Rockets and regulation: Injecting agility into US space industry oversight

The space industry faces a familiar regulatory challenge

Regulating emerging technologies is often difficult due to the “pacing problem,” which arises when the speed of technological development outpaces the regulators’ ability to keep up, adjust, and update the rules in response to the rapid changes in the industry.⁶ The pacing problem, in a way, represents the balance between fast-paced changes in technology and slower governance processes. As a former Federal Aviation Administration administrator once remarked, “Innovation moves at the speed of imagination … and government … moves at, well, the speed of government.”⁷

The pacing problem is a challenge because the success of innovation tends to depend on market clarity, and regulations shape markets.⁸ When regulations are ambiguous, they can sow seeds of uncertainty, casting a pall over market entry, consumer trust, and investor sentiment. So, when regulations aren’t designed for the technology they regulate, they can stymie innovation and the development of new markets.⁹

The space industry is currently experiencing the pacing problem. Innovations in space launch, satellite designs and services, business models, and more are changing how companies and governments explore and develop space.¹⁰ Notably, the industry’s new energetic pace defines much of this change. Slow or unclear regulatory processes have impacted innovations in launch, in-space manufacturing and servicing, among other areas that may hold great promise for the competitiveness of United States’ commercial space industry.¹¹ The cadence at which the industry is advancing new technologies and services is straining existing regulations and regulatory agencies.¹²

How can this issue be addressed? Enter agile regulation.

Agile regulation focuses on continuous learning and regulatory experimentation through close industry and government collaboration.¹³ Key to continuous learning is to regularly ask: What’s the current state of regulation, when should we regulate, how should we regulate, and what has changed?¹⁴ Asking these questions is important for keeping pace with innovation. That’s because collaborative exploration of these questions can empower regulators and companies to understand what laws to write or amend and how to organize around new problems. For instance, Singapore became a global leader in autonomous vehicle readiness in part by adopting principles of agile regulation, including continuous learning, close government and industry collaboration, and regulatory experimentation.¹⁵

The pacing problem is industry agnostic. However, the way it stunts innovation can differ across industries due to variations in regulations, regulatory bodies, and technologies unique to each sector.

Contours of the pacing problem for the space industry

For the space industry, the pacing problem presents two primary challenges to innovation:

• Poorly defined licensing processes
• Nebulous procedures surrounding technology risk assessments

These challenges can make it difficult for companies to complete the regulatory process (for example, receive permission from regulators to conduct space activities) without increasing timelines and adding costs while adding to regulator’s workloads.¹⁶

However, stepping away from technical details, there’s a more fundamental issue: the potential for the loss of trust. Trust often forms the bedrock upon which progress is built. However, poorly defined processes and uncertain evaluations can create doubt, which can cause trust to crumble. This fissure can widen with every regulatory hurdle, eroding trust between the industry and regulators and among regulators themselves.¹⁷

Licensing process friction 

New space activities don’t often fit within existing regulations. Yet, new space technologies are still regulated,¹⁸ requiring regulators to stitch together existing laws and processes while attempting to encourage innovation and affording necessary public protections. Creating new regulations is possible, but that typically takes years and the work of Congress.¹⁹ Instead of a fluid and transparent regulatory process that unfolds seamlessly like a well-mapped journey, the ad hoc approach tends to create a rugged and opaque labyrinth (figure 1), presenting a puzzling obstacle course for both companies and regulators.

Ultimately, these obstacles can create friction points—such as uncertainties around timelines and costs, among others—in the licensing process for companies and regulators (see “Common friction points” for more on this).²⁰ Friction points can create business risk for companies and challenge regulators by increasing workloads.

Take, for instance, in-space servicing, assembly, and manufacturing (ISAM), a suite of capabilities and activities poised to usher in a new era in space exploration and development. As a commercial offering, ISAM is new. Many ISAM missions require things that legacy missions typically don’t, like transitioning through orbits more routinely or even intentionally creating waste via servicing (for example, by replacing a satellite component in orbit, the old component becomes waste).

The ISAM mission’s novelty means that aspects of it are not accounted for in existing regulations.²¹ Thus, the industry and regulators may have to wade through ad hoc and bumpy regulatory processes to understand roles, responsibilities, safety, timelines, and more. ISAM is just one of many new space activities with an uncertain regulatory path.²²

Even if the specific steps and people needed to complete the licensing process are clear, it may not be straightforward. Ambiguities in how the proverbial process boxes are checked—like how new technologies are assessed for risks—are often another source of regulatory challenges.

Technology risk assessment uncertainty

Regulatory processes often require regulators to assess the potential risks novel technologies or services pose to individuals, the environment, or national security. Yet, the nature of trying to understand something novel can create a paradox for regulators: How can they acquire adequate knowledge to make informed decisions when something is brand new? The task can be so complicated that there is often very little certainty in assessing the risks and benefits of emerging technologies.²³

Uncertainty is difficult for companies and regulators to navigate because it often leads to subjectivity. The problem arises because when assessing technology risks of something novel, there is seldom a clear or singular answer to questions such as what data should be collected, how much is sufficient, or who is best suited to make those determinations—hence the subjectivity.

