1. 1 COMSTAC Briefing: Human Spaceflight Legislation in Virginia and Florida James E. Dunstan Garvey Schubert Barer May 16, 2007

2. 2 Setting the Stage How do we get from this: Flying Test PilotsFlying Paying Passengers To this:

3. 3 States Have Impact in Three Areas State tort law (immunity and liability legislation) Conducive business and tax environment Launch infrastructure development

4. 4 State Liability and Immunity Acts Virginia Space Liability and Immunity Act Florida Informed Consent For Spaceflight Act

5. 5 Tort Law: Air Transportation As Context 1918: –Air mail service well established –Airplane reliability – 90% 1919: First regularly scheduled service between London and Paris 1925: Air Mail Act Passed, guaranteeing air mail contracts 1929: Warsaw Convention adopted, limiting liability for passenger fatality on international flights to $10,000. Passenger fatality rate of 45 persons per million miles flown 1966: Montreal Convention: Upped damage cap to $75,000

6. 6 CSLAA and FAA/AST Regulations Congress passed the Commercial Space Launch Act Amendment in 2004: –“The goal of safely opening space to the American people and their private commercial, scientific, and cultural enterprises should guide Federal space investments, policies, and regulations” –Directed the FAA through AST to promulgate rules –Specifically precluded AST from adopting any specific vehicle safety regulations until 2012 AST adopted final rules December 15, 2006 in “Human Space Flight Requirements for Crew and Space Flight Participants”

7. 7 FAA Regulations Limited reach Specific requirements as to crew safety and training Much looser requirements as to SFP Reciprocal waiver regime to protect the government (all crew and SFPs must agree not to sue the Federal government for injury) “Informed Consent” regime for SFP

8. 8 Virginia Space Liability and Immunity Act Effective July 1, 2007 Adds New Article 24 in Chapter 3 in Title 8.01 (Civil Remedies and Procedure), Section 8.01-227.8 et seq. Has a sunset of July 1, 2013

9. 9 Virginia Space Liability and Immunity Act Keyed to FAA Regulations Provides limited immunity for spaceflight entities, which includes “manufacturers or suppliers of components, services or vehicles that have been reviewed by the FAA” as part of the federal licensing process Informed consent regime Specific statutory language warning potential participants of the danger and that they are waiving rights to sue “space flight entities” in the case of an accident

10. 10 VA Statutory Warning "WARNING AND ACKNOWLEDGEMENT: I understand and acknowledge that, under Virginia law, there is no civil liability for bodily injury, including death, emotional injury, or property damage sustained by a participant in space flight activities provided by a space flight entity if such injury or damage results from the risks of the space flight activity. I have given my informed consent to participate in space flight activities after receiving a description of the risks of space flight activities as required by federal law pursuant to 49 U.S.C. § 70105 and 14 C.F.R. § 460.45. The consent that I have given acknowledges that the risks of space flight activities include, but are not limited to, risks of bodily injury, including death, emotional injury, and property damage. I understand and acknowledge that I am participating in space flight activities at my own risk. I have been given the opportunity to consult with an attorney before signing this statement."

11. 11 Florida Informed Consent For Spaceflight Act Effective October 1, 2008 Creates Part III of Chapter 331 of the Florida Statutes, Section 331.501 et seq. No sunset Virginia Statute used as model

12. 12 Florida Informed Consent For Spaceflight Act Keyed to FAA Regs, including referencing the Federal definition of “spaceflight activities” limiting the reach of the statute to sub-orbital flights only Provides a release from liability for spaceflight entities, but limits them only to those entities actually holding an FAA license Specifically states that there will be no cause of action for injury occurring during spaceflight Statutory warning language required

13. 13 FL Statutory Warning "WARNING: Under Florida law, there is no liability for an injury to or death of a participant in a spaceflight activity provided by a spaceflight entity if such injury or death results from the inherent risks of the spaceflight activity. Inherent risks of spaceflight activities include, among others, risks of injury to land, equipment, persons, and animals, as well as the potential for you to act in a negligent manner that may contribute to your injury or death. You are assuming the risk of participating in this spaceflight activity."

14. 14 Conducive Business and Tax Environment Virginia –Zero G/Zero Tax Florida –Qualified Space Flight Contractor Tax Refund Act –Reusable Space Vehicle Industry Prize

15. 15 Virginia Zero-G/Zero Tax Passed both houses 2/20/08, signed into law by Gov. Kaine March 2, 2008 Effective 7/1/08 for calendar tax year 2009 Adds subsection 33 & 34 to 58.1- 322 of the Virginia Tax Code (corporate tax) and subsections 22 & 23 to 58.1-402 (partnership tax)

16. 16 Virginia Zero-G/Zero Tax Grants a STATE income tax exemption for income resulting from –the sale of launch services to space flight participants or launch services intended to provide individuals the training or experience of a launch, without performing an actual launch –any gain recognized as a result of resupply services contracts for delivering payload entered into with the Commercial Orbital Transportation Services division of the National Aeronautics and Space Administration or other space flight entity. To qualify for a deduction under this subdivision, launch services must be performed in Virginia or originate from an airport or spaceport in Virginia

17. 17 Florida Qualified Space Flight Contractor Tax Refund Act Amended existing state statute to include space flight contractors to allow them to receive refunds for certain taxes after entering into tax refund agreements To be eligible for a refund, a new space flight business contract or a facility consolidation must result in a net increase in space flight business employment at an applicant’s Florida facilities

18. 18 Florida Qualified Space Flight Contractor Tax Refund Act For Example: Qualified applicants would receive a tax credit of $3,000 per job created or retained, but $6,000 per job if the business is located in a rural area or enterprise zone; and An additional $1,000 per job bonus when the jobs pay 150 percent of the average private sector wage in the area where the business is located, or a $2,000 per job bonus when the jobs pay 200 percent of the average private-sector wage in the area.

19. 19 Florida Reusable Space Vehicle Industry Prize Establishes a $40 million prize to encourage the invention of a reusable space vehicle “to replace the Space Shuttle” Half of money to come from state, half from unidentified private match (but no funds currently appropriated for the prize)

20. 20 Florida Reusable Space Vehicle Industry Prize To be awarded “ to the firm or individual in the private sector providing the most significant advancements within the reusable space vehicle industry the period beginning January 1, 2009, and ending January 1, 2014” To mirror as closely as possible the Ansari X Prize

21. 21 Infrastructure Development Virginia –Virginia 21 st Century Capital Improvement Program Florida –Florida appropriations to support commercial space activities

22. 22 Virginia 21 st Century Capital Improvement Program Passed both houses 5/3/08, awaiting Gov. Kaine signature Public bond package which includes new funding for the Virginia Commercial Space Flight Authority to make significant infrastructure upgrades to the Mid-Atlantic Regional Spaceport ($15 million)

23. 23 Florida Appropriations to Support Commercial Space $14.5 million for launch infrastructure modifications at the Cape Canaveral Spaceport $4 million for Space Florida operations $500K for a suborbital spaceflight research and training program $1.25 million for an aerospace workforce training initiative.

24. 24 Conclusions Next set of major developments in commercial human spaceflight regulation are occurring at the state level Virginia and Florida clearly at the forefront of this movement These state actions are already having an impact on business decisions (Space Adventure’s purchase of Zero-G, Orbital Science’s choice of launch site for COTS) Will New Mexico, California, and Oklahoma stay in the game?

25. 25 Contact: James E. Dunstan Garvey Schubert Barer Washington, DC jdunstan@gsblaw.com