NASA Advises of Intent to Grant an Exclusive License

This is interesting.  The link is to a Federal Register notice where NASA gives notice of its intent to grant an exclusive license for an invention for a multi-Gb/s laser communications terminal for mini-spacecraft.  The notice provides interested persons 15 days to object:

The prospective exclusive license may be granted unless, within fifteen (15) days from the date of this published notice, NASA receives written objections including evidence and argument that establish that the grant of the license would not be consistent with the requirements regarding the licensing of federally owned inventions as set forth in the Bayh-Dole Act and implementing regulations. Competing applications completed and received by NASA within fifteen (15) days of the date of this published notice will also be treated as objections to the grant of the contemplated exclusive license.

There are a couple of interesting points.  The first is that NASA says it won’t make any objections public, and that “to the extent permitted by law,” it won’t release the objections under the Freedom of Information Act.  Potential objectors should bear in mind that FOIA is a federal statute, and that any grounds for withholding an objection from public disclosure would have to fall within one of FOIA’s enumerated exemptions.

The second interesting point is more frivolous and may be mostly interesting to me.  When I wrote my bourgeois, legal science fiction novel, The Sky Suspended, the plot turned on a patent and the federal licensing of an interstellar star drive created by one company but licensed to its competitor.  I based the novel’s plot on this statute, specifically paragraph (f) of 42 U.S.C. 2457, but the NASA notice is grounded in this one, 35 U.S.C. 207.  Readers of the novel might point out that I clearly didn’t know about this objection process.  They would be right, but I would explain that the book is alternate future history, somewhat like Michael Flynn’s books.

Anyway, anyone who wants to object to the exclusive license or file his or her own application has 15 days in which to do so.

 

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Demonstrating Compliance with a Performance Standard

Performance standards are the new* “in” thing in the regulatory world. Everyone wants them. Everyone notes how they offer greater flexibility, greater opportunity for innovation, and greater speed in adopting new designs. Everyone wonders why they didn’t do them sooner.  When considering them, however, rule writers should keep in mind that the regulated people need to have some certainty as to what an acceptable demonstration of compliance might be.

What are these great things? In the regulatory world, performance standards are requirements that mandate satisfaction of a goal instead of requiring a specific design as the solution to a problem. Rather than saying that your time machine must carry six ounces of dilithium crystals for every fifty pounds of weight, the performance-based regulation says “Each time machine must possess sufficient power to return all occupants to the present.” The first version of the requirement envisions only one way of getting everyone back to the positive now, only one ratio, and only one acceptable power source for achieving that goal. The second approach focuses on the underlying goal, and allows any power source, any method, and any ratio so long as it works. Returning time travelers to the present has to work, because you can’t walk into today from yesterday but one second at a time, and if the time machine dumps you 24 hours earlier than now, you’ll stay there, possibly run into yourself, and create a temporal vortex in the time/space continuum. No one wants that.

The mandatory design solution is not without its admirers.  It’s very easy to administer:  if the time machine weighs 100 pounds, it better have 12 ounces of dilithium crystals powering it.  No one need perform any additional analysis.  It provides certainty.  It’s what the guy who invented the time machine used, and he always brought everyone back, except for the time that wasn’t his fault.  Lastly, the mandatory design solution forces manufacturers to ask for waivers and exemptions, so the Time Stream Administration can look at any deviations individually.

Nonetheless, there is a growing consensus that good government requires performance based standards for purposes of transparency, encouraging innovation, and avoiding unnecessary costs.  These are all virtues.

However, when it adopts performance based requirements, an agency should not lose sight of making all its requirements transparent.  There is one last requirement at issue, and it plays an important role in the whole process, namely, the demonstration of compliance.  At one end of the spectrum, we can be pretty sure the TSA won’t be satisfied with an applicant’s bald statement that his machine has enough power to bring everyone back.  At the very least, the agency will want to know the proposed power source and how it works.  What more would the agency want?  A computer model or actual real-time testing?  How many hours of testing or how many successful journeys would qualify a time machine using chewing gum as its power source?  Should an agency mandate reliability and confidence levels?  Should it put that out as guidance rather than a regulation?  If it does, will it wind up treating similar applicants differently?

