Congress and commerce in the final frontier (part 1)A brief legislative history of US commercial space lawby Cody Knipfer
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| The US government has, for decades, pursued a generally consistent national policy of enabling and fostering the development of a robust commercial space sector. |
The continuing commercialization of outer space may be ascribed to many factors, not least of which are advancements in technologies, reductions in costs, and emerging capabilities and opportunities (along with corresponding business plans). Standing at the fore of the growing and globalizing commercial space sector is the United States, where the industry is experiencing unprecedented growth through an influx of private investment and novel research and development. The industry’s maturation is being guided by the anticipation that new markets, both government and commercial, will soon be accessible and vibrant in the “final frontier.”
The industry’s trajectory may be explained by its economics, board rooms, billionaire patrons, and rocket scientists. Yet just as important an influence, if perhaps subtler, has been the “guiding hand” of government policy. The US government has, for decades, pursued a generally consistent national policy of enabling and fostering the development of a robust commercial space sector. This has been implemented and is reflected in all facets of federal and state power: White House policy guidance, statements, and decisions; agency regulations; judicial adjudications; and state tax codes and incentive programs, to name just a few.
It’s also reflected in federal statute. Beginning in the mid-1980s and continuing to this day, a series of laws—the Commercial Space Launch Act of 1984, the Commercial Space Launch Amendments Act of 1988, the Land Remote Sensing Policy Act of 1992, the Commercial Space Act of 1998, the Commercial Space Transportation Competitiveness Act of 2000, the Commercial Space Launch Amendments Act of 2004, and the Commercial Space Launch Competitiveness Act of 2015—have progressively established and updated the statutory basis and authority for licensing and regulating commercial space activity. By tracing the evolution of commercial space statute through successive legislation, a picture of the sector’s policy priorities, challenges, and interests begins to emerge.
Far from a comprehensive study, this essay is a brief survey of the decades-long evolution in statute governing US commercial space activities. It relies extensively on the Congressional record, reports, public testimony, and other available primary sources to piece together the positions, debate, and details of the time. To accommodate the reader’s interest in further insights, these sources are heavily cited throughout this piece. Limited in scope, the essay omits other key legislative endeavors, particularly those related to NASA, the Department of Defense, and the privatization of satellite communications services, which have contained provisions affecting—sometimes profoundly—the commercial space sector. The reader and author will need to rely on a more exhaustive study to tell in full the rich story of commercial space law, its Congressional proponents and opponents, and the many on and off the Hill who have played a hand in its creation.
The origins of US commercial space statute can be traced to 1984, with the passage of the Commercial Space Launch Act.” This legislation established an authorization and licensing regime for private space launches. Subsequent commercial space bills have largely built off and amended the language produced through this “organic law” act.
| In 1982, the first private launch of a rocket took place in the United States. The process required to gain government authorization for the launch was convoluted and time-consuming. |
Throughout the 1960s and 1970s, only the Department of Defense and NASA provided launches from American soil. As private companies and foreign companies began producing and purchasing satellites in the 1970s, they had to contract through the government for launch. The Space Shuttle, introduced in the early 1980s, was intended to take all American satellites into orbit. However, it became clear that the shuttle’s flight schedule could not meet growing launch demand.1
In 1982, the first private launch of a rocket took place in the United States. The process required to gain government authorization for the launch—required by the Outer Space Treaty, of which the United States is a party—was convoluted and time-consuming, as no agency had been designated with the authority for launch licensing.2 A year later, President Reagan issued a directive that the government would facilitate the commercialization of launch activities in the United States.3
Concurrently, interest was growing in the Congress on the commercialization of space activities. In 1981, the Congressional Space Caucus was formed, led by Congressmen Newt Gingrich (R-GA) and Daniel Akaka (D-HI). Between Gingrich’s personal affinity for space and Akaka’s parochial interests, the Caucus grew to include a substantial membership and became a leading force on Congressional focus on space throughout the 1980s.4 The commercialization of space launch was an early and primary focus of the Caucus; in 1982 and again in early 1983, Rep. Akaka introduced the “Space Commerce Act,” which would have designated the Department of Commerce as the authorized lead agency for licensing launches.5 The bill had heavy co-sponsorship by colleagues on the Caucus.6
However, as the Space Commerce Act waited for floor action, the Department of Transportation (DOT) began to press a case that, given its experience as a deregulator, it should be the lead agency for licensing launch, and was successful in convincing that point to the President. In November 1983, he announced his intention that DOT be given the role.7 Although the Space Commerce Act had been reintroduced in September— incorporating the House Subcommittee on Space Science and Applications’ amendments to-date—as the “Commercial Space Launch Act,” the House had signaled that it would defer final consideration on the bill pending this decision, having received pushback from the Office of Management and Budget.8,9 , Following President Reagan’s announcement, the subcommittee received testimony from the Secretary of Transportation on how the Department of Transportation envisioned its role as the lead licensing agency; based on this testimony, the Commercial Space Launch Act was redrafted and circulated to the Administration for comment.
