Global Outer Space Guide: United States

Key trends in outer space investment and activities

Overview of the United States space program

The United States space industry can be grouped into three seemingly distinct sectors, each of which has meaningful overlap with each other: civil, national security and commercial. 

Civil sector

The "civil sector" refers to non-defense activities of United States government agencies, including launching and managing satellites, research and solar system exploration. Civil space activities are managed principally by the National Aeronautics and Space Administration (NASA) and the National Oceanic and Atmospheric Administration (NOAA).

While NASA and NOAA are the key government agencies regulating and managing the civil sector, certain other agencies have various roles and responsibilities, and provide input to NASA and NOAA, including:

• The Federal Aviation Administration (FAA). Within the FAA is the Office of the Associate Administrator for Commercial Space Transportation (AST), whose mandate includes:
  • Regulating commercial space transportation to protect public health and safety and to ensure compliance with international obligations;
  • Promoting commercial space launches by the private sector;
  • Making recommendations for appropriate changes in federal statutes, treaties, regulations, policies, plans and procedures; and
  • Facilitating the strengthening and expansion of United States space transportation infrastructure;
• The Department of Energy (DOE). The DOE's unique set of capabilities through highly skilled engineers and technicians and specialized facilities at DOE national laboratories assist NASA and NOAA with their principal mandates;
• The Federal Communications Commission (FCC). As further detailed below, a FCC license is required in order to launch a satellite into space. The FCC accordingly has an oversight role as its promotes a competitive and innovative global communications marketplace by leading policy and licensing matters related to satellite and space-based communications and activities;
• The Department of State (DOS), which administers export controls over products that may be adverse to the United States' national security interests, including from their use for military purposes;
• The Department of Commerce (DOC), which administers export controls in relation to commercial products. The DOC also includes:
  • The National Telecommunication and Information Service (NTIA), which is responsible for domestic and international telecommunications and information policy issues as part of the executive branch; and
  • The Office of Space Commercialization, which is responsible for space-related issues, programs and initiatives with respect to policy development and market analysis; and
• The Department of Transportation (DOT), which is responsible for regulatory guidance pertaining to commercial space transportation activities.

National security sector

The term "national security sector" refers collectively to defense and intelligence sectors within the United States Government. The United States Department of Defense oversees space missions in support of military operations and several agencies in the United States intelligence community are involved in operating space assets for intelligence purposes to support military and law enforcement operations. National security space agencies include:

• The United States Space Command (SPACECOM);
• The Combined Force Space Component Command (CFSCC);
• The Joint Task Force-Space Defense (JTF–SD);
• The United States Space Force (USSF);
• The Army Space and Missile Defense Command (SMDC);
• The Defense Advanced Research Projects Agency (DARPA);
• The Defense Intelligence Agency (DIA);
• The Missile Defense Agency (MDA);
• The National Security Agency (NSA); the
• The National Geospatial-Intelligence Agency (NGA); and
• The National Reconnaissance Office (NRO).

Commercial sector

Commercial space products can be broadly classified into four categories: space launch services, communications and remote sense satellites, related satellite services, and necessary ground-based equipment:

• Space launch services are what we think of as traditional space flight and operations—sending satellites or spacecraft to space. These services also include the transportation of cargo and astronauts to the International Space Station (ISS). Finally, space tourism falls within this category;
• Commercial communications satellites, like the space launch services sector, are principally related to the launch and operations of satellites, but in this case, for commercial, academic, non-profit, or civilian purposes (pursuant to commercial contracts);
• Remote sensing satellites are satellites used for imaging the earth; and
• Satellite services include communications, broadband internet, direct-to-home television, radio and imaging/mapping services utilizing a launched satellite. To operate, these satellite services require the use of ground equipment and operators, which are an important subset of the satellite services category.

Major private participants in the commercial sector include SpaceX, Boeing, Sierra Nevada Corporation, Lockheed Martin, Virgin Galactic, Northrop Grumman, Blue Origin, Bigelow Aerospace, Planet Labs, Relativity Space and Kymeta, among others.

Complexity and coordination in the United States space sector

Given the United States' leading role in the space industry, and the rapid speed of technological innovation in space, coupled with a broad breadth of stakeholders, a general trend emerges: United States industry participants are attempting to navigate the changing "industry architecture" of the United States space industry.

