Rutan and Regulation

Not to long ago, Burt Rutan was interviewed by Ted Balaker, which was published on the Reason Public Policy Institute website. Tom Bell over at Agoriphilia wonders about Rutan's motives and adds a few comments. All well and good. Unfortunately, in this case more regulation may actually mean less total government intrusion. Burt's arguments actually make sense, if you've heard all his arguments. The interview does not include a couple of key points.

I first heard Burt complain about the regulatory situation several months before his first spaceflight. The problem was simple- Burt is an airplane guy. His SpaceshipOne is an airplane with an unusual powerplant. He thought he'd do exactly like he always does, go to the local FAA/FSDO and ask for an experimental certificate. The FAA sends someone to Scaled's facilities, checks out the aircraft and signs the certificate. No problem. Except that a vehicle having more thrust than lift for the majority of its powered flight is not covered under normal aircraft regulations, it is a launch vehicle. Burt has to get a space launch license from the Associate Administrator for Commercial Space Transportation (AST). In addition, the launch license process is completely different from the aircraft certification process. So he's a bit upset, and understandably so.

Fast forward a few months, Burt has won the Ansari X-Prize and is on the lecture circuit presenting at the Space Frontier Foundation in October. He points out that space launch with paying passengers and employee crews have some serious liability concerns, and current regulation does nothing to protect the company from that liability. More precisely there is no "we did everything by the book, we were not negligent" defense. There is no "book" to do everything by. He also argues that the cost of normal certification over what a responsible aircraft developer needs to do anyway is negligible. On top of that the current launch license process is rather burdensome as it is, with things like NEPA (National Environmental Policy Act) that do not apply to airplane certification, but do apply to commercial launch licenses. Or the expected casualty (E sub c) calculations that are required for launch licenses. According to Burt, the "additional" regulations he wants aren't really any more draconian than current regulation under the existing Commercial Space Transportation Act with amendments, and these "additional" regulations would address liability concerns.

But. How many aircraft has Burt designed? Dozens. How many of his designs been certificated for commercial use? Two. Actually, IIRC, the second is still in process. And the latest one is far more traditional than his typical designs. Ever wonder why most Boeings and Airbus aiplanes look so similar? Or why a brand new 2005 Cessna 172 is essentially the same as a 1960's model Cessna 172? The answer can be found in the aircraft certification regulations. If it looks and acts like existing aircraft one has a good chance of spending lots of money and having a certified aircraft. If it doesn't look or act like existing aircraft one has a good chance of spending even more money and not ending up wth a certified aircraft. The aircraft regulations encourage stasis and discourage trying out new things.

This is a bit of a problem for spacecraft developers. We don't have the luxury of building things that look and act like existing models. The launchers used by NASA and the Air Force do not make sense for commercial use. We can't afford to throw away multi-million dollar vehicles on each launch, or in the case of the Space Shuttle, do a multi-million dollar refurbishment for each launch. In order to open up the final frontier we need vehicles that are truly reusable. There isn't a certificated model that we can copy. The regulations and rules for aircraft certification do not work for the new generation of space launch vehicles that are in current development. Whether we have the current launch license rules or Burt's preferred certification system, there is still no "book" to do things by.

In summary, there is nothing particularly un-libertarian about Burt's position, it may even make sense given the existing legal order, but I don't think it will help the way Burt thinks it would.

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If Rutan is looking to limit

If Rutan is looking to limit his liability to passengers and crew, he ought to be able to do that with the contracts of employment and passage. There is a pretty good assumption of risk argument, and I would not object to a recognition of the right to limit liability.

Unfortunately there is this common law thing called negligence. Negligence trumps any previous agreements. It is often the case that insurance companies and estates will claim negligence.

On the other hand, if his spacecraft crashes into my house, Rutan should have to pay and should not be able to limit his liability to me without my consent.

No one is suggesting otherwise. The entire argument is about second party (passengers/crew) liability, not third party liability.

If Rutan is looking to limit

If Rutan is looking to limit his liability to passengers and crew, he ought to be able to do that with the contracts of employment and passage. There is a pretty good assumption of risk argument, and I would not object to a recognition of the right to limit liability.

On the other hand, if his spacecraft crashes into my house, Rutan should have to pay and should not be able to limit his liability to me without my consent.

This leads into something I

This leads into something I have been wondering about with liability in general--namely, are there assumptions about liability that either conflict or are supported by basic assumptions on natural rights?

There seem to be two ways of trying to protect yourself against misfortune:

A) Take out a policy that pays you compensation if your life, property, etc. is damaged by unforseen or improbable events.

B) Require everyone else in the world to take out a policy to compensate you if they are involved in any damage to your life, property, etc.

With (A), if your automobile is damaged in an accident, your benefit is limited to whatever amount you chose in your policy. With (B), you try to obtain as much compensation as possible through the policies of anyone else who was involved in the accident by showing that they have some liability. With (A), you can only try to seek compensation from another party if they were doing something with malicious intent, such as dropping bricks on cars from an overpass. But if bricks were lying in the road because they fell off a truck, then that is just bad luck and it is up to you to protect yourself against such bad luck by either having savings or taking out an insurance contract against the risk.

Obviously, (B) is largely in force in the US today. I can understand some of the consequences of this:

1) The total amount insured for must be much higher - I cannot merely take out insurance for the total value of my assets, I must insure the assets of anyone I could come into contact with.

2) Greater legal services are required to investigate, argue, and resolve the issues of whose assets were damaged by whom.

3) Parties are reluctant to be involved in any activities that may cause risk to another party, as Dave has pointed out in his comment about negligence.

4) The state must require that every party have a policy against unforseen injury to some other party.

Besides these consequentialist arguments, for or against liabilty insurance, are there any arguments from first principles? Can it be shown that choice (B) either is or is not compatible with fundemental libertarian assumptions?

Perhaps the current state of affairs with liability is already so wrong by default that it takes additional government action to exempt parties from it. Thus, the launch industry has to negotiate with government to get special protection from what is a government problem in the first place. This would be similar to, for example, the way that a profusion of negotiated bilateral trade agreements are required to exempt countries from tariffs that really shouldn't be there in the first place.

Mark, Situation A mostly

Mark,

Situation A mostly obtains for automotive accidents in states with 'no-fault' insurance laws. The problem is that common law on liability and negligence pretty much require direct gov't intervention in order to make situation A come about.