UK: Creating The Landscape For UK Spaceports

Last Updated: 29 March 2017
Article by John Worthy

The UK is setting its sights on being "the best place in Europe for space flight operations." As the country writes the next chapter of its history in space, the target is to deliver commercial space flight from UK spaceports by 2020. So the ambition is clear. The UK government has laid out its plans for horizontal and vertical launches from the UK, alongside important financial support for new spaceport operators.

First, the UK Space Agency is offering grant funding of up to Ł10 million (possibly even more in exceptional cases) to encourage those wishing to develop spaceport operations. Proposals must be submitted by joint enterprises, consisting of at least one potential UK spaceport and one small-satellite launch or sub-orbital flight operator. Applicants need to propose a business plan on how they intend to launch small satellites or sub-orbital flights, including space tourism, microgravity flights or spaceplanes, from the UK by 2020. All applications must be submitted by 28 April 2017.

In parallel, the draft Spaceflight Bill will establish the regulatory framework for building and operating spaceports and enabling the launch of satellites from UK soil. This reflects the growing wave of government enthusiasm for enhancing space business in the UK. Underlying these developments is the desire to promote smallsat launch capabilities (aligned with the UK's market-leading smallsat manufacturing facilities) and encourage space-based research and experimentation.

Licences

Spaceflight licences will cover spaceport operation, spaceflight activities and range control services. Many provisions of the new Bill mirror the Outer Space Act 1986 (which will remain in force, although limited to activities outside the UK). Among other things, applicants must demonstrate that they have the necessary financial and technical resources and be a fit and proper person to carry out this activity. Further detail of the application processes will be spelled out in future regulations, which operators will follow with great interest.

Many potential licence conditions are already flagged up in the Bill – the regulators will have to determine which of these (and any other applicable conditions) will form part of the licence in practice. While the selection will of course depend on the circumstances of the applicant and the nature of the space activities, applicants will also be keen to understand which terms are likely to be included in reality. In order to increase their visibility of the likely licence terms, applicants may wish to engage with the regulators at an early stage.

Much needs to be done to flesh out the important detail of the regulatory licences, addressing the operating, safety and insurance requirements, among other issues; this will be set out in regulations currently being developed. Given that many of the policy issues need to be finalised by the regulators before the regulations can be concluded, this may take some time. Meantime, hopeful spaceport operators and launch providers need to be creating their business plans and engaging with investors, financiers and insurers. All these parties will look for certainty and clarity on how the regulatory frameworks fit together in practice, in order to support the spaceport business plans. So all concerned will need to work hard to make the timetable of operational spaceports by 2020 achievable.

Licence duration/transfer

Licences will run for a defined period – no doubt the precise period will vary according to the nature of the space activities. It will be critical for licence applicants to ensure that the period is long enough to support their business plans.

Helpfully the Bill also recognises that a licence will be transferable with the regulator's consent - an important feature for bankability, assuming the regulator will be willing to approve transfers when required by financiers.

Operators' liability and insurance

Spaceport operators will be subject to "no fault" liability, so that they will be automatically liable for injury or damage caused by a spacecraft or space object, or any person in the craft. This burden is balanced by mechanisms which allow protection from liability to those who cause or contribute to their own damage or injury. Operators will need to secure "informed consent" from all those participating in their spaceflight/spaceport activities. It will be interesting to review how far the legal questions about informed consent in other contexts, such as for medical purposes, will be applicable here.

Operators will be required to indemnify the UK government against any claims made against it for loss or damage; however, this indemnity may be limited to a defined liability cap. As with the Outer Space Act licences, under which liability is limited to €60 million, the licensee will be required to carry insurance up to the defined liability level.

Insurers in particular will be looking at this requirement carefully to assess their approach to offering suitable cover, in order to dovetail with the statutory requirements and provide protection for licensed operators. Clearly, it will be important for operators, insurers and regulators to engage in an effective dialogue to ensure that the regulatory requirements and the insurance markets are moving in tandem, and hence enabling the operators to plan and protect their businesses realistically.

Importantly, the Bill allows the regulator to offer protection to operators where liability exceeds any limit specified in the licence. If the limit is exceeded, and where insurance does not provide adequate cover (it will most likely be in line with the licence limit, where applicable), the Secretary of State will be able to step in and pay a third party for loss or damage that results from spaceflight activities of a licensed operator. So, if this mechanism is adopted, the government may become an insurer of last resort.

What happens next?

The Bill is expected to be introduced to Parliament in the latter part of this year, with the objective of becoming law by early/mid 2018. Alongside this timetable, the more detailed regulatory policy positions will become clear, probably with the aid of consultation documents.

The Bill is a key first step along the road to UK spaceports and spaceplanes. Important as the Bill is, the devil is in the detail: all players will be keen to see the finer points of the regulatory regime as it emerges. For operators, investors and financiers alike, the opportunity is there to engage with the regulators and understand (and help to shape) the way in which this new framework is crafted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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