Senate Commerce Hearing on Regulating Space: Treaty, Agency, and Tax Issues

On Wednesday, April 26, 2017, Senator Ted Cruz chaired a hearing titled “Reopening the American Frontier: Reducing Regulatory Barriers and Expanding American Free Enterprise in Space.” The witnesses included Robert Bigelow, founder and CEO of Bigelow Aerospace, Rob Meyerson, President of Blue Origin, George Whitesides, CEO of Galactic Ventures, and Andrew Rush, CEO of Made in Space. The hearing covered a range of issues, but the two most interesting from a space law perspective were the regulatory and treaty discussions. Also, Senator Cruz was once the Solicitor General of Texas, and it was he who argued the case Medellin v Texas, which readers of know is a major case in figuring out the consequences of a treaty that is not self-executing.

Outer Space Treaty. There was a lovely exchange between Senators Cruz and Nelson on the possibility of homesteading the Moon. Senator Nelson told the story of how his grandparents homesteaded just north of the Cape, and when he boarded the shuttle on his way to space he took a moment to look out over the old family homestead. Senator Cruz responded that perhaps his grandchildren could homestead on the Moon or even Mars.

During the question and answer session Senator Cruz asked whether the United States had a sufficient regulatory architecture in place. If the senator was intent on whether Article VI of the Outer Space Treaty, which requires the “authorization and continuing supervision” of “non-governmental entities in outer space,” requires more regulation, he is someone who is in a good position to know that it doesn’t have to.

We can gain insight into how the Senator may think about Article VI from an essay he wrote for the Harvard Law Review Forum, where he said:

With treaties potentially supplanting federal and state governmental authority, the President and Senate should carefully scrutinize all treaties, as a policy matter. We must jealously guard the separation of powers and state sovereignty if we are to preserve the constitutional structure our Framers gave us.

At the same time, our courts must scrutinize the federal government’s powers to make and implement treaties. Our federal government is one of enumerated, limited powers, and the courts should not let the treaty power become a loophole that jettisons the very real limits on the federal government’s authority.

Luckily, the Roberts Court has signaled that it will recognize the limits on the federal government’s treaty power. As Solicitor General of Texas, I had the privilege of arguing Medellí­n v. Texas, which recognized critical limits on the federal government’s power to use a non-self-executing treaty to supersede state law.

(emphasis added). Medellin is where the Supreme Court said that a non-self-executing treaty is not enforceable federal law. Article VI is  not self-executing because it requires Congressional action in the form of legislation to decide if a particular space activity requires authorization and supervision. Since Article VI does not require oversight of either all activities or any particular activity, the treaty itself does not provide sufficient reason to create a new regulatory regime.  For more detail on this issue, see here.

Regulations. One of the three regulatory agencies that oversees space activities is the Federal Aviation Administration’s Office of Commercial Space Transportation, which authorizes and regulates the launch and reentry of rockets, capsules, hybrid carrier aircraft and rocket combinations and any other vehicle going to or returning from outer space. Mr. Meyerson stressed Blue Origin’s position that the FAA needed to prioritize its existing authority before taking on new authority such as space traffic management. He wants the FAA to address the congestion in the nation’s airspace before attempting to solve any congestion in outer space. This comment alludes to the growing debate between the airlines, launch operators, and the FAA about how to integrate space travel with air travel. You have to go through the nation’s air space to get to outer space, after all, and the airlines don’t want holds for frequent launches placed on major travel routes.

Another point that Blue Origin touched on was duplication between the FAA and the U.S. Air Force. The bulk of the nation’s commercial launches take place at federal launch ranges such as Cape Canaveral, Vandenberg, Wallops, and White Sands, which are operated by the Air Force, Army and NASA. The ranges have their own safety requirements, and launch operators must agree to abide by them when they contract with the range to use their facilities and services.

It would be interesting to know whether Blue Origin finds duplication to be a concern solely for purposes of reentry, or on the launch segment as well, because there is a mechanism in place to avoid duplication for launch.

Years ago, the FAA and the Air Force attempted to resolve duplication concerns when the FAA promulgated 14 C.F.R. part 417, which contains many of the Air Force’s safety requirements. Neither agency thought duplication efficient  so the FAA committed to conducting “launch site safety assessments,” in which it would regularly review the Air Force’s requirements and practices to ensure compliance with part 417. See 14 C.F.R. § 417.101. The FAA would keep a list of where the two agencies diverged, and it would only be for the differences between the FAA and the range that the FAA would require a launch operator to demonstrate satisfaction of its requirements to the FAA. Otherwise, the FAA planned to rely on the ranges for safety oversight for launch. Reentry is another matter and may be the source of Blue Origin’s concerns. A quick review of parts 431, which applies to reusable launch vehicles, and part 435, which applies to all reentry vehicles, shows that the FAA does not rely on the ranges for oversight, perhaps, if memory serves, because at the time the FAA issued these rules, the ranges did not have reentry requirements.  Regardless, Blue Origin wanted the FAA designated as the sole oversight authority for licensing.

Intellectual property and taxes. Mr. Rush of Made in Space had two interesting requests, the first being that if a company develops intellectual property it be allowed to retain the intellectual property it develops. This may have to be the subject of a separate post depending on the context of his remarks, and I do not yet have his written testimony.   He also requested, however, that there be no customs or import tax for goods manufactured in space.  The Commercial Space Launch Act may already address that question. 51 U.S.C. § 50919(f) states:

(f)Launch Not an Export; Reentry Not an Import.—

A launch vehicle, reentry vehicle, or payload that is launched or reentered is not, because of the launch or reentry, an export or import, respectively, for purposes of a law controlling exports or imports, except that payloads launched pursuant to foreign trade zone procedures as provided for under the Foreign Trade Zones Act (19 U.S.C. 81a–81u) shall be considered exports with regard to customs entry.