Compromise Reached Over New Mexico Informed Consent Law

By Douglas Messier
Parabolic Arc Managing Editor

New Mexico legislators announced last night that they had negotiated a compromise with Virgin Galactic over an informed consent bill covering passengers who will be flying aboard the company’s SpaceShipTwo vehicles from Spaceport America.

The proposed agreement comes after negotiations between Virgin Galactic officials, legislators and trial lawyers. The proposed bill, which has not yet been made public, includes a $1 million insurance coverage provision whose scope is currently unclear.

Under the informed consent law, passengers to sign a waiver absolving spacecraft operators, builders and suppliers from liability in the event of injury or death except in cases of gross negligence or intentional harm. New Mexico’s current law provides liability protections to operators, but not to builders and suppliers.

Virgin Galactic had said it would consider moving to other states that have already extended coverage to all three parties if New Mexico didn’t change its law. Virgin Galactic not only operates SpaceShipTwo vehicles and their WhiteKnightTwo carrier aircraft but also builds them at a production facility in Mojave, Calif.

Officials said that the proposed would require the entities provided liability protections to have $1 million in insurance coverage. This provision might be similar to an insurance provision in the 2o-year lease that Virgin Galactic signed with the New Mexico Spaceport Authority to operate out of Spaceport America. The following is an excerpt from the lease agreement [emphasis mine].

Comprehensive Aviation Liability Including Airport/Spaceport Premises Liability, Aircraft Liability (including passengers), Contractual Liability and Products/Completed Operations. Virgin will procure and maintain comprehensive aviation liability policies of insurance, including Aircraft liability, passenger liability, Airport/Spaceport premises liability, contractual liability and products/completed operations of no less than Two Hundred Million and No/100s Dollars ($200,000,000.00) combined single limit per occurrence and in the aggregate as respects Products. Virgin will also procure and maintain policies of insurance for vehicle liability insurance for all vehicles used in its operation at the Spaceport in amounts not less than One Million and No/100s Dollars ($1,000,000.00) per occurrence and no less than Five Million and No/100s Dollars ($5,000,000.00) in the aggregate single limit liability for bodily injury, including death, and property damage. Said policies of insurance will include coverage for premises, operations and Virgin’s contractual liability to the Authority under this Lease. Contractual liability coverage will specifically insure all Indemnification provisions of this Lease. The insurance policies will contain “products” and “completed operations” coverage (if applicable) and will not be written on a “claims made” form. The insurance policies will include coverage for all use of, activities on, or operations with respect to all Facilities, coverage for the use of all owned, non-owned, hired automobiles, vehicles, and other equipment, both on and off work.

The Authority reserves the right to review the limits stated above at three (3) year intervals and to notify Virgin that the Authority believes the coverage limits need to be increased to give effect to the changing risk management environment and inflationary trends. Virgin will have thirty (30) days from its receipt of the Authority’s notice to notify the Authority that Virgin believes that the increased limits are not justified. If Virgin so notifies the Authority, the parties will negotiate in good faith to resolve their disagreement.

Details of the bill are not yet available. However, it seems possible that the measure has extended the $1 million in insurance coverage to include spacecraft builders and suppliers. The lease only covers Virgin Galactic’s operations at Spaceport America.

Officials also said the informed consent law would be extended from 2018 to 2021. It’s not clear what they meant by this statement.