Commercial Space in Draft DOT Strategic Plan. Opportunity for Comment.

By Federal Register notice, the Department of Transportation released for public comment a draft of its Strategic Plan for FY 2018-2022.  Comments are due November 13, 2017.  Although the draft focuses on trains, planes, drones, and automobiles, it also touches upon commercial space transportation, and some of its more general points have implications for commercial space.

Safety.  The plan mentions commercial space transportation as an example of a mode of transportation that poses new and poorly understood hazards:

Regulatory agencies must reimagine existing regulations and develop flexible regulations that do not create unnecessary barriers while promoting safe and efficient deployment of private transportation service.  For instance, unmanned aircraft systems and commercial space flights pose new and poorly understood hazards into the national air space, requiring more collaborative, data informed and risk-based safety management approach to emerging safety risks. Public agencies need to find avenues for collaboration that benefit both parties, … .

The concern over commercial space flight could arise out of two points.  As it was decades ago, commercial space flight is still new, and the technologies range from pointy-end-up expendable launch vehicles to rockets launched from carrier aircraft to reentry capsules.  This makes more difficult to implement the typical approach of standardizing a regulatory response. The second is the lack of data.  Although the space sector has a good understanding of the hazards, the flight rate for launch and reentry offers nothing close to the kind of data available to DOT for aviation and automobiles.

International: On the international front we see that “The DOT will promote exports by providing technical assistance to encourage international adoption of U.S. transportation standards and regulations.”  The FAA’s Office of Commercial Space Transportation has been engaged in similar efforts for years, and it’s good to see official support for that endeavor.

Regulation:  On the regulatory front, the plan states that DOT will implement the President’s executive orders on regulatory reform. Additionally, “DOT will also identify opportunities to facilitate, improve, and expedite the exemption and special permit processes to support deployment of innovative technologies and practices.”  This could bode well for aircraft operators who wish to receive exemptions from aviation regulations in order to participate in commercial space activities.

Environmental reviews.  Although the following sets out a plan to improve the environmental review process for infrastructure grants, the National Environmental Policy Act (NEPA) also applies to other major federal actions.  Major federal actions include the licensing of launches, reentries, and the operation of launch and reentry sites.  The proposed streamlining could aid commercial space environmental reviews:

The environmental review and permitting process in the United States is fragmented, inefficient, and unpredictable. Existing statutes have important and laudable objectives, but the lack of cohesiveness in their execution make the delivery of infrastructure projects more costly, unpredictable, and time-consuming, all while adding little environmental protection. The median time to complete an environmental impact statement (EIS) is approximately four years or more. The full environmental review process on complex projects can exceed 10 years. More efficient and effective Federal infrastructure decisions can transform our economy, so the Federal Government, as a whole, must change the way it processes environmental reviews and authorization decisions. DOT will be a leader in implementing Executive Order 13807 and other White House directives on speeding the permitting process, meeting a two-year deadline for Federal infrastructure projects.

Operators might consider filing comments to highlight the need for streamlining the NEPA review in the licensing context, too.

Comments due:  November 13, 2017.

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Space Law, Separation of Powers, and Henry VIII

I don’t know a lot about UK law.  That won’t stop me from talking about it, of course, especially when it looks like the same problems visit space law on both sides of the pond, namely, questions regarding separations of powers.  In the United States we see very broadly drafted legislation in which our legislative body, the Congress, tells the agencies of the Executive Branch to license and regulate consistent with “national security” or “foreign policy” interests.  This direction cedes much legislative power to the regulatory agencies in the Executive Branch, and no one should claim surprise when its employees construe that delegation as a mandate to go farther in the exercise of their powers than Congress might have intended.

Apparently, other countries have the same problem.  In the linked story Professor Mark Elliott at Public Law for Everyone takes issue with a proposed Space Industry Bill.  The Space Industry Bill makes ‘provision about space activities and sub-orbital activities, and for connected purposes’.  Elliott considers it inappropriately broad in the powers it delegates to the Executive:

the Bill serves as nothing less than a case study in a variety of drafting techniques that are becoming increasingly common and which, individually and collectively, give rise to separation of powers concerns. It was partly for this reason that the House of Lords Constitution Committee published a report on the Bill in early September, albeit that that report did not attract quite as much attention as its latest intervention, published the previous day, in relation to the EU (Withdrawal) Bill.  There is, however, a connection between the two Bills. While the Withdrawal Bill is, without question, a uniquely egregious example of the executive seeking inappropriately broad and insufficiently controlled powers from Parliament, the Space Industry Bill serves as a more mundane example of the way in which the accretion of administrative law-making authority is becoming commonplace.

