Most people in the space industry recognize HR 3752, the Commercial Space Launch Amendments Act of 2004, as the bill that codifies into law the definitions of suborbital rocket and suborbital trajectory, and ensures vehicles that fall under those definitions are regulated by the FAA’s space transportation division and not its aviation division. (Those definitions were formally adopted by the FAA and published in the Federal Register last fall, but by putting them into the bill it makes it much harder to change them in the future.) However, as I point out in an article today in The Space Review, there are other aspects of this bill that could prove equally useful, if not more so, for the suborbital RLV industry. This includes waivers of second-party (i.e., passenger) liability, which will ease the insurance burden these companies face. In addition, the bill establishes an experimental permit regime similar to experimental certificates in aviation that will (or at least should) be easier to obtain. The House overwhelmingly passed the bill two months ago, but the Senate has yet to take action on it, but then, the Senate is taking very little action on any legislation these days.
Insurance is a complex business. Its also the epitome of a genuine free market. Lloyds of London will cover just about anything, for the proper premium.
Since “hole in one” contests and the like can easily and regularly buy insurance, if insurance truly is unavailable, that suggets to me that alt-space may be far less safe than the proponents would like us to believe.
Would flying on an alt-space vessel void the basic life insurance policy we all carry? What about group life offered through your employer?
Concerning insurance for participants, I tend to think an alt-space company should locate an insurer willing to write a life policy with a set face amount – – $500,00 or $1 million say – – and if a participant dies in an alt-space accident the estate receives that policy in lieu of all other compensation.
The potential space tourist signs a contract which plainly says that this policy will be the ONLY compensation they will receive in the event of an accident.
However basic fairness requires that any potential space tourist be told of the risks in an honest, candid and public manner. Otherwise, an accident risks setting commercial space back decades, as the tearful widow cries, “No one told us this could happen!”
As far as uninvolved folks on the ground, do we really want to write laws that say if an alt-space vehicle crashes into a house ownd by Mabel of Moline, she is barred from suing?
Should the risks of alt-space be transferred to unknown civilians who probably have no idea what alt-space even is?
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Bottom line – – insurance via legislation is a government subsidy. Pure and simple. I am not against government subsidy for alt-space, actually I favor it, but lets be honest, okay?
I am often amused by private entrepenuers who claim that the only way to “unleash the free market” is to start with government protection.
From the SpaceReview article:
“In his ideal world, Greason said he would be able to carry two to three times less insurance than he is currently mandated to have.”
I would like to see some actual numbers. Is this insurance market radically different from others in terms of pricing?
Normally the cost of increasing liability coverage is not linear. In other words $60 million of coverage will often cost far less than 3x the cost of $20 million in coverage. Finding out (in exact dollars) exactly how much Greason would save by cutting coverage in half seems essential to judge the merits of this issue.
Anyone who has looked into personal umbrella coverage will see this point immediately. The cost difference between $2 million umbrella and a $5 million umbrella is often trivial.
Maybe this type of coverage is different, so I say show us the actual numbers.
The insurance is mandated because the United States has absolute liability over objects launched from US soil. This is due to various international treaties, which would need to be amended to allow limited liability.
What this legislation does is moves space travel from the category of “exceptional” to the category of “routine”. Smoothing the launch license application process, making manned space travel more profitable, that is all good. It brings more players into the market. The more players in the market, the more it becomes like the airline industry, thus leading to fewer environmental assesment costs once launches are no longer “exceptional” and lower insurance costs as launches become routine.
The “alt-space” issue that I frankly see no solution for is the national security angle.
If a genuine ultra-low cost Earth to LEO RLV were developed, by definition it would be inexpensive to manufacture and operate. Otherwise capital costs along would drive payload prices above $100 per pound.
At 10% interest (venture capital rates) a $50 million spacecraft would need to lift 50,000 pounds to LEO per year just to cover interest expense, with nothing towards R&D and operatng expense.
If such a craft were developed, mass production would also be needed to assure Earth to LEO launch costs fell below $100 per pound. If only a handful were built, supply and demand would force prices way above $100 per pound. If only a dozen say, of these fancy new RLVs existed the owners could charge full market rate, less 5%, and still corner the market.
