Closing Bell - Manifest Space: Space Law with CS Consulting President Caryn Schenewerk 11/24/23

Episode Date: November 24, 2023

Commercial space regulation law is on the House of Representatives’ docket — but what needs to be regulated? The White House and House Science, Space and Technology Committee have both unveiled their proposals for simplifying government oversight of the commercial space sector; with two different takes on how to approach the space. Morgan Brennan sits down with Caryn Schenewerk, former SpaceX & Relativity Space counsel, to discuss the playbook for regulation as it stands.

More regulation is poised to come to the business of space. When lawmakers return from the Thanksgiving break, one of the first pieces of legislation set to potentially be sent to the House floor for a vote is H.R. 6131. Better known as the Commercial Space Act of 2023, the bill would designate the Commerce Department's Office of Space Commerce as the, quote, single authority for authorizing and supervising novel space missions outside of spectrum, which the FCC would still handle, and outside of launch, which the FAA would continue to oversee. Meantime, the White House's National Space Council also put forward a plan that would split authorities between the transportation and commerce departments. It all speaks to the growing commercial space economy and the need for clearer rules as companies look to ramp activities in orbit and beyond.

It's something Georgetown's Karen Schenewerk knows quite a bit about. Unfortunately, particularly in the area of launch and in the area of emerging activities in space, for example, in-space servicing activities, in space manufacturing, future lunar activities, commercial LEO habitat destinations for private citizens that want to go to space, for example. Those are the areas where we are developing regulation or even just statutes to govern the activity. And in the area of launch, where our launch regulations are not keeping pace with the

industry and are really struggling to facilitate that true American launch capability of consistent, rapid access to space. Shenowork has operated at the intersection of space and regulation throughout her career, with time spent on the Hill before working as Senior Counsel and Senior Director at SpaceX, where she handled spaceflight policy, and then as a senior vice president of regulatory and government affairs at startup Relativity Space. On this episode, which we taped before the House Science, Space, and Technology Committee marked up its new bill, we take a deep dive into the world of space regulation, what exists, what doesn't, and what needs to. I'm Morgan Brennan, and this

is Manifest Space. All right, so let's talk a little bit about space regulation and specifically, I think, commercial space regulation, a topic that I realized could get very dense very quickly, but we're going to make it exciting here. I think just to start, we've seen this commercial space economy really emerge. There are some rules and regulations in place right now, but the argument could also be made, at least here in the US, that it hasn't kept pace with what industry has done. Is that the right way to think about it? Yeah, definitely. The rules are significant in governing the activities that we have traditionally engaged in or that we think of as our primary

activity. And those are the activities that really drive the space economy today. You know, our in-space satellite services, our remote sensing capabilities, and even the launch industry, which has significantly grown in the United States over the last number of years. They are all regulated and governed by a whole course of laws, including terrestrial laws that govern their manufacturing and transport and all those activities that apply to any industrial or science-based activity. But unfortunately, particularly in the area of launch and in the area of emerging activities in space, for example, in- space servicing activities, in space manufacturing, future lunar activities, commercial LEO habitat, destinations for private citizens that want to go

to space, for example. Those are the areas where we are developing regulation or even just statutes to govern the activity. And in the area of launch, where our launch regulations are not keeping pace with the industry and are really struggling to facilitate that true American launch capability of consistent, rapid access to space. And I want to get into the meat and potatoes about what currently exists and what potentially should exist from there. But first, just a little bit of street cred for you, because you've been at Relativity Space, you've been at SpaceX, you've testified in front of Congress recently as well. You're an adjunct professor at Georgetown now. I guess just walk me through your expertise in this, given the fact that you've kind of been on all sides of the equation at some point or another.

Yeah. So, you know, I got interested in being in the space industry when I was in government and working to try and facilitate it. So, you know, this is back in the, you know, like 2010 timeframe when we were first starting to think about what the follow-on would be to the shuttle, how we would facilitate the commercial industry when we were really looking at a significant reliance on Russia. And that was untenable from the American perspective. And so here came companies like SpaceX, where I went to work in that timeframe, that were looking at really building jobs in America, bringing high-tech manufacturing to the United States, and bringing that launch and that astronaut carriage capability back to the United States. And we saw that on display.

