Taking a page from maritime practice to self-regulate the commercial space industry
by Michael J. Listner, Tommaso Sgobba, and Christopher Kunstadter
|The industry will see future regulation as it matures, but how that regulation comes about is still in question.|
When considering regulation, the issue is not about making a commercial human spaceflight vehicle safe, since the launch providers already have an interest in building a safe vehicle. Moreover, engineers endeavour to build safe systems and to verify their safety. The real issue is defining an acceptable risk with currently available technology. Absolute safety does not exist, and what is considered safe is usually established by government standards and regulations. Without standards or regulations to reference, the designer and operator would have difficulty defending themselves in litigation.
Traditionally, safety-related standards and regulations are guided by recommendations issued following past serious incidents and accidents, and tend to be very detailed and prescriptive to prevent similar occurrences. Prescriptive standards require design features, as in electrical codes, which may be either specific designs solutions or impose design requirements as redundancies or the use of protection systems.
A classic example of what a prescriptive requirement is and how it can sometimes dramatically fail due to obsolescence comes from the sinking of the RMS Titanic. The ship, which was on its maiden voyage from Southampton, England, to New York, struck an iceberg and sank in the early hours of April 15, 1912, with the loss of 1,517 passengers and crew due in large part to an insufficient number of available lifeboats. The lack of sufficient lifeboats was due to a decision made during the construction of the Titanic. One of the managing directors of the Harlan and Wolfe shipyard suggested using a new type of davit, which could accommodate more lifeboats, giving Titanic the capability to carry 48 lifeboats. This would have provided more than enough capacity for all the passengers and crew on board the ship.
However, to prevent an increase in construction costs White Star Line decided that only 20 lifeboats would be necessary, which provided lifeboat capacity for only about 50% of the passengers on the maiden voyage. While this number met and exceeded the Board of Trade regulations of the time, which stated that all British vessels over 10,000 tons had to carry 16 lifeboats, the regulations were out of date in an era which had seen within a few years the size of ships reaching the 46,000 tons of the Titanic. The choice to dispense with an explicitly required design solution of increasing the number of available lifeboats to satisfy the implicit goal of allowing all passengers to safely abandon a ship in distress was a contributing factor in the considerable loss of life.
The basic aim of prescriptive safety standards and regulations is to ensure their effectiveness and prevent circumvention by avoiding any subjective interpretation in the implementation and compliance verification. Certification against those standards and regulations is straightforward and is usually provided by inspection that demonstrates that the required design features are implemented properly. In some industries, practitioners are licensed based on their knowledge of the standards or codes of practice. The FAA’s approach for civil aviation, for example, has been overwhelmingly prescriptive, and the initial certification has been based on the quality of the prescribed process used to develop the aircraft and the implementation of various airworthiness standards in the aircraft’s design. Operational oversight is based on inspection as well as feedback about the safety of the operations process, making the violation of a prescriptive requirement relatively easy to determine.
Modern safety standards tend to be goal-oriented and performance-based. Performance-based regulation defines results without specific direction on how those results are to be obtained. The implementation of goal-oriented and performance-based standards requires the analysis and mitigation of “potential accidents,” which are called hazards, concurrently with the design. This is accomplished by identifying all such hazards, their causes in operationally worst conditions, and then either removing them or making their occurrence remote by introducing a specific feature in the design and/or operations, which is commonly known as hazard control. The results of an analysis are documented in safety-case reports, which are often referred to as safety assessment reports or safety data packages.
|The traditional government role in establishing safety regulations and certifying compliance is no longer suitable for highly advanced and fast evolving systems and operations such as suborbital and future commercial space transportation.|
Certification against goal-oriented and performance-based standards is complex, and requires a more complex argument and evaluation strategy. To verify compliance of goal-oriented and performance-based standards, the safety certification team must have a deep knowledge of how the system is meant to work in order to understand the relevant hazards and the soundness of the design controls selected to mitigate the risks. In principle, the safety certification team should be even more knowledgeable and experienced than the design team. This is currently the case with NASA’s safety certification teams, who evaluate the design of privately developed commercial human spaceflight vehicles such as the Dragon space capsule by SpaceX. However, there are industries where relying on past experience to build a safe system is simply not possible because the system is completely new, highly safety-critical, and extremely expensive. This is the case with the commercial spaceflight industry.
