Want to make money in space? It appears that Congress wants to help. It also appears from what Congress has so far proposed that their help will have only a limited value.
The heart of the problem is twofold. First, the regulatory framework that American companies must navigate to get projects off the ground is difficult and complex. They must deal with multiple government agencies whose conflicting needs cause delays and increased costs. Sometimes this bureaucracy kills projects entirely.
Second, there is significant worry in the investment community about the uncertainty of property rights in space. Article II of the Outer Space Treaty forbids countries from claiming territory in space, which means it is difficult for capitalist countries like the United States to establish secure property rights for its citizens on any territory in space.
Furthermore, Article VI of the treaty requires signatory nations to regulate the efforts of their citizens beyond Earth orbit and on other planets, something U.S. law so far neglects to do. The complex regulations that do exist apply only to launch operations and activities in orbit.
In the Senate, the third in a series of hearings organized by Sen. Ted Cruz (R-Texas) on the legal problems private companies face is scheduled for July 13. What will come from these hearings remains unknown, though it appears Cruz has had two goals. First, he has been giving industry and legal experts a chance to air their thoughts on existing regulations to help guide the Senate in any law it should write. Second, it appears he has been using this testimony to convince the Democratic Party committee members to sign on to regulatory reform.
What the House Space Bill Would Do
In the House we already have at least one proposed law. On June 8, the House Science Committee approved a new space law entitled the American Space Commerce Free Enterprise Act. No further action on it has taken place. Still, the bill deserves a close look, as it appears to make a serious effort to streamline the permitting process, while creating a certification system for private missions in space or to other asteroids, moons, or planets, as required by the Outer Space Treaty.
The question is whether the law succeeds entirely in these goals. First, the good news. The main objective of the bill, to simplify the overall regulatory process, appears to move things in the right direction. You could call this bill a “shall issue” law. It takes the position that the federal government shall be required to issue a permit or certification for any private space project, unless it can show very good cause otherwise.
Even here the bill provides private companies clear and straightforward methods for challenging any rejection of their applications. Second, the bill addresses the gap in U.S. law concerning private missions beyond Earth orbit, creating a simple certification process for such missions, administered by the Office of Space Commerce in the Commerce Department.
Third, the proposed law significantly reduces the bureaucratic maze that commercial companies have to travel to obtain permits for payloads doing remote sensing of the Earth. Under present law, such payloads have national security concerns and are handled by the State Department, which must approve any launch beforehand.
Moreover, approvals must also be run past the Defense Department, as well as “other Federal agencies,” depending on circumstances. Unfortunately, the industry has found this arrangement to be a serious hindrance, as it often requires approvals from multiple agencies that have conflicting concerns and often find it easier to simply say no rather than face a problem they cannot control. The proposed House bill places this entire permitting authority in the hands of Commerce.
Moreover, Commerce must issue the permit, unless it can identify some specific problem with the proposal that might threaten national security. The law is also explicit in stating that any denial must be made because there is “clear and convincing evidence” of a “significant threat to the national security.” Moreover, if Commerce denies a permit, the private entity will still have recourse to appeal.
Finally, the bill recognizes it is merely a first step and that as the commercial space industry grows and evolves, the law might prove significantly inadequate. To address this concern the bill creates two 15-person committees appointed by the Commerce secretary, no members of which can be government employees. The mission of these committees will be to review different aspects of the law as it is implemented, and issue recommendations if problems become obvious, with the overall goal being to eliminate “harmful interference to private sector activities” and to “facilitate and promote a robust and innovate private sector.”
Committee members will only serve four-year terms, and the committees will only exist for ten years. Whether these committees can help improve the law over time remains unclear. Often committees such as this end up making recommendations that might help the industry’s current players while imposing barriers against any new competitors. Even so, their proposed existence shows that the lawmakers who wrote the bill want the law to provide as few obstacles to the growth of commercial space as possible, and have provided a means for making that happen. This is a very good thing.
It’s Not All Guns and Roses, Though
Now for the bad news. The House bill appears to add an extra bureaucratic layer. Right now, any company launching anything into space must get a license from the Office of Commercial Space (AST), part of the FAA at the Department of Transportation. Even suborbital companies have to do this. The new law does not appear to eliminate that requirement. Instead, the new certification process for private payloads beyond Earth orbit as well as the simplified permitting process for remote sensing satellites are additional requirements.
While launch companies will still have to get a launch license from FAA/AST at the Department of Transportation, private payloads will also need either a certification or permit from the Office of Space Commerce in the Department of Commerce. At first glance, this new permit might not be an additional burden. The older requirements were mostly aimed at launch companies, both orbital and suborbital. The new permit process is aimed at companies that operate payloads, either in orbit or on other celestial bodies. That distinction suggests no one will have to get both an FAA/AST license and a Commerce certificate.
