Launch Auctions and the Outer Space Treaty

Note: Below is part three of my series of blog posts on the allocation of launch licenses by the FAA.

Today, I write to propose legislation authorizing the FAA — or better yet, NASA — to allocate launch licenses using auctions. (I will discuss the technical design of these proposed “launch auctions” in my next post; here, I will limit myself to question of the FAA’s legal authority to conduct auctions.)

Currently, the FAA exercises authority over the launching and re-entry of commercial space vehicles — in addition to its jurisdiction over civil aviation — so any private company that wants to launch a rocket or other kind of spacecraft from the United States into outer space must obtain a launch license from the FAA. According to this recent report in the journal Nature (Boley & Byers, 2021, footnote omitted), for example, SpaceX, one of the leading companies in the commercial space industry, has already requested launch licenses “for an additional 30,000 satellites.”

Considering that Low Earth Orbit is becoming a scarce resource (see my previous post), why doesn’t the FAA consider auctioning off the right to launch satellites into outer space, instead of giving away these launch licenses for free?

A landmark historical precedent for this possibility is the Omnibus Budget Reconciliation Act of 1993 (OBRA-93). Among other things, OBRA-93 gave the Federal Communications Commission (FCC) the legal authority to use auctions to allocate property rights in the electromagnetic spectrum. (See here, for example.) Subsequently, Congress expanded the FCC’s auction authority when it enacted the Balanced Budget Act of 1997. Based on these legislative precedents, perhaps the current Congress could enact similar legislation authorizing the FAA or even NASA to conduct “launch auctions.”

One potential roadblock to my Coasean proposal is public international space law — specifically, the Outer Space Treaty, which was originally drafted during the height of the space race between Russia and the United States in the 1960s. (As an aside, the full title of this governing law 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” See Resolution No. 2222 (XXI) of the 21st session of the General Assembly of the United Nations (1966).) Among other things, the Outer Space Treaty prohibits “the national appropriation of outer space by claim of sovereignty, by means of use or occupation, or by any other means” — language that could be interpreted to mean that property rights in outer space are forbidden.

That said, even if the Outer Space Treaty is read in this restrictive way — i.e. requiring outer space to remain a commons –, my proposed system of competitive “launch auctions” in place of free “launch licenses” does not necessarily create any exclusive property rights in outer space. Instead, the winner of a launch auction would only have the temporary right to launch a rocket, satellite, or other spacecraft during a given launch window — not the exclusive right to a particular orbit. Of course, the spacecraft to be launched would still have to satisfy the technical specifications set forth in the original call for auction, and these specifications would still be set by the relevant regulatory agency, whether it be the FAA or NASA. I will further survey the logistics of my proposed system of “launch auctions” in my next post …

The Outer Space Treaty | Outer space treaty, Space, Peace

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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2 Responses to Launch Auctions and the Outer Space Treaty

  1. Pingback: Year in Review (2021) | prior probability

  2. Pingback: Why not use auctions to allocate orbits in outer space? | prior probability

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