In a year that was dark for many people, 2020 was an amazing year in space when we brought American astronauts flying from American soil on American rockets back with SpaceX's capability. And so that's really what drew me in. It was that opportunity to work for a company that was really thinking about how we bring that kind of excellence back to the United States and how we do it in a way that leverages the private sector to support government interests. What was it like to work at SpaceX, especially given the fact that you were working on human spaceflight and forging this new path with a commercially owned vehicle that the government basically pays for services for?

It was an amazing experience. I really had such a great opportunity to learn there. It's how I developed the expertise that I have now, because it was a company that really looks to people to step up, set stretch goals and achieve those. And that's what the company did. It was the mission with making humanitarian, multi-planetary, that humanity to the multi-planetary mission really drives everybody to have, you know, an extreme idea about how you can achieve really interesting and ambitious goals. And the place is populated with incredibly dedicated, incredibly hardworking people. And, you know, some of my best friends today are people that I met

when I was working there and that I stay in touch with now. And I really believe that the amazing progress we're seeing in American industry in launch and in space activities, you know, it is a direct result of the amazing goals that SpaceX set and the leadership there in driving capability in the United States and also giving us the opportunity to engage with the government to provide value and to engage with the government to progress the launch regulations, for example, and the regulations of space activities. So when I started at SpaceX, nobody was reflying rockets. There was no reusability. Now SpaceX is doing it every day, it seems like. And the government regulations for launch didn't contemplate reusable orbital vehicles. We had to fix that. So that's something where I had the opportunity to identify a problem and develop a solution set.

And that's really what defines SpaceX, identifying an issue or an opportunity and then developing a solution set that beats that opportunity and is really innovative. How long did it take to get some of those regulations amended or addressed in terms of reusability? And I guess, is there a template there in terms of what some of these next stages could look like? Yeah, so it actually took years. So first we identified the fact that the regulations didn't match what we were doing. Then we had to work with the existing regulations because regulatory changes are, of course, subject to the Administrative Procedures Act, which defines the process that has

to be followed under U.S. statute to change our regulations, right? It's meant to give opportunities for anybody who is interested, whether that's industry, academia, to comment and to engage with that process. And so, you know, we had to work with what we had. And then in the Trump administration, the National Space Council was reconstituted. And one of the efforts under that council, an early effort, was to update the launch regulations. And that actually went really quickly. In fact, it probably went a little too fast because we had an update to the launch regulations that didn't allow for as much significant industry input and engagement with the agency to identify some of the challenges. So what we have today are regulations that maybe moved a little too fast, which is rarely hear industry complain about regulations that move too quickly. But this is the downside of when

that happens is that you can get something that isn't as operationally prepared for the activities that it's governing. So, you know, we have regulations that are turning out to be a little bit more costly and cumbersome and, you know, a need for resources at the agency to be able to implement those regulations and probably make some updates to them as a result of some of that speed. So, you know, sometimes you want it to move fast, but sometimes you got to go slow to go fast. And this was an example of that. So when you refer to that, are you referring to Part 450 and specifically some of the jurisdiction of the FAA? That's exactly what I'm referring to. So the Part 450 challenges are what are encumbering, overly encumbering new entrants. So, you know, operations like SpaceX's Falcon 9 continue to operate and launch under the prior regulations. And I actually think that one of the big points to make about the

current regulations is that they are, they're a bit anti-competitive. So they're pro-incumbent. If you're already operating under the old regulations and you're staying there, then the problem that you are facing is the ability to get the attention of the folks at the FAA because they are resource constrained. But if you're trying to operate under the new regulations, like say Relativity did, it is taking an inordinate amount of time to navigate those new regulations versus the kinds of vehicles that are trying to fly under those. So when a smaller vehicle could have flown, I believe, under the old regulations in a much faster time frame in terms of the regulatory oversight than what we're seeing today with the new regulations. And that actually is a competitive concern. Interesting. I don't feel like we talk

enough about this, the fact that different launch companies, based on when they've moved forward and been able to get their licenses, are operating under different sets of rules. I mean, it raises, and this is not even human space flight we're talking about. We're just talking about launches writ large. That's correct. So, and, you know, SpaceX, as they testified to the Senate last week, they're facing this in some ways because they have Falcon 9, which is flying under the old regulations. And then they're trying and working towards oversight of Falcon, sorry, they're working towards oversight of Starship under the new regulations. And so the mission that Starship already flew or the launch that already occurred with Starship and Super Heavy, that was a 450 license.