Overcoming subjectivity is possible when companies and regulators share perspectives on what constitutes risk. It can be easier to assess risk when all involved see it the same way. That isn’t the case for the space industry, however.²⁴ For space industry regulators, safety often informs their perspective of risk—the safety of the public, the environment, and national security.²⁵ Meanwhile, for the space industry, it tends to be business risk: achieving cost and schedule with a functioning product.²⁶ Though regulators are also concerned with fostering innovation and the industry is also concerned with safety, they don’t necessarily see risk in the same way.²⁷ When considering the multitude of government regulators and agencies participating in the regulatory process (figure 1) and the growing number of commercial companies, aligning on risk assessments can be difficult. 

Nonetheless, assessing risk is often a requirement for obtaining regulatory approval. The need for risk assessments combined with the uncertainty surrounding their execution form regulatory obstacles that can adversely affect both the industry and regulators (see “Common risk assessment uncertainties” for more on this).²⁸ For businesses, the lack of clarity can impact timelines, costs, and even public opinion of their products and services.²⁹ For regulators, it can entail dedicating already scarce time and resources chasing sufficient certainty in a process defined by uncertainty.³⁰

Licensing process friction and technology risk assessments are two prominent challenges the pacing problem imposes on the space industry. Solutions to address them have also been ad hoc (figure 2). While these solutions can assist individual license applicants by helping to make navigating the process easier, they don’t necessarily address the root causes of the friction itself. To address the source of the problem, the space industry should have a system of agile regulation characterized by constant learning and adaption.

Creating a system of agile space industry regulation

Space industry companies and policymakers are working to address the pacing problem. Current proposals seek to streamline regulatory processes for emerging space activities to reduce process friction. While a good start, more is needed to create a genuinely agile system of regulation.

Proposals to create a new mission authorization framework are an excellent start …

Mission authorization frameworks are cornerstone reforms being advanced by the industry, Congress, and the White House.³¹ While different versions exist, generally, it’s a proposed regulatory system that could streamline regulatory processes and reduce friction by consolidating mission approval authority (for example, regulatory authority) for new space activities under a single or set of regulatory agencies. Current licensing processes often require different agencies to approve various aspects of the same mission.

For example, currently, a space mission that, among other activities, captures images of the Earth and sends radio signals back to Earth requires separate approvals from the US Department of Commerce and the Federal Communications Commission. In contrast, a mission authorization framework approach could centralize this approval process for novel space activities, allowing a single agency to authorize the entire mission after consulting with other relevant agencies.³²

The significance of a proposed mission authorization framework could extend beyond procedural efficiency. At its heart lies a fundamental shift in the dynamics of regulation—a transfer of responsibility from the industry to regulators. No longer would space companies be asked to navigate the complexities of interagency coordination. Instead, regulators would be responsible for working across agencies, alleviating some of the current process friction frustrating innovation.³³ It could also create process efficiencies for regulators by clarifying roles and responsibilities.³⁴ Rethinking mission authorization is likely an important part of creating an agile system of space industry regulation, but it’s not the only part.

… but more is required to be truly agile

A mission authorization framework can improve many aspects of the regulatory process for space activities emerging today, but it can’t solve every problem. That’s because formal, legislated (also known as hard law) regulations, like a mission authorization framework, are large, comprehensive rules that typically detail regulatory processes and outcomes at a high level–like which agency is responsible for what, expected timelines, and congressional reporting requirements. However, hard law regulations don’t typically detail how the responsible agency should implement them.

For example, the White House’s proposed mission authorization framework gives the secretary of transportation the authority to review certain mission applications while leaving it up to the secretary to decide what the application process will entail.³⁵ So, while a new mission authorization framework could address some sources of process friction, it may not be fit to address all issues.

Take coordination, for instance. Operating under a new mission authorization framework, the duty of coordination shifts from industry to government. Yet, regulators often struggle with interagency coordination.³⁶ Meaning applicants may still face a lack of process transparency since they may continue to rely on regulators to share information provided by other agencies consulted during the process.

Moreover, a mission authorization framework will still need to address complex and subjective technology risk assessment processes. For instance, which government organizations involved in the mission authorization process will have the final say in deciding how to assess risks if interagency disagreements arise? Would the decisions be collaborative? How would a mission authorization framework address adjudicating risk assessment disagreements?

To be sure, these challenges aren’t reasons to abandon mission authorization frameworks. Instead, they are evidence of the complexity of regulating emerging technologies. Even with comprehensive legislative regulatory reform, there will still likely be issues that need fixing. A mission authorization framework would need to be accompanied by other tools to address these remaining issues.

