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Capella Space
The new commercial remote sensing regulations should make it easier for synthetic aperture radar satellite companies like Capella Space get licenses for their systems. (credit: Capella Space)

Sausage making in space: the quest to reform commercial space regulations

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There’s long been a tension between government and industry involving regulations. Companies traditionally want to minimize regulations in order to reduce the cost and other burdens they place on them. Governments, on the other hand, seek regulations in order to support broader priorities, like national security, workplace safety, and the environment.

The pendulum recently has shifted in favor of industry, as the Trump Administration has emphasized deregulation to a degree not seen in many years. That includes space, where Space Policy Directive 2, signed more than two years ago, directed regulatory reforms in several areas in order to support growth in the commercial space industry.

“If someone had said to me 18 months ago that we would end up with a regulation” like this, Klinger said, “I’m not sure I would have bet my paycheck, or anything else, on that outcome.”

But just because the government wants to streamline regulations doesn’t mean that the regulations it proposes will be, in the industry’s view, streamlined. The space industry found that out last spring, when the FAA published a draft of new commercial launch and reentry rules, followed weeks later by the Commerce Department’s draft of revised commercial remote sensing rules. Both, in industry’s view, fell short of the mark, or were even counterproductive (see “Streamlining the space industry’s regulatory streamlining”, The Space Review, June 17, 2019.)

A year later, though, and things have turned for the better. The Commerce Department published a final rule for commercial remote sensing regulations that won widespread approval from industry, and even many in government. The space transportation industry, meanwhile, is hoping for a similar outcome this fall.

Devil in the details

The revised commercial remote sensing rules, a draft of which was published last May, were intended to address delays and uncertainty many companies experienced in seeking licenses for their Earth imaging systems. While the NOAA officials responsible for those licenses had been working to reduce the review time of license applications, there were still cases where proposed systems, particularly ones with newer technologies like synthetic aperture radar (SAR) or shortwave infrared, were stuck in limbo for months, or even years, because of interagency reviews.

The industry, though, didn’t see the new rules as much of an improvement. That draft proposed classifying systems as either “low risk” or “high risk,” but in a way that companies concluded would end up putting most in the “high risk” category and subject to essentially the same degree or review. “I find, at the moment, that the draft rule is wanting across the board, and it’s not close,” said Gil Klinger, chair of the Advisory Committee on Commercial Remote Sensing (ACCRES) during a meeting of the committee last June that discussed the draft.

The government accepted public comment on the rules through mid-July of last year, then went to work behind closed doors to develop the final rule. When that final rule was published at last, on May 20, it marked a surprising turn of events in favor of the commercial remote sensing industry.

The final rule did away with the “low risk” and “high risk” categories of the rule. In its place it established three tiers, based on the capabilities of the proposed systems and how they compared to what existed in the market. Proposed satellites that produce data “substantially the same” as sources not licensed by NOAA—i.e., foreign systems—would go in Tier 1 and be subject to few rules, since there was little to be gained by restricting such systems.

Those systems that would provide data matched only by other US systems would go into Tier 2 and be subject to some more conditions. That includes what’s known as “shutter control” that allows the government to temporarily restrict imaging of certain areas. It also requires companies that propose to take resolved images of satellites or other artificial space objects—“non-Earth imaging” in industry parlance—to obtain the permission of the owner of that object and notify the Commerce Department five days in advance.

Tier 3 would be reserved for systems that offer what the rules call “a completely novel capability” not available at all, either in the US or worldwide. Besides the conditions imposed on Tier 2 systems, the Commerce Department would have the authority to impose additional restrictions for up to three years, unless either the State or Defense Departments ask for an extension.

“We made the case with our government colleagues that the US industry must innovate and introduce new products as quickly as possible,” Ross said.

“In short, the final rule represents a philosophical shift away from a purely risk-based approach. No longer will the U.S. Government assess systems based on the risk they may pose to national security and burden them accordingly to protect against such risk,” the Commerce Department stated in the rule. “Instead, the U.S. Government will shift more of the burden of protecting national security to itself, focusing on mitigating the risk posed by the global remote sensing industry.”

The final rule, which formally takes affect July 20, won widespread support from industry. “If someone had said to me 18 months ago that we would end up with a regulation” like this, Klinger said at a meeting of ACCRES last week, “I’m not sure I would have bet my paycheck, or anything else, on that outcome.”

The three-day online meeting of that committee featured a steady stream of speakers that offered bipartisan support for the new rules. “I want to congratulate you all for pushing to make the final regulations forward-looking, in that they protect our national security but are flexible enough to allow industry to thrive and compete on a level playing field with remote sensing companies across the world,” said Sen. Ted Cruz (R-TX), chair of the Senate Commerce Committee’s space subcommittee.

His counterpart in the House agreed. “I think the new commercial remote sensing rules take an important and necessary step forward,” said Rep. Kendra Horn (D-OK), chair of the House Science Committee’s space subcommittee. “Overall, this rule reflects an evolving mindset on the tension between enabling commercial innovation and protecting national security.”

While there was a lot of praise for the final regulations, there was less insight into how those rules, so different from the draft version, won approval through a process that requires consultation with other agencies, including the Defense Department.

“We made the case with our government colleagues that the US industry must innovate and introduce new products as quickly as possible,” Commerce Secretary Wilbur Ross told the committee. “We argued that it was no longer possible to control new applications in the intensifying global competition for dominance.”