That includes government agencies that regularly work together in the civil sector, attempting to better understand roadblocks for achieving objectives that tie into the commercial sector, like the study commissioned by NASA, the DOC (Bureau of Industry and Security (BIS)) and NOAA to conduct a comprehensive survey and assessment of a critical industrial sector that supports United States space missions and programs. In a press release, NASA noted that the study aims to better understand potential weaknesses in the sector's supply chain and how they may impact NASA's major missions related to exploration, space operations, science, space technology and aeronautics.

The complexity of coordination among the various federal agencies active in civil space is well recognized. In March 2023, the United States House of Representatives Committee on Science, Space and Technology conducted a hearing entitled, "Innovation Through Collaboration: The Department of Energy's Role in the US Research Ecosystem," whose purpose was to examine and consider possible legislation to facilitate coordination between the DOE, NASA, NOAA, the Department of Agriculture (USDA) and the National Science Foundation (NSF), among others. The legislative hearing was intended to consider a series of bills that would strengthen partnerships among the various agencies and codify them in law.

While the US Government continues to have a central role in the growth and development of the space industry, with many private companies relying on contracts from the US Government, satellite services companies, including in communications, broadband internet, direct-to-home television and earth imaging, are examples of non-governmental commercialization efforts. 

Outer space regulatory framework

The United States has one of the most advanced regulatory frameworks for outer space activities in the world—a reflection of current government investment in the sector and the expansion of private enterprise space activities, particularly in relation to satellites, which have called for robust "rules of the game" in outer space.

In December 2010, the existing outer space laws were re-codified and enacted as Title 51 of the United States Code (National and Commercial Space Programs)—bringing together a wide variety of distinct laws in a single place. 

What federal agencies regulate commercial space activities?

A number of federal agencies are involved in the regulation of commercial space activities in the United States. These include NASA, the Department of Defense, the FAA, the FCC, NOAA, the DOS, the DOC, DOT and the DOE. The roles of these agencies are outlined above. 

Is the United States a party to the five principal UN space treaties?

The United States is a party to the Outer Space Treaty, the Rescue Agreement, the Liability Convention and the Registration Convention. However, the United States is not a signatory or party to the Moon Agreement, a point returned to below. 

Are there any licensing/approval requirements for commercial space operators?

Licensing regime for launches

Under the Commercial Space Launch Act of 1984, a license is required for persons to launch a vehicle into outer space from the United States, operate a launch site within the United States, re-enter a vehicle from outer space in the United States or operate a re-entry site within the United States. A license is also required for United States citizens (or entities incorporated in the United States) to conduct launch or re-entry activities outside the United States. The license requirements are set out in Subchapter C of Title 14 of the Code of Federal Regulations (CFR).

As part of the conditions for obtaining a license, an applicant must meet certain financial responsibility requirements set out in Part 440 of Title 14 of the CFR (outlined in further detail below). Additionally, the FAA conducts policy, safety, payload and environmental reviews in relation to the activity proposed to be licensed.  

A policy review involves the FAA considering—typically in conjunction with other federal agencies—whether the proposed activity presents any issues affecting United States national security or foreign policy interests, or international obligations of the United States.

In conducting a safety review, the FAA considers whether the launch can be conducted without endangering public health and safety and the safety of property, with reference to matters such as flight plans and accident mitigation plans.

A payload review considers whether a license applicant or payload owner or operator has obtained all required licenses, authorizations and permits (except in relation to payloads subject to regulation by the FCC or the DOC or those owned or operated by the United States Government) and, again, whether the launch or re-entry of the payload (i.e. the relevant satellite or other spacecraft) would jeopardize public health and safety, safety of property, national security or foreign policy interests, or international obligations of the United States. It is important to note that the FAA licenses launches and re-entries, but not on-orbit activities.

An environmental review evaluates the environmental impacts associated with a proposed launch or re-entry, with reference to applicable legislation such as the National Environmental Policy Act of 1969.

Regulations concerning satellite communications

Under the Communications Act of 1934, the FCC has oversight of all commercial activities that transmit radio frequency signals to, from or within the United States. Commercial operators must apply for a license from the FCC to conduct these activities.