Considering this, the future of regulation in commercial human spaceflight activities lies in self-regulation. The traditional government role in establishing safety regulations and certifying compliance is no longer suitable for highly advanced and fast evolving systems and operations such as suborbital and future commercial space transportation. Rather, the commercial space community should take the lead in developing goal-oriented and performance-based safety standards and policies. These companies have the necessary in-house skills and technical resources to thoroughly and efficiently verify compliance with regulations and standards. This would be a more efficient and cost-effective approach, as long as such verifications are performed with the necessary independence and rigor.
The government’s role should be to define certification process rules and maintain a general supervisory and auditing role of the safety assurance and management system. This mirrors the key recommendations of the presidential commission that investigated the Deepwater Horizon oilrig disaster in the Gulf of Mexico in April 2010. In their report, the commission recommended that “the gas and oil industry must move towards developing a notion of safety as a collective responsibility.” Such a recommendation is less revolutionary than may appear, however, because the maritime industry has done precisely this for more than 250 years in regards to the design, construction, and maintenance of seagoing vessels through Classification Societies. This article proposes that the commercial space industry should follow such a self-regulatory approach for the “space-worthiness” certification of their systems.
Classification Societies originated in the 18th and 19th centuries at the initiative of English ship insurers. Their purpose is to serve the public interest and the needs of their clients by promoting the security of life, property and the natural environment.1 They are impartial organizations consisting of technical experts that have established a system of public safety based on private law contracts. They are often described as the unofficial “policemen” in the marine world. Classification Societies enter into contracts primarily with ship owners and shipyards, which enable them to determine and control whether a ship conforms to their rules. Although Classification Societies do have economic interests, these interests are not the primary reason for their existence. Because of this, they often take the form of non-profit corporations.2
Classification Societies set the standards for the design, construction, and maintenance of maritime vessels. They accomplish this through rules and standards formulated through a committee process. In developing these rules, a Classification Society’s staff relies upon prudent marine engineering principles, theoretical research, and experience.
Certification by Classification Societies is done on a fee basis and can be elected by a ship owner; however, the credibility of these societies is such that protection and indemnity (P&I) insurers depend on certification by them in determining insurability. The value of Classification Societies and the standards they set in the maritime setting have been recognized such that United States federal regulations dealing specifically with their activities in the United States have been promulgated.3
Can the maritime concept of Classification Societies be applied by the commercial suborbital industry to not only satisfy the FAA that the spacecraft are built to adequate specification without the need for substantial federal regulation, but also provide assurances to insurers that operators are meeting the proper requirements in the design, construction, and maintenance of their spacecraft? Such a goal is feasible, but there are hurdles to overcome.
|Classification Societies are impartial organizations consisting of technical experts that have established a system of public safety based on private law contracts. They are often described as the unofficial “policemen” in the marine world.|
One important step is the issue of standards for the design, construction, and maintenance of commercial human spaceflight systems. Classification Societies in the maritime industry rely upon standards developed through decades and centuries of vessel construction and operation internationally. From this practice, Classification Societies are able to develop coherent rules to certify a vessel over its lifetime. The suborbital industry, however, is still in its infancy. Standards for space system construction are practically nonexistent and, as discussed before, may be even counterproductive because of the novelty of such systems. Conversely, various goal-oriented and performance-oriented safety standards that have been produced in more than 40 years of government space programs can be easily tailored to suit suborbital systems.4
Another issue to take into account is that the current suborbital launch companies are highly competitive and may be unwilling to disclose information regarding the characteristics of their space vehicle that might reveal proprietary information to a competitor. However, this kind of issue has been successfully dealt with by the highly competitive Formula 1 racing industry through the establishment of an independent safety institute.5 It should be noted that the previously mentioned commission that investigated the Deepwater Horizon disaster in the Gulf of Mexico also recommended that the gas and oil industry “should establish a Safety Institute, which would be an industry-created, self-policing entity aimed at developing, adopting, and enforcing standards of excellence to ensure continuous improvement in safety and operational integrity offshore.”
