Achieving Clear and Reliable Legal Norms in Space to Encourage Commercial Transactions

Picture1By Rob Philbrick

SpaceX just successfully completed tests on the main core of the Falcon Heavy this week in Texas. The Falcon Heavy is a reusable super heavy lift space launch vehicle. By the end of the summer, Elon Musk projects his team will conduct a complete test launch of the Falcon Heavy. Even considering the requisite Musk Timeline Factor Adjustment, most private companies are preparing for commercial spaceflight to occur within 30 months.

How have we arrived here, and what extant law governs the expanse today?

The current international law governing outer space emerged in the late 1950s, and remains largely unchanged. The Soviet Union had just launched the first artificial satellite, Sputnik, and ushered in the Space Age, leading two professors to publish Perspectives for a Law of Outer Space in the American Journal of International Law. A key takeaway from this article was that the establishment of legal standards in this field would be a slow and deliberative process. True to that view, the Outer Space Treaty came into effect a full ten years later in October 1967.

The Outer Space Treaty, formally known as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Out Space, including the Moon and Other Celestial Bodies, is the core of international space law. As the formal title acknowledges, this treaty is focused on the actions and responsibilities of states – not private actors. Article VI does touch on this topic, however, in requiring that “non-governmental entities in outer space . . . require authorization and continuing supervision by the appropriate State Party to the Treaty.” But with unpredictable government space program budgets and industry knowledge condensed in the private sector, are states truly in the best position to authorize and supervise non-governmental entity activities in outer space? Looking forward, what should be our goal when crafting laws for this rapidly changing and increasingly privatized field?

According to Sergio Marchisio, Chairman of the European Centre for Space Law and Professor of International Law at University La Sapienza of Rome, the primary goal of space law is to “ensure a rational and responsible approach to the exploration and use of outer space for the benefit and in the interest of humankind.” “The function of space law,” he continues, “is to maintain order and coordinate behavior and relations among [public and private subjects] involved in space activities.”

Have these stated goals and functions of space law remained effective through the budding commercial space industry?

President Obama defines “commercial space activities” in the National Space Policy issued June 2010 as “space goods, services, or activities provided by private sector enterprises that bear a reasonable portion of the investment risk and responsibility for the activity, operate in accordance with typical market-based incentives for controlling cost and optimizing return on investment, and have the legal capacity to offer these goods or services to existing or potential nongovernmental customers.” This definition follows the commonly-held notion that goods or services provided primarily to other private sector enterprises or consumers (e.g., DirecTV satellite television and Sirius XM satellite radio) are markedly distinct from goods or services provided primarily to government customers when the government shoulders most of the risk because it requires the services (e.g., remote sensing satellite company DigitalGlobe, Boeing-Lockheed Martin United Launch Alliance).

Under these definitions and understandings, the global space economy has doubled to $330 billion in the last 10 years. Revenue related strictly to commercial space activities doubled to $250 billion in that same period. Commercial space products, services, infrastructure, and support from private enterprises comprise over 75% of the space economy. The United States government space budget makes up less than 15%, and in combination with all other government space budgets makes up less than 25%.

What have years of growth in this industry given us? Well, massive investment activity has benefitted our lives in quite a few ways. Researchers can more capably track climate change, telecommunications have advanced at astounding rates, we can observe and warn communities of incoming natural disasters, and navigation tools through GPS is a luxury that has quickly been adopted as a necessity by much of the world.

Today, private companies such as SpaceX and Blue Origin have innovative and flexible organizations that are ready to take risks. There is even an air of one-upmanship between their sparring billionaire owners, Musk and Bezos. Fortunately, this one-upmanship has the effect of bringing down the cost of access to space as a commercial market. According to The Economist, the first stage booster section of the Falcon 9 rocket accounts for about $42 million of the $60 million total cost. Even though Musk and Bezos occasionally bicker on twitter, the reality is that their work to reuse these significant rocket cost drains – even though done separately and in competition with one another – will in turn bring about entirely new blue ocean industries: space tourism and planetary colonization.

It remains unclear whether space law, as it has been drafted and consolidated so far, can aptly face the many challenges ahead in the space economy. UN treaties dealing with space activities were born in a time when today’s expansive commercial space industry could hardly be imaged, let alone property regulated. Several commentators suggest that “these treaties no longer seem to provide for an adequate framework to address the complex relations that have resulted from the rapid growth of commercial activities in outer space.” Ultimately, we have inherited a thoughtful and well-meaning institutional framework that simply cannot satisfactorily resolve today’s substantive concerns around commercial space transactions.

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