That effort, he said, included meetings with Deputy Secretary of Defense David Norquist and Air Force Gen. John Hyten, vice-chair of the Joint Chiefs of Staff, to discuss their national security concerns. “We incorporated their ideas into the new regulation, and were able to publish the new rules while protecting national security,” Ross said. He didn’t elaborate on the ideas the Pentagon put forward that made it into the final rule.

“DOD was actively involved throughout the entire process of drafting and issuing the new rule,” said John Hill, principal director for space policy in the Defense Department, including participation by Norquist and Hyten. “This rule has high-level buy-in and support across the Department of Defense.”

Ross, in his comments to ACCRES, also credited Scott Pace, executive secretary of the National Space Council. “He must also be commended for his leadership in insisting that we ‘get this done,’ especially as we headed into the turbulence caused by the COVID-19 pandemic.”

While the process that led to the final rule might remain hidden, industry was more interested in how the final rule will be applied. A theme from the ACCRES meeting last week was a focus, from both companies and Congress, on how NOAA’s Commercial Remote Sensing Regulatory Affairs (CRSRA) office implements the rule.

“The devil is going to be in the details of how exactly they’re going to be implemented,” said Cruz. Many who followed Cruz at the three-day meeting used that same phrase—“the devil is in the details”—to discuss their focus on implementation.

“Depending on how it is implemented, the tier structure proposed in the new rule could simply lead to the government reverting to its old ways,” Babin said.

Some, like Horn, are concerned that the rules are subjective enough to be open to interpretation that could undermine their intent. “How will the decisions on the tiers be made, and who will make those decisions?” she asked, noting that terms like “substantially the same” with regards to availability of comparable data from foreign systems is qualitative. “How will a clear and standardized approach to this categorization be made available?”

Rep. Brian Babin (R-TX), ranking member of the subcommittee chaired by Horn, agreed. “Depending on how it is implemented, the tier structure proposed in the new rule could simply lead to the government reverting to its old ways by making subjective determinations that the applicants’ systems are subject to the highest tier process,” he said.

He also doubts that the government can regulate non-Earth imaging as it can under the new rules, or has in the past under old regulations. “Congress did not give the government the ability to regulate any sensing from space,” he said, citing language in the Land Remote Sensing Policy Act of 1992, the foundation for commercial remote sensing regulations, that appears to limit that authority to imaging of the Earth from space, rather than other space objects from space. “I struggle to see how the 1992 act covers satellite imagery of other satellites.”

He called for an overhaul of the 1992 act, something he has been promoting for several years through the American Space Commerce Free Enterprise Act, to address that and other issues. “If American commercial remote sensing companies are to lead in the 21st century, Congress must update the Land Remote Sensing Policy Act to reflect today’s technological landscape,” he argued.

At the meeting, though, the focus was more on implementing the new regulations. “It’s all about implementation,” said Tahara Dawkins, director of CRSRA. “We’re trying to get this right. We’re trying to be as transparent as possible as we move forward.” That included discussion at the meeting about the process the office will use to determine what tiers systems will fall under, and the capabilities of foreign systems that will be compared to applications as part of that process.

“It becomes important for us to focus some attention on the implementation details,” said Klinger, warning that history has shown “how wonderful policy ideas crash and burn when it came to the implementation.”

DM-2 launch
The commercial space transportation industry is awaiting a final version of “streamlined” regulations due out as soon as September. (credit: NASA/Bill Ingalls)

Avoiding a step backwards

While the commercial remote sensing industry can celebrate a regulatory victory, the commercial space transportation industry is still awaiting an outcome. Many companies argued against the FAA’s draft rules for streamlining launch and remote sensing regulations last year, saying they had questions about them or concluded that they could be a step backward.

“Unfortunately, instead of one giant leap forward, the FAA seems to have taken only a cautious half-step towards a regulatory regime needed by the growing and diverse new space transportation providers,” Eric Stallmer, president of the Commercial Spaceflight Federation, said at a House hearing last summer, calling the proposal “very complex and frequently confusing” that in many cases favored incumbent companies over new entrants. (Not everyone agreed, with several established launch companies arguing in favor of the proposal and against what they called an “indefinite rulemaking process.”)

The public comment period closed last August, and the FAA has been working on developing the final rule. It set a goal of publishing that rule as soon as September, a deadline it has stuck to even amid the disruptions caused by the pandemic.

“I am confident it is absolutely going to be better than the regulations that we operate under today,” Monteith said of the final rule.

“We are currently in the ‘sausage-making’ stage of the review cycle,” Wayne Monteith, FAA associate administrator for commercial space transportation, said at a meeting of the Commercial Space Transportation Advisory Committee (COMSTAC) last week. Because of that, he could not discuss the content of the final rule, only that it remained on track for publication in September.

The FAA received 154 comments on the draft rule, noted Lirio Liu, executive director for the Office of Operational Safety within the FAA’s Office of Commercial Space Transportation, or AST. Of those, 55 were “substantive” in terms of providing feedback on the proposed rule.

“I think we have taken the [draft rule] from the comment input and revised it so that it is a pretty functional rule,” she said. “We still have work to do.” However, she noted that the rule should soon be ready to go to the Office of Management and Budget for a mandatory 90-day review prior to publication.

In the meantime, Monteith has been working on a reorganization of AST finalized this spring. That reorganization puts all licensing work under a single manager, he said. “This construct allows for a streamlined process,” he said, one that he believes is essential to keep up with the growing level of commercial launch activity without jeopardizing the safety of the uninvolved public. “Without safety, there is no business.”

He also addressed the concerns about the draft rule being a step backwards from the industry. “I am confident it is absolutely going to be better than the regulations that we operate under today,” he promised. In the end, that’s what everybody wants when it comes to regulatory reform.

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