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The Fine Print

LeFebvre Law's blog exploring legal issues related to the small business community, entrepreneurs, contractors, the construction industry, along with occasional pieces about futurism, the commercial space industry and space law, and other emergent technologies and novel legal fields. "Always read The Fine Print!"

The Fine Print

LeFebvre Law's blog exploring legal issues related to the small business community, entrepreneurs, contractors, the construction industry, along with occasional pieces about futurism, the commercial space industry and space law, and other emergent technologies and novel legal fields. "Always read The Fine Print!"

Space Law – Property Rights in Outer Space

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Space Law – Property Rights in Outer Space

The commercial space industry was recently given a gift by the U.S. House of Representatives in the form of the SPACE Act. This bill is imperfect and a bit of a wishlist for the industry, limiting their liability in big ways and prohibiting just about any real safety regulation for the next decade by the FAA. The bill also faces a tough hurdle with the Senate, which has its own bill that is less industry favorable. But there was something interesting in the SPACE Act which caught my eye, along with many others interested in the commercial space industry – the fact that the House attempted to address the outstanding issue of property rights in space, though in an inelegant way considering the complicated issues and diplomatic concerns.

Now as an attorney I make my living catering to small businesses, but my passion is futurism – especially space. I happen to be a member of the Planetary Society, a non-profit space policy and advocacy organization, and I am particularly fond of the emerging commercial space sector. How can you not be? It’s clear proof we are living in the future that was promised to us back in the 60s! Well, minus the flying cars, but hey, stranger things have happened. Obviously the space industry is not going to be in the realm of small business, generally speaking. Its hard to compare a company that designs and builds rockets to your local corner bodega. They just tend to require far too much capital. But I happen to be an optimist in this domain, and as launch costs and other access to space expenses inevitably go down, and as large companies like SpaceX, Virgin Galactic, Orbital Sciences, and Blue Origin take on the prohibitive rocket and spacecraft costs, smaller companies and start-ups can find niche areas to service in the industry. A local Brooklyn company comes to mind, Final Frontier Design, which is a small business that designs spacesuits that it plans to market to the commercial space industry. If you are taking a rocket ride in a SpaceX Dragon 2 to a Bigelow Aerospace inflatable space-station for an orbital vacation, you may want to be in a FFD made pressure suit for the ride up. Safety first! No doubt there are many other small businesses in the industry in all sorts of niche areas, and I find it all very exciting.

While at this stage most of the attention is focused on companies opening up access to space, the thing that really captures my imagination is the idea of exploiting the infinite off-world resources orbiting around out there. Several companies have been formed with the idea of mining asteroids or the moon for valuable resources. One such company is called Planetary Resources, which made waves a couple years ago after a very successful Kickstarter campaign to raise funds for a small space telescope, intended to be part of a large network of such telescopes, called the Arkyd, to map asteroids in our neighborhood for potential targets to mine in the not-too-distant future. These celestial bodies are rich in minerals and other useful resources which will not only prove profitable on Earth, but may also be the key to pushing the human frontier beyond low earth orbit.

But here is where we bump into a few legal issues. Can you actually own an asteroid, or if not the entire space-rock itself, can you own real estate on an asteroid in the form of a mine? Can you own the resources you extract from an asteroid? What are the rules governing property rights in space?

asteroid_mining_trillion_dollar_industry

Asteroid Mining as envisioned by Planetary Resources. Image courtesy of Planetary Resources

Private off-world investment has been difficult to secure because of a lack of clearly defined laws and regulations governing property rights in space, both domestically here in the U.S. and internationally. While there exists some legal precedent with regards to ownership of resources harvested in space, such as lunar samples, the issue remains largely open. And when it comes to actually owning a part of space property, like the asteroid or lunar location you obtained your resources from, well, there simply isn’t a framework for that at present. And this is a real problem for any would-be space-miners. Without legally recognized rights to buy, own, and sell titled property, how can you invest in an off-world mining project? Without clearly defined property rights, true investment in any such ventures will remain elusive. And obviously the only way to get a space-mine off the ground would be to raise lots and lots of capital.