Elliott raises six concerns, one of which resembles a concern we face on this side of the Atlantic, too:  that the bill does not limit the executive’s rulemaking power.

Clause 67(1) provides that: ‘Regulations may make provision generally for carrying this Act into effect and for achieving the purpose set out in [clause] 1(1).’ And clause (1) says that the Bill has effect for the purpose of regulating space activities, sub-orbital activities, and associated activities carried out in the UK. The purpose of the Bill is thus set out in very broad terms indeed, rendering the clause 67(1) power commensurately wide. Among other things, the existence of such a power will make it relatively difficult to seek judicial review on the ground that the scope of individual powers conferred by the Bill have been exceeded. Indeed, the catch-all power in effect undercuts those limits, given that when they inconveniently apply so as to narrow specific powers in the Bill, the general power may instead be available.

Another complaint centers on the paucity of something called the affirmative procedure, where rulemaking may require the approval of both Houses of Parliament to go into effect:

while some of the regulation-making powers in the Bill are subject to the affirmative procedure, in a number of cases that procedure is required only upon the first use of the powers, subsequent uses being subject only to annulment — and so, in practice, to minimal-to-non-existent parliamentary control.

Elliott raises the concern that the executive could make regulatory changes without legislative review. The legislative review of the affirmative procedure sounds like the Congressional Review Act in the United States, although that provides for streamlining of a review process whereas the UK approach may be more fundamental.

Finally, we get to the Henry VIII power. According to the UK’s Parliament website it is quite as alarming as it sounds:

The Government sometimes adds this provision to a Bill to enable the Government to repeal or amend it after it has become an Act of Parliament. The provision enables primary legislation to be amended or repealed by subordinate legislation with or without further parliamentary scrutiny.

Such provisions are known as Henry VIII clauses, so named from the Statute of Proclamations 1539 which gave King Henry VIII power to legislate by proclamation.

How would it operate in the proposed Space Industry Bill?

the Bill provides that: ‘The Secretary of State may by regulations make provision that is consequential on any provision made by this Act.’ This broad power is a Henry VIII power because, according to clause 66(3), it can be used to ‘amend, repeal or revoke any enactment passed or made before this Act or in the same Session’. The use of Henry VIII powers normally is — and normally should — be subject to the affirmative procedure. However, this Henry VIII power is subject to that procedure only in part: it applies when regulations ‘amend’ primary legislation, but the annulment procedure applies otherwise — including, presumably, when primary legislation is repealed by regulations. It may be that ‘amend’ here is supposed to include ‘repeal’, but that seems unlikely, given that ‘amend’ and ‘repeal’ are specified separately in clause 66(3).

The professor concludes with some hope:

The fact that large volumes of delegated legislation are (deemed to be) necessary does not inevitably mean that constitutional principle [of separation of powers] must be sacrificed to the extent that it currently is. Indeed, our system, at present, is set up very poorly when it comes to the making of delegated legislation. Such legislation cannot normally be amended, meaning that it must be approved unless the nuclear option of outright rejection is to be taken; the House of Lords is subject to the threat of having its powers stripped away should it ultimately refuse to knuckle under; and Parliament in general lacks the capacity to exercise its own discretion so as to divert secondary legislation that is more than merely technical into elevated scrutiny processes.

(I think that the UK’s “delegated legislation” is somewhat akin to regulations issued by the Executive Branch in the United States.  Or, this may be another of those instances where, as Churchill or Shaw said, Great Britain and the United States are two countries separated by a common language.)

If I am reading this correctly, the UK’s proposed Space Industry Bill should receive careful scrutiny before it serves as a model for any U.S. legislation.

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Words Matter: Regulation vs Regulation

Words matter.  Although Lewis Carroll’s Humpty Dumpty was perhaps wrong to claim that words meant what he wanted them to mean, it’s still helpful to remember that sometimes people mean different things.  This may be so with the term “regulation.”