Title 47 of the CFR sets out the FCC's rules on procedures, technical standards and other requirements for the licensing and operation of facilities used for satellite communications, including ground stations and satellites. Among other things, commercial operators must comply with frequency tolerance requirements, emission limits, power limits, transmission standards and spectrum sharing requirements in relation to the satellite service being provided and the operational frequency band.

Operators are also required to conduct any necessary coordination with other commercial operators in the same frequency band to mitigate any potential harmful interference. 

As a condition of obtaining a license, commercial operators must also comply with orbital debris mitigation requirements, discussed further below.  

There are streamlined licensing procedures available for CubeSats and other small satellite operators which feature a quicker review process and reduced application fees.

Remote sensing

If a satellite is equipped with remote sensing capabilities (i.e. the collection of unenhanced data which can be processed into imagery of surface features of the Earth) – other than sensors used primarily for navigation, attitude control or payload developments—the commercial operator is required to obtain an additional license from the Commercial Remote Sensing Regulatory Affairs office within the NOAA. This will require the operator to carry out the remote sensing activities in a manner that preserves United States national security and the ability of the United States to observe its international obligations, in the manner set out in Title 15, Part 960 of the CFR.

Following the adoption of streamlined regulations in 2020, operators are categorized into one of three tiers, with the relevant tier determining the stringency of license conditions applied to the operator. The categorization system depends on whether the unenhanced data to be generated by the proposed remote sensing system is already available in the market. Relevantly, as set out in Title 15, Section 960.6 of the CFR:

• If the operator proposes to use a remote sensing system with the capability to collect unenhanced data substantially the same as unenhanced data already available from sources not regulated by the NOAA (such as foreign sources), the system will be categorized as Tier 1 and will face minimal licensing conditions. The policy intention is that the NOAA does not wish to restrict commercial operators in the United States any more than foreign competition;
• If a system is proposed with the capability to collect unenhanced data substantially the same as unenhanced data already available from United States sources only, the system will be categorized as Tier 2. License conditions may include restrictions on the dissemination of data, protecting data through encrypting satellite tracking, telemetry and control, protecting mission data transmissions and meeting any relevant international obligations; and
• If a system is proposed with the capability to collect unenhanced data not substantially the same as unenhanced data already available from any domestic or foreign entity or individual, the system will be categorized as Tier 3. More extensive license requirements will apply in this case because the imagery being produced is unique.

At the end of 2022, there were 71 Tier 1 licenses, no Tier 2 licenses and 19 Tier 3 licenses.  
Are there any mandatory insurance requirements for commercial space operators?  

Launchers (which are regulated by the FAA) are required to procure liability insurance for each mission, covering the launch personnel and the operator. However, satellite operators are not currently required to procure any type of liability insurance.  
With respect to launch insurance, all commercial operators that obtain a FAA license are required to meet minimum financial responsibility requirements.

Under Title 14 of the CFR (Section 440.9), the licensee is required to comply with all relevant insurance requirements or otherwise demonstrate "the required amount of financial responsibility." The insurance requirements specify that a licensee must obtain and maintain in effect a policy or policies of liability insurance in an amount sufficient to meet the maximum probable loss (MPL) determined by the FAA. The insurance policy or policies must protect, to the extent of their respective potential liabilities, the following persons against covered claims by a third party for bodily injury or property damage resulting from a licensed or permitted activity in connection with a particular launch or re-entry:

• The licensee, its customers, their respective contractors and subcontractors, and the employees of each, involved in a licensed activity;
• The United States, its agencies and its contractors and subcontractors involved in a licensed activity; and
• United States Government personnel.

The MPL reflects the projected loss from covered claims by a third party for bodily injury or property damage. The MPL is prescribed by the FAA for each licensee, but cannot exceed the lesser of US$500m or the maximum liability insurance available on the world market at a reasonable cost.

A licensee is also required to obtain and maintain in effect a policy or policies of insurance that cover claims by the United States, its agencies and its contractors and subcontractors involved in a licensed or permitted activity for property damage or loss resulting from the activity. The covered property must include all property owned, leased or occupied by, or within the care, custody and control of, the United States and its agencies, and its contractors and subcontractors, involved in a licensed activity at a Federal range facility. The MPL in this case cannot exceed the lesser of US$100m or the maximum liability insurance available on the world market at a reasonable cost.