The reason that property rights are such an issue when it comes to outer space goes back to the early days of the space-race. In those days the U.S. and Soviet Union were duking it out for global supremacy, and to each of the superpowers the idea of the other controlling the heavens, especially in a military context, was deeply troubling. As a result, the U.S. and Soviet Union took pains to ensure that neither one would be able to legally exploit space for political or military purposes, leaving space a domain for science and exploration. Obviously, at the time, no one was seriously considering commercial applications – perhaps a lack of vision by the politicians at the time. I suppose they can be forgiven, but now it falls to our generation to resolve the issues.

That’s not to say there isn’t any relevant law on the topic. There is, in fact, the 1967 Outer Space Treaty. Actually, the full name of the treaty is the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, but Outer Space Treaty is much quicker. This treaty establishes some international rules on space, but was drafted at a time when commercial exploitation of space was science fiction. The purpose of the treaty was to establish clear rules to maintain outer space as a global commons, where national concerns which dictate so much of what happens here on earth will not be exported to activities in space. The treaty covers things such as the exploration and use of outer space being for the benefit and in the interests of all countries and shall be the province of all mankind, that outer space shall be free for exploration and use by all States, that outer space is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means, that States shall not place nuclear weapons or other weapons of mass destruction in orbit or on celestial bodies or station them in outer space in any other manner (obviously very relevant in the 60s!), that the Moon and other celestial bodies shall be used exclusively for peaceful purposes, that astronauts shall be regarded as the envoys of mankind and treated accordingly, especially when in distress, that States shall be responsible for national space activities whether carried out by governmental or non-governmental entities, that States shall be liable for damage caused by their space objects, and that States shall avoid harmful contamination of space and celestial bodies.

So we have an international treaty that establishes some space law. What does it say about property rights in space as it might apply to a commercial asteroid or lunar mining venture? Well, not much, it seems. The most relevant portions appear to be Article II, which states:

“Outer space, including the Moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.”

Now this was intended to prevent any nation from claiming the moon under the old Discovery Doctrine. So Article II is problematic because it suggests that one cannot claim ownership of a celestial body. But it also raises the question, does this apply to non-governmental entities? Clearly the treaty was drafted with the understanding that only Nation States would be involved in outer space endeavors. However, Article VI does suggest that commercial ventures could get in the game. It states:

“State 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. When activities are carried on in outer space, including the Moon and other celestial bodies, by an international organization, responsibility for compliance with this Treaty shall be borne both by the international organization and by the States Parties to the Treaty participating in such organization.”

So commercial ventures, which are non-governmental entities, are permitted to conduct space activities. As such, commercial endeavors in space have been able to develop over the years, resulting in commercial telecommunications and private launching endeavors, among others, some of which are very important to our modern world.

But there is still the issue of property rights. There have been efforts to preserve space as a global commons for mankind. There is The Moon Treaty of 1979, which was modeled after the Law of the Sea Treaty, designed to preserve the ocean floor as a global commons by regulating seabed mining ventures. The problem with both the Moon Treaty and The Law of the Sea Treaty is that they tend to disincentivize investment in harvesting the resources in those areas. Now, this may be fine for the ocean floor for environmental purposes, and while I believe we should be careful in how we exploit off-world resources and be responsible stewards of extraterrestrial environments that we encounter, I believe that we can responsibly harvest these asteroids without trashing the solar system or somehow infringing on the free exploration of space as the right of all mankind. Fortunately, the Moon Treaty has not been adopted by many nations at all, and certainly not by the major space-faring nations, so it is not as important a piece of legislation as the Outer Space Treaty. What the Moon Treaty suggests by its very existence, however, is that the Outer Space Treaty does not definitively prohibit land claims on extraterrestrial territory. That means there is room to expand on celestial body land claims while conforming to the broader goals of the Outer Space Treaty.

