Citizens are going into space. Who has the right to do what and where out there? How do we avoid the mistakes made on Earth, yet encourage the harvest of space resources that might save the planet? How do we make sure no one grabs the solar system yet enable regular people to dream they might own a house on the Moon or homestead Mars?
This month the Institute for Humane Studies and the Mercatus Center co-sponsored a fascinating seminar on the Law and Economics of Space Policy in Arlington, Virginia. Dr. Alexander Salter, a professor of economics at Rawls College of Business and a Comparative Economics Research Fellow at the Free Market Institute, Texas Tech University, presented his paper, Ordering the Cosmos: Private Law and Celestial Property Rights, on how a private legal system could protect property rights despite Article II of the Outer Space Treaty. (I have my own issues with whether Article II actually prohibits private property in Outer Space, but Salter’s ideas give me hope that it might not matter). He proposes a purely private legal system for space commerce to make up for any lack of government enforcement of private property rights.
The discipline of continuous dealings can be self-enforcing. Salter envisions self-enforcing property rights and rules for private parties to adjudicate their own disputes. He acknowledges the problems posed by game theory’s Prisoner’s Dilemma, where two individuals face the choice between respecting each other’s property rights or taking the other’s property. Respect results in them getting to keep their own property. But if one of them defected from the norms of civilized conduct that person could get double the property. Without a sovereign to enforce their respective property claims, the property-maximizing approach (if I am not abusing the lingo here) would be to go barbarian. As Salter notes, however, the 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. If one of them were to defect, the lost trust would hinder future dealings. As Salter explains:
Social scientists call this the discipline of continuous dealings: since the gains from defection are gained only once, but the gains from cooperating extend into the indefinite future, rational individuals will be much more likely to cooperate when they repeatedly interact.
Adding additional players strengthens the tendency for cooperation because of the reputational effects of behaving badly. Space commerce, Salter posits, will select for patient players who can foresee the consequences of failing to cooperate. Large up front investments and long lead times before seeing positive cash flow do not reward the impatient.
History shows that self-enforcement can work. The international stage itself constitutes an example of the kind of cooperation Salter envisions. There is no king of the world, and “the world’s polities exist in a ‘state of nature.’” Yet international trade and commerce still manage to happen in a “sophisticated private and voluntary legal system.” The historical roots for this system extend all the way back to the 9th and 10th centuries, when Europe’s trade began recovering from the collapse of the Roman Empire in the West. Merchants developed law enforced in private, merchant-developed courts. This medieval lex mercatoria “was a system of self-enforcing property rights according to legal rules that emerged out of dispute resolution among interested parties.” The merchant courts, Salter explains, developed their own rules of evidence, allowed for consulting experts, and provided quicker decisions than the national courts of the time. Because the courts had no formal enforcement power, enforcement relied on reputational effects. Failure to comply with a decision would brand a merchant a defector and an unsafe trading partner. (Even without the internet).
Private courts have not vanished, even with the court systems of the modern nation state. Salter explains that nowadays at least 90 percent of international commerce contracts provide for private arbitration in the event of a dispute.
The desirability of private law. To determine the desirability of private law, Salter first explores the difference between organizations, such as corporations or regulatory agencies, and emergent or spontaneous order (called a cosmos). A market is an example of an order. A market has a tendency toward efficiency as millions of individuals somehow cooperate even though they don’t know each other or even all the conditions of the market. Prices—continually adjusting in response to changing conditions of supply and demand—provide the substitute for individual omniscience.
We also see orders in the creation of law. Where a regulatory agency’s rules are created by an organization, judicial decisions in a common law legal system exhibit the characteristics of an order. Under a common law system, whether public or private, and under lex mercatoria, “rules that do a good job of providing both stability and flexibility are likely to be discovered and maintained, while rules that do a poor job are likely to be discarded.” Innovation may take place at the margin as new circumstances extend the application of legal principles to new situations.
Both the market and legal systems are orders that generate information and align incentives. In a private legal system the reputational effects tend to keep the arbitrators impartial and disputants willing to abide by private arbitration. The lower costs of a private legal system tend to get passed on to consumers. The feedback mechanisms keep the order flexible, and the order itself stable enough for planning and investment purposes.
Do read the whole paper to best appreciate the discussion of benefits.
Pun acknowledgment: Now that we know the other meaning of cosmos, we can doubly appreciate the orderly aspects of the paper’s title.
