For many people asteroid and extraterrestrial mining still seems quite implausible. However, Michio Kaku, a well-known American theoretical physicist, says it can happen soon enough:

“Thomas Jefferson bought Louisiana [editor’s note: The Louisiana Purchase] and wrote that it can take a thousand years, a thousand years before they can then begin to settle the West. Well, how long did it take? A few decades. Because what happened? Gold. Gold was discovered in California, sparking the Gold Rush and within just a few years millions, millions of prospectors, settlers, fortune hunters converged on California. It didn’t take a thousand years to develop that.”

Probably it sounds too ambitious at this point, yet space mining could become the next Gold Rush. Even one M-type asteroid can make the founder of an asteroid mining company richer than all the world’s billionaires combined.

As was mentioned in the previous article, there is an urgent necessity to devise clear national and international rules regarding the exploitation of extraterrestrial resources by private companies. This article covers the actual efforts made in this direction in the U.S. and Luxembourg, the two countries currently in the lead of the nascent space mining industry.

The US Regulations: Creating a Space Valley

There are lots of various space-related companies in the U.S., like SpaceX, Blue Origin and Axiom Space. There are also several U.S.-based companies, such as Deep Space Industry and Planetary Resources, that have serious plans for space mining. As the space mining industry might become mundane in the nearest decades, there is a need to get rid of legislative uncertainty that currently prevails the discourse of space commercialization. Aiming to solve this problem, the U.S. has adopted a specific national legal framework, the Space Resource Exploration and Utilization Act, or simply the Space Act, signed by Barack Obama in November 2015.

The Space Act: Why Is It Important?

The general purposes of the Space Act, according to the full report and the Space Act provisions, are to give private entities lawful rights to “remove, take possession, and use in-situ natural resources from celestial bodies” and to promote the development of the space mining industry.

According to the Space Act, any asteroid resources obtained in outer space should be owned by the entity that extracted those resources.

The provisions of the U.S. Code also state that “a U.S. citizen engaged in commercial recovery of an asteroid resource or a space resource under this chapter shall be entitled to any asteroid resource or space resource obtained, including to possess, own, transport, use, and sell the asteroid resource or space resource obtained in accordance with applicable law, including the international obligations of the United States.”

Even though the Space Act and the U.S. Code created some legislative certainty regarding the property rights, the international community is concerned about the potential breach of the Outer Space Treaty and other international agreements. Such concerns are somewhat justified as property rights of private companies eventually might eventually prevail over fundamental space law principles like “outer space shall be free for exploration and use by all states” and “the non-appropriation of the Moon and other celestial bodies.”

However, lawyers think differently. According to the Moon Agreement defines, celestial bodies and extraterrestrial materials (i.e. mined resources) are different things, so space mining companies may make such resources their property and apply the Pedis Possessio Doctrine without actually claiming the celestial body that houses said resources. In layman’s terms, the principle entitles anyone who has appropriate qualification to mine resources even from public domain areas. Nobody can obstruct their work if they work diligently.

Craig Foster, J.D. in the University of Illinois College of Law, thinks as follows:

“The idea of pedis possessio, though not expressly mentioned in the legislative history or in the statute itself, seems to be a driving force in the [Space Act] statutory language because it provides that citizens should have the right to explore for and recover space resources ‘free from harmful interference.’ This strongly suggests that Congress foresees a system in which U.S. commercial entities have exclusive right to possess and extract from any asteroid, or at least part of an asteroid, on which they have landed.”

The application of the Pedis Possessio allows mining companies to extract and utilize resources from all space objects despite the fact that they are the common heritage of the humankind. By doing so, such companies won’t breach any law or treaty.

Okay, let’s say private companies can mine asteroids lawfully, space resources and space objects are really different things, and resources can be appropriated. But the U.S. Space Act goes even further distinguishing “space resources” from “asteroid resources”. To make it simple, space resources are all resources that could be obtained in outer space, while asteroid resources could be extracted from a single asteroid.

Why does it matter? Because in terms of the Space Act only asteroid resources could be considered the property of a mining company. Therefore, resources extracted from the Moon, Mars or other celestial bodies couldn’t be appropriated by private companies. Yeah, wording also counts.

