Property Rights and Space Commercialization

[Mark Reiff <markreiff@xxxxxxxxxxxxx>]

FYI,

"Property Rights and Space Commercialization"
The Space Review
http://www.thespacereview.com/article/141/1

: It’s time to start thinking about commercialization and colonization
: of the Moon and Mars.

: We need to make the regulatory environment for 50 years after Apollo
: now. An American private property regime and capitalist economic
: system can encourage space commercialization and colonization. A
: utopian property regime and a communitarian economic system will
: keep out commercialization and leave colonization and exploration in
: the realm of governments.

: The Federal Communications Commission has adopted an excellent
: private property rights regime for telecommunications spectrum.
: Bidders have tendered tens of billions of dollars for property
: rights, then spent tens of billions more to deploy systems. By
: assuring these companies exclusive rights to the spectrum bands,
: they had the incentive to develop these bands and have created a
: major new industry.

: By having a strong property rights regime, owners will invest in
: their property and everyone benefits.

: The current advocates of space commercialization have the mindset of
: rocket engineers. They primarily focus on technology and usually
: ignore the regulatory and legal environment. Imagine a rocket
: engineer who has an excellent design for an inexpensive Mars base
: that will use in situ resources such as local water deposits. The
: rocket engineer proposes to send scouts to look for that water. The
: rocket engineer puts this proposal into a business plan and goes to
: potential funders. The funders may say that the engineering is
: sound, but still no funding comes. Investors do not have sufficient
: assurance that water found in the scouting expedition will be
: available when the time comes to build the base. Other Mars missions
: may extract the water in the intervening time and not pay any
: compensation to the prospector. On Earth we protect mining claims by
: granting exclusive exploration and extraction rights. Sometimes
: these mineral rights fetch a good deal of money in government
: auctions.

: In order to facilitate commercialization and colonization, there
: needs to be a property rights regime established. There are some
: impediments to private property in space, but they may not be
: insurmountable. The Outer Space Treaty says some things that the US
: and other signatories cannot do. The US cannot stake a sovereign
: claim in outer space. This effectively limits the property rights
: that the US can grant to its citizens. The Treaty does, however, ask
: that the US and other signatories closely monitor non-governmental
: activities, “The activities of non-governmental entities in outer
: space, including the moon and other celestial bodies, shall require
: authorization and continuing supervision by the appropriate State
: Party to the Treaty.” The Outer Space Treaty demands that we do
: this. Depending on how we regulate activities of US entities, we can
: bootstrap a private property regime by only granting a single US
: entity the right to exploit a certain tract on Mars. We will be
: expanding an American way of doing business into space.

: In the United States, we have always monitored and supervised
: activities using a capitalist system. Here on Earth, we have
: property rights regimes for real estate, intellectual property,
: mineral rights, water rights, spectrum rights and airport takeoff
: and landing slots among myriad property rights that are bought and
: sold. I propose that we extend that regime into the heavens. A
: property right is a right to exclude someone from doing something.
: By excluding US citizens and corporations from doing certain things,
: the US can create pseudo property rights in outer space for other US
: citizens and corporations that are not excluded from doing so. These
: pseudo property rights in outer space would be just like the rights
: afforded by patents in the US patent system. By filing a patent, a
: company can exclude all other rocket companies from using a certain
: novel process or technique. But an outer space pseudo property right
: is also just like the title deed to a house—the deed gives me the
: right to exclude others from using my house. Excluding others from
: using something is creating a right that is tangible and valuable
: even if it is not technically a property right.

: While it is not really a property right—since those are
: forbidden—these pseudo property rights would have the same effect as
: one if only US entities were in space. If there are two US
: non-governmental entities that both want to use a particular plot of
: land or a particular slice of radio spectrum in space, they need to
: obtain authorization from the United States. If the US only
: authorizes one of the entities to do so, that authorization could
: create a transferable property right that could be bought and sold
: like a US spectrum license or a piece of real estate. That
: authorization would have the force of law.