A major concern of applying the concept of Classification Societies to the commercial suborbital is legal liability. Maritime Classification Societies are subject to legal action to recover damages when a loss occurs that arise from the alleged failure of the classification society to reveal defects that compromise the seaworthiness of a vessel. Legal action may be taken by a ship owner or by the insurer through subrogation. Actions for liability may also be filed by third-parties; however, it’s notable that courts in the United States have not decided the question of whether a Classification Society can be held liable to a third party for negligent conduct in connection with a classification survey. Since 1928, there have been nearly 50 cases involving the liability of Classification Societies before the US federal courts.6
The theory of liability to ship owners rests on the presumption that the Classification Society’s inspection of a vessel was not in accordance with their own rules and standards. Generally, suits by owners or insurers for the loss of a vessel allege that the Classification Society performed its inspections in a negligent manner and breached an implied warranty of workmanlike service. However, the courts have not generally looked favorably upon these actions, recognizing that a cause of action on the first basis would undermine the traditional doctrine that imposes the non-delegable duty on the ship owner to maintain its vessel in a seaworthy condition. The courts also generally recognize that allowing a cause of action in this instance could be a precedent for making the Classification Society the ultimate insurer of any vessel it surveyed. This could have the undesirable effect of making the Classification Society ultimately responsible for a vessel’s seaworthiness, which is in contradiction to the duty imposed on the ship owner.
While the intended activity of certifying commercial spacecraft presently is not currently the domain of a Classification Society, such activity could be similar in scope and process. Similar arguments used to defend Classification Societies against suits by ship owners and insurers could be used in suits filed by the owners and insurers of surveyed commercial spacecraft. The noteworthy exception is that the maritime principle of the implied duty of seaworthiness would not apply to commercial spacecraft frames. Furthermore, unlike the loss of a ship, the wreckage of a commercial spacecraft involved in an accident may at least partially recoverable, which might provide evidence of the cause of the accident. However, the burden would still be on the owner and the insurer that negligence on behalf of the Classification Society was responsible for the loss.
Another area of legal liability faced by Classification Societies comes from third parties. Third-party claims against Classification Societies involve injuries to passengers, their beneficiaries, and the owner of cargo. Claims arising from third parties against Classification Societies are based primarily on the tort of negligent misrepresentation, which asserts that the classification society failed to abide by its own rules and procedures when making the survey of the vessel.7 However, third-party plaintiffs have failed so far to meet the standard of negligent misrepresentation in regards to certification surveys and therefore have not been able to recover. Notably, recent cases involving third-party actions against Classification Societies have been brought under the legal theory of reckless conduct.8
To the extent that commercial suborbital certification would be similar in nature and scope to the traditional activities of Classification Societies, it is likely that suits from third parties could arise primarily under the tort of negligent misrepresentation or reckless conduct. However, there is still the question of whether entities performing commercial certification can be held liable to third parties, but that question will not prevent in all cases a third-party from filing suit.
