June 15, 2017

The American Space Commerce Free Enterprise Act

Last week, the House Science, Space, and Technology Committee marked up the American Space Commerce Free Enterprise Act. The bill intends to overhaul the U.S. government’s oversight of commercial activities in outer space, both in terms of existing operations and in addressing potential future missions. On both of these fronts, this bill is a major step in the right direction. It strikes at some of the major issues facing America’s commercial space industry, and opens the door for new missions.

Why Reforms Were Necessary

There are two acute problems within the government’s oversight of commercial space activities that require action. The first involves the current regulatory system overseeing commercial remote sensing.

Remote sensing has long been viewed as a critical capability for expanding commercial space activities, though there are potential national security risks to consider. In addition, a botched attempt at privatization of U.S. remote sensing capabilities in the late 1970s and early 1980s led to a belief that remote sensing was a public good that would struggle to make profits in the private sector. This led to locked-in expectations of the commercial market that did not keep up with changing capabilities and demand. National security concerns, in combination with that lack of focus on promoting commercial remote sensing, resulted in an overly burdensome and archaic oversight regime for remote sensing today.

The current system is seen as capricious and opaque, with decisions on why companies cannot pursue certain capabilities left unexplained. Companies have been restricted from deploying capabilities currently available through other methods or on the international market, ceding American market share. With the global proliferation of remote sensing capabilities, current restrictions disadvantage the United States. Commercial space activities face a burdensome regulatory regime that is ineffective for today’s global space economy.

The second problem with the current oversight regime stems from a lack of certainty over new and untried missions. These missions, from mining resources on asteroids to sending private rovers to the moon, do not currently fall under any single oversight body. Some companies, such as Hawkeye 360, are approaching old industries like remote sensing with new ideas that are not currently regulated. For these types of missions, the problem of uncertainty can raise funding and finance issues. After all, while Moon Express got permission to send a private rover to the moon, there is no guarantee that another company could get permission for a similar mission. Companies in these industries want certainty on how the United States will approach these missions so that they can raise the necessary funding.

However, as these companies are quick to point out, they do not want certainty through draconian regulations. If the United States’ approach is to make burdensome regulations on new private uses of space, it will merely limit the potential of an emerging market to make positive contributions—in jobs and GDP—to the American economy. The United States will lose global market share of commercial space opportunities to competitors, like Luxembourg, that want to license the same missions.

Getting the Balance Right

A balance must be struck between reforming anachronistic regulations while creating certainty through non-burdensome regulatory requirements. To that end, the American Space Commerce Free Enterprise Act strikes that balance. It works to streamline existing regulations and introduces a light-touch approach to potential new missions.

On the remote sensing issues, it targets the choke points that have hindered the remote sensing industry. The new oversight regime would be biased towards approval, with the Secretary of Commerce held to a deadline to provide a denial or approval decision. Otherwise, the application is automatically approved without condition. If the application is denied or has conditions set on it, the Secretary must both notify the applicant of the reasons—including with as much classified information as can be provided at the applicant’s clearance level—and the relevant House and Senate committees. The bill also contains a process for appeal. Both of these steps—transparency and appealability—are crucial for reforming remote sensing regulations.

Additionally, and perhaps more importantly, the Secretary is restricted from preventing U.S. companies launching remote sensing capabilities “for which the same or substantially similar capabilities, derived data, products, or services are already commercially available or reasonably expected to be made available in the next 3 years in the international or domestic marketplace.” If passed, this would eliminate one of the largest concerns of America’s remote sensing industry: that they would be prevented from using capabilities that competitors abroad already have in the market.

The bill also addresses the concerns of companies wanted to undertake missions not currently overseen by any American agency. It authorizes the Office of Space Commerce (OSC), under the Secretary of Commerce, to issue certifications for any space missions so long as they do not violate American international obligations or national security concerns. The bill also includes parameters for how and why the Secretary can refuse or restrict those certifications. The OSC must return its certification decision within 60 days, and must inform both the applicant and the relevant Congressional committees on specifics if applications are denied. The OSC must interpret its international obligations in a way that promotes free enterprise, and the Secretary can remove conditions on certification if such a removal is deemed necessary.

Certification for these missions also follows a registration-styled system. Companies are asked to submit general information about the space object—from physical form to expected operations—and are required to update the OSC on material changes. It does not, however, require more burdensome regulations—there are no requirements for continuous updates on activities in space, for example.

Counter Arguments & Problems?

Overall, the bill is a big step in the right direction, and deals with two major problems that the commercial space industry face. Of course, with all such bills, the question arises about whether there are any good counter-arguments or problems with its approach to government oversight of private space activities.

The strongest counterargument, such as it is, to this bill’s approach is the argument that we should not throw the interagency baby out with the bathwater—that the diverse expertise across the intelligence community, Defense Department, State Department, and others is valuable in making determinations as to the foreign policy or security implications of licensing either remote imaging or new missions.

However, the bill does not prohibit the Office of Space Commerce from consulting across the government. It in fact encourages the Secretary to consult with other agency heads, but makes certain that the decision to make a call exists in one place. This will better ensure that those determinations are accountable. The lack of a clear final arbiter of decisions has been one of the largest frustrations of the private space community over the last few decades. Consolidating that authority in one particular agency has long been suggested by regulatory and industry experts.

The only problems with the bill are not with what it attempts to do, but the limits of what it can address. The bill does not address pressing concerns over space situational awareness and traffic management—concerns that will grow as more space objects are launched into orbit. The bill also does not address national space integration of commercial space launch, another topic that will grow more pressing as the cadence of commercial launch increases.

There may also be concerns about whether the new organization of the OSC will be properly funded and staffed. A tangential issue related to oversight of commercial remote sensing is that the current regulatory office within NOAA does not have the appropriate staff and funding to handle licensing rules as they stand. To make calls on new missions, the OSC will need the requisite expertise. Moving remote sensing authority to OSC and standing up new authorities for certifications will of course change the process, but it will be important to ensure that the office receives appropriate monitoring, funding, and staff.

However, these are not critiques of the bill as it stands—merely a note that even if this bill passes there is work left to be done.

A Step Forward

As it is, this bill is makes great progress on two important space regulatory issues. If it moves forward, it will dramatically improve current regulatory oversight on remote sensing and create a sense of certainty for private space actors that wish to undertake new missions. These reforms have been needed for a long time, and Congress should pass this bill.