As a condition of each license, the licensee must also comply with the reciprocal waiver of claims requirements in Section 440.17 of Title 14 of the CFR. Essentially, the licensee, and each of its contractors and subcontractors, each customer and each of the customer's contractors and subcontractors must enter into an agreement under which each party waives and releases claims against all the other parties to the waiver and against any other customer, and agrees to assume financial responsibility for property damage it sustains and for bodily injury or property damage sustained by its own employees – and also to hold harmless and indemnify each other from bodily injury or property damage sustained by employees resulting from a licensed or permitted activity, regardless of fault.

Is there a register of space objects?

In implementing its obligations under the Registration Convention, the FAA requires each licensee to register all objects placed into space by a licensed launch, including launch vehicles and any components (Title 14, Section 450.217 of the CFR). The information prescribed by Section 450.217(b) must be filed no later than 30 days following the conduct of a licensed launch—being the international designator of the space object, the date and location of launch, the general function of the space object, the final orbital parameters and the ownership and country of ownership of the space object.

A licensee must also, under Section 450.217(c), notify the FAA when it removes an object that it previously placed in space.

The Office of Space Affairs, within the DOS, maintains the official United States registry of objects launched into outer space.

Are there regulations on property rights in outer space?

Given the significant potential offered by outer space mining—and the interest in it by governments and private actors globally as an opportunity to generate new resources and revenue, both in servicing the Earth and as a basis for sustaining human settlements in outer space and future space exploration—regulatory norms concerning property rights in outer space are critical. Yet the current international framework does not deal with the issue sufficiently, and different countries are now beginning to legislate for their own property rights regime in outer space – raising the prospect of conflicting and inconsistent regulations and potential property disputes in future years.

The Outer Space Treaty only touches on ownership rights concerning resources acquired in outer space peripherally, with Article II stating:

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.

Yet there is no explicit denial of ownership rights by private entities—only an inability to acquire objects in outer space by means of "national appropriation," and only by states. Some take the view that Article II does not prohibit private entities from obtaining ownership rights over assets acquired from outer space (such as in the course of space mining activities) due to the application of the Lotus principle—that is, what is not explicitly prohibited is permitted. Others take the view that the passage of legislation providing for the acquisition of ownership rights in outer space assets by private entities is a way in which states have asserted sovereignty in direct violation of Article II.

The ownership of resources acquired from outer space is more explicitly dealt with in the Moon Agreement. In relation to resources on the Moon (but not other celestial bodies), Article XI states not only that the Moon is not subject to national appropriation by any claim of sovereignty (the language adopted in the Outer Space Treaty), but also that "the Moon and its natural resources are the common heritage of mankind."

Further, Article XI provides:

Neither the surface nor the subsurface of the Moon, nor any part thereof or natural resources in place, shall become the property of any state, nor any entities or natural persons.

Article XI also provides a framework for signatory states to "establish an international regime … to govern the exploitation of the natural resources of the Moon," which is to include a process for the "equitable sharing" of benefits from the resources.

However, apart from the fact that the Moon Agreement is limited to resources acquired from the Moon (and does not extend to resources from other celestial bodies), it has only been ratified by 18 countries and signed without ratification by four others. The United States is among the many countries yet to adopt the Moon Agreement. 

The United States Commercial Space Launch Competitiveness Act 2015 provides:

A United States citizen engaged in commercial recovery of an asteroid resource or a space resource … shall be entitled to any asteroid resource or space resource obtained, including to possess, own, transport, use, and sell the asteroid resource or space resource obtained.

An Executive Order issued by the former Trump Administration in April 2020 reiterates this position, with an express disavowal of the Moon Agreement ownership framework and the notion that outer space, and resources in it, are a "global commons" (see United States Government Executive Order No 13914, Encouraging International Support for the Recovery and Use of Space Resources, Federal Register, Vol. 85, No. 70).

The Executive Order also sets out the United States' position that the existing international framework has "discouraged some commercial entities" from engaging in activities focused on the commercial recovery and use of lunar resources due to the deep "uncertainty regarding the right to recover and use space resources."

According to the Executive Order:

Americans should have the right to engage in commercial exploration, recovery and use of resources in outer space, consistent with applicable law. Outer space is a legally and physically unique domain of human activity, and the United States does not view it as a global commons. Accordingly, it shall be the policy of the United States to encourage international support for the public and private recovery and use of resources in outer space, consistent with applicable law.

