Wayne Crews Letter of Record on Regulating Space: Innovation, Liberty, and International Obligations

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In many if not most federal regulatory regimes, were we starting with a blank sheet of paper, we would not maintain the same authorities in place today.  

So when liberalizing a heavily regulated segment of a mixed economy, or protecting an emergent sector like the commercialization of outer space from regulatory and political ambitions, the gauge of impending reform’s appropriateness is simple: The body of private activity subject to future regulation must decline rather than increase. The de-escalation of central power is the essence of agency expertise, rather than the administrative state’s century long premise that expertise consists in a priestly, guiding hand from above.[i] Commercial and hazard-reducing expertise are distributed globally. Further, rare are the instances in which agency licensing processes move rapidly enough for modern commerce, as we will review.

One hears deserved praise of “permissionless innovation,”[ii] the case for a light regulatory touch and a rejection of over-precaution. But there exists too little vocabulary among 21^st century policymakers for legitimizing large-scale or complex free enterprise, for articulating the reasons for casting off entrenched administrators. This vacuum and the negative initial conditions being created has diminished the prospects for light touch regulation, threatening to paint us into a hyper-regulatory corner even as the “Final Frontier” awaits.[iii] That will cost tomorrow’s economy trillions.[iv]

The public probably has little idea how much regulators intend to crack down on the commercialization of space. A substantial problem for the space sector today is that laissez-faire did not happen automatically for earthbound heavy industries and technologies after our industrial revolution, and still hasn’t materialized for them. The “smokestack” stage of industrial free enterprise brought the contemporaneous public utility era, which created artificial regulatory monopolies against which competition was outlawed (deemed “natural” monopoly), and the progressive era “rule by experts” of regulatory bureaucracies.

The further failure to extend liberal economic institutions of complex property rights, contract and risk management into infrastructure, airsheds, watersheds, spectrum, roads, or even to take the obvious 21^st century step of kick-starting the privatization of ordinary commercial flight airspace,[v] stands to derail the open-ended potential of commercial space activity. These realms remain largely controlled by governments; such laws as the Antiquities Act govern still more, as do such international agreements as the Law of the Sea Treaty.[vi]

Given this precedent and context, for commercialized space (and alas, for other sectors) we need a regulatory heatshield, a HOT Act (“Hands Off Technology”). We require better and soundly defended private and collaborative institutions to replace 19^th and 20^th century central bureaucratic oversight of private endeavors that, in fact, should largely be let alone. Congress should eliminate agencies as it once promised in the Contract With America era, or at least pass Article I-enshrining legislation, such as requirements for votes on costly agency rules. If the 115^th Congress does neither, it should at minimum prohibit agencies from issuing new rules and guidance regarding frontier technologies where (1) Congress has not enacted law to authorize (such as Internet “net neutrality”) or (2) has enacted law prematurely given the vocabulary problems noted and inadvertently yielded power to the administrative state (autonomous drones, space).

Sectors like commercial space, networked communications technology, robotics, autonomous vehicles and exo-transportation (cars, airborne drones and low-earth orbit) stand on the threshold of inextricably snug, irreversible regulation at precisely the time these very technologies eliminate the “market failures” that rationalized old-school regulation of safety, the “commons” and other features in the first place. The primary engines for these threats to the tech sector are the thousands of pre-existing regulators and their constituents, whose once-convincing justifications for their supposed impartial oversight no longer apply (allowing that they ever, properly, did).

The other threat is cronyism, from government funding of science and technology that widely displaces private funding,[vii] to billionaires with hands outstretched for federal subsidies and favors[viii] to assuring NASA first dibs.[ix] It is not prudent to expect such individuals or entities to be advocates of laissez-faire. A corollary for permissionless innovation is the presupposition that one innovates, not that extract others’ resources or political favor. Other citizens have aspirations of their own that may not involve paying for battery research technology, the HyperLoop or a trip to Mars. Recipients pay for subsidies by accepting regulation in exchange. That makes the subsidy in one sense a mere wealth transfer, rather than the innovation-enhancing boost it seems. This that doesn’t just hurt recipients and their industry, even if they don’t see it; it impacts all of society. Cronyism’s impacts can be particularly severe in frontier sectors like commercial space development where entire industry structures are being upended and the role of the regulator and perhaps even some incumbent firms require total reassessment. Technology pulls America’s economic wagon, but the wrong interventions can mean stagnation that propagates for decades, doing even century-long damage as when competition outlawed in the communications and electricity sectors and government-granted monopolies affirmed instead.

In technology, market liberal institutions are too easily pre-empted by the bureaucratic impulse to expand and create “public good” or “public utility” centrally managed models for everything big and new and game-changing. Drone and self-driving car policies are at grave risk of morphing into 21st century versions of 19th-century public-utility style regulation. The reason? Since roads already are primarily government-owned, and airspace government-controlled, we can be certain that policymakers are not pondering liberalizing alternatives that reduce their power, such as a wealth-creating extension of private property rights into airspaces. We’ll cover the implications of this for commercial space development shortly.

Many regulatory steps will be backward; others will veer into a cul-de-sac inducing an incalculable reduction in frontier production possibilities, wealth expansion, well-being and advancements in safety. This Letter for the Record is a call for making explicit the benefits of the principle, while conforming to international treaty obligations, of separation of technology and state in the commercial space sector. It seeks to provide some of the initial vocabulary needed to legitimize keeping distortion-inducing regulation off the entrepreneurial frontier. Regulation in advanced technology beyond the absolute minimum necessary is worse than government merely picking winners and losers (governments pick only losers); regulation effectively chooses among business models as such, imposing rigid frameworks on all. (examples include the allegedly “open” Internet; antitrust regulatory reconfigurations; government controlled airspaces). Today’s technologies make the stakes immensely higher than in previous eras.  

Read the full testimony here.