Home to a $209 million spaceport, New Mexico approved a new law designed to limit tort claims from space travel passengers to suppliers and manufacturers.
"Lawmakers had previously only exempted spacecraft operators from liability, but some space companies began passing up the New Mexico spaceport in favor of states that had extended these protections to suppliers as well," said Kim Hennessy, senior vice president, DefCon Risk Group, Equity Risk Partners, and a 2013 PowerBrokerŪ winner in the aviation category.
Richard Branson based his Virgin Galactic operations in New Mexico, and is offering space flights at a cost of $200,000 per person. His company and Spaceport America officials have been fighting to get the legislation enacted, according to news reports.
After signing the legislation into law, New Mexico Gov. Susana Martinez said the legislation "will prevent lawsuit abuse and make it easier for businesses related to the space travel industry to thrive and succeed right here in New Mexico."
Building on existing legislation passed in 2010, which covered only spaceflight operators like Virgin Galactic, the new law provides coverage to both operators and their supply chain "during the critical early years of the industry's development," according to the announcement by Martinez and Spaceport America, which is part of the growing spaceport tourism industry.
The new law provides legal options to spaceflight participants "in cases of willful, wanton or reckless disregard, while creating an environment that enables New Mexico to more successfully recruit and retain commercial space tenants and customers for human spaceflight operations at Spaceport America," they said.
Hennessy said other states, such as Colorado, Texas, Florida and Virginia have also changed their laws "to provide favorable business environments to the commercial space industry."
"Businesses and risk management professionals need to fully understand the impact of the law," she said.
"The law does not protect companies in the commercial space industry from contract claims," Hennessy said. "The reform also does not clearly address the third-party risks for any injuries to ground victims in the event of a spacecraft accident."
She said the law is "well intended and is a step in a direction to allow companies the protection to develop in this emerging market. It is important to note that the law does not provide a substitute for the need for risk management practices, nor does it replace the need to purchase insurance."
Insurers over time, she said, will view such tort limitations favorably. As more states adopt similar laws, she expects insurers to provide broader terms and improved pricing.
By Anne Freedman
June 1, 2013
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