The agreements that govern the ISS international partnership could permit privatization of the station. (credit: NASA)

The legal and financial challenges of privatizing the International Space Station

by Kiran Krishnan Nair
Monday, May 14, 2018

The Trump Administration, as outlined in its budget proposal for NASA released in February, wants to turn the ISS into an orbiting real estate venture run not by the government, but instead by private industry. The White House plans to stop funding for the station after 2024 and yet, since it does not intend to abandon the ISS altogether, is working on a transition plan that could turn the station over to the private sector.¹ The decision to sell the ISS was met with consternation in many quarters. The outbursts were deeply emotional and primarily related to concerns on the “tricky” legal issues² and financial prudence in selling off an investment worth billions of dollars.³ In view of the foregoing, an analysis of the “tricky” legal issues is undertaken followed by a brief deliberation on financial prudence in an effort to steer the narrative from impassioned opinion to a more reasonable, rational view that may provoke informed discussion and debate on the subject.

First, the central objective of the legal framework governing ISS is to regulate specific aspects of a permanently inhabited, multi-national research facility in space. Accordingly, a three-tier legal framework governs the ISS, which consists of:⁴

• One Intergovernmental Agreement (IGA) signed January 29, 1998, which stipulates that UN conventions governing space activities apply to ISS cooperation.
• Four Memoranda of Understanding (MoU) between NASA and each of the four cooperating space agencies of Russia, Canada, Europe (signed January 29, 1998) and Japan (signed February 24, 1998).
• Various Implementing Arrangements (IAs) concluded as and when the need arises between NASA and another cooperating agency.

Further, paragraph 1 of Article 1 of the IGA lays down that the objective of the IGA is “to establish a long-term international cooperative framework among the Partners, on the basis of genuine partnership, for the detailed design, development, operation, and utilization of a permanently inhabited civil international Space Station for peaceful purposes, in accordance with international law. This civil international Space Station will enhance the scientific, technological, and commercial use of outer space”. In addition, paragraph 2 of Article 1 states that “the Partners will join their efforts, under the lead role of the United States for overall management and coordination, to create an integrated international Space Station.”⁵ Additionally, paragraph 4 of Article 1 clearly states that the ISS is conceived as having an evolutionary character.

The net effect of this legalese that the answer the oft-repeated question of “Can the US sell the ISS?” is, in simple terms, “Yes, it can!” For operation, utilization, for peaceful purposes, in accordance with international law to enhance the scientific, technological, and commercial use of outer space, the US can sell the ISS. The intent for sale is not known to be anything apart from continued scientific, technological, and commercial, peaceful use. Second, privatization of the ISS is enhancing commercial use of space and is aligned to the “NewSpace” line of thinking that celebrates commercialization of space. Also, because the US has the lead role for overall management and coordination, it can, in consultation with partner states, take the decision and coordinate the sale. And finally, in keeping with the evolutionary character of ISS, if it changes from an intergovernmental to a commercial character, that is but part of its evolution for survival.

With regards to concerns about privatization leading to loss of state control or responsibility, or wanton commercial greed taking over and playing havoc with the pristine environment of space, it needs to be borne in mind that the safeguards originally envisaged and put in place by Article-2 continue to be in place. They continue to be as effective as ever and nothing dilutes or does away with state responsibility for acts by commercial, private players. The state ultimately continues to bear responsibility, and state control is just not affected. Article 2 of the IGA lays down the international rights and obligations, with paragraph 2 stating that the ISS shall be developed, operated, and utilized in accordance with international law, including the Outer Space Treaty (OST), the Rescue Agreement, the Liability Convention, and the Registration Convention. In effect, privatization does not change the state of affairs with respect to state control, jurisdiction, responsibility and liability. The legal obligations, implicit and explicit in these international treaties, prevail.

Paragraph 2 of Article 2 further specifies that nothing in the IGA modifies the rights and duties of partners in respect of space treaties; consequently, commercial gain cannot override the duty of international cooperation explicit in international law and the space treaties. Conversely, if a case for commercial international cooperation among partner states is made, as is the case here, it only promotes the principle of international cooperation further. At the same time, under Article VI of the Outer Space Treaty, states shall bear international responsibility for their national activities in space and hence, while asserting its leadership role, the US would need to consider the legal prudence of taking over responsibility for other nations’ activities in space. Similarly, as per Liability Convention, the state is responsible for compensation in case of damage by space objects, and hence whether the US would like to accept liability for actions of others needs to be thought out.

