Thoughts on H.R. 2262, Section 107, the Federal Courts and Commercial Space [Updated]

The “Spurring Private Aerospace Competitiveness and Entrepreneurship Act of 2015” (H.R. 2262) has a significant provision that would grant the federal courts of the United States exclusive jurisdiction over any legal actions arising out of a launch license issued by the FAA.

H.R. 2262 states in part:

SEC. 107. FEDERAL JURISDICTION.    Section 50914 of title 51, United States Code, is amended by adding at the end the following:    “(g) Federal Jurisdiction.–Any action or tort arising from a licensed launch or reentry shall be the sole jurisdiction of the Federal courts.”

Translated, Section 107 would modify Title 51, Chapter 509 to 51 U.S.C. § 50914(g), which would require any legal actions made under a launch license, including a case in tort for personal injury or wrong death or strict product liability, and even contract disputes to be heard exclusively in federal court.

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UPDATE: November 26, 2015

President Obama signed the Commercial Space Launch Competitiveness Act into law on November 25, 2015.  51 U.S.C. 50914 reads:

Federal jurisdiction.—Any claim by a third party or space flight participant for death, bodily injury, or property damage or loss resulting from an activity carried out under the license shall be the exclusive jurisdiction of the Federal courts.”

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Congress’ Constitutional Power Over the Courts

Congress has the Constitutional power to create lesser federal courts as it seems fit. Article III , Section 1 of the Constitution provides for a Supreme Court headed by the Chief Justice of the United States:

The judicial Power of the United States, shall be vested in one supreme Court…

This portion of Article III establishes one Constitutionally mandated court in the Supreme Court of the United States, which one of the three branches of government formed by the Constitution.

Article III, Section 1 continues stating:

and in such inferior Courts as the Congress may from time to time ordain and establish.

Without delving into the follow-on legislation, which fleshes out the rationale for granting Congress’ authority under this portion of Article III, it only need be understood that this section of Article III not only grants Congress the power to create lesser federal courts, but it also grants Congress the power to decide within proscribed limits what the subject matter jurisdiction of those lesser courts is and whether or not that jurisdiction is exclusive to the federal courts or concurrent with the state courts.

This means that Congress has the authority to grant the lesser federal courts, denoting the federal district courts, subject matter jurisdiction over any actions at law or equity that arise under a launch license granted pursuant to Title 51, Chapter 509. Consequently, this means Section 107 if signed into law will increase the Constitutional subject matter jurisdiction of the lesser federal courts found in Article III, Section 2 of the Constitution, and it will make the federal court’s jurisdiction exclusive.

Illustrating the Effect of Exclusive Jurisdiction of the Federal Courts on Commercial Space Activities

The effect of federal jurisdiction is best illustrated through hypotheticals.

Presume the State of X hosts commercial suborbital flights and there is a contract dispute between the space flight provider and a space flight participant because the space flight provider failed to reach an altitude of 60 kilometers (~100 miles). The vendor, seeking damages for breach of contract files a lawsuit in a superior court in the State of X as the plaintiff. However, the space flight provider, who is the defendant, files a motion to dismiss asserting the superior court in the State of X lacks subject matter jurisdiction because 51 U.S.C. § 50914(g) grants the federal district court exclusive jurisdiction over any action or tort arising from a licensed launch or reentry. The superior court in the State of X would have no choice but dismiss the case without prejudice because it does not have the authority to adjudicate it under 51 U.S.C. § 50914(g).

At this point the aggrieved plaintiff could cut his losses or file his complaint in the federal district for the State of X. If the plaintiff decides to take this course, the complaint would include a statement that the federal district court of State X has subject matter jurisdiction over this matter per 51 U.S.C. § 50914(g). This would allow the federal district court to accept the matter and litigation would ensue. However, because case is required to be heard by a federal court, the case would be subject to the Federal Rules of Civil Procedure and the Federal Rules of Evidence, but since there is not federal law equivalent to the state law governing the contract made between the plaintiff and the defendant for the suborbital flight, the federal district court would be required to apply the substantive laws of State X regarding contracts to adjudicate the matter. Similarly, if this was a case for personal injury or tort, the substantive laws of tort in State X would be applied by the federal court.  That is to say, a case or controversy subject to the jurisdictional requirements of 51 U.S.C. § 50914(g) means the federal district court would apply federal procedural and evidence rules, but it would be required to apply state substantive law, i.e. contract law, tort law, etc.

Let’s change this around a bit and presume that the State of X has a law, which limits the liability of space flight providers and their vendors, meaning space flight participants and their heirs would have little or no recourse for injuries or death sustained during a commercial space flight. A space flight participant in the State of X is then injured during the course of a commercial space flight and decides to test the scope and legality of the limited liability law in the State of X.  The space flight participant proceeds to file a personal injury suit in the superior court in the State of X alleging the space flight provider’s negligence, which resulted in injury. The space flight provider, who is now the defendant, responds by filing a motion to dismiss asserting the limited liability law of State X prevents the plaintiff from recovering for the injuries sustained during the commercial space flight. However, in this hypothetical the defendant does not challenge the subject matter jurisdiction of the state court.