After last Friday’s post on the Outer Space Treaty’s Article VI, which states that the activities of non-governmental entities in outer space shall require authorization and continuing supervision by the appropriate state party to the treaty, I had some interesting conversations on the topic at a couple of conferences. One person pointed out that the FAA’s payload review authority allowed the FAA to take foreign policy interests into account when making a payload determination. This is true and not inappropriate, but should not be applied for Article VI reasons in light of the fact that the provision is not self-executing.
When conducting a payload review, the FAA must do so consistent with public health and safety, safety of property, national security and foreign policy interests. The FAA’s foreign policy authority may be a double-edged sword for industry. (If it were a light saber, we’d speak of whether it glowed blue or red.)
On the one hand, the FAA could use its powers to encourage, facilitate and promote. For example, were a prospective lunar harpist to seek a payload determination from the FAA, the FAA would engage in its normal practice of inter-agency consultation. The U.S. Department of State might raise concerns with respect to the fact that Congress has not passed legislation to regulate harp playing despite Article VI providing that all States Parties to the treaty authorize and continuously supervise the acts of their nationals in outer space. With its own foreign policy authority, independent of that of the State Department, the FAA could determine that because Article VI is not self-executing, until Congress acts, the U.S. has not determined that playing the harp constitutes the type of activity requiring oversight under Article VI. Having satisfied its consultation obligations the FAA could then issue a favorable payload determination.
Conversely, the FAA could worry that other countries might raise issues about Article VI authorization and continuing supervision of a lunar harpist and contemplate denying the harpist’s requested payload determination. Such a determination should, however, run afoul of the fact that Congress has not determined that lunar harp playing is the kind of activity that requires federal oversight. The FAA must make any policy determinations in accordance with U.S. law, and a non-self-executing treaty is not, as noted by the Supreme Court’s Medellin opinion, binding federal law. To treat it as such would raise the question of whether the FAA was usurping Congress’s legislative role.
Lunar harp playing is a vaguely ludicrous example of an activity that could take place extra terrestrially, but it makes the point that the Outer Space Treaty left the determinations of what requires authorization and continuing supervision to each signatory nation. If Congress hasn’t decided that lunar harpists or miners require oversight for their respective activities, they don’t. The treaty does not say which activities must be regulated, and in the United States that determination lies with Congress. For the FAA to say that it had the ability to make such determinations about a non-self-executing treaty would be to say that it, rather than the legislative branch, could decide which activities required federal oversight.
I’m looking forward to attending Denton’s space law event today. It will cover a host of satellite issues, including liability, traffic management, NASA’s role in emerging space, and the commercial extraction of space resources.
A couple of years ago I read an early draft of my friend Jim Dunstan’s book Atlantis Ascending, about a young woman and her best friend’s recruitment to working on a solar power station in orbit. It was a lovely if alarming read, and it highlighted the perils of the company town. If your employer owns everything around you and is the source of your food, water, and even air, how does that work? Do you want to sign that contract? What kind of protections do you have? Any? It can make life hard on the worker, and this books certainly shows a number of ways for that to happen. I mention this book here because it raises questions for a space lawyer who likely hasn’t yet been born. Also, Jim is a space lawyer. Lastly, he has a really cool space simulator at newspacefiction.com. Accordingly, Atlantis Ascending gets a Ground Based thumbs up!
About the Books Tab: I like science fiction. I like space law. The Book Tab contains science fiction books I come across that touch upon some element of space law. When I find an issue of space law in near future science fiction I will mention the book and the issue , and you can find links in the post and at the Book Tab. The Book Tab also contains my books, of course, even though two of them are purest space opera with not an ounce of space law to them. (That’s because it’s my blog.) The other two are bourgeois, legal, science fiction. Do watch out for the space opera. You have been warned.
There are many claims these days that a new regulatory regime needs to be in place in order for a private entity to operate in outer space. These claims should not be treated as correct to the extent that they claim that private parties may not operate in outer space unless authorized and continuously supervised. As noted in a previous post, not all provisions of the Outer Space Treaty are self-executing, so until Congress acts, those treaty provisions don’t bind private operators. That logic applies to the treaty’s Article VI as well.
Article VI of the Outer Space Treaty is Not Self-Executing. Article VI states:
States Parties to the Treaty shall bear international responsibility for national activities in outer space, including the moon and other celestial bodies, whether such activities are carried on by governmental agencies or by non-governmental entities, and for assuring that national activities are carried out in conformity with the provisions set forth in the present Treaty. The 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.
This provision may place an obligation on the United States government. It does not place a barrier in the way of any particular activity by a private actor in outer space. That is because Article VI is not self-executing. It is true the Constitution makes treaties the supreme law of the land, but only if they are self-executing. If a treaty promises that the signatories shall go off and do something to carry out whatever the signatories agreed to, it necessarily requires additional action by someone in the government. In the United States, that someone is Congress.