“Regulation” as Oversight  As a former regulatory bureaucrat I always thought of “regulation” as meaning that some part of the government gets to tell someone not in the government (a “private actor”) what he or she must or may not do in some specific context.  The Federal Aviation Administration is a great example of a regulator.  It tells builders and operators of aircraft what they must or may not do via certificates, regulations, orders, exemptions, and a host of other regulatory mechanisms; and that’s just on the aviation side.  On the space transportation side of the agency, the FAA regulates launch, reentry, and non-federal spaceports, including those operated by states.

The FAA issues regulations through rulemaking.  If a private actor violates one of the agency’s regulations the FAA may impose fines in the form of civil penalties or revoke the private actor’s authorizations to fly or build an aircraft or launch a launch vehicle.  I long thought this was what everyone meant by regulation.

“Regulation” as the Rule of Law.  I think I was wrong.  In the past year or so I’ve heard other references to regulation that left me quite puzzled at first.  They did not apply to some part of the executive branch telling the private sector how to conduct itself.  Instead, these people spoke of regulation more as a sort of order.  Some wanted regulation and title to protect property rights.  Investors wanted regulation for certainty, so they would understand the lay of the land.  When questioned more specifically, some investors turned out to want rules of the road, not a series of authorizations and rules.  (Others, by the way, the ones who wanted what I think of as regulation, stressed they did not want a lot of it.  That was bad for business, too.)

This broader use of the term regulation suggests that people want to understand what law applies.  Specifically, the question of certainty over property rights appears to loom large.  That concern I understand.  If a private actor spent a fortune and decades of his or her life getting to the Moon, that person might worry that the investment might not be protected by the rule of law out where no nation has sovereignty.  After all, how will two private entities handle disputes when they both lay claim to the same patch of ice on the Moon?  Who will decide such disputes?  What law will apply?  What if another country wants to claim the lunar village you just finished building?

Words of Caution.  These are important questions.  The critical thing is not to mix the questions of regulation as rule of law with “real” regulation, if I may be allowed to call it that.  Assigning some agency in the federal government to authorize lunar roving does not address the questions of how to tell who owns what, how to handle disputes, how to ensure that no one takes someone else’s hard work, or what law will apply.  Those people looking for rules of the road should avoid asking for regulation.  They should be more specific and say they want certainty about property rights or the rule of law.  If they ask Congress for “regulation,” they’ll get it.

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Softly, Softly

On October 4, 2017, the FAA issued new regulations for noise certification standards on certain airplanes.  They become effective November 3, 2017.  Certification standards apply to the design and manufacture of an aircraft.  Operational rules apply to its operation.  Specifically, the new rules adopt:

a new noise standard for newly certificated subsonic jet airplanes and subsonic transport category large airplanes. By lowering the noise limit, this standard requires quieter designs and encourages manufacturers to adopt the latest available noise reduction technology into their aircraft designs. This rulemaking adopts new noise certification standards for airplanes certificated in the United States (known as Stage 5) that are equivalent to the International Civil Aviation Organization (ICAO) Annex 16, Volume I standard known as Chapter 14.

These new rules will not apply to launch or reentry vehicles because the law does not treat launch and reentry vehicles as aircraft.  Additionally, launch and reentry vehicles do not undergo certification. However, the new rules may serve as a reminder of what happens when noise overburdens a community.  The communities turn to Congress and demand that Congres take action.

Another interesting facet of the new rules is that the FAA describes its new standards as equivalent to the international standards of the International Civil Aviation Organization.  ICAO has expressed keen interest in suborbital launch vehicles.

Try to keep it down out there.

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Is it a Reentry Vehicle if it Doesn’t Return Substantially Intact?

Let’s say you plan to bring something in from outer space.  You might wonder whether it needs a reentry license from the Federal Aviation Administration.  The answer will depend on what you bring back. (It will also depend on a lot of other factors, such as your location and whether you are a citizen of the United States).  If you plan to reenter a reentry vehicle you do need an FAA reentry license.   When Congress gave the FAA authority over reentry of a reentry vehicle, it defined a reentry vehicle to mean “a vehicle designed to return from Earth orbit or outer space to Earth, or a reusable launch vehicle designed to return from Earth orbit or outer space to Earth, substantially intact.”  If your object doesn’t satisfy the definition, you don’t need a reentry license.  This definition excludes, for example, satellites.

To qualify as a reentry vehicle, the vehicle needs to be designed to return form Earth orbit or outer space substantially intact, regardless of whether it’s a simple reentry vehicle or a reusable launch vehicle.  We know that the requirement that it be substantially intact applies to both reusable and non-reusable vehicles because we all remember the grammar rule about how if a modifier comes after a list of two things it modifies only the second thing unless there’s a comma.  Because of the location of the comma, “substantially intact” applies to both types of vehicles.  One thing we can tell from this definition is that reentry of most satellites would not need an FAA reentry license.

