Should America regulate commercial manned spaceflight?
In late December 2012, the world could change dramatically. No, not that.
Congress passed a law in 2004 saying essentially that the FAA, which regulates commercial space launches, should not put any regulations in place to address the safety of crew or spaceflight participants. (They're not called passengers, because the government doesn't want to imply the level of safety you could expect from a commercial airplane.) Part of the intent of that law was to let the industry develop on its own.
On December 23rd, 2012, that provision is set to expire.
To date, there has been one private manned launch vehicle, SpaceShipOne, and it flew into suborbital space three times, carrying only a pilot on each flight; it is now retired. SpaceShipTwo is planned to begin flight tests in 2010, and enter commercial service with Virgin Galactic in 2011. I am not aware of any other commercial manned vehicles planned to enter service before the law expires.
So, should the FAA begin regulating commercial manned spaceflight? If so, to what extent? And if you were flying to space, how safe would you expect to be?
Note: a rocket has to launch from (and possibly land in) somewhere, and by someone. If that somewhere (launch and/or land) is America, and/or that someone is an American, they need a license from the FAA to launch. See the Commercial Space Launch Act of 1984. (The Commercial Space Launch Amendments Act of 2004 is where the manned spaceflight question originates.) So there is jurisdiction.
The commercial space section of US Law (look for §70104(a)): http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=BROWSE&TITLE=49USCSIX&PDFS=YES
The CSLAA of 2004 (search for "Safety Regulations"): http://www.faa.gov/about/office_org/headquarters_offices/ast/media/PL108-492.pdf
I agree, if a non-American wants to launch from and land somewhere that's not America, the CSLA doesn't apply, and the FAA doesn't have authority.
Also, America officially has no definition of space, precisely for the reason that the government doesn't want to get into sovereignity issues and limit itself later on. But the US government does recognize as astronauts people who achieve 80 km altitude.
Additionally, space is similar to international waters. There is no sovereignity in international waters but there are treaties governing how nations act and interact there. Same deal for space. For some examples, see here.
http://www.islandone.org/Treaties/