Transfer of ownership in day-to-day life is inherently tricky and is no different in the case of the ISS. The transfer of ownership of ISS elements or equipment does not affect rights and obligations under the IGA Article 6.3. However, any transfer requires prior notification and requires consent of all parties, according to Article 6.4 of the IGA. Thus, the decision would require intense consultations among the partners and can only be consensus driven. Apart from hardware, human relations are covered by Article 22 of the IGA, whereby states retain jurisdiction over their nationals. How this complex legal issue can be handled in the case of privatization demands specific treatment. The issue is difficult and sensitive, but not impossible to deal with. Liability aspects are equally complex in that Article 16 of the IGA deals with cross-waivers of liability, or affects the rights or obligations of partners in exploration and use of space, and draws on the 1972 Liability Convention, which was designed for states. Converting this complex web of liabilities from state to private, commercial character is fraught with difficulties in legal and sub-legal arrangements at international, national, and private levels. Again, the issue is difficult but not impossible to handle.

In summary, the legislative framework of the IGA and four MOUs has been flexible enough to regulate affairs well among the partners so far without the need for an amendment, while the Implementing Arrangements and program instruments have evolved as required. There is little reason to conclude that the inherent flexibility would not apply in transfer or evolution from a governmental to commercial character.

With regards to financial prudence, in 2010, Space.com reported that since 1994, the ISS has cost the US over $50 billion and its fifteen member nations over $100 billion.⁶ Today, maintaining the ISS costs the US $4 billion annually out of a total budget of just over $20 billion.⁷ By contrast, the Large Hadron Collider, the world’s largest particle accelerator at Geneva, cost only $9 billion and has at least discovered the Higgs boson.⁸ The ISS is reportedly the most expensive single object ever built by humanity and yet many argue that it has offered nothing worthwhile for the general public. The lack of returns already causes a lot of heartburn, with numerous reports questioning the prudence of continually funding the ISS.⁹ Also recall that the ISS was to be deorbited in 2015, but life extensions to enable maximization of scientific returns have pushed that out beyond 2024.¹⁰

Regardless of the life extensions, the scientific returns are not yet visible or known. On the other hand, the commercial world sees ample opportunity and looks forward to creating space hotels, promote tourism, and do much more than esoteric scientific research. There certainly would be complications in the finer nuances, but the larger picture of demand complementing supply appears clear. There may be takers for the ISS and, given the right motivation and rewards, the ISS could evolve into a successful self-sustaining entity that serves a far larger population on Earth than it does at present in many ways. After all, commerce drives ingenuity, and where ingenuity is regulated by law, the rewards are many and flow to many. Bereft of biases, the Trump Administration’s move appears to be bold, progressive, and perhaps provides the lifeline for ISS to survive and evolve.

Endnotes

1. Christian Davenport, “The Trump administration wants to turn the International Space Station into a commercially run venture, NASA document shows”, Washington Post, February 11, 2018.
2. Nicole Mortillaro, “Why selling off the ISS would be a tricky mission for the US”, CBC News, March 4, 2018.
3. Jeffrey Kluger, “3 Reasons Trump’s Plan to Privatize the ISS Won’t and Shouldn’t Happen”, Time, February 11, 2018.
4. For details, see US Department of State, “Treaties and other International Acts series 12927, Space Station Agreements Between the USA and Other Governments” Washington, January 29, 1998.
5. US Dept. of State, “Treaties and other International Acts 12927”, op.cit. pp.3.
6. JR Minkel, “Is the International Space Station worth $100 Billion?”, Space.com, November 1, 2010.
7. Jeffrey Kluger, ft. 3, op.cit.
8. Andrew Griffin, “Large hadron Collider finds five new subatomic particles shedding light on what makes the universe work”, Independent, March 20, 2017.
9. Reports abound, for instance see Steve Connor, “The Big Question: Has the Space Station achieved anything or is it a waste of money?”, Independent, November 21, 2008, also, Mark K. Matthews, “Critics doubt value of International Space Station Science”, Orlando Sentinel, January 24, 2014.
10. Tariq Malik, “International Space Station gets life extension through 2024”, Space.com, January 8, 2014.

Kiran Nair is a graduate student of Law at McGill University specializing in space law.

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