Easy cases. How do we figure out if a manufacturer designed a vehicle to return substantially intact?   Let’s take the easy scenarios first.  If one operator returns a capsule from space, lands it in the ocean, and pulls a bunch of rocks or science experiments out of it, it’s not a stretch at all to say that vehicle has returned substantially intact.  At the other end of the spectrum, another vehicle might take trash out of an orbiting habitat and be designed to burn up in the atmosphere.  It won’t need a license because it won’t return substantially intact.

Hard case.  Of course, real life will offer more difficult examples.  What do we say about a vehicle with a surviving chunk of titanium that reaches the surface of Earth ?  Titanium can survive reentry, but it’s not like the vehicle itself will come back substantially intact.   Satellites exist which have pieces that can survive the rigors of atmospheric reentry yet they are not designed to survive.  The risk numbers for Envisat, for example, indicated as much.  No, the definition requires the vehicle to be designed to return substantially intact.  A chunk of titanium alone hardly counts as a vehicle.  What if other bits of the vehicle and the chunk of titanium survive?  Then we have to figure out if those count as a vehicle and as “substantial.”

These types of questions will likely get worked out on a case by case basis.

 

 

 

 

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Lessons in the Tricky Navigation of Drafting

Every now and then it helps when you are working on something to see what happened with other things like it. As Congress, the commercial space industry, and lobbyists contemplate legislation for non-traditional private actors in outer space, it may be wise to revisit the perils of imprecision.

Look what happened to the “navigable waters of the United States” in the hands of the U.S. Army Corps of Engineers. They grew some. The Supreme Court did a fine job of describing a regulator’s first shy, then creeping, then galloping jurisdictional expansion over the course of five Presidential administrations in Rapanos v. United States by expanding what “navigable waters” mean.

The Clean Water Act requires a permit to discharge a pollutant into navigable water. Justice Scalia, with his usual verve, described the predicament that Mr. Rapanos faced starting in April 1989, when Mr. Rapanos

backfilled wetlands on a parcel of land in Michigan that he owned and sought to develop. This parcel included 54 acres of land with sometimes-saturated soil conditions. The nearest body of navigable water was 11 to 20 miles away. Regulators had informed Mr. Rapanos that his saturated fields were “waters of the United States,” 33 U. S. C. § 1362(7), that could not be filled without a permit. Twelve years of criminal and civil litigation ensued.

***

In deciding whether to grant or deny a permit, the U. S. Army Corps of Engineers (Corps) exercises the discretion of an enlightened despot, relying on such factors as “economics,” “aesthetics,” “recreation,” and “in general, the needs and welfare of the people,” 33 CFR § 320.4(a) (2004). The average applicant for an individual permit spends 788 days and $271,596 in completing the process, and the average applicant for a nationwide permit spends 313 days and $28,915—not counting costs of mitigation or design changes.

***

The enforcement proceedings against Mr. Rapanos are a small part of the immense expansion of federal regulation of land use that has occurred under the Clean Water Act—without any change in the governing statute—during the past five Presidential administrations.

***

One of the statute’s principal provisions is 33 U. S. C. § 1311(a), which provides that “the discharge of any pollutant by any person shall be unlawful.” “The discharge of a pollutant” is defined broadly to include “any addition of any pollutant to navigable waters from any point source,” § 1362(12), and “pollutant” is defined broadly to include not only traditional contaminants but also solids such as “dredged spoil, . . . rock, sand, [and] cellar dirt,” § 1362(6). And, most relevant here, the CWA defines “navigable waters” as “the waters of the United States, including the territorial seas.” § 1362(7).

(Most citations and page numbers omitted).

At first the Corps was becomingly modest in its approach, and interpreted “navigable waters” in the ordinary way, as “interstate waters that are ‘navigable in fact’ or readily susceptible of being rendered so.”  We might, perhaps, think back to steam boat captains in days of yore asking each other whether a stretch of the Mississippi was navigable or whether they’d run aground on sand bars.

Instead, as Justice Scalia informed us:

After passage of the CWA, the Corps initially adopted this traditional judicial definition for the Act’s term “navigable waters.” After a District Court enjoined these regulations as too narrow, the Corps adopted a far broader definition. The Corps’ new regulations deliberately sought to extend the definition of “the waters of the United States” to the outer limits of Congress’s commerce power.