There may be the possibility of loopholes in the Outer Space Treaty. We lawyers love loopholes. And who wouldn’t love a space loophole? It sounds pretty neat, like the little brother of a black hole or wormhole. At any rate, the Outer Space Treaty leaves quite a lot of ambiguity, which means it is subject to interpretation. For example, the prohibitions against appropriation applies to the Moon and “other celestial bodies.” So what is a celestial body? Is an asteroid a celestial body? Well, a plain language definition would suggest that an asteroid is such a celestial body. But legal documents often defy plain language definitions. Absent a definition within the document, it is possible that an asteroid might be considered something other than a celestial body, and that the prohibition against appropriation applies to moons, planets, dwarf planets, and things of that nature.

Still, I find that to be pretty unsatisfying. There should be a legal framework that sets clear, unambiguous laws regarding the commercial exploitation of space. There are certain proposed pieces of legislation that attempt to resolve the issue, while also conforming with the terms and spirit of the Outer Space Treaty. One such example is the Space Settlement Prize Act a/k/a the Space Real Estate Act, a draft law proposed by New York based advocacy group the Space Settlement Institute. The “Prize” mentioned in the act’s title refers to federal recognition of land claims on the Moon, Mars, or asteroids. The Space Settlement Prize Act states that land claims could be recognized under natural law’s “use and occupation” standard, as sovereign rights are unrecognized in space thanks to the Outer Space Treaty. The Space Settlement Prize Act also manages to deal with the national appropriations prohibition by having the U.S. recognize the land claim of any private legal person (which includes corporations, of course), regardless of their nationality, provided they comply with the terms of the Act.

And there is the the 2015 SPACE Act (H.R.2262), just recently passed by the U.S. House of Representatives. It deals with property rights on this subject rather decisively and clearly, stating:

“Any asteroid resources obtained in outer space are the property of the entity that obtained such resources, which shall be entitled to all property rights thereto, consistent with applicable provisions of Federal law.”

It also includes a very lax regulatory scheme whereby the FAA is prohibited from proposing any passenger safety regulations until the end of 2025 and requires spaceflight passengers to waive liability against launch providers and other parties. These provisions are very favorable to the industry but have critics worried, particularly as passengers are waiving liability even in the instance of negligence. Critics are also concerned about what is seen as a controversial property rights regime regarding resources from outer space without full consideration, including how this law would work in light of the Outer Space Treaty. And while the bill made it through the House with bipartisan support, there is concern it will not get through the Senate, which has its own bill, The Commercial Space Launch Act (S.1297).

The Senate’s bill is silent on the issue of rights to resources harvested from Celestial bodies. And the Senate may be hesitant to pass a bill which clashes with an international treaty to which the U.S. is a signatory – the Outer Space Treaty. Traditionally the Senate is more in tune with the diplomatic ramifications of the legislation it passes compared to the House. Ultimately, the concern is that the bill passed by Congress will not get through the Senate, and therefore never get to the President’s desk. Critics of the SPACE Act, such as Space Subcommittee Ranking Member Donna F. Edwards (D – Maryland), believe that the House should have passed the Senate’s version, which has support from the commercial space industry and is popular with the Senate, as this would more likely result in legislation being passed for the industry.

I find it very encouraging that these issues are being debated. The SPACE Act may never become law, and indeed it does leave things to be desired in my opinion. But it does actually address the issue of property rights, if in a fairly blunt way. I would rather see something that attempts to fit into the Outer Space Treaty’s framework with regard to property rights, but I am pleased to see that the Congress is interested in supporting this fledgling industry.

The new space race has already begun, and it may not be long before we see a veritable gold rush to orbiting mines. We need to address the issue of property rights comprehensively, both domestically and internationally. We should do so in a thoughtful way to ensure outer space remains a place of international cooperation, even with private commercial competition. If we craft appropriate legislation, we can allow the new commercial space industry to expand mankind’s frontiers yet further, and allow our species to truly take advantage of the resources in our solar neighborhood.

Ad astra

Tim LeFebvre, Esq.

EDIT: There is, in fact, legislation in the Senate the addresses the property rights issue, the  Space Resource Exploration and Utilization Act of 2015 (S. 976). This uses essentially the same language as the House bill. My thanks to Space Attorney Michael J. Listner, Esq. for pointing that out. (@Ponder68) http://www.spacelawsolutions.com/