Agencies don’t always put their demonstrations in their regulations.  One of the prettier performance standards I’ve seen is for human space flight.  In 14 C.F.R. § 460.5(b), the FAA requires that “[e]ach member of a flight crew [aboard a licensed or permitted launch or reentry] must demonstrate an ability to withstand the stresses of space flight, which may include high acceleration or deceleration, microgravity, and vibration, in sufficient condition to safely carry out his or her duties so that the vehicle will not harm the public.”  “In sufficient condition” to carry out one’s duties shows that a commercial flight crew member need not be a superhuman astronaut.  One might only need to retain sufficient consciousness to work the controls .  That the flight “may” include high acceleration suggests that all flights might not include that particular stress of space flight.  If a capsule gets to space via a balloon, the operator might not need to demonstrate to the FAA that the crew member can withstand high acceleration.  The requirement, in other words, is tailorable to the technology, and an applicant need only demonstrate that the crew can withstand the stresses of his particular vehicle.

However, what the regulation does not say is what a successful demonstration of compliance looks like.  Does the flight crew have to undergo the anticipated stresses?  How many times?  To what level of reliability?  Nine times out of ten?  99 times out of 100?  The answers to these questions may reveal hidden costs of the regulation.  While each applicant gets to make his case for his vehicle, operators of similar vehicles should be treated similarly.  One crew member should not be required to undergo hours of high acceleration while another one is subjected to only minutes.

Consistency and fairness suggest that these unwritten “requirements” be made public. If the FAA finds one method of demonstrating compliance acceptable for certain circumstances, it could let everyone else know by publishing that method in an advisory circular. (The Administrative Procedure Act also requires the publication of an agency’s opinions.) Then, other operators with a similar flight profile would know that they could follow that method without long talks with the agency.  Alternatively, that same operator might have something less costly in mind and could go to the FAA and makes it case for using a different demonstration.  That demonstration could also be shared.  Publication, of course, carries concerns regarding proprietary information, but those can be worked out.

None of this is to suggest that performance standards aren’t awesome.  They are, but no one should lose sight of the question of how much advance notice is necessary regarding the demonstrations of compliance.

*”New” is a relative term.  In the regulatory world, “new” can span a couple decades.

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The Space Show

I will be on The Space Show tonight at 5:00 p.m. EDT to discuss commercial space regulation and Article VI of the Outer Space Treaty with host Dr. David Livingstone.  You can listen at www.TheSpaceShow.com.  I’m looking forward to this.

Update (the next day):  Well, that was a lot of fun!  The shows get archived and podcast, so if you want the link to last night’s show, go here:  http://www.thespaceshow.com/show/20-mar-2017/broadcast-2886-laura-montgomery

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A Request to the Regulators

How we write things matters.  How we write regulations really matters because regulations can influence design and make people spend money.  One small but important area of regulations is the definitions.  If you are going to regulate something, you need to define and identify what you are regulating.  That’s all you need to do.  After you’ve defined the object, you can impose any design requirements or operational restrictions in a different paragraph, a different section, somewhere else, just not in the definitions.

This is a nice, clean approach that avoids legal problems, brain-breaking confusion, and just plain stalling out when it’s time to administer the regulations.  Waivers and exemptions illustrate this point nicely.  Let’s say someone asks you for a waiver from a requirement.  If you’ve loaded the requirements into what should only be a description, how do you waive a definition?  You don’t.

In order to avoid pointing fingers, I will indulge my fondness for science fiction to illustrate the concern.  Let’s say that someone has invented a time machine.  As a well-informed TSA (Time Stream Administration) regulator you know that sending people back in time more than a year wreaks havoc with the space-time continuum, creates alternate timelines in which the internet is not invented and you might have to live there, and sends vast waves of energy pulsing out from the sun to engulf your home planet in radiation.  So, that’s all bad.  You don’t want to approve a time machine that travels back more than ten months because you like margin.  How do you go about it?