So part of the challenge they're facing is even their vehicles being under different regulations and the challenges with 450 for one and then being able to still consistently operate under the old regulations for new. But if you're a new entrant and you're starting off with 450, then you're starting off in a more difficult place than we started off previously. I do want to just diverge for a moment here and, or digress, I should say, and talk a little bit about Starship because we've never seen a vehicle like this before. We've never seen a spacecraft that's been launched like this before. Does the FAA fully have its arms around what this is going to look like, what it's going to entail, and what needs to happen for it to be able to keep having these launch attempts? So I think it does. I think that it's, you know, Starship is a larger launch vehicle, but it's still a launch vehicle and a spaceflight capability. So as far as that's concerned, the ability to oversee that is the ability to do the analysis that needs to be done for the flight safety, do the analysis for ground safety, do the environmental reviews that I know are getting a lot of attention. Those are the same regardless of what kind of vehicle you're doing.

It just is whether you're scaling up for that size or you're scaling down for a smaller size. It really, the regulations can accommodate all of those differences in a vehicle. That's one thing that is true. It's whether or not it's, I think, overly burdensome regardless of the vehicle or overly time-consuming regardless of the vehicle or whether the FAA has the resources to dedicate to the to that launch operator or that reentry operator, regardless of the vehicle or the operator. So I think that's really what what Starship is facing is the the is is just like anybody else, the challenge of getting through those regulations. And I think that it's, you know, the safety factors are the same. The level of expected safety is the same, whether it's Starship or whether it's a very small launch vehicle. It's just a matter of the FAA's ability to process the information and work with that operator to get to flight. And right now, my understanding is that the FAA is being forced to operate in series rather than in parallel with various operators. And so they

have a serious resource constraint that needs to be addressed. I mean, would it make sense, would it make sense for, for there to be just a totally separate division or subdivision that's set up specifically focused on spaceflight? I mean, I think about the FAA, it's just a huge, expansive, you know, entity within the transportation department. I think it's the biggest by far, if I'm not mistaken. But given the fact that it is resource constrained, it is focused on things like aviation as well right now. I mean, would that actually help alleviate some of these issues and some of these delays? So the FAA Office of Commercial Space Transportation is its own office within the FAA. At one point when it was actually first created under statute under the Commercial Space Launch Act, it reported directly to the Secretary of Transportation.

In a reorganization of the Transportation Department, it was moved to be within the FAA. And there are, there are arguments for and against that. An argument for is that space activities do occur through the airspace and there's airspace coordination that occurs. There are also arguments that it needs to be at the level of the transportation secretary because it is an interesting in its own mode of transportation versus being under aviation and embedded in that organization. I think either way, the need for that office to see an increase in staffing, a use of more modern tools for navigating the regulatory process. So some automation right now, most of the work is done over email with PDFs being emailed around.

That's kind of an unacceptable, in a high-tech industry like space, you would think that we would have high-tech oversight and processes. And that's something that definitely needs to be invested in and improved in that office. So we need increased staffing. We need more technical interchanges between the staff and the, sorry, the staff and the operators. And we really need some automation. We need some to automate, we need some automate, excuse me. We need to automate the processes with which they use because this kind of paperwork, literal paperwork exercise that goes into overseeing the operations is really outdated and it's not scalable, right? It really is hindering the industry at this point. Let's talk a little bit about the human spaceflight piece of this because there was

this moratorium that was put in place limiting certain types of regulations back in, what, 2004? There was an expectation that we were going to see that moratorium addressed or even lifted this year. That hasn't happened. It's been pushed to the beginning of next year as it currently stands. What is currently regulated? What isn't? What could change? So a human spaceflight activity cannot occur unless you get a launch license and you're not going to bring anybody back without a reentry license. So the same licensing, the 450 licensing that applies to the launch, applies to any activity that involves human spaceflight. So you're already regulating the vehicle. That is primarily focused on public safety. But public safety is dependent on the safe

operation of the vehicle. So that means that if there are crew, if there is crew involved with the vehicle, whether that's crew actually in the flight or crew on the ground, those operators of the vehicle are regulated. So if that means that they need to, you know, whether that's giving commands to the vehicle in real time, whether that's actually, you know, like flying the vehicle and operating it, or if that is overseeing the vehicle's operations, you know, with a more automated system, that crew is part of the safety system. The difference is the people who are choosing to be on board the vehicle as spaceflight participants. So these are members of the PANG public who have chosen to engage in spaceflight. And in 2004, we recognized that there was an interest in this. Originally, it was thought that they would largely be people who were going to

fly on suborbital flights versus, you know, folks going on, say, these, you know, missions to the space station or into orbit, like the Inspiration4 mission. So we've since updated for the idea that you could have government astronauts on board. So those are people that are flying specifically under the auspices and approval of the NASA administrator. You can have spaceflight participants. So those are members of the public who are paying participants in the spaceflight.