In February of 1984, President Reagan signed an executive order formally designating DOT as the lead agency. DOT had for months been socializing the concept with the Congress, to mixed reception.10 Nonetheless, by 1984, both the Senate and House expressed growing approval of the move. However, they noted the need for Congressional codification that would eliminate the possibility of executive redirection or restructuring of the emerging licensing arrangement—a view shared by industry.11,12 ,
Throughout the spring of 1984, the subcommittee and full Science Committee met several times to mark up the bill, responding to unfavorable comments on particular sections received from NASA, DOT, and FCC in January, and advanced it to the full House on May 23. In June, the House passed the bill by voice vote.13 In the Senate, a companion bill was introduced by Sen. Paul Trible (R-VA) in August, with a hearing held in September that largely reaffirmed the need for a lead agency to license launches and the proposed approach.14 On October 3, the Senate Committee on Commerce, Science, and Transportation advanced the referred Commercial Space Launch Act—as an amendment in the nature of a substitute, reflecting compromises between the Senate and House versions and the full Senate passed the bill on October 9.15 On October 30, the bill became law.16
While most significant for laying an enabling regulatory groundwork for commercial launch activities in the United States, the Commercial Space Launch Act also contained other provisions of relevance for the budding commercial space industry. This included sections encouraging the use and acquisition of excess launch facilities by the private sector, and a requirement that licensed launch operators purchase and maintain liability insurance at a level deemed necessary by the Secretary of Transportation.
The Commercial Space Launch Act established the foundation for commercial launch activities in the United States, but the industry was slow to materialize in the years that followed. The Space Shuttle continued to be used as the principal vehicle for commercial satellite launches. Then, in January 1986, Challenger was lost in a launch accident; in response, President Reagan announced in August that the shuttle would no long be used for commercial launches—a move in part to incentivize the development of commercial launch vehicles.17
In September of 1987, the House Subcommittee on Space Science and Applications held several hearings on the state of the commercial launch industry. Industry representatives testified that insurance requirements for space launch were a particularly significant barrier to entry into the launch market.18 The Commercial Space Launch Act had given the Department of Transportation authority to set minimum insurance levels for liability and government property damage. However, there was outstanding uncertainty about whether insurance would be available to cover such risks, an uncertainty accentuated by government requirement to assume all risks insurable and non-insurable, as notes in the Senate’s later report.19 Congress also noted the emergence of a European launch competitor, Arianespace, which led the global market share of commercial satellite launch. Arianespace was shielded from the financial consequences of unlimited liability by the promise of European government-backed indemnification.20
| There was outstanding uncertainty about whether insurance would be available to cover such risks, an uncertainty accentuated by government requirement to assume all risks insurable and non-insurable. |
In response to the testimony received, Rep. Bill Nelson (D-FL), the chairman of the subcommittee who had expressed enthusiasm for the President’s decision to commercialize satellite launches,21 drafted and introduced the “Commercial Space Launch Amendments Act” in December of 1987, with 25 co-sponsors. The bill sought to establish a workable risk-sharing regime between industry and government, allowing launch companies, as an alternative to obtaining full liability insurance, to demonstrate sufficient responsibility to compensate claims resulting from a failure during a licensed launch, while the Department of Transportation would pay for successful claims that were not compensated by insurance.