Another important issue is the question of liability. The Space Act sets up the “safety of operations” principle. Thus, the U.S.-based space mining companies should avoid causing harmful interference in outer space. National states are liable for the damage caused by space objects registered with them. Again, if a U.S. company’s vessel causes damage in space, the U.S. will pay for that.

Concerns Related to the Space Act

Many specialists are concerned about the lack of licensing system, as the Outer Space Treaty requires state governments to take control over their citizens’ operations in space. As of now, there is no authority responsible for authorization and supervision of the U.S. non-governmental activities in space. The Office of Commercial Space Transportation of the Federal Aviation Administration (FAA) is the regulator in charge of all space launches and reentries but extraterrestrial mining isn’t supervised at the moment.

Referring to the Outer Space Treaty, some people also say that the U.S. law violates the treaty’s prohibition on celestial bodies’ appropriation. Does the USA really violate the international agreements?

“With the Space Act, the U.S. gives itself the authority to confer property rights over space resources even before they are extracted. Thus, it seems to follow logically that the U.S. is appropriating at least some part of a celestial body in order to do this — against the express prohibitions of the Outer Space Treaty,” Mr. Foster explained.

In December 2015, the International Institute of Space Law (IISL), however, released a special position paper specifying that the Outer Space Treaty doesn’t prohibit the use of space resources. Moreover, the IISL admitted that the U.S. Space Act is a “possible interpretation of the Outer Space Treaty”, which means the provisions of the act are still in line with the international legislation.

The Space Act doesn’t provide any special rights over space objects and doesn’t free the United States from its international obligations, including those imposed by the Outer Space Treaty. The IISL’s position paper also says that the Space Act “pays respect to the international legal obligations of the United States and applicable law on which the property rights to space resources will continue to depend.”

From the legal perspective, the USA merely interpreted the international rules without directly violating anything. In fact, the U.S. Space Act offers several interesting points that could be useful for improving international regulations in the future. Yet, the USA isn’t the only country that has plans for asteroid mining and regulates the industry.

Luxembourg: European Hub for Space Mining

The U.S. Space Act was aimed at transforming space mining laws and the economy as we know it. Shortly after the adoption of the U.S. Space Act, Luxembourg’s government also started the intensive work in that direction. In 2016, after two years of work, the country presented the Space Resources Initiative. Soon the biggest players in the space mining industry, such as Planetary Resources and Deep Space Industries, decided to set up subsidiaries there.

A year later, Luxembourg passed the Law on the Exploration of Space and Use of Space Resources, which was the first space law originating from the E.U. The law became enforceable in August 2017. Although the proposed framework is quite similar to that of the U.S. Space Act, it has some noteworthy points that make it different.

Article 1 of the Law states that “space resources are capable of being appropriated.” According to the Explanatory Statement accompanied the act’s proposal, Luxembourg has become the first European country “to provide legal certainty as to the ownership of minerals, water and other space resources identified in particular on asteroids,” as international treaties haven’t any clear position in this regard. Notably, Luxembourg’s lawmakers didn’t limit the range of resources that can be appropriated only to asteroid resources as the U.S. did.

Also, unlike the Space Act of 2015, the Law has a well-defined mechanism for authorizing each company to operate out in space as prescribed by the Outer Space Treaty. So, Articles 2 and 3 clearly define that in order to conduct a space resources utilization mission, the company in question will have to obtain a written mission authorization from the authorities.

The law, however, restricts the range of activities that an authorized company can carry out as it should stay in line with the authorization conditions and all international obligations of the state. At the same time, not only the range of activity is being restricted. The authorization is personal, non-assignable, and can be granted strictly to specific types of entities:

Public company limited by shares (société anonyme).

Corporate partnership limited by shares (société en commandite par actions).

Private limited liability company (société à responsabilité limitée) of Luxembourg law.

European Company (société européenne) having its registered office in Luxembourg.

Such entities still have to satisfy numerous conditions set forth in Luxembourg’s legislation. Article 7 of Luxembourg’s Law sets forth the following requirements:

Central administration of the company should be based in Luxembourg.

A company willing to engage in space mining must have a registered office in the country, including administrative and accounting structures.

The same company should have a reliable scheme of all procedures (e.g. technical or financial) and actions through which the mission, including the commercialization of space resources, is planned and executed.