The right way would be to define a time machine with enough precision and clarity that the time machine operators know you are talking about their machine, but not so much that machines that don’t fit the definition but still accomplish time travel are left out.  Thus, you can say something like “a ‘time machine’ means a machine that travels forwards or backwards in time.”  This definition may require some tweaking, but it will do for now.  Then, over in a different section of the regulations you can say something like “No person may operate a time machine to travel farther back in time more than ten months.”  (I know, I know:  what if she takes it back 8 months and then another 8 months?  This post isn’t about that.  But if you want to write a guest post…..?).  This very hygienic approach avoids all sorts of problems.

Sometimes, however, regulators focus on the ultimate approval, and if you do that, you might not want to give your  approval to a time machine that will take people back to visit London in the 18th century where they’ll win the Longitude Prize years early, and then, somehow, the internet won’t get invented.  If that is your sole focus you might be tempted to define a time machine as “a machine that travels backward in time by ten months and forward in time.”  (Traveling to the future does not bring about the heat death of our home planet.  Everyone knows that.)  Please resist this temptation.  Later when someone invents a time machine that doesn’t do all the bad things you addressed in the preamble to your notice of proposed rulemaking, you might legitimately want to waive the ten-month prohibition.  Now you can’t, because it’s not a prohibition.  It’s part of the description of what a time machine is.  Also, all those other requirements and prohibitions that you put into the right place in the regulations won’t apply to time machines not meeting your definition.  This will matter if you want to approve something that’s perfectly safe without going through a whole new rulemaking.

Thus, my plea.

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Testimony to House Space Subcommittee

What follows is my written testimony to the House Space Subcommittee on the role the Outer Space Treaty plays in the regulatory responsibilities of the United States.  It’s long, and much of it will be familiar to regular Ground Based readers, but there are some new thoughts regarding paths forward, and it puts together what I have covered here over the past months.

Testimony of Laura Montgomery

Before the Committee on Science, Space, and Technology

Subcommittee on Space

Regulating Space: Innovation, Liberty, and International Obligations

March 8, 2017, Rayburn Building

 

Chairman Babin, Ranking Member Bera, and Members of the Subcommittee, thank you for inviting me to participate in this important discussion and to address the role Article VI of the Outer Space Treaty plays in the regulatory responsibilities of the United States. As someone who hopes to see people beyond Low Earth Orbit again in my lifetime, and who hopes to see commercial space operations other than launches, reentries, and communications satellites, I respectfully recommend that the United States not regulate new commercial space activities such as lunar habitats, mining, satellite servicing, or lunar beer brewing for the wrong reason: the belief that Article VI makes the United States regulate either any particular activity or all activities of U.S. citizens in outer space. Regulations already cost American industry, the economy, and the ultimate consumer upwards of four trillion dollars, according to recent research from the Mercatus Center,[1] so we should think carefully before creating more drag on the space sector.

A misunderstanding of the Outer Space Treaty looms as possible regulatory drag, because many claim Article VI of the treaty prohibits operations in outer space unless the government authorizes and supervises—which I’ll refer to as “oversees” or “regulates”—those activities. Although Article VI states that “[t]he activities of non-governmental entities in outer space, including the moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty,” to interpret this as forbidding unauthorized, private space activity is wrong for three reasons. The treaty does not forbid private operators from operating in outer space. It does not say that either all or any particular activity must be authorized. And, finally, Article VI is not, under U.S. law, self-executing, which means that it does not create an obligation on the private sector unless Congress says it does.

In order to put to bed the regulatory uncertainty arising out of these misunderstandings, Congress could take a number of different approaches. The most certain and long-lasting approach, however, and the one that would reduce the opportunities for confusion, misunderstanding, and regulatory overreach, would be for Congress to prohibit any regulatory agency from denying a U.S. entity the ability to operate in outer space on the basis of Article VI. Continue reading

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The Past, The Future, and Stateless Property Rights

Yesterday’s Wall Street Journal contained a charming  mention of the birth of the credit report. What does this have to do with space law? It provides another example—albeit in the context of extending credit—of private information exchange and its effects on a commercial actor’s reputation to bolster Alex Salter’s proposal for a purely private legal system for space commerce. Such a system could make up for any lack of government enforcement of private property rights arising out of a popular but probably incorrect interpretation of Article II of the Outer Space Treaty.