The Corps’ current regulations interpret “the waters of the United States” to include, in addition to traditional interstate navigable waters, 33 CFR § 328.3(a)(1) (2004), “[a]ll interstate waters including interstate wetlands,” § 328.3(a)(2); “[a]ll other waters such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds, the use, degradation or destruction of which could affect interstate or foreign commerce,” § 328.3(a)(3); “[t]ributaries of [such] waters,” § 328.3(a)(5); and “[w]etlands adjacent to [such] waters [and tributaries] (other than waters that are themselves wetlands),” § 328.3(a)(7). The regulation defines “adjacent” wetlands as those “bordering, contiguous [to], or neighboring” waters of the United States. § 328.3(c). It specifically provides that “[w]etlands separated from other waters of the United States by manmade dikes or barriers, natural river berms, beach dunes and the like are `adjacent wetlands.'” Ibid.

Lesson One: don’t rely on the name of the term if that’s what you really mean.  That broad definition of navigable waters as “waters of the United States” allowed the Corps endless leeway in interpreting what was meant by “navigable waters.”  The word “navigable” in the name didn’t limit the waters to those that could actually be navigated.  My own suspicion is that the drafters didn’t mean to include water in prairie potholes.  If I’m right, the better place for “navigable” would have been in the definition than in the name.

Lesson Two: don’t forget that there are other actors out there who will influence the interpretation of the language you have crafted.  It was the courts who pushed the Corps toward a more expansive approach.  The Corps went with it.  How did the courts become involved?  I would imagine an environmental group sued the Corps and won.  That broad definition gave the Corps all the room it needed to extend its reach.

Lesson Three: don’t rely on the present occupants of an agency to be there forever.  Write as if the future depended on it.  “Navigable waters” grew to include water in prairie potholes, even though no one’s going to get a rowboat in a pothole, much less a steamboat.  These changes took place over decades, but that broad definition provided the tools for the expansion from the outset.   Although the Supreme Court finally set some limits on the Corps’ reach, it took Mr. Rapanos a long time and a lot of money to be rescued.

Note for the non-lawyers:  The laws Congress writes go in the United States Code (USC).  When regulatory agencies such as the Corps or the Federal Aviation Administration issue their requirements in accordance with the law Congress wants them to administer, the agencies locate their regulations in the Code of Federal Regulations.  If there is a conflict between the United States Code and the Code of Federal Regulations, the United States Code wins because the Constitution vests the power to make laws in the Congress.  The regulatory agencies are in the Executive Branch, and are merely carrying out the directions Congress supplied through the United States Code.

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This New Ocean II

Although not all space lawyers are mesmerized by the Deep Seabed Hard Mineral Resources Act (the Deep Seabed Mineral Act), I confess that I am. Accordingly, when the Deep Seabed Mineral Act offers a model of a regulatory scheme for resources extracted from the global commons, taking a peek at new happenings under that law can prove irresistible.

Regular readers may recall that back in April of this year the National Oceanic and Atmospheric Administration asked for comments on a request for a license extension from Lockheed Martin Corporation, one of NOAA’s licensees under the Deep Seabed Mineral Act. NOAA approved the requested five-year extension of Lockheed’s exploration license. The extension maintains Lockheed’s proprietary interests but does not authorize Lockheed to conduct “at-sea exploration activities” under the license. Instead, NOAA must perform additional authorization and further environmental review before Lockheed may conduct exploration at sea.

I wondered in April whether competitors or environmental groups might file comments. Now we know. NOAA had requested comments specifically from the Department of State and the Western Pacific Fisheries Management Council. State had no objections or comments. The Council found that none of the fisheries under its jurisdiction would be affected by the onshore activities Lockheed described in its request and did not object to the extension. Depending on the location of the fisheries and the mining targets, the Council could theoretically object later to actual exploration.

NOAA received five other comments. A review of the docket shows they appear to come from individuals. The commenters’ objections fall into three categories: environmental, international, and claims that Lockheed failed to substantially comply with its license and application plan. One commenter objected to Lockheed’s rationales for requesting an extension, namely, that economic conditions are not ripe and that the U.S. must accede to the 1982 Law of the Sea Treaty. NOAA’s responses are available here.