And, if very large numbers of these RLVs were built, international proliferation would be impossible to prevent. Why?
Suppose hundreds or thousands of RLVs are flying routinely. Bribe a pilot to land in China rather than the Mojave and then the Chinese rather easily reverse engineer the thing and start making hundreds or thousands of their own. A
And maybe selling some to North Korea and al Qaeda. After September 11th, the US Air Force has orders to shoot down unauthorized airliners that approach US air space. But they ravel at maybe 500 mph.
How would we stop the new alt-space style RLV? Wouldn’t our entire current national ballistic missile defense investment be rendered worthless?
Frankly, I believe that if the federal government ever truly believed an ultra-low cost Earth to LEO RLV was imminent, the developers would vanish under an avalanche of regulation.
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None of this analysis involves the technical feasibility of $100 per pound Earth to LEO RLV technology. It only looks at the consequences were such technology to magically appear.
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If this alt-space RLV cost $5 million per copy, the Chinese could build thousands and flood US air defenses rather easily, right?
Why is this relevant to Jeff’s thread?
Because unless we solve the natioanl security issues related to ultra low cost Earth to LEO RLVs I believe alt-space will never advance beyond hobbyist stage.
And why should hobbyists receive special legislative treatment?
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PS – – I would very much LOVE for someone to prove me wrong on the national security angle.
Personally, I would be in heaven to have a $5 million dollar Earth to LEO RLV parked in my backyard hanger.
The only draw back to cheaper or more RLV for flight use is that there is only one place to dock at(ISS) and until that changes there is no need to build the rockets that we all would enjoy a ride on. Floating in orbit is just not the same as actually visiting your favorite vacation place.
Private sector supply is meaningless without private sector demand.
At $100 per pound, humanity will need to be slinging huge quantities of mass into LEO to generate any meaningful amounts of revenue.
Emigration. A permanent settlement on Mars solves that problem nicely. A space hotel funded with the sale of name rights and advertising is a nice intermediate step as well.
A single payor system, where all demand is funneled through the federal government, will never create the sufficient demand needed to justify low cost Earth to LEO.
I’ll try to address some of Mr. White’s initial comments; I’ll ignore the $100/lb-to-LEO RLV discussion for now since it seems to be something of a strawman argument.
The space insurance industry is indeed quite different from other aspects of insurance, including aviation. Much of this has to do with the numbers: there are far fewer commercial launches than commercial flights (let alone cars, homes etc.) This means there are far fewer insurers, and those insurers don’t have the actuarial databases that other insurers have. Moreover, as noted in the article, the Outer Space Treaty means that space does not have the limited liability protections that commercial aviation has, for example.
This does not mean insurance isn’t available: as Jeff Greason noted at Space Access, companies can get enough third-party insurance at rates they can afford, although they believe they could get by with far lower levels. HR 3752 makes no provision for a waiver of third-party insurance, so there’s no chance “Mabel of Moline” would be barred from suing in the event of such an accident. Keep in mind the odds of such an accident are very remote, since during the licensing process the FAA and the company work to minimize the risk to the uninvolved public.
(There is a provision in the bill to study whether the existing government indemnification for third-party damages that exceed the MPL should be continued. To the best of my knowledge the government has never paid out a dime in such damages, but the existing commercial ELV launch industry wants to keep this indemnificaion regime in place. Stay tuned.)
What HR 3752 does offer is a “fly at your own risk” system that would shelter launch compenies from second-party (passenger) liability. This would allow companies to avoid purchasing second-party liability insurance that, the article notes, could cost more than those companies could expect to take in as revenue. Companies would be expected to make clear that spaceflight is a risky activity—one company at the conference joked it would show prospective passengers videos of “other companies’ rockets” crashing. Whether such flights would void a passenger’s life insurance is something each individual would need to take up with their insurer: if the policy has existing exclusions against risky activities like mountain climbing, then I would expect suborbital spaceflight to also be included.
Provisions to secure and enforce second party liability waivers are an excellent idea I support 100%.
I apologize for my rant – – I just get frustrated by people (not Jeff Foust) who seem to believe that humanity would be off to the stars if only those darn bureaucrats would just cut the red tape. And as if outlawing liberalism and the Democratic party is a first mission critical step for space exploration.
My apologies to Mr. Foust.