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The SpaceX Rocket Crash: Space Legislation and Personal Injury

On Sunday, June 28th 2015, a SpaceX Falcon-9 rocket exploded after launching from Cape Canaveral Air Force Station, Florida during a resupply mission to the International Space Station. Debris from the explosion fell harmlessly into the Atlantic Ocean. But what if it didn’t? What if the debris fell in a populated area killing or seriously injuring people and damaging private property? Further, what if passengers were onboard? If this were an air crash, injured parties would have legal recourse. However, if proposed space-related legislation becomes law, injured parties would face oppressive legal hurdles, and relief awarded may come from American taxpayers.

Proposed Commercial Space Legislation

On May 21, 2015 the House passed H.R.2262, or The Spurring Private Aerospace Competitiveness and Entrepreneurship (SPACE) Act of 2015. Concurrently, the Senate is moving forward with S.1297, or the U.S. Commercial Space Launch Competitiveness Act. A space legislation bill will likely make its way to the President’s desk this year and become law. The stakes are high for tax payers, the commercial space industry, and the insurance industry (which for aviation and space is predominately foreign-based). Proposed legislation includes U.S. government-backed indemnification and the establishment of exclusive FEDERAL jurisdiction and law.

Limitation of Liability (Launch Liability Indemnification)

The House proposes a “launch liability extension” from 2016 to 2025. The Senate proposes an identical extension through 2020. Launch liability indemnification, originally enacted in 1984, caps a commercial spaceflight corporation’s, and consequentially its insurer’s, legal exposure to third parties and the government at a “maximum probable loss” for all claims which do not involve willful conduct/gross negligence. Any claim over the maximum probable loss would be paid by the U.S. government (i.e. taxpayers) up to a maximum amount of up to around $3 billion. Both versions of the bill are attempting to lower the maximum probable loss figure, and extend the limitation of liability, which would expose taxpayers to more risk of paying damages in the event of a disaster.

As a point of reference, the maximum probable loss for the recent SpaceX rocket launch is approximately $170 million dollars ($57 million for third party claims and $113 million for U.S. government property). What does this mean? According to American Association of Justice CEO, Linda Lipsen, “If private space travel corporations were to cause any kind of crash or disaster, this bill would immunize those at fault and leave victims and taxpayers stuck footing the bill for the tragedy.” At a minimum, taxpayers would be on the hook for any amount over the $57 million “maximum probable loss” figure. The limitation of liability period will expire on December 31, 2016—32 years after it was initially enacted. Why would a government with a current national debt approaching $20 trillion chose to extend its risk exposure, or allow its taxpayers to bare corporate and insurer risk?

Exclusive Federal Jurisdiction and Law

The House version of the bill states that “[a]ny action or tort arising from a licensed launch or reentry shall be the sole jurisdiction of the Federal courts and shall be decided under Federal law.” Such an approach runs afoul with American jurisprudence. Space may be the final frontier, but it is not the first frontier the US has encountered. Sea travel for the Framers of the Constitution and commercial air travel in the twentieth century offer a guide to the development of space jurisdiction and law. On sea, the Framers determined that federal maritime law would apply; yet, in application State and Federal courts maintained concurrent jurisdiction through a “saving to suitor’s clause” for most maritime claims. In Air, neither the Federal Aviation Act nor the Airline Deregulation Act expressly created “federal aviation law” or exclusive federal jurisdiction. Why should a California resident injured by a California (spaceflight or space launch) corporation not be permitted to seek justice in a California court?

When the final version of this bill passes both Houses and is signed, let’s hope prudence, not partisanship, makes for good space law.


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