What’s interesting about all the objections to the extension is that it shows that the regulatory agency, NOAA in this instance, could have found that the licensee had not substantially complied and thus denied the request for extension. This means that one’s business plans and prospects may lie outside a company’s control. To the extent that a company has not managed its relations properly with the regulator or filed only a cursory statement of its progress it may place itself at regulatory risk. Additionally, the participation of the public provides another opportunity for the throwing of monkey wrenches into the works. While such a regulatory regime is affordable for companies with the infrastructure to cater to its care and feeding, smaller companies may not have the same resources.

The commenter linked to above provides a good example of the type of comments a competitor might have filed. If someone else wanted a license to mine where the first licensee had yet to act, the new competitor might make arguments about the equities of letting a claim be hoarded rather than worked, and the regulator might be persuaded despite the investments the first company had made.

For those interested in a similar regulatory regime for space, it might be advisable to proceed with caution.

 

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This New Ocean

This isn’t space law, but it feels like space law.  Or, to put it more pedantically, this application to the National Oceanic and Atmospheric Administration from Lockheed Martin Corporation to extend its deep seabed mineral exploration licenses contains interesting parallels to the mining of celestial bodies.  The mining would take place outside of anyone’s sovereign territory.  As a review of Lockheed Martin’s application shows, it’s technically very difficult.  Also, there’s a treaty that Lockheed is waiting on the United States to ratify, somewhat like some space miners are waiting for Congress set up a regulatory structure for them before they will start mining.   There is an International Seabed Authority, much as some, including the signatories of the Moon Treaty, would have there be an international authority for extraterrestrial activity.  Unlike for space miners, Congress did pass a law, the 1980 Deep Seabed Hard Mineral Resources Act, to regulate and administer seabed mining.

NOAA’s Federal Register notice links to the application itself.  In its application, Lockheed Martin states that it:

requests an extension of the seabed exploration licenses for the two Lockheed Martin claims, USA-1 and USA-4. NOAA renewed these licenses in 2012 enabling us to continue our investigation into the viability of exploration and development of the USA-1 and USA-4 licensed areas. Since the most recent 5 year license extension was granted, the Corporation has made significant progress against Phase I of its Exploration Plan.1 However, during the same period, progress on the Exploration Plan has been delayed due to the prolonged, severely depressed state of the metals markets and continued delay in resolving the security of tenure issues given the lack of ratification of the U.N. Convention on the Law of the Sea.

It would be very interesting to know why Lockheed sees the lack of ratification of the UN Convention as an impediment to going forward, but I found no additional detail or explanation in the Lockheed application for this tantalizing tidbit.

A quick internet search unearthed this comprehensive review of the 1982 UNCLOS.  Writing in 2012, Steven Groves of the Heritage Foundation explains how U.S. companies can engage in seabed mining without joining UNCLOS.  For one thing, the United States has entered into a series of agreements with other nations to, among other things, resolve conflicting claims and to notify each other when approving applications for exploration. A number of nations

have made a commitment to the United States that they will not interfere with or infringe on the claims by the United States or its companies in the CCZ. None of the nations has denounced or withdrawn from the agreements or has otherwise indicated that it does not respect its international commitments to recognize U.S. claims in the CCZ.

As a legal matter the article notes, the countries who are part of  UNCLOS “cannot prevent the United States or any other nation from mining the seabed any more than they can prevent the U.S. from exercising the freedom of navigation and overflight, the freedom of fishing, or any other high seas freedom.”

Simply because most nations have ratified UNCLOS does not mean that those nations or any international organization, such as the Authority, may deny a right to the United States that it enjoys under international law. One set of nations cannot annul the rights of another set of nations by drafting a treaty that the second set of nations chooses not to join.

(From the perspective of Article II of the Outer Space Treaty, which bars national appropriation of celestial bodies, it is interesting to note that no nations claim sovereignty over the deep seabed yet those nations may recognize claims.)

Groves’ article sums up the state of affairs for security of tenure:

In sum, acting under the authority of DSHMRA, customary international law, and multilateral agreements with foreign countries and companies, the United States has successfully claimed and maintained security of tenure over vast tracts of the deep seabed. The U.S. has done so as an independent sovereign nation exercising its inherent rights.