The United States adopts the position that legislating for private ownership of resources acquired in outer space is not inconsistent with the United States' obligations under the Outer Space Treaty because it is not seeking to "assert sovereignty or sovereign exclusive rights or jurisdiction over, or the ownership of, any celestial body," as distinct from permitting its citizens to engage in activities and acquire ownership of resources in a private capacity.

The United States intends to maintain the right of its citizens to acquire property rights in outer space resources, and this position is at the heart of the Artemis Program, discussed further below.

How the international community responds in making the case for an international property rights framework for outer space resources—or alternatively in establishing potentially inconsistent and conflicting local laws on outer space property rights—remains to be seen.

Are there any regulations requiring the removal of space debris?

The FAA requires an operator, as a condition of obtaining a launch license, to describe how it will satisfy the FAA's requirements for avoiding the creation of space debris—including a requirement to show how collisions will be avoided.

The FCC adopted comprehensive rules on orbital debris in 2004—set out in the FCR—pursuant to its authority to determine whether the public interest would be served by the authorization of satellite communications systems. The FCC requires commercial operators to submit an orbital debris mitigation plan, containing, among other things (see 47 CFR Sections 25.110 to 25.129):

• A statement that the operator has assessed and limited the amount of debris released in a planned manner during normal operations;
• A statement that the operator has assessed and limited the probability of the operation becoming a source of debris by collisions with small debris or meteoroids that could cause loss of control and prevent post-mission disposal;
• A statement that the operator has assessed and limited the probability of accidental explosions during and after completion of mission operations;
• A statement that the operator has assessed and limited the probability of the operation becoming a source of debris by collisions with large debris or other operational space stations; and
• A statement detailing the post-mission disposal plans for the operations at end of life, including the quantity of fuel—if any—that will be reserved for post-mission disposal maneuvers.

Although not specifically codified in the Commission's 2004 rules, the FCC has also applied the so-called "25-year benchmark" in licensing decisions.

This was first proposed by NASA in the 1990s to balance the mitigation of orbital debris with costs and complications for a commercial operator. It has, since then, been adopted by a number of space agencies of other nations.

On September 29, 2022, the FCC adopted new rules (see the Second Report and Order FCC 22-74) requiring satellite operators in low-Earth orbit to dispose of their satellites as soon as practicable, and no later than five years after the completion of their missions—down from 25 years. This is a substantial step forward in the management and mitigation of space debris.

It is noted in the Second Report and Order:

It is widely recognized that the growing challenge of orbital debris poses a risk to the nation's space ambitions. Defunct satellites, discarded rocket cores, and other debris now fill the space environment creating challenges for future missions. Moreover, there are more than 4,800 satellites currently operating in orbit as of the end of last year, and the vast majority of those are commercial. At risk is more than the US $279 billion-a-year satellite and launch industries and the jobs that depend on them. Satellites connect the most remote locations in the world to high-speed broadband. They help us navigate unfamiliar roads, broadcast video to millions of viewers, connect us to financial services, and provide imagery that can help us monitor climate change and other environmental problems. When disaster strikes, satellites help organize first responders, the government, and humanitarian organizations and make it possible to coordinate effective relief efforts. Left unchecked, orbital debris could block all of these benefits and reduce opportunities across nearly every sector of our economy. We believe strong compliance with post-mission disposal guidelines is an effective tool that can help stabilize the orbital debris environment.

Export controls relevant to outer space activities

The US export control system is designed to prevent the spread of sensitive technologies to foreign actors that could threaten the interests of the United States, while at the same time allowing US companies to engage in legitimate commercial activity. Specifically in relation to export controls in the space sector, regulators act to ensure controls are in place to reduce the possibility of missile-related and other technology spreading to foreign entities that could use it to threaten the interests of the United States.

Export controls arise from the regulations administered by two government departments. Pursuant to the Arms Export Control Act, the DOS's Directorate of Defense Trade Controls (DDTC) administers the International Traffic in Arms Regulations (ITAR), which control the export of items, information and activities that could be used for threatening foreign military purposes—as listed on the United States Munitions List (USML). 