And then you have crew. And there are activities that are overseen relative to all three. So of course the environmental control, life support systems, some of the safety factors for people on board, those are governed by the regulations. And the regulations specifically lay out an informed consent regime. So anybody who is a spaceflight participant and even a crew member has to understand the risks of engaging in the activity and agree to those risks. Government astronauts only fly with NASA under the auspices of NASA. And so the vehicles that fly, government astronauts,

have a whole level of review and certification relative to NASA because they are the customer for those missions. So that's a separate kind of question. I would say that those flights are, you could say, highly regulated, but actually the term would be that they have high levels of requirements for NASA certification because NASA is not a regulatory agency. But this spaceflight participant activity, you know, we set that out because we allow people to take risks and we want to support the idea that the industry is a nascent industry. Still, with regard to human spaceflight, there have been very few missions with people on board. And we want to be able to let innovation occur because all of the vehicles, only three, I should say, that are flying humans are very different in their operations, in their design, even in where they go and where they do that from. So right now, I think that the

learning period and the reasoning behind it still remains strong because we still want to see that innovation and we still want to allow people to accept risk, informed risk per the regulations. I mean, it's really fascinating. I think one of the other things that gets my attention is that if you're an American company, whether we're talking about this specifically, a human spaceflight, or whether we're talking about launch or reentry, whether you're doing it on U.S. soil or not, you're still governed by the U.S. government in terms of how you do it. That's a very important point. Yes, there's no escaping the U.S. jurisdiction by virtue of operating from international waters, or even if you want to operate from a foreign country, you're going to be subject to U.S. law. So the way that the launch

regulations are written and the statute specifically that governs those, the Commercial Space Launch Act, it has a very long arm when it comes to jurisdiction. So if you're a U.S. entity or a U.S. citizen as defined specifically for launch and reentry activities, then we've got you. We're going to oversee what you're doing no matter where you're doing it. And that actually all ties up to the Outer Space Treaty, which says that nations are responsible for the activities of their non-government entities. So you actually have the, you know, you've got the regulations, you've got the statute, and all of this actually ties up to the 1967 Outer Space Treaty, you know,

which apparently is holding strong when you look at it according to what we're doing today and what it says about how we should do that looking back to the 60s. That's interesting that you bring that up, because I feel like I've had so many conversations about the fact that the last time we did see some sort of multilateral agreement was going back to the 1960s. But when I hear you talk, it sounds like, yeah, I'm sure there's some updates that need to happen. But in general, it's still providing a blueprint that works today. That's right. I mean, the Outer Space Treaty is a framework for operations and it agrees, it's an agreement of some, you know, some principles, some hard lines, so no weapons of mass destruction or nuclear weapons in space, for example. But generally speaking, there's permissiveness in it. So it allows countries, as long as they authorize and

provide continuing supervision of their nationals to engage in space activities, largely, you know, for the peaceful and scientific purposes is what it's intended. But it holds up. You know, more recently, we, of course, are engaging in the Artemis Accords. And that's, you know, more of a became, you know, start kind of bilateral, multilateral agreement. And, you know, the whole framework, the international treaty framework allows for those kinds of agreements where we can work with, you know, like minded countries to come to some more nuanced principles, say kinds of agreements, starting perhaps bilateral and moving multilateral, can emerge for how we agree with other entities that we want to conduct ourselves. And the U.S. just showed leadership on this topic with the banning our own, you know, bans for ASAT testing. We said we think that the testing of, you know, those kinds of weapons in

space generates unnecessary debris and that we're going to say we're not going to do that. And indeed, other countries came along and said, we also are going to not engage in anti-satellite testing activities like the United States. And so, you know, you can build norms of behavior that supplement and complement the Outer Space Treaty along the way, which is, you know, what we certainly continue to engage in doing. And then we all interpret it, you know, we say we've got this obligation with regard to liability and responsibility, and then we interpret that down into our statute and our regulations at the national level. Yeah. One more question on this before I go back to the national level, and that is just, I mean, what happens when the Chinas and the Russians

