clarity because the term dangerous condition has been defined in both statute and case law. In the context of governmental immunity, for example, the term means “a physical condition of a facility . . . that constitutes an unreasonable risk to the health or safety of the public, which is known to exist or which in the exercise of reasonable care should have been known to exist and which condition is proximately caused by the negligent act or omission of the public entity or public employee in constructing or maintaining such facility.” The dangerous condition should have been known to exist if “the condition had existed for such a period and was of such a nature that, in the exercise of reasonable care, such condition and its dangerous character should have been discovered.” By contrast, a dangerous condition does not exist solely because of the inadequate design of any facility.16 A similar analog in Colorado applies to operators of recreational areas, in which otherwise available limitations on liability do not necessarily extend to a situation involving “a known dangerous condition, use, structure, or activity likely to cause harm. . . .”17

Because each state has its own statutory and judicial precedent, the interpretation of the laws will necessarily require a case-by-case application. Nonetheless, the language of this third exception appears to draw on the concept that the condition must have existed for a period of time and was not simply the result of some negligence during the mission activities. Further, it must be the type of condition that is recognized as likely to cause harm. Under these circumstances, the language can be construed as similar in degree to the other conduct for which exceptions are created: gross negligence and intentional conduct. As further indication of this interpretation, the Colorado legislative history reflects an attempt to delete the word gross from gross negligence during Senate hearings, which would have reduced the statutory limitation to a mere negligence standard. The fact that this amendment was defeated signals the legislature’s intent to raise the bar and to protect this nascent industry, so long as the spaceflight participants are adequately informed.18

An obvious question arises from this piecemeal approach to liability limitations: should federal law be expanded to supplant or preempt the state laws? Because similar language across state laws can be interpreted only in the context of state precedent, there is no uniform, national approach to limiting liability for spaceflight operators. Many say federal action is needed to avoid inconsistencies; while others argue that the state-by-state approach is the more appropriate model in the context of commercial activities. The possibility of federal legislation or regulation is being studied, with a variety of approaches: liability caps, government indemnification, and statutes of repose, to name a few. The change may require congressional action because the federal agencies responsible for spaceflight activities have specified limits to their authority, which might be inconsistent with attempting to regulate liability across all mission types and mission phases. The relatively slow pace of commercial space transportation efforts, however, has not forced the issue. Indeed, the moratorium on regulation of certain space operations that existed under CSLAA has been extended to 2015 in light of the lack of activity to guide further regulatory developments.

The race to adopt state legislation protecting the commercial spaceflight industry is just the beginning of an effort to spur economic growth in this field. Through tax incentives and other governmental programs, lawmakers are quick to lay out the welcome mat for the industry. In addition, informed spaceflight participants are eagerly waving their hands to book reservations long in advance of the first test flight. u

Endnotes

1. 118 Stat. 3974 (Dec. 23 2004).

2. Id. at § 2(b).

3. 14 C.F.R. § 460.45 (2006).

4. 14 C.F.R. § 460.49 (2006).

5. Va. Code Ann. § 8.01-227.8 (2007).

6. Texas Civ. Prac. & Rem. Code Ann. § 100A.001 (2011); Colorado Senate Bill 12-035 (had not been enacted at the time of publication, but was passed out of the Senate and to the full House, as of Mar. 8, 2012); Florida Stat. ch. 331.501(1)(c) (2011).

7. Florida Stat. ch. 331.501 (2008); N.M. Stat. Ann. § 41-14-2 (2010).

8. N.M. Stat. Ann. § 41-14-3; Florida Stat. ch. 331.501(2); Colo. Rev. Stat. § 41-6-101(2) (2012).

9. Texas Civ. Prac. & Rem. Code Ann. § 100A.002; Virginia Code Ann. § 8.01-227.9(A).

10. Texas Civ. Prac. & Rem. Code Ann. § 100A.001(3).

11. See 49 U.S.C. § 70102; 51 U.S.C. § 50902.

12. N.M. SB 3 (2012).

13. Florida Stat. ch. 331.501(2)(b); N.M. Stat. Ann. § 41-14-3 (B); Colo. Rev. Stat. § 41-6-101(2).

14. Fla. Stat. ch. 768.137 (1992).

15. Fla. Stat. ch. 316.0085 (2006).

16. Colo. Rev. Stat. § 24-10-103 (2008).

17. Colo. Rev. Stat. § 33-41-105 (1963).

18. By contrast, in New Mexico, an amendment with the stated intention of “clarify[ing] that manufacturers and suppliers are not liable for acts of simple negligence” failed to pass. N.M. SB 3, Fiscal Impact Report, dated Jan. 30, 2012.

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