Salter, as described here last October, focused on the fact that, while it might behoove a barbarian to take another person’s stuff, for those engaged in commerce, and particularly for those who have self-selected for the patience to engage in space commerce, the “discipline of continuous dealings” will lead to more civilized behavior. The barbarian scenario is limited in that it assumes a one-time interaction between the two parties, which is not realistic. In real life, there should be multiple interactions over a lifetime, making vital the need for cooperation and dealing with other players properly. He points to the reputational effects of dealing badly and describes private medieval merchant courts as an example of voluntary private law.

The WSJ outtake reminded me of his thoughts on reputation when it quoted from A Culture of Credit, by Rowena Olegario:

In the late eighteenth century, attempts to improve the flow of information led English mercantile and retail creditors to band together into trade protection societies. …

[T]he Society of Mutual Communication for the Protection of Trade . . . proved longer lasting. . . . The society’s constitution expounded two principles that lay at the heart of all trade protection societies: “Every member is bound to communicate to the Society without delay, the Name and Description of any Person who may be unfit to trust, for the security and satisfaction of the other Members; and shall, on all occasions, impart, without reserve, any information that may be solicited by any of the members.”

Talk about ensuring reputational effects for poor behavior.

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For Whom the Clock Starts, For Whom it Stops, and Tolling

When a launch or reentry operator applies for a launch or reentry license from the Federal Aviation Administration, the FAA has 180 days to determine whether to grant the license or not. This time limit comes from  the Commercial Space Launch Act (CSLA), 51 U.S.C. ch. 509, and the FAA has to follow it. This sounds very simple, but, of course, it isn’t. Because Congress did not specify how the FAA is to count the days, the FAA’s regulations, which it must follow under Supreme Court case law, start and stop the clock based on whether the FAA has enough information in the application to start working on it.

The clock starts. When does the clock start counting down? Might an applicant submit its name and address and have the clock start running? No.

Under the FAA’s rules the clock starts when an applicant submits an accepted application.  An accepted license application is one that is “complete enough for the FAA to start its review.” In other words, the applicant has to provide enough information for the FAA to start figuring out if the operator can satisfy, among other things, the FAA’s safety and financial requirements. That’s when the clock starts ticking.

The FAA can afford this approach because it has the ability to “toll” its review: it can stop the clock. As the regulations note, “[t]he FAA’s acceptance of an application does not mean it has determined that the application is complete.”

The clock stops. If the FAA has an application that does not contain all the necessary information, the FAA will toll the review period under section 413.15(b). To do that, the FAA writes to the applicant and requests the missing information. Although this part is not in the rules, the FAA’s notification of the applicant that the agency needs more information will contain a date by which the applicant should submit the information to avoid tolling. If the applicant provides the information before that date, the clock does not stop. If the FAA does not receive the requested information, the clock stops on the specified date. For example, let’s say that on Day 50 of the review period the FAA writes the applicant requesting information about an applicant’s safety official because the applicant doesn’t seem to have one. The FAA requests the information by April 5, which is Day 60. The applicant does not provide the information. Although the FAA may keep working on the application, it will toll the review period, and the clock doesn’t start again until May 1, when the applicant finally provides the FAA the identity of its safety official.

This system is actually a great benefit to the applicant. If tolling were unavailable, the FAA would have to deny the license application at 180 days for missing information, and the clock would reset to Day 0.

Another interesting point is that both the CSLA and the FAA’s regulations state that the FAA must inform the applicant in writing of any additional information the agency needs if it hasn’t made its final determination at 120 days.

Thus we see that the FAA, in accordance with Congressional direction and expectations, structured its regulations on this topic to allow an applicant to submit an incomplete application, albeit one that is “complete enough” for the FAA to start its review. Were the FAA to change this approach it would have to change its regulations.