of the world don't sign on to some of these agreements? So in this case of the Outer Space Treaty, they have signed on. It's a matter of their behavior and whether or not we believe it's in accordance with the treaties, right? And, you know, sometimes you have countries that will say that they're doing one thing and, you know, what you actually experience is doing another. And the, you know, Outer Space Treaty is no different than, you know, all of the other treaties. In fact, the Outer Space Treaty says that all of our international obligations apply to our activities in space. It pulls those into the treaty, into the obligations under the treaty. That said, you know, no different than any other international situation, you know, we have diplomatic conversations that can occur. We can engage in sanctions. We can bring challenges to the,

you know, to the international criminal tribunals or to the international arbitration. I would say not the criminal tribunals would only be if there's something serious that falls under those, but for arbitration and for the criminal justice system, sorry, I said it again, for the international justice system. But generally speaking, you're going to look to the same kinds of solutions, whether it's sanctions or the discourse that happens at the United Nations. It doesn't look much different in space than it would terrestrially. Okay. I do want to circle back to U.S. regulation and one topic we haven't hit on yet, and that's novel activities. I mean, you touched on it a little bit with lunar and with in-space servicing, but how

does that come along? How does that evolve? So we have some really exciting companies that are either engaging in that activity already or on the verge and a lot of development happening in this area. So I would kind of characterize those novel activities right now as being in space servicing. So that's like the ISAM activities. So servicing, assembly, manufacturing in orbit, that would be like refueling or even tugs or orbit changing maneuverability kind of work. Also orbital debris removal.

I would put all of that in the ISAM category. I would also put the habitats. So the commercial LEO destinations, private habitats in that category. So it's not the launch activity. It's not the reentry activity. Its core function is to actually provide a scientific and a platform for people to go and spend time in low Earth orbit. And then the other one would be activities that are targeted at, say, resource extraction, lunar communications, lunar rovers, anything that is going to go beyond, you know, beyond Earth's orbit, whether that's Leo, Mio, or geosynchronous orbit where we do most of our satellites, and into space. So those activities, which we've called novel or non-traditional, it's not clear how we would best regulate those yet. And so

there's some significant conversations that are occurring. I've seen draft legislation in the House, draft legislation in the Senate on this topic of who would be given the authorization for that oversight. And then what would a framework look like? Of course, you get the statute and then we actually have to go through the regulatory APA governed process to determine the regulations. And I think it's really important that we know that these are activities that are emerging to the extent that they've occurred so far. We've figured it out, right? We've either, you know, companies have gone to the FCC, they've worked with NOAA's remote sensing office or the FAA, depending on the activity. But we really need a clean approach to governing these activities so that we can, you know, have investor confidence,

so that we can have regulatory certainty. And so we can actually, you know, customers know how their, you know, company that they're going to be hiring to do this for them is going to actually get from where they are today with, you know, whether that's R&D or early testing to actually being able to provide these services. All right. Final question for you. How long does all of this take? I mean, are we looking at years to see some of this regulatory framework fully fleshed out and amended in a way that's going to be most ideal for everyone? So, I mean, yes, it will take years, but we actually thankfully have a bit of a, you know, we have some flexibility in our governance systems. So if a statute is passed and the Commerce Department, which tends to be the more agreed upon office, the Office of Space Commerce within the Department of Commerce for governing these activities, if they get statutory

authority, then they can immediately start figuring out how they provide approvals to entities. And that I think, you know, it'll look on it like a case by case basis until they can move through the regulatory process, which is generally a three to five year process. Again, launch license regulations told us that we don't want to go too fast, but we obviously also don't want to go too slow. So how do we get that like Goldilocks zone of getting a statute, getting oversight so that we can have a permissive environment that fosters innovation and fosters American competitiveness here, while also making sure that we have certainty around the regulation and the ability to identify the core issues that

we needed to focus on. And here they're pretty simple. It's what are our international treaty obligations? What are our national security interests? And how do we ensure that we're protecting the public? And that for these in-space activities actually is a pretty light touch opportunity. So I think that we can get there in a pretty good manner if we have good collaboration. I think that's a really important point of the engagement between the industry and the regulator that needs to occur so that they can understand the activities and the industry can understand what's necessary to get that approval. Karen Shenowork, it's so great to speak with you. Thank you so much for joining me. Thank you so much. And thank you so much for your interest in this kind of nerdy, nuanced topic

relative to something that gets so much interest and is so exciting and wonderful to see, which is space activities. And yet, you know, you can always make, you can make anything, I guess, a little bit nerdy on the legal front. And this is certainly one that I enjoy spending my time on. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.