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Exploring Limits on Liability

Exploring Limits on Liability. FAA Responsibilities. The FAA shall “ encourage, facilitate and promote commercial space launches and reentries by the private sector including those involving space flight participants. ” 51 U.S.C. 50903(b). E.O. No. 12465 tells the agency to

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Exploring Limits on Liability

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  1. Exploring Limits on Liability

  2. FAA Responsibilities • The FAA shall “encourage, facilitate and promote commercial space launches and reentries by the private sector including those involving space flight participants.” 51 U.S.C. 50903(b). • E.O. No. 12465 tells the agency to • Identify Federal statutes, treaties, regulations and policies with adverse impacts on ELV commercialization efforts

  3. Adverse Impacts of Liability and Uncertainty • General aviation • Annual sales dropped from 18,000 to 928 between 1978 and 1994 • 100,000 jobs lost • Vaccines • Vaccine manufacturers dropped from 25 in 1967 to 3 by the mid 1980s

  4. Adverse Impacts (cont’d) • Asbestos • Over 600,000 claims filed as of 2002 • Bankruptcies of manufacturers with attendant job losses and direct costs in the hundreds of millions • 35 bankruptcy filings between 1998 and 2002 • 15 filings in 2002 • Spread of litigation beyond the asbestos industry to related industries in

  5. Adverse Impacts (cont’d) • Planning for insurance and litigation costs • Int’l Bar Assoc’n: • US tort litigation costs have increased nearly three times faster than GDP between 1950 and 2003 • Direct costs, settlement costs, inability to recoup costs associated with non-meritorious claims • Reallocation of resources from productivity to defense of claims • State responses may provide incomplete solution

  6. Space is a Frontier Environment • Congress recognized the inherent risks and seeks its development • Informed consent ensures that participants know the risks they face • Participants will be sophisticated individuals • Employees of companies with an ability to plan ahead to deal with financial risks

  7. Benefits of Liability Protection • Certainty in managing financial risk may promote • Lower costs • Increased market entry • Increased availability of private capital • Space-related economic activity and employment • International competitiveness

  8. Federal Responses • CSLA • Insurance and possibility of indemnification • Reciprocal waivers of claims • Informed consent • GARA • Statute of repose for suits brought for damages caused more than 18 years after delivery of aircraft • Aircraft production tripled • National Childhood Vaccine Injury Act • No-fault compensation program

  9. Options at Federal Level • Preemption: displacing state tort law through one of three options: • Extinguish liability: immunity from claims • Caps: limit the amount of damages • Statute of repose: requires right to be acted upon by a certain date

  10. Scope of Protection • Operators of space transportation vehicles • and habitats? • citizenship? • FAA authorization? • Manufacturers or suppliers of components, parts, services or vehicles • For actions brought by anyone for death or serious injury of space flight participants

  11. Discussion • Questions • Thoughts • Remarks

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