: Specifically, the US should recognize individual and corporate
: pseudo property rights. There are a couple of ways the property
: rights can work. One way is like title deeds that entitle the
: property holder to non-interference from the United States and all
: of its citizens in perpetuity. Another way is more like water
: rights, mineral rights or spectrum licenses that entitle the holder
: to lease for a specific use for a specific amount of time and
: require the licensee to undertake development of the lease within a
: set amount of time or lose the lease.

: The US should begin to regulate these pseudo property rights. We
: should register them. We should hold hearings on them. We should
: auction them off in some cases where there is contention just like
: for spectrum licenses or government land. We should hold the money
: in trust until the international community decides who should get
: it. The President should establish a property rights regime by
: executive order that is later written into law by Congress.

: The property rights might not be sufficient to spark investment.
: Having a piece of paper from the United States saying that no US
: entities may interfere with what you are doing does not necessarily
: give a US person or business the right to do something. There may be
: prior claims on the resources and there may be international actors
: that do not recognize US property rights. However, since there is no
: proven enforcement mechanism for prior claims, they are unlikely to
: deter investment if a new strong property rights regime were
: established.

: Regarding international contention, the Outer Space Treaty gives the
: US the right to ask for a consultation before someone interferes
: with a US space activity. “A State Party to the Treaty which has
: reason to believe that an activity or experiment planned by another
: State Party in outer space, including the moon and other celestial
: bodies, would cause potentially harmful interference with activities
: in the peaceful exploration and use of outer space, including the
: moon and other celestial bodies, may request consultation concerning
: the activity or experiment.” While this is not as ominous as a
: complaint through the WTO or NAFTA, it is something. We would hope
: that the US would undertake to sign reciprocal bilateral agreements
: with countries willing to coordinate their space activities with us.
: That is, if we adopt a policy that allows a US business to have an
: exclusive and defined territory to scout for ice at the lunar South
: Pole and Australia is willing to do the same, then we can jointly
: manage the registry of who is authorized to do so. The US should
: take steps to expand property rights in space with a little of the
: vigor we use to extend copyright agreements, open skies policies and
: international telecommunications spectrum standards that we pursue
: on Earth.

: One could interpret Article VII of the Outer Space Treaty to mean
: that damages might be due if another country’s spacecraft infringed
: the property of US “natural or jurisdictional persons”. “Each State
: Party to the Treaty that launches or procures the launching of an
: object into outer space, including the moon and other celestial
: bodies, and each State Party from whose territory or facility an
: object is launched, is internationally liable for damage to another
: State Party to the Treaty or to its natural or juridical persons by
: such object or its component parts on the Earth, in air or in outer
: space, including the moon and other celestial bodies.” While this is
: not the main meaning of this Article which primarily protects people
: on the ground from debris, it could become the main meaning as in
: situ resource utilization gets going to support exploration.

: This might not be enough to assure entrepreneurs that their
: investments will be their property, but don’t let the perfect be the
: enemy of the good. The US is the center of a good fraction of the
: global economy and the space economy and if the US leads, other
: like-minded nations will follow. On Earth, countries that honor
: property rights are in ascendance. One surmises they will ascend in
: space as well. If bilateral agreements and the Outer Space Treaty do
: not provide an adequate regulatory environment for commercialization
: and colonization, then perhaps the treaty should be amended or the
: US should withdraw.

: Space property rights will probably not spark a space transportation
: boom that will rival the railroad boom, the airplane boom, or the
: automobile boom. But there will be no boom if there are no property
: rights. Leaving the regulatory regime the same is a recipe for
: continued sclerosis.

: If we do nothing, space will look a lot more like Antarctica than
: Alaska. Without property rights there will not be adequate
: investment and space resources will be underutilized. Establishing
: property rights in space will cost millions, not billions, and can
: be done decades ahead of any commercialization or colonization. It’s
: time to set the stage to break out of the exploration mode of
: Columbus and get on with establishing the regulatory regime to lay
: the foundation for the next Plymouth Rock.

: Sam Dinkin is a Ph.D. economist who specializes in auctions for
: privatization and industries in regulatory transition and has
: advised buyers and sellers in auctions for telecommunications and
: energy worth over $70 billion.

Mark Reiff

--
Mark Reiff <markreiff@xxxxxxxxxxxxx>




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