In February of 1988, the subcommittee held a second series of hearings on the bill, which addressed industry and Department of Defense, NASA, and Department of Transportation perspectives on insurance requirements and liability reform for commercial launch licenses.22 In April, the subcommittee considered amendments incorporating comments received from administration and industry witnesses, rejecting tort reform but establishing reciprocal waivers of claims between launch operator and customers and subcontractors, setting maximum liability amounts, and setting maximum insurance requirements for third-party claims, damage to government property, and cross-claims. Industry would need to demonstrate liability insurance for up to $500 million, while also covering maximum probable loss of government property not to exceed $100 million. The United States government would indemnify and pay third-party claims in excess of the maximum probable loss, but not to exceed $1.5 billion, adjusted for inflation.23 As payout through government indemnification would require Congressional appropriation of funds, a mechanism was established within the bill to expedite passage of a compensation plan through the Congress. A “clean” bill was subsequently introduced and approved by the House Science Committee on April 21. A month later, the House passed it by voice vote.24
Sen. Tim Wirth (D-CO), with Sens. Lloyd Bentsen (D-TX) and John Dansforth (R-MO), introduced a companion bill in the Senate in May. The Senate heard testimony from administration officials and insurance industry representatives concerning both the House and Senate measures that month.25 In October, the Senate Committee on Commerce passed the House measure with an amendment in the nature of a substitute, incorporating Senate provisions, and the full Senate passed the bill on October 14 by voice vote. On October 21, the House agreed, 355–1, on the Senate’s amendments.26 The bill was signed into law on November 15, 1988.27
While an indemnification regime for commercial launch was the primary and pressing focus of the Commercial Space Launch Amendments Act, the legislation also addressed other areas of interest pertaining to commercial launch. It encouraged NASA and the Department of Defense not to preempt licensed launches from access to launch sites or property, required a study on best practices for scheduling commercial launches at government launch sites, and directed NASA to design a program to support research and development into launch system technologies.
Like commercial launch, the Congress had also taken interest in the commercialization of Earth observation services and satellites throughout the 1980s—a response to significant executive direction and action to that effect.28 In the 1970s, NASA developed, launched, and operated the Landsat satellites to gather Earth imagery, which became particularly valuable for organizations such as the Department of Interior and the scientific community. The early 1980s saw an effort to commercialize the civil Landsat system, which culminated in the passage of the Land Remote Sensing Commercialization Act of 1984.29 The Department of Commerce was given licensing authority for private Earth observation (“remote sensing”) systems, while a program was established to contract commercial operations of the Landsat systems.
However, by the early 1990s, it was becoming increasingly apparent that the commercialization effort was failing.30 The Senate and the House held a series of hearings on the effort in late 199131 and early 1992,32 where witnesses and members expressed similar concern about shortfalls in funding and the lack of a competitive marketplace materializing for Earth observation data. The House’s Science Committee had also frequently consulted with the White House’s National Space Council, which was reviewing policy options since early 1989.33 The House and the Senate subsequently began parallel efforts on reform legislation.
In October 1991, Rep. George Brown (D-CA), chairman of the House Science Committee, introduced the Land Remote Sensing Act of 1992. The bill was reported out of committee in May 1992, having been marked up with an amendment in the nature of a substitute prepared by Brown, Rep. James Scheuer (D-NY), chairman of the committee’s Environment Subcommittee, and Rep. Robert Walker (R-PA), which reflected suggestions made by the administration.34 The bill passed by the House on voice vote on June 6.
| While the Land Remote Sensing Policy Act made a number of significant changes to the civil operation and organization of the Landsat program, it largely left the licensing regime for private remote sensing systems established under the 1984 act intact. |
Sen. Larry Pressler (R-SD) introduced the “Land Remote Sensing Policy Act of 1992” in the Senate on February 27, 1992, and in August the Senate Committee on Commerce reported the bill. What followed was a series of legislative maneuvers to expedite the legislation’s passage through both chambers, to reach the President’s desk before the end of the 102nd Congress. On October 7, the Senate incorporated the measure, through a substitute amendment, into the House’s version, which had been referred to the Senate after its passage. The Senate then passed the bill by voice vote. In the House, Brown had reintroduced the bill, now incorporating the Senate’s language, on October 5. On October 6, the bill was discharged from the Science Committee, considered by unanimous consent on the House floor, and passed. On October 28, the President signed the bill.35
While the Land Remote Sensing Policy Act made a number of significant changes to the civil operation and organization of the Landsat program, it largely left the licensing regime for private remote sensing systems established under the 1984 act intact. Most significant for industry was that the Land Remote Sensing Policy Act, unlike the 1984 legislation, allowed operators of private remote sensing systems to sell their data to whomever they wished at market term, enabling the development of a competitive marketplace.36 By comparison, the 1984 act required all data to be sold at the same terms and conditions to all potential customers. A requirement was also added that the Department of Commerce respond to applications for licenses within 120 days, slightly alleviating a significant source of uncertainty for companies wishing to pursue development of a private remote sensing satellite.37
Following the passage of the Land Remote Sensing Policy Act in 1992, Congress made little headway in further dedicated commercial space legislation throughout the 1990s, despite a number of efforts to do so. Nonetheless, as the House noted in one report, “Congress [continued] to be interested in [commercial space] issues… with the announcement of policies intended to create a stable business environment for the commercial development of space, both the government and the commercial sector have identified areas for improvement.”38 In 1996, toward the end of the 104th Congress, Rep. Walker introduced the Space Commercialization Promotion Act. The bill passed the House in September, but languished after introduction in the Senate. In May of 1997, Rep. James Sensenbrenner (R-WI), chairman of the House Science Committee, reintroduced a substantively similar bill, called the Commercial Space Act.