Additionally, since certification activities of commercial spacecraft will operate under state law as well as federal law, there is the potential that contractual concepts of warranty under state laws could apply to surveys of commercial spacecraft. Specifically, certification of a commercial spacecraft could create an express warranty under the contract law of the states where the spacecraft is built and operated. Furthermore, since Classification Societies would not be protected under immunity laws given to commercial operators, any accident could produce a suit from the spacecraft owner or operator based on breach of that express warranty. Classification Societies in the maritime realm do not encounter such situations.
|To the extent that the maritime community has effectively self-regulated safety through the use of Classification Societies, the commercial space industry, the insurance community, and the FAA might look to that experience when deciding on the appropriate methodology for setting standards and regulations.|
While it is questionable whether actions against commercial suborbital operators would be successful, in the event of an accident that results in injury or death, a Classification Society would be a prime target for litigation, especially where the spacecraft owner and the suppliers of the components for the spacecraft are essentially immune from liability. General liability insurance would cover the Classification Society for costs of defending a lawsuit and payment of damages, but considering the high likelihood of an accident, and the resultant suits, insurance premiums for Classification Society could be prohibitive.
A potential solution is for Congress to take a page out of its recognition of maritime Classification Societies and amend the Commercial Space Launch Act to formally recognize Classification Societies and the contributions they can make in ensuring the future safety of the industry. In such an amendment, Congress could grant the Classification Societies either absolute or limited immunity from liability from applicable state laws. While such a grant of immunity would not guarantee that Classification Societies would not be sued, it would at least stem the flow of potential suits and the effect they would have on insurance premiums.
Regulation of safety for the commercial space industry is an inevitable reality, but the opportunity exists to allow the industry to develop its own regulations and standards to govern safety itself. To the extent that the maritime community has effectively self-regulated safety through the use of Classification Societies, the commercial space industry, the insurance community, and the FAA might look to the experience of Classification Societies when deciding on the appropriate methodology for setting standards and regulations.
1 Liability of Classification Societies from the Perspective of United States Law, 22 Tul. Mar. L. J. 75
2 Examples of some prominent maritime Classification Societies are the International Maritime Organization, Lloyd’s Register Group, American Bureau of Shipping, Bureau Veritas, Registro Italiano Navale, Det Norske Veritas, Germanischer Lloyd, Nippon Kaiji Kyokai, Russian Maritime Register of Shipping, China Classification Society.
3 For example, 33 CFR § 157.04. Authorization of classification societies, allows the United States Coast Guard to authorize Classification Societies to perform certain plan reviews, certifications, and inspections of maritime vessels within the navigable waters of the United States. Furthermore, 46 CFR § 298.11. Vessel requirements dealing with Obligation Guarantees requires in part that any application for such a guarantee for a vessel constructed, rebuilt, or reconditioned must meet the highest classification, certification, rating, and inspection standards for vessels of the same age and type imposed by classification agencies identified within the regulation. Additionally, 46 U.S.C. § 3316 Classification societies, requires every department, agency and instrumentality of the United States government to recognize the American Bureau of Shipping as its agent in classifying vessels owned by the Government and in matters related to classification, as long as the Bureau is maintained as an organization having no capital stock and paying no dividends.
4 “Tailoring of ESA Human Rating Requirements for Sub-orbital Commercial Vehicles” Tommaso Sgobba, Maite Trujillo - 2nd IAA Symposium on Private Human Access to Space, May 2011, Archachon, France.
6 The District Courts of the United States have subject matter jurisdiction over controversies arising from maritime activities. The cases before the United States courts are not inclusive of cases that have arisen in other countries.
7 In order to prevail under the maritime standard of negligent misrepresentation against a Classification Society, the third-party must show that: at the third-party’s request, the Classification Society provided the third-party with information about the certification for their guidance; the Classification Society failed to use reasonable care in supplying the information regarding the certification; the Classification Society knew the third-party would rely on the information regarding the certification for a certain purpose; and the third-party relied on the information regarding the certification and suffered pecuniary loss as a result.
8 In the context of classification societies, their conduct would be considered reckless if: the Classification Society intends to commit the act in question knowing it may create a risk of harm; the risk itself is an unreasonable one; the risk is substantially greater than negligent conduct; and the Classification Society knows, or has reason to believe, others are present and in harm’s way.