Supplementing a mission authorization framework

Adopting a mission authorization framework to update formal, hard law regulations offers half the solution to the pacing problem. The other half requires more and more effective use of soft law tools.

Soft law tools offer a way to fill gaps left by hard law. These tools include nonbinding instruments and arrangements that set expectations (for example, guidelines or norms of behavior).³⁷ The space industry has been using soft law tools for a while, but they are usually applied separately and isolated by different regulatory agencies, which can reduce their overall effect. With a mission authorization framework, there may be an opportunity to focus and cohere soft law efforts around mission authorization, driving more effective learning and adaptation. Rethinking the use of soft law tools around a new mission authorization framework would, for instance, help regulators avoid overlapping programs that can create more confusion than clarity for the industry.³⁸

Soft law fosters learning and adaptation. First, creating soft law doesn’t require following formal rulemaking processes like hard law does, and hence it’s easier to make, change, or remove regularly. The ease of creating soft law also permits the industry to develop it separately or collaboratively with regulators.³⁹ Two prominent examples of industry soft law are technical standards and industry best practices. That both government and the private sector can play an equal role in shaping soft law is why it can foster improved communication and cooperation between each,⁴⁰ which, in turn, can empower how the space industry builds regulatory knowledge and experiments to solve related problems.⁴¹

Another reason is that soft law is often used to influence expectations associated with hard law, but not substitute it. For example, the use of advisory circulars as a soft law tool to offer guidance and modify certain processes, like reporting requirements, allows the Federal Aviation Administration to change regulatory processes without altering the hard law regulations themselves.⁴² This allows soft law to inform the development of hard law (figure 3).⁴³ As one example, nonbinding guidelines addressing space debris mitigation developed by the Inter-Agency Debris Coordination Committee have informed national debris mitigation regulations across several countries.⁴⁴

Soft law can help enable a regulatory system to learn, cooperate, and adapt more effectively. While soft law tools are nonbinding, when complemented with hard law, they can create a more agile system of regulation. With a new mission authorization framework, a likely near-term development, the space industry has the chance to shape the development of a new, complementary soft law and create an agile system of regulation.

Getting started: Soft law tools that can complement a mission authorization framework

In addition to a mission authorization framework, developing a system of agile space industry regulations can be aided by soft law tools and programs that foster learning, adaptation, and cooperation to address existing regulatory challenges, including:

1. Developing multistakeholder “mission owner” groups for soft law coordination and education and to provide a single voice for novel space activities.

A mission owner is an idea adapted from the concept of governance coordination committees.⁴⁵ Like a governance coordination committee, a mission owner would be a multistakeholder (for example, private sector, regulators, or academics) group coordinating and integrating various actors and strategies to inform hard and soft law programs for emerging space missions. Whereas a governance coordination committee is focused on governing specific technologies, focusing on missions would be more appropriate for the space industry because it would complement a mission authorization framework.

A mission owner could garner influence by becoming the authoritative source of regulatory information for industry and regulators. Mission owners would not be regulators but would be inclusive of them. As an inclusive central hub for a given category of mission, mission owners can foster learning, collaboration, and experimentation and lead regulatory efforts by reducing the number of separate groups and activities trying to do the same thing.

2. Activity- or mission-based risk assessment dialogue groups.

As another complement to a mission authorization framework, industry and regulators should establish dialogue groups around specific emerging space activities or missions, like ISAM or debris remediation, to help clarify how new space activities and technologies are being assessed for potential risks. Ideally, such a group would exist within a mission owner organization. Short of that, multistakeholder groups that focus on understanding emerging space activity risk and standardizing or creating common approaches to assessing risk can help companies and regulators more equitably manage business and safety concerns. One example of a similar effort is the National Institute of Standards and Technology’s Artificial Intelligence Risk Management Framework, developed through a multistakeholder group to “incorporate trustworthiness considerations into the design, development, use, and evaluation of AI products, services, and systems.”⁴⁶

To encourage inclusive and transparent conversations, such a group should be multistakeholder (for example, regulators, academics, investors, and space companies) and include tools to protect intellectual property and other business concerns. Protecting business concerns is important for encouraging open and honest conversation.

3. Creating a regulatory playbook for space industry.

A regulatory playbook should be a working document that allows companies to understand the entire space industry regulatory landscape (for example, not regulator-specific), including how to get started, what issues are common, and helpful tools and resources, among other materials. A mission owner organization, like the one described above, may be ideally suited to develop a playbook. Otherwise, developing a playbook should occur through industry and government collaboration and be routinely updated.

Establishing a system of agile space regulations is an important next step in advancing the industry and maximizing the numerous benefits it brings, including scientific advancements, economic growth, and national security. An agile regulatory system can help address current challenges and better hedge against future regulatory issues the pacing problem may impose. While implementing these changes may be a substantial undertaking, the innovations they could unlock suggest it is an investment worth the effort.