Export controls are also set out in the Export Administration Regulations (EAR), which are administered by the DOC's Bureau of Industry and Security. The EAR apply to technologies that could be used for either military or commercial purposes ("dual-use")—as detailed in the Commerce Control List.

In response to a number of national security concerns, export control responsibility for all commercial and non-commercial satellites was transferred from the EAR to the more restrictive ITAR in 1998. However, new regulations in 2014 transferred a wide range of items back to the CCL established under the EAR, including certain commercial communications satellites and remote sensing satellites, probes and rovers for planetary and interplanetary science and exploration. These items are regulated in CCL Category 9 (Aerospace and Propulsion). A Strategic Trade Authorization (STA) license exception—which authorizes the unlicensed export, re-export, and in-country transfer of specified items on the CCL provided all requirements for the use of the license have been met – is available for 36 NATO countries and certain other allies of the United States.

Items subject to the EAR that are not listed on the CCL or the USML are designated "EAR99" and generally can be exported without a license.

Only items with various space-related military functions, sophisticated sensors, certain satellite integration and launch services and manned spacecraft remained subject to the ITAR.

Further, the 2014 amendments mean that the "see through rule" no longer applies. Previously, this rule required that if any part or component of a satellite was controlled under the ITAR, the entire satellite was as well.

With these relaxations, exporters in the space sector now face a lesser regulatory burden in relation to licensing and regulatory controls in the United States.

The Artemis Program and the Artemis Accords

In December 2017, NASA established the Artemis Program, a human spaceflight initiative which aims to revitalize the United States space undertaking in a "next era of human exploration." The immediate aim is to land, by 2025, the first crewed mission on the Moon since Apollo 17 in December 1972 (with the crew to include the first woman and the first person of color on the Moon).

NASA will then use innovative technologies to explore more of the surface of the Moon than ever before, and will collaborate with commercial and international partners to establish the first long-term presence on the Moon with a view to the extraction and use of resources from the Moon and near-Earth asteroids. The longer-term aim is to use the experience, technology and knowledge gained from the Artemis Program to send the first astronauts to Mars and beyond.

In profiling the benefit of the Artemis Program, NASA specifically draws attention to the opportunity to "enable a growing lunar economy by fueling new industries, supporting job growth and furthering the demand for a skilled workforce."

In support of the Artemis Program, and the public and private partnerships and enhanced outer space activity contemplated by it, NASA released the Artemis Accords in October 2020. On October 15, 2020, the Artemis Accords were signed by eight founding nations.

As of December 2022, the Artemis Accords had been signed by a total of 23 countries and one territory.

The Artemis Accords are intended to serve as "a practical set of principles, guidelines and best practices to enhance the governance of the civil exploration and use of outer space." However, while grounded in the Artemis Program, it is also contemplated that the Artemis Accords will provide "mutually beneficial practices for the future exploration and use of outer space" more broadly. This framework, in the words of the Artemis Accords, aims to:

• Increase the safety of operations;
• Reduce uncertainty; and
• Promote the sustainable and beneficial use of space for all humankind.

It is envisaged that the specifics of cooperative activities regarding the exploration and use of outer space will be implemented via bilateral instruments between individual countries, government agencies and other entities.

The United States' position on outer space property rights clearly informs the drafting of Section 10 of the Artemis Accords, which states that "the extraction of space resources does not inherently constitute national appropriation under Article II of the Outer Space Treaty".

The Artemis Accords contemplate in Article 10(4) that signatories will "use their experience under the Accords to contribute to multilateral efforts to further develop international practices and rules applicable to the extraction and utilization of space resources." Whether this occurs, and whether the property rights approach under the Artemis Accords itself forms part of any such practices and rules, remains to be seen.

Additional issues and developments

On January 9, 2023, the FCC released an Order announcing its intention to modernize its operations by establishing a dedicated Space Bureau and Office of International Affairs. According to the FCC, this reorganization is designed to "better support the needs of the growing satellite industry, promote long-term technical capacity at the FCC and help the agency navigate 21^st century global communications policy."

FCC Chairwoman Jessica Rosenworcel said that the change reflects that "the satellite industry is growing at a record pace, but here on the ground our regulatory frameworks for licensing have not kept up." The modernization of the FCC's structures and operations is therefore intended to reduce the regulatory burden on commercial space operators, reduce delays and enhance efficiency to support a growing space industry in the United States.