The company in question is also obliged to have a robust internal governance scheme with clear organizational structure, transparent lines of responsibility, and control and security arrangements for its technical systems and applications.

According to Article 9, there have to be at least two members in the management body, and they must have good repute and sufficient knowledge, skills, and experience to perform their duties.

So, the requirements are quite strict and hard to meet. This can make the process too complicated for companies but, on the other hand, it makes the authorization requirements transparent. Moreover, it would allow the government to pick the best projects and help them grow, benefitting the whole country.

Here’s the thing: the government would also levy a fee for each application submitted for authorization of the space mission varying from €5,000 to €500,000, depending on the complexity of the application and the amount of work involved. Such funds could be subsequently invested in the further development of Luxembourg’s space industry and infrastructure.

The Law also defines the liability for corporate operations. For example, the authorities can withdraw the authorization for the mission if the company:

Failed to meet the requirements for the permission.

Didn’t make use of the authorization for 36 months from the moment the authorization was granted.

Renounced from the government’s authorization.

Has ceased to carry out its business for the preceding six months.

Obtained an authorization using false statements or any other irregular means.



Another distinctive feature of Luxembourg’s law is Article 16. It stipulates that the company, and not the country, is responsible for all the damage it may cause either during the space mission or during the preparatory work or duties. This clause is totally opposite to Article VII of the Outer Space Treaty. It’s hard to say if this provision will be efficient, but considering the potential commercialization of space, it sounds reasonable that private companies should be liable for their actions.

Finally, the last article of the regulation offers a punitive mechanism preventing unregistered exploration. Companies or natural persons that explore outer space without a specific permission may be imprisoned for up to 5 years and fined for up to €1,250,000.

For other offenses, such as assigning a written authorization for a mission to another person or any other attempt to contravene the terms and conditions of the authorization, a company or a natural person may face 18 to 365 days of imprisonment , a fine of between €1,250 and €500,000 or either one of those penalties.

Moreover, the court that will be ruling the case is authorized to stop the mission and impose a fine of up to €1,000,000 every day as of the discovery of the infringement.

Such penalties are obviously strict, however, such astronomically high amounts possibly have something to do with the location of the intended production field and the budget of such endeavors.

“The amendments to the new Luxembourg Law and the increasing assimilation of this Law with the approach taken by the US Commercial Space Launch Competitiveness Act only serve to underscore the tenuous nature of national legislation that ignores the fundamental questions of conformity with international law in favour of a formal adherence to Article VI OST [editor’s note: the Outer Space Treaty]. For it is difficult to see how national citizens would be able to exercise property rights over space resources obtained from a celestial body in accordance with the international obligations of their State if the content of those obligations remains subject to controversy.” says Philip De Man, Senior Researcher at the Leuven Centre for Global Governance Studies.

Despite all the controversies of Luxembourg’s Law, it’s an innovative document that suggests a way to regulate commercial exploitation of space resources. One might safely assume that it may later become the basis for changing or even developing new international treaties.

Conclusion

So, in order for the industry to work properly, a similarly proper regulation has to be developed. Moreover, all extraterrestrial mining-related questions should be regulated on both national and international levels, and the latter is way more important.

The good old Outer Space Treaty discussed in the previous article is a little bit out of date, so it would be a wise decision to amend it or to start discussing a new regulation that would make extraterrestrial mining possible, as well as to establish an international regulator in charge of space mining. Moreover, amendments or future treaties may freely encompass all the best practices of the lawmaking from two aforementioned laws.

There are already several laws that were enforced in the U.S. and Luxembourg, like the right for appropriating space resources and the obligation to obtain a specific permission for conducting a space mission. While the USA didn’t solve the problem of authorization, Luxembourg did it well, defining all the requirements and liabilities in case of breach. The provisions of those laws may be more than helpful for developing and establishing new rules for the space mining industry.

To sum up, the international community should amend or replace the Outer Space Treaty, and draw a definitive line between space resources and the space objects that house them. International treaties should provide a special framework for extraterrestrial mining and define whether space resources can be appropriated by private companies. Also, the procedure of granting permission to the companies that plan to mine asteroids or other celestial bodies should be clearly defined.