Through May 1997, the House Subcommittee on Space and Aeronautics held three hearings regarding the bill. The first dealt with identifying improvements in the remote sensing regulatory regime to support continued growth of the sector.39 The second dealt with issues of regulation on commercial space transportation, particularly licensing emerging “reusable” rockets that could land after launch as well as in-space transportation services.40 Witnesses at that hearing agreed that a regulatory regime to license reusable rockets was necessary, though it was premature to establish one for in-space transportation.41 The third also dealt with commercial remote sensing, particularly on improvements that could be made to the remote sensing policy, particularly the Land Remote Sensing Policy Act.42
| The act established, as policy, that the economic development of space was a priority goal for constructing the International Space Station, and required NASA to study commercial opportunities onboard and in using the International Space Station. |
In June, the subcommittee and full committee marked up the bill, with minor amendments being made to satisfy administration requests.43 As stated during the markup, the committee would push ahead with provisions requiring the Departments of Defense and State to list, in the public register, its concerns related to national security and international obligations on submitted remote sensing license applications, so as to ensure further licensing transparency and certainty for the industry.44 Notably, the committee report chastised the Department of State for its “failure to appear before the Committee [during hearings on remote sensing] and offer its comments in a public forum limit the value or import that can be given to the Department’s concerns, many of which appear to be inconsistent with existing law in the Land Remote Sensing Policy Act of 1992.”45
On November 4, despite an earlier call of “no quorum” on the House floor,46 the House passed the bill by voice vote. A companion bill was introduced by Sen. Bob Graham (D-FL) on November 8, which codified administration policy on the use of excess ballistic missiles as launch vehicles but did not include the House bill’s remote sensing provisions.47 On March 5, the Senate convened a hearing on the House’s bill.48
On June 2, the Senate Committee on Commerce reported the bill with an amendment in the nature of a substitute that incorpated several changes, including the addition of Graham’s excess ballistic missile provision. The legislation was then finalized as it bounced between chambers, both making minor modifications through amendments to the others’ passed version. On July 30, the Senate passed the bill by unanimous consent. Significantly, to secure its passage by unanimous consent, the Senate’s version struck the House version’s remote sensing provisions.49 On October 5, the House agreed to the Senate’s amendments with its own amendment, making further minor changes; the Senate agreed to that amendment on October 8 by unanimous consent. Finally, on October 28, the bill was signed into law.50
As passed, the Commercial Space Act contained a series of significant overhauls to standing commercial space statute, as well as new measures to foster the continued commercial development of space.51 It established, as policy, that the economic development of space was a priority goal for constructing the International Space Station, and required NASA to study commercial opportunities onboard and in using the International Space Station.
By amending the Commercial Space Launch Act, authority was given to the DOT’s Office of Commercial Space Transportation to license commercial reentry activities, filling a regulatory gap related to, and facilitating the development of, reusable rockets that could land after launch. The bill authorized the government’s purchase of space science data and Earth remote sensing data from commercial providers, so as to offer the industry more market opportunity. It mandated that the government, including the Department of Defense, was required except under certain circumstances to procure space transportation services from US commercial providers, which would be treated as commercial acquisitions under federal acquisition regulations. Finally, as noted, the bill codified national policy prohibiting the use of excess intercontinental ballistic missiles as space launch vehicles.
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