Further intended to achieve that end, the Satellite and Telecommunications Streamlining Act is currently before Congress.

The Act, if passed, would include a one-year limit for the FCC to determine whether to approve applications for new satellites (subject to an extension in extraordinary circumstances or to enable the completion of national security reviews).

On March 16, 2023, the FCC also announced that it would introduce a new regulatory framework to facilitate innovative collaborations between satellite operators and wireless companies—intended to "leverage the growth in space-based services to connect smartphone users in remote, unserved and underserved areas." Under the framework, authorized non-geostationary orbit satellite operators would be able to apply to the FCC for authorization to access the terrestrial spectrum of a terrestrial service provider if certain prerequisites are met. A satellite operator could then serve a wireless provider's customers if they were in need of connectivity in remote areas.

As the FCC notes, "connecting consumers to essential wireless services where no terrestrial mobile service is available can be life-saving in remote locations and can open up innovative opportunities for consumers and businesses".

Another piece of legislation currently before Congress is the Secure Space Act. This legislation, if passed, would prohibit the FCC from granting satellite licenses to foreign entities which the United States deems to be a threat to national security or domestic supply chains.

Major near-term challenges and opportunities

Opportunities

Enhanced technology

New technologies have enabled rapid growth in commercial outer space activities in the United States in recent years, and enhanced technological capability is expected to continue.

In particular, anticipated advancements in reusable launch vehicles—pioneered so far by companies such as SpaceX, Blue Origin and Virgin Galactic—the use of SmallSats (satellites of low mass and size) and CubeSats (square-shaped miniature satellites), as well as commercial applications of AI and robotics in outer space, have the potential to drive a wealth of new opportunities in outer space investment.

It is also anticipated that there will be improvements in edge computing—with enhanced efficiency and miniaturization (and lower costs) of data processing and storage technologies that can be leveraged by outer space missions instead of relying on terrestrial sources.

AI may also be used in space debris removal projects—with spacecraft equipped with AI-enabled cameras able to locate debris autonomously and collect it before returning it to the Earth's atmosphere for disposal.   

Innovation is also reducing the cost of launches—which has enhanced the ability of commercial enterprises to access outer space. Morgan Stanley has estimated that the cost to launch a satellite has declined to around US$60m from US$200m, via reusable rockets, with a potential drop to as low as US$5m in the short-term. Further, satellite mass production could reduce the cost to just US$500,000 per satellite. Other reports suggest that the cost of launching a satellite will eventually, on this trajectory, become comparable to launching an app. Clearly, outer space is no longer the domain of governments and large, established, highly capitalized companies.

There is also the prospect of further developments in "space data" applications, with observational data collected from outer space able to be used for novel commercial purposes—from the tracking of factors that influence crop yield in agriculture, to identifying areas prone to flooding for urban planning purposes, and now mapping and monitoring carbon emissions as the drive towards a net-zero emissions intensifies. Advancements in the capability and use of space data will be critical to support a greener, more sustainable future on planet Earth.

Increase in private sector funding

While the US Government remains the primary source of funding, private sector investment in outer space has been increasing, with Space Capital estimating that, by the end of 2022, some US$272.3bn of equity investment had been provided to 1,791 unique companies in the space economy in the last 10 years. McKinsey has found that private sector funding in space-related companies topped $10bn in 2021 and estimates that private sector funding in commercial space activities could surpass government funding within the next two decades.

A recent report by Space Capital divides investment in the industry into three technology categories: infrastructure, distribution and application, and notes that venture capital has invested at record levels in all three categories, despite a recent drop in 2022. With respect to private equity investment, recent transactions demonstrate a model forward for creased investment, in part due to potential targets holding long-term government contracts.

This growth in private sector investment, along with rapidly advancing technology, will continue to facilitate new business models such as low-Earth orbit (LEO) mega-constellations that deliver enhanced capability in high-speed broadband and communications.

Challenges

Regulatory burden and complexity

Perhaps one of the primary challenges to the further advancement of the commercial space sector in the United States – as is the case elsewhere in the world – is regulation. It is critical to put in place a modern, efficient regulatory framework that incentivizes investment and commercial activity, while retaining appropriate checks and balances that are required to protect the national security and policy interests of the United States. In the 2023 Deloitte Space Survey, respondents ranked regulatory requirements and timelines as among the top three challenges in the commercial space sector.