The launch company will work with FAA/AST, and the payload company will work with Commerce. However, what happens when private companies begin building fully reusable launch vehicles that reach orbit? Is that a launch service? Or is it a payload in orbit? The law does provide language that says if a private company obtains a license from FAA/AST, under the older rules, this license will automatically act as the certification that the new law requires Commerce to issue. It is unclear, however, whether this exemption is only temporary during the transition to the new law.
While the House bill seems to suggest that it supersedes the old FAA licensing requirements, it does not specifically repeal them. If I ran a private company, I would not be happy with this vagueness. Regardless, the failure of the proposed law to repeal and replace the old, more complex FAA/AST licensing process partly defeats its laudable goal of simplifying the regulation of private space. Companies will still be forced to deal with two separate bureaucracies, with the dividing line separating their responsibilities guaranteed in the coming years to become increasingly indistinct.
What Lawmakers Should Do To Improve This Bill
To make the bureaucratic simplification truly work, lawmakers should pick one of these agencies and let them do it all. In simplifying this process, Congress does not need to transfer the licensing authority from Transportation to Commerce. They could merely replace the complex regulatory framework run by the FAA/AST licensing requirements with these newer and simpler rules, and have FAA/AST continue to be the licensing agency.
Finally, on the question of property rights in space, the law includes this language:
The President shall ensure that United States entity exploration and use of outer space, including commercial activity and the exploitation of space resources, is secure from acts of foreign aggression and foreign harmful inter ference and is given due regard, and the President shall uphold the ownership rights of space objects of United States entities. Space objects certified under this chapter shall receive the full protection of the United States.
Although the House bill is clearly attempting to address the private property concerns created by the Outer Space Treaty, this language doesn’t really do the job. It provides legal protection for any “space objects” launched by American companies, but no protection for any real estate they occupy and use.
If you launch a ship to mine the Moon, the ship will belong to you, but your rights to the mine and the resources you get from it remain unclear. It is very clear, however, that the private property concerns of the commercial space sector—many of which are caused by the Outer Space Treaty—are on lawmakers’ minds, both here in the United States as well as internationally.
Besides Cruz’s hearings and this bill, several foreign nations have recently raised questions about the treaty’s private property limitations, including Luxembourg, Japan, the United Arab Emirates, and the United Kingdom. Many in the private sector are reluctant to fiddle with the treaty, fearing that any replacement might be worse than what we have now.
They also believe that the treaty’s ban on any nation establishing sovereignty in space will not hinder private property in space, and that it is possible for private property to legally exist under the treaty’s sixth article. This was the general conclusion of the witnesses during the second of Cruz’s hearings.
Unfortunately, based on my understanding of the law as well human history, this approach appears significantly inadequate. Every suggestion pussy-foots around the treaty’s fundamental problem: It outlaws any nation from imposing its laws on any territory in space. Even if the United States should insist that a private company has ownership of a specific crater or mine on the Moon, there can be no internationally recognized borders, and another country, say China, could legally move into that crater and set up its own operations, even to the hindrance of the first settlers.
There Are No Easy Solutions to the Property Problem
One interesting idea, posed here at The Federalist by Carl Rosene, suggested that private entities choose the nation and laws under which they wish to function. Rosene proposed that such a system could be established under United Nations resolutions without rewriting the treaty. The problem remains, however. Such an approach does not provide a system to establish borders or property lines. No one will know where one company’s property ends and another begins.
Moreover, no UN resolution can establish any specific national legal system on any specific territory in space because the Outer Space Treaty specifically forbids this. And without internationally recognized borders, there will once again be no framework for protecting those property rights, should another nation decide to exercise its will in the same area.
Right now, it appears that the world’s legislative and space business community is reluctant to take on the task of fixing the Outer Space Treaty, and are looking for easy solutions. Unfortunately, nothing they have proposed appears to solve the problem. In the end, however, they are going to have to deal with it. Now would be easier. Later, when actual businesses and nations have established settlements and operations in space, it will be far harder, and in fact, might be impossible.
W.E.B. Du Bois, in studying the African slave trade, once asked, “How far in a State can a recognized moral wrong safely be compromised?” and answered his own question by saying that it is dangerous for “any nation, through carelessness and moral cowardice, [to allow] any social evil to grow. . . . From this we may conclude that it behooves nations as well as men to do things at the very moment when they ought to be done.”
The Outer Space Treaty poses limits on property rights. It also does not provide any mechanism for peacefully establishing sovereignty for any nation on any territory in space. Yet national sovereignty and territorial control is a given in all human societies. If we do nothing to establish a peaceful method for creating sovereignty and national territories in space, nations are going to find their own way to do it, often by force and violence. It behooves us to have the courage to face this issue now, and “do things at the very moment when they ought to be done.”