There are two possible scenarios that transpire: First, the superior court may sua sponte or on its own accord recognize it does not have subject matter jurisdiction over this case because of 51 U.S.C. § 50914(g), and proceed to dismiss the case without prejudice so the plaintiff can file in the federal district court. On the other hand, the lack of the court’s subject matter jurisdiction would not come up and the court would reject the defendant’s motion to dismiss and proceed to consider whether the limited liability law is legal and prevents the plaintiff from recovering.

Taking this further, let’s suppose the defendant realizes the court is about to invalidate State X’s limited liability law and rule in favor of the plaintiff. The defendant, understanding the issue of subject matter jurisdiction can be raised at any point during the proceedings, asserts before or after the judge rules in favor of the plaintiff the trial court does not have subject matter jurisdiction because 51 U.S.C. § 50914(g) grants exclusive jurisdiction of this matter to the federal court. At this point the court would have to defer or vacate its ruling depending on when subject matter jurisdiction is raised. However, if the trial court rejects the defendant’s assertion that the court lacks subject matter jurisdiction, the defendant, presuming a timely objection is made, could appeal the trial court’s ruling to the appellate court in the State of X and argue lack of subject matter jurisdiction, at which point the appellate court would likely vacate the lower court’s decision.

While these hypotheticals vastly simplify the procedural maneuvering that would occur in a civil suit, consider the implications if Section 107 of H.R. 2262 becomes law and 51 U.S.C. § 50914(g) grants the federal courts exclusive jurisdiction for any actions under a commercial launch or reentry license. In the case of the second hypothetical, if plaintiffs try to challenge the veracity of state limited liability laws for commercial space flight participants or suppliers, the scope and legality of those laws will not be adjudicated in a state court by a judge appointed or elected by a state but by a federal court and judge nominated by the President and approved by the Congress.

The difference in venue is such that plaintiffs enjoy “home court advantage” in a state court, but they lose that advantage in federal court, which has the effect of leveling the playing field for defendants. This is the underlying reason why the Democrats on the House Committee on Science, Space, and Technology and in particular Eddie Bernice Johnson, have made such a fuss about Section 107 of H.R. 2262. The trial lawyer/plaintiff lawyer lobby, which steadfastly supports the Democratic Party, understands Section 107 would effectively take away the “home court advantage” they enjoy in state court, which will affect their ability to recover for their clients and as a consequence their legal fees, particularly if they bring suits on a contingent fee basis. On the other hand, this would benefit the commercial space industry given the legal industry would have less of an advantage making it more difficult and expensive to litigate against the commercial space industry in the same manner it has litigated to great effect against the general aviation industry in state courts.

Closing Thoughts

Whether Section 107 becomes part of the final bill approved by the Senate and sent to the President remains to be seen. It is noteworthy the language of Section 107 is not found in S. 1297, so whether this provision becomes law is questionable. Regardless of whether Section 107 makes the cut this time around, the jurisdiction of the federal courts is a logical progression for commercial space flight for reasons other than venue to adjudicate actions of law.

Consider the first paragraph of Article VIII of the Outer Space Treaty:

A State Party to the Treaty on whose registry an object launched into outer space is carried shall retain jurisdiction and control over such object, and over any personnel thereof, while in outer space or on a celestial body.

Article VIII vests continuing jurisdiction over any space object registered to a country and the personnel on board whether they are in outer space or a celestial body. Coupled with the legal responsibility under Article VI, this grant of jurisdiction covers the whole gambit of potential commercial space activities from sub-orbital flights to mining of asteroids or commercial activities on the lunar surface. Bearing in mind the federal government through the Executive Branch licenses and regulates commercial activities, it is only logical the Judicial Branch through the the lesser federal courts would have subject matter jurisdiction over any civil action that arises. Of course, whether the federal court applies state or federal substantive law will depend on the nature of the commercial activity from which the action arose and whether there is concurrent federal law.

Conversely, if there is a crime committed during a commercial space activity, Article VIII implies the federal government and by extension the federal courts would have jurisdiction. The question is whether state criminal law or federal criminal law would apply. Considering that federal criminal statutes parallel most state criminal laws for crimes against individuals, the Supremacy Clause dictates federal criminal law would apply.

In view of this, jurisdiction of the federal courts over civil and criminal actions arising out of commercial space activities is a natural progression of the jurisprudence for commercial space activities. Predictably, the combination of politics and special interest will attempt to forestall this inevitably, but the question is whether this combination will accept the certainty of the jurisdiction of the federal courts or kick and scream throughout the transition.

UPDATE

Both the House and Senate have approved a compromise commercial space bill that includes what will become § 50914(g) when the President signs the bill into law.

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4 thoughts on “Thoughts on H.R. 2262, Section 107, the Federal Courts and Commercial Space [Updated]

  1. Michael,

    I have a question regarding HR 2262 and the OST, with respect to extraction of natural resources. So it would appear that the law now allows private companies to extract resources for personal use. I know you had some concerns about how this new “property right” is reconciled with the OST. What if a private company were to capture a small asteroid and use ALL of the resources (not just extract a portion)? The reason I ask is that I got excited about Dr. Bruce Damer’s SHEPERD concept. If you haven’t heard about it, here is his Tedx talk on the subject: ( https://www.youtube.com/watch?v=wLMHcUg36yc ). I’d like to get your thoughts on the legality of asteroid capture (not just resource extraction). Thanks. Fremont John

    Like

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