This balance is not easy to achieve—indeed, with the outer space industry evolving so rapidly, the existing regulatory regime can become outdated fairly quickly, and can serve as an impediment to continued investment. 

The current need for commercial space actors to obtain, in many cases, multiple licenses from different regulatory bodies, each with their own requirements and processes, can be challenging and the delays and lack of coordination involved have been a frequent source of concern within the industry.

There have been suggestions for the fragmented licensing approach to be streamlined, with further collaboration and cooperation among regulators to minimize costs, time delays and the regulatory burden. Indeed, with many commercial space actors originating as start-up enterprises, excessive costs and delays deplete working capital and limited investment funds necessary to pursue commercial space projects.

The modernization of the operations and licensing process by the FCC—identified above—is welcome news for commercial space enterprises. Similar reforms from other regulators ought to be considered simultaneously—in addition to options for consolidation of different licensing processes between each of the core regulators.

Space debris

While the FCC's new space debris rules are a positive step in setting the expectation for satellite operators to take responsibility for decommissioning and removing end of life satellites from the "orbital graveyard" accumulating in outer space, many commercial operators still view space debris as one of the major impediments to the continued advancement of commercial outer space projects.

To achieve meaningful "cut through" in the space debris impasse internationally, many in the industry argue that the United States ought to take a leadership role in progressing an international framework for space debris removal and mitigation. This could involve investing in the research and development needed for commercial operators to in fact comply with any space debris mitigation obligations, as well as collaborating with international agencies to advance an international normative framework. 

The need for an international normative framework in other areas

Beyond space debris, the absence of an international normative framework that deals with complex issues such as property and ownership rights, liability in the event of a collision and dispute resolution, may serve as a deterrent to future commercial activity in outer space, and multinational collaboration opportunities. Indeed, without a consistent international framework on these issues, individual nations have adopted their own regulatory regimes—such as the US, the UAE, Japan and Luxembourg in relation to property rights. Facing inconsistent and conflicting regulations across multiple jurisdictions creates uncertainty for commercial space actors, and does not provide the confidence needed to pursue innovative projects such as space mining and engineering that depend on multinational cooperation and recognition.

Funding in a difficult economy

While private sector investment in outer space has been increasing over the last decade, the current combination of high interest rates, high inflation and declining business and investment confidence means that a short-term slow down in investment in outer space commercial activities can be expected.

However, this is likely to remain a temporary slow down, with a return to financial stability and economic growth and enhanced capital flows spurring interest in innovative, growth-enhancing industries such as the commercial outer space sector.

Human capital

The expansion of commercial space activities—underpinned by technology—will require significant investment in the expertise required to fill the jobs that support a world-leading, innovative and value-creating space industry. Incentives to grow the number of science, technology, engineering and math (STEM) graduates in United States universities will be necessary to deliver a highly skilled and qualified space workforce, and ensure the United States is able to compete globally in the long-term.

Availability of insurance

Space insurance, which initially began as a subset of the aviation industry, quickly spun out after insurers realized the difference in risk levels and technologies between aviation and space flight. But the space insurance industry is far from homogenous, with commercialization challenges better understood in the context of different activities.

Two worthwhile distinctions are in the context of launch versus orbit and Geosynchronous Equatorial Orbit (GEO) versus LEO satellites. Launch insurance is required by the FAA, so both GEO and LEO satellites acquire launch insurance, but LEO satellites are more likely to forgo orbit insurance in part because there is less pressure to procure from investors (unlike banks who tend to finance GEO satellites and require orbit coverage to finance) and due to built-in redundancy of constellation clusters.

But most importantly, certain insurers have carved-out insurance in the LEO space given increased risk of collision in orbit (see the above discussion of space debris). Given the high-risk, high-reward nature of space insurance and changes in technologies that alter the risk profile of the covered activity, insurance coverage is subject to volatility and dependent on new entrants to maintain premium coverage at economically viable levels.  

Space cybersecurity

The United States Government and commercial industry participants have identified a greater need for, but have yet to formulate an approach to, ensuring the United States space ecosystem is protected against cyber threats. With the growth of commercialization of space operations, the ability of the civil and commercial space system to operate without disruption requires the development of a comprehensive cybersecurity framework.