Groves’ discussion highlights a number of areas of concern for U.S. companies, including environmental measures, inspections, data sharing, and, most significantly for a company with fiduciary obligations to its shareholders:

Under an UNCLOS regime, a U.S. company would have limited control over the area licensed to it for exploration. Once a U.S. company identifies an area of the seabed that it wants to explore, it must divide the area into two halves of equal estimated commercial value and share its data on the area with the Authority.[51] Thereafter, the Council reserves one half of the area for exploration by developing countries or the Enterprise, the Authority’s mining arm.[52] The remaining half would be licensed to the U.S. company for exploration. The size of the U.S. company’s half is effectively limited to only 75,000 square kilometers.[53] (By comparison, the USA-1 exploration area is almost 169,000 square kilometers.[54] Finally, a U.S. company would not have exclusive access to its half because the Authority has the right to enter into contracts with third parties to explore and mine the U.S. half for resources other than polymetallic nodules.

According to NOAA’s Federal Register notice, it seeks comments from the public by May 22, 2017, on Lockheed Martin’s request for an extension.  It will be interesting to follow this docket and see if anyone objects to the extension.  Might competitors file?  Might environmental groups?  Might those who think this a fine regulatory model for outer space be deterred by the thought that others get to comment on and thus delay their business plans?

Bonus points to anyone able to identify the source of this post’s title.

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Inflating the Penalties for Commercial Space Transportation

To account for inflation, the Federal Aviation Administration issued a final rule that adjusts the fines—“civil penalties” in FAA lingo—that the agency may impose for violations of its regulations and statutes. The agency has to do this because several laws require inflation adjustments to ensure that the threatened fines of regulatory agencies continue to have a deterrent effect.   The laws include the Federal Civil Penalties Inflation Adjustment Act of 1990, the Debt Collection Improvement Act of 1996, and, most recently, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The 2015 Act amended the formula for and frequency of agency inflation adjustments, requiring an initial “catch-up” adjustment, followed by annual adjustments of civil penalty amounts using a statutorily mandated formula. The FAA implemented the initial adjustment in July 2016. This new rule provides the first of the annual adjustments. The FAA notes that the new law:

provides a formula for annual inflationary adjustments that increase civil penalty maximums and minimums by a cost-of- living adjustment (COLA). Under the FCPIAA, as amended by the 2015 Act, the COLA for each civil penalty is the percent change between the U.S. Department of Labor’s Consumer Price Index for all-urban consumers (CPI–U) for the month of October of the calendar year preceding the adjustment and the CPI–U for the month of October of the previous calendar year. Any resulting increase must be rounded to the nearest $1.

*          *          *

To derive the 2017 adjustment, the FAA must multiply the maximum or minimum penalty amount by the percent change between the October 2016 CPI–U and the October 2015 CPI– U. In this case, October 2016 CPI–U (241.729)/October 2015 CPI–U (237.838) = Multiplier (1.01636).5 Accordingly, the agency multiplied the civil penalty maximums and minimums provided in current 14 CFR 13.301 and 406.9 by 1.01636 to derive the updated maximums and minimums provided in this final rule.

Relying on an interpretation of the 2015 law from the Office of Management and Budget, the FAA did not issue a notice of proposed rulemaking for public comment. This final rule changes the minimum and maximum penalties effective April 10, 2017, the day the rule was published in the Federal Register.

The FAA’s space transportation regulations do not contain minimum or maximum penalties like the FAA’s aviation regulations do. Instead, the commercial space regulation, 14 C.F.R. § 406.9, implements the single penalty listed in 51 U.S.C. ch. 509 (aka the Commercial Space Launch Act). When Congress initially granted the FAA the authority to impose civil penalties, it capped the amount at $100,000.00 per violation per day. 51 U.S.C. § 50917. The United States Code still says that. With the passage of its various inflation adjustment laws, Congress mandated a global search and replace on civil penalties, including those imposed for violations of space regulations. Thus, the FAA’s own new requirement now says:

14 C.F.R. § 406.9 Civil Penalties.

(a) Civil penalty liability. Under 51 U.S.C. 50917(c), a person found by the FAA to have violated a requirement of the Act, a regulation issued under the Act, or any term or condition of a license or permit issued or transferred under the Act, is liable to the United States for a civil penalty of not more than $229,562 for each violation. A separate violation occurs for each day the violation continues.

The FAA will not necessarily claim a civil penalty as high as that, and, to my knowledge, has yet to do so.  Agencies are allowed discretion in deciding the size of a penalty, and will typically attempt to impose smaller fines for first-time violations.

 

 

 

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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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