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Chairman Babin on International Obligations in Space

On February 7, 2017, at the FAA’s Commercial Space Transportation Conference, Representative Brian Babin, Chairman of the Space Subcommittee of the House Science, Space and Technology Committee spoke on how the U.S. can fulfill its international obligations for commercial actors in outer space.  If you wish to read his whole speech, this link will take you there:   FAA conference Feb 7 2017 .  Among other topics, he addressed questions raised by Article VI.  As GroundBased readers know full well, Article VI of the Outer Space Treaty states that “[t]he activities of non-governmental entities in outer space, including the Moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty.”  The Chairman responded to this provision in a very thoughtful fashion.  First, he lays out the domestic philosophy of governing.

[T]he government’s role isn’t to give you permission to do something. The government’s role should be limited to only those areas that require its intrusion, which is a high bar. The burden of proof shouldn’t be on the individual to demonstrate the “right” to act; the burden of proof should be on the state when it seeks to restrict liberty.

In thinking about how this clear statement of philosophy might play out, I see two possible paths.  In the one path, the executive branch’s agencies would recognize that because Article VI is not self-executing, and if Congress hasn’t passed a law like it did when it told the FAA to authorize launch, reentry and spaceports, then Article VI poses no barrier to any particular activity.  In the second, Congress itself would pass legislation reminding everyone of that point.  (I am nervous about processes where Congress would assign an agency the job of “defaulting to approval.”  I suspect that was the original intent behind the FAA’s payload review, but I’m not sure it’s worked out that way.  The better course might be to create a notification regime, or, better yet, to ensure that an applicant need apply for nothing to operate in outer space.)

The Chairman also discussed what he did not want to see:

[T]he Constitution places the responsibility upon Congress to make legislative determinations regarding what requires federal authorization and supervision. It should not be the case that everything anyone does in outer space requires federal approval. Article 6 grants States the discretion to decide what must be authorized to assure conformity with treaty obligations and how it is to be supervised. Transferring this authority to the executive branch raises serious concerns given how vast the scope of regulatory oversight would be.

Legislative Responsibility and Due Process.  Chairman Babin raises a couple of interesting legal points with this observation.  As he notes, it is Congress, not the Executive Branch that makes the legislative decisions about what requires federal oversight.  Also, if the U.S. decides that more private activities in outer space require oversight, we should identify what those activities are.  As the Supreme Court has said on more than one occasion, due process considerations of notice and transparency require that an ordinary person be able to tell what is forbidden and what is required.  Saying everything must be authorized would be so broad as to create constant confusion.  People would convince themselves that the law cannot possibly apply to playing the piccolo or anything else equally mundane.  But we lawyers read the words of a law with exactitude, and if the law says everything then the law means everything.  The agency charged with enforcing any such law would have to apply the words as written.  Recently, we’ve seen pie in the sky and a proposal for lunar brewing.  Are those activities so hazardous they require the expenditure of taxpayer resources?

Discretion.  The Chairman is correct to note that the treaty “grants States the discretion to decide what must be authorized to assure conformity with treaty obligations and how it is to be supervised….”  (Emphasis added).  This means that a country might decide not to regulate the lunar harpist, but go all in on the lunar brewer.

The Chairman also echoes the Supreme Court in noting that, for a treaty that is not self-executing,

the executive branch, unless explicitly authorized by Congress, should not deny an American citizen the right to explore and use Outer Space. I hope that the incoming Trump Administration will closely examine this topic, because this question of how we will regulate our private sector activities is not simply academic. I believe it is one of the fundamental space policy questions of our time. America is great because it is a country where you have the freedom to create without government permission. We are all free, unless we chose, through our legislative process, to limit our freedoms.

Self-executing.  As this blog has discussed, Article VI is not self-executing, which means that Congress must provide direction before the executive branch may attempt to enforce that provision.  It would be wonderful indeed if the new Administration were to issue a statement recognizing that if Congress has not forbidden a space activity, then that activity  is allowed, thus putting to bed the regulatory uncertainty that plagues some.  Then, if an agency sought more authority over the private sector it would have to go through the usual exercise of demonstrating to Congress a real need to burden the private sector.

 

 

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