As the Supreme Court noted in Medellin v Texas in 2008, “not all international law obligations automatically constitute binding federal law enforceable in United States courts.” The origins for this can be found in the early 19th century case of Neilson v Foster (which was reversed on other grounds):
Our Constitution declares a treaty to be the law of the land. It is consequently to be regarded in courts of justice as equivalent to an act of the Legislature whenever it operates of itself, without the aid of any legislative provision. But when the terms of the stipulation import a contract, when either of the parties engages to perform a particular act, the treaty addresses itself to the political, not the Judicial, Department, and the Legislature must execute the contract before it can become a rule for the Court.
In Neilson, the Court interpreted the English version of a treaty with Spain regarding a transfer of land to the United States. The English text said that the Spanish land grants to plaintiffs “shall be ratified and confirmed to the parties in possession thereof.” The Supreme Court said that Congress therefore had to first enact legislation because the text of the treaty required further action, namely, the ratification and confirmation.
Similarly, the Medellin Court looked to the text and history of a treaty to determine that Article 94 of the UN Charter was not self-executing, because, although the treaty said, “[e]ach Member of the United Nations undertakes to comply with the decision of the [ICJ] in any case to which it is a party”, the Court did not find the provision immediately operable because it spoke of future action.
The text of Article VI is remarkably similar to that of the Neilson treaty. Both use the term “shall” to indicate future undertakings on the part of the signatories. Both require implementing legislation, which necessitates policy judgments by the legislative branch. Additionally, for Article VI, given the paucity of commercial activity in 1967, it could only address future activity and a future legislative response. Even if the text weren’t so clear, the history of the Senate’s confirmation of the Outer Space Treaty supports the text. Indeed, Ambassador Goldberg, when testifying to the Senate, stated that not all provisions of the treaty were self-executing. Accordingly, Article VI is not self-executing and the Executive Branch should not treat it as a barrier that applies to commercial actors.
Not All Activities Require Regulation. Article VI requires that a State Party authorize and continuously supervise its nationals. The treaty does not say what activities require authorization. Nor does it define “continuing supervision.” These answers are left to the signatory states. For example, the USSR might have instituted price controls on platinum group minerals to supervise sales. Hong Kong likely wouldn’t. In the United States, the U.S. Congress must decide what activities require authorization and supervision. This means that the Executive Branch should wait on Congress to tell it what activities might rise to the level of concern—for whatever reason—that they require regulation.
Continuing supervision. I long ago sat in on a class called something like Telecom for Poets. One of the things I remember from it was the visual depictions of what frequencies looked like. X-rays were short sharp spikes all smashed up against each other. Other frequencies looked like long, languid stretches of string, barely shaped by a curve. Both of these, the professor said, were continuous. We students gasped, but we got it: “continuous” can mean different things in different contexts. In fact, even now we see different examples of what “continuous supervision” means in the regulatory environment. One agency will send inspectors to all launches but not necessarily all component testing. Another agency will travel abroad with its regulated entities to ensure against the unlawful transfer of technology. Another one shows up after an accident happens. Different resources and different priorities drive different levels of supervision, but they may each be characterized as providing continuing supervision of some sort, regardless of the frequency.
Activities. Congress should not pass legislation that encompasses everything anyone might do in outer space. That would be the equivalent of federalizing Connecticut, and it’s not necessary. Life is full of activities, from the benign to the ultra-hazardous. Not only will persons engage in activities that might endanger themselves,their customers, or their neighbors, but they will also perform more ordinary acts. A musician may decide to play the harp on the Moon. Lots of people will brush their teeth in outer space. Rather than enacting overly broad legislation that transfers all legislative powers to an agency, Congress should make decisions about what requires oversight and what does not. (Indeed, such a transfer would only prolong any regulatory uncertainty as industry faced the possibility of having to obtain permission for every little activity proposed.)
Other decisions that require Congressional determinations: Congress, in deciding to regulate an activity of a private U.S. entity in outer space , would have to pick an agency to do the regulation. Perhaps the Department of Housing and Urban Development could oversee space habitats. Perhaps the Department of the Interior would acquire jurisdiction over space mining. Or, maybe the Department of Commerce. What would the regulation look like? Would it be a license, a permit, a certificate? Would regulations address safety issues, national security, or food safety? Let’s not forget that a State Party “shall bear international responsibility” for, among other things, “assuring that national activities are carried out in conformity with the provisions set forth in the present Treaty.” Although not many provisions of the Outer Space Treaty clearly apply to a country’s nationals as private entities, perhaps Congress could address Article IX’s prohibition on interference by a country’s nationals, and enact implementing legislation to carry that out. (As noted in the previous post, the harmful contamination provision of Article IX only applies to State Parties so should not fall within the responsibilities intended by Article VI.)
