Virginia's Leads on Human Spaceflight Innovation Incentives
September 24th, 2012

Six years ago, Virginia became the first state in the nation to offer an innovative legal incentive to encourage nascent commercial human spaceflight firms to locate in the New Dominion. The measure is known as the Virginia Space Flight Liability & Immunity Act (§ 8.01-227.8).

Virginia effectively became “the most progressive state in the nation in addressing the challenge of the existing tort law posed to emerging commercial spaceflight transportation companies,” noted a 2009 Federal Aviation Administration report. The legislative effort was lead by State Del. Terry Kilgore (R-Scott County) in the General Assembly.

The Virginia Space Flight Liability & Immunity law limits the liability of those providing human space flight transportation services in the event of an accident. Basing the state law on the federal law that the FAA operates under, Virginia created an informed consent regime for spaceflight participants soaring through the Earth’s atmosphere after departing from the state.

In response to “Virginia’s change agent” status, legislators in state capitols around the nation took notice of Virginia’s bold attempt to lure commercial space launch firms to the Commonwealth. Florida enacted an almost identical Space Flight Liability & Immunity tort reform in 2008 and since that time New Mexico, Texas, Colorado and, most recently, California have adopted similar spaceflight tort limitation measures.

Law in six distinctly aerospace states stipulates the language that prospective commercial spaceflight transportation clients must review and sign. It is a statement acknowledging the risks associated with fledgling commercial human spaceflight.

The limited liability regime may yet be effective in drawing commercial human space transportation companies to Virginia as flight-testing of FAA regulated vehicles are completed and the industry matures. Since the July 1, 2007, effective date of the state law, Virginia now finds a space-tort limitation level playing field with commercial spaceport competitors in five states.

Space law legal experts give the six state laws limited value, however. Tort lawyers argue that the federal tort claims may not bind spaceflight participants from suing the human space launch firms. Arguing that the Congress may need to adopt a law giving federal recognition to state jurisdiction of the six state laws now limiting human spaceflight liability, the time may have come for federal action.

With California, Colorado, Florida, New Mexico, Texas and Virginia now having state statutes limiting the liability of commercial space transportation passengers, the time may be ripe for the aerospace state Congressional delegations to advance federal legislation giving the state tort limitation laws the recognition that may be deemed necessary.

Virginia has yet another innovative economic arrow in its quiver to attract commercial space launch investment to the state, nonetheless.

In 2008, the state legislature adopted the Zero-G Zero Tax regime exempting companies from paying state income taxes on income derived from human spaceflight training, launch services and/or cargo missions to the International Space Station launched from Virginia after January, 1 2009, (§ 58.1-322 (C) (33) (34) and § 58.1-402 (C) (22) (23). The legislative effort was lead by former State Senator William C. Wampler, Jr. (R-Bristol).

Zero-G Zero Tax was not a new idea; indeed, in 2003, federal legislation to provide a similar federal income tax exemption was introduced, but failed to pass. Virginia, nonetheless, was the first state in the nation to enact such an innovative tax system to encourage the development of the commercial space transportation industry.

The tort reform and tax-free income laws provide the Virginia Commercial Space Flight Authority, and others seeking to utilize the Mid-Atlantic Regional Spaceport launch pads or the NASA Wallops Flight Facility runway, cause to take a second look-see at Virginia when comparing spaceport locations from which to fly.

Commercial human space launch firms like SpaceX, Boeing, Sierra Nevada, Virgin Galactic, XCOR and Armadillo Aerospace may still opt to locate in Florida, Texas, California, Colorado or New Mexico because of direct cash incentives and/or real estate grants, since limited liability is less of a factor.

Virginia, however, continues to offer one of the more innovative business environments; evidenced by it being first in the Space Flight Liability and Immunity risk reduction, Zero-G Zero Tax law, and other more traditional incentives. Orbital Sciences Corporation’s serious investment in the spaceport is testament to its future. Despite the delays in liquid fuel system approvals over the last year, the successful launch of the Antares rocket will thunder a positive message throughout the commercial space sector.

The leadership of Gov. Bob McDonnell has resulted in the spaceport operations budget gaining nearly $50-million dollar state investment over the next five years, having commenced July 1, 2012. The influx of new funds will enable a more dynamic strategic business plan to attract the key commercial human space launch firms to Virginia; should the state adopt an aggressive stance in competition with the other aerospace states.

Before the end of the current decade, China and Russia will each have two human-rated spaceports capable of lofting cosmonauts and taikonauts to low earth orbit. Europe may opt to upgrade its French Guiana spaceport to a human launch capability, as will India, prior to the end of the current decade.

Strategically, the United States has good reason to foster more than Cape Canaveral for commercial orbital human space launches. The probability is likely that more people will be flying to space from the United States in the balance of the current decade than have cumulatively worldwide in the past fifty years. American public-private spaceflight investment partnership is underway.

Virginia remains in a good position to engage the emerging era of suborbital and orbital human transportation. Virginians must conceive and believe to achieve a NewSpace transportation infrastructure. Human space transportation from Wallops Island remains an untapped but realistic public-private entrepreneurial partnership vision. It will require consistent nurturing.

Jack Kennedy is a Virginia attorney with a M.S. in Space Policy. He serves as chair of the Virginia Chamber of Commerce Transportation Subcommittee on Virginia’s Spaceport. Contact him at: <>