Until Congress acts, the government should not claim that Article VI prohibits all or any particular private activity. Indeed, given the close textual analysis that the Supreme Court applies to treaties, Article VI’s potential obligation on the government does not, even on its own terms, constitute a prohibition on the private sector.
I am looking forward to participating in the annual space law day that the University of Nebraska law school puts on. This year it will be on Monday, October 17 at the National Press Club in Washington, DC. Scroll down here to learn more. CLE credit is offered.
I’m looking forward to participating in The Law and Economics of Space Policy, a seminar conducted this weekend by the Institute for Humane Studies and the Mercatus Center at George Mason University. I will talk about U.S. government regulation of space transportation and communications, and whether the Outer Space Treaty requires the regulation of all commercial activities in outer space.
An agency’s notice of proposed rulemaking (an NPRM) does not get written overnight. An agency must identify a problem, come up with its proposed solution, justify it by explaining the legality and need for it in an explanatory preamble, and subject it to a regulatory evaluation, which is bureaucrat-speak for an analysis of the costs and benefits of the proposed requirements.
Sometimes the public and industry are surprised by an NPRM. They don’t need to be. A Unified Agenda provides the public a way to learn about an agency’s rulemaking priorities. The Unified Agenda reports regulatory and deregulatory activities under development in the agencies of the federal government, but not Congress. Fall editions provide The Regulatory Plan, in which agencies state their regulatory priorities and identify their most significant regulatory activities in the coming year. An agency may also list long-term actions scheduled for more than 12 months away. It may list completed actions as well.
This page provides a space for inputting the agency you are interested in. The FAA is in the Department of Transportation, so I selected that, and it took me here. I scrolled down, and noticed rulemakings addressing both aviation and space. There is one, for example, for a rulemaking on Reciprocal Waivers of Claims for Licensed or Permitted Launch and Reentry Activities. If you click on the linked RIN number and scroll down, you’ll see that it shows links to the Federal Register notices for the NPRM and for a re-opening of the comment period. There is no link to a final rule, but it’s always good to check–using the search engine of your choice. It turns out that the final rule has been published, and may be found here.
I was going to title this “Does Planetary Protection Apply to the Private Sector?” However, various corners of the internet mock the use of questions in headlines, so I was too chicken. But, at the end of the day—or perhaps of the century—that is the question; and in the United States the answer must come from Congress.
Background Article IX of the Outer Space Treaty provides that States Parties must pursue their studies and explorations so as to avoid “harmful contamination” of the moon and other celestial bodies and “adverse changes in the environment of the Earth resulting from the introduction of extraterrestrial matter and, where necessary, shall adopt appropriate measures for this purpose.” As a science agency that is part of the U.S. Government, NASA has interpreted this to mean that its missions must not only avoid what the ordinary person might consider harmful contamination, but microbial contamination as well, limiting the presence of bacterial spores on any surface to no more than 300,000. Accordingly, NASA requires the sterilization of its spacecraft to avoid bringing microorganisms to Mars. ESA, the European Space Agency, follows similar measures.
These measures are expensive. ESA describes the creation of clean rooms. NASA bakes its spacecraft. The space agencies spend money on preparing protocols, training technicians, sampling, testing, and devising new and more stringent requirements. Although it is difficult to find information about the costs of planetary protection, one expedition cost somewhere between $80 to $100 million in 2003 dollars.
People are full of microorganisms. I’m no biologist, but I think there are far more than 300,000 bacterial spores on the surface of the human body, never mind what’s inside us. Are we planning to prohibit people on Mars? Probably not. I hope not.
The question does, however, highlight the existence of competing interests. Science agencies want to do science. They have interpreted the directive against “harmful contamination” to mean no harmful contamination to science. The space agencies have now had decades to perform their scientific studies and exploration, and others, including commercial actors, are interested in going to Mars as well. This means that other human interests aside from science will take the stage. Those interests may range from space settlement, with its attendant needs for air, agriculture (albeit in high-tech greenhouses), and manufacturing, to tourism, leisure, art, and mining.
These interests are not obviously less important than the question of whether there is life on Mars. That’s an important issue, even if the life found is less complex than Edgar Rice Burroughs’ Tars Tarkas. The question is, who decides?