The Evolving Space Launch Industry and the Need for Streamlined Regulations

Commercial space launches have recently skyrocketed in quantity and complexity and the economic impact of these changes will be substantial. World-wide, the commercial space industry is expected to grow dramatically and Goldman Sachs analysts predict the sector would grow to about $1 trillion by 2040. As for quantity, the launch rate in the U.S. alone has increased from 9 licensed launches in 2015 to 33 licensed launches in 2018, and the Federal Aviation Administration (“FAA”) predicts that up to 40 FAA-licensed commercial space launches will occur this fiscal year. As for complexity, space launch vehicles can now be reusable or expendable, can occur from multiple sites and on various timelines, and these vehicles are operating in more unique and individualized ways.

Despite the industry undergoing these substantial changes, current FAA licensing requirements have failed to adapt to these changes in four main ways, according to the agency itself. First, the FAA currently requires different vehicle operator licenses for different launch vehicles, launch activities, and launch sites, without demonstrating that requiring different licenses increases public safety. Second, current space launch regulations are highly prescriptive and do not account for other less cumbersome ways that launch operators can meet the spirit of the licensing requirements. Third, FAA jurisdiction over space launches has become excessive and duplicative. Finally, the current safety framework for these launches has failed to keep pace with new technological innovations.

The FAA’s Proposed Regulatory Changes

In response to these shortcomings, the FAA issued a notice of proposed rulemaking (“NPRM”), entitled “Streamlined Launch and Reentry Licensing Requirements,” which was published on April 15, 2019 and is currently open for public comment. The NPRM offers the following four main solutions to simplify and modernize the FAA’s commercial space launch and reentry regulations

(1) Create a Single Vehicle Operator License and Tailor License Duration

The NPRM proposes to establish a single license that would cover the launch activity itself, launch vehicles, and launch sites. As for launch activities, the NPRM proposes that a “vehicle operator license” be used for all commercial launch and reentry activity. This would simplify the current licensing process by consolidating several different licenses that are currently required into a single license. As for launch vehicles, the proposed rule would eliminate the distinction between expendable launch vehicles (“ELVs”) and reusable launch vehicles (“RLVs”) when issuing licenses. Lastly, launch licenses would be expanded to cover multiple launch sites, as opposed to issuing site specific licenses. By allowing one license to cover different vehicles, different types of operations, and different launch sites, this NPRM would streamline the licensing process and would make it administratively easier for commercial space launches to occur.

The NPRM allows greater flexibility in determining the license’s expiration date. The current regulations do not provide this flexibility, which generally sets licenses to expire after two years from the date of issuance for an RLV and five years for an ELV, or upon completion of all launches authorized by the license if it occurs first. Under the proposed rule, the FAA would be able to tailor the licenses duration to account for each launch’s specific timing concerns (with a license duration limit of five years). In some instances, applicants may prefer a shorter license duration so they can be relieved of their obligations under an FAA license (such as the requirements to demonstrate financial responsibility and allow access to FAA safety inspectors) as soon as possible. This new rule would allow these applicants that option and would be sensitive to each applicant’s timing needs.

(2) Implement More Performance-Based Licensing Requirements and Allow Launch Operators to Propose Alternative Routes for Compliance

The current licensing procedure is overly burdensome because it may require an applicant to “follow 350 pages of federal safety regulations and meet 2,845 specific regulations.” Seeking to simplify this process and provide launch operators with more input in meeting compliance standards, the proposed rule would create two paths to meet any particular licensing requirement necessary to perform a commercial space launch.

Following the first path, the applicant can comply with new FAA regulations, which would include more performance-based requirements as opposed to prescriptive-based requirements to allow greater flexibility and scalability in the rule’s application. Recognizing that the government “could attain the same level of public safety by auditing a company’s own safety program,” the NPRM would provide a second path that allows a licensing applicant to propose an alternative approach for compliance that meets an “equivalent level of safety” as the current safety regulations require. This second path allows operators to meet safety requirements with greater flexibility and in predictably less time. According to the Safety Engineering and Analysis Center, companies already launching rockets could complete this streamlined licensing process in as little as three months.

(3) Limit FAA Jurisdiction

The task force chartered by the FAA in March 2018 to study streamlined procedures and requirements for commercial space launch and reentry licensing, has suggested that FAA jurisdiction has become excessive and duplicative. In response, the proposed rule would limit FAA jurisdiction in two main ways. First, it would limit FAA jurisdiction over ground safety to operations that are hazardous to the public. Second, the NPRM proposes that an applicant who wishes to launch from a federal launch range may satisfy new performance-based requirements for ground and flight safety by complying with Air Force and NASA practices. The current rules require an operator to comply with the FAA’s safety review and approval requirements and other launch safety requirements. The new approach would give an operator more avenues to satisfy requirements to launch from a federal range.

(4) Update Safety Framework

A key criticism of the current ELV launch regulations is that they are too prescriptive to keep pace with new innovations. For instance, launch operators must have at least 11 plans that define how launch processing and flight of a launch vehicle will be conducted, even though requiring 11 plans are not necessary to conduct safe launch operations. On the other end of the spectrum, RLV launch regulations have been criticized for being too general and lacking regulatory clarity. For example, RLV launch regulations do not contain specific qualification requirements of flight safety systems, flight safety analysis, and ground safety. The NPRM proposes a safety framework designed to strike a balance between prescriptive and flexible regulations and that covers all launch vehicles. The framework essentially falls into three parts: universal rules, prescriptive rules for flight safety and ground safety, and flexible rules on achieving public safety.

As for the universal requirements, all applicants would need to comply with core system safety management principles through a system safety program. The prescriptive rules will differ slightly for flight safety and ground safety. For flight safety, an operator would need to satisfy a preliminary flight safety assessment and conduct a flight hazard analysis to identify public hazards and determine the appropriate hazard control strategy for a phase of flight or an entire flight. For ground safety, an operator would be required to conduct a ground hazard analysis that identifies ground hazards and determine the appropriate ground hazard control strategy. With regards to the flexible rules, the use of a flight hazard analysis to derive hazard controls would provide flexibility that does not exist under current prescriptive requirements in that it is optional in certain situations. If the operator uses proven hazard control strategies such as physical containment, wind weighting, or flight abort, the flight hazard analysis would not be required. This overhaul of the safety framework would provide both the flexibility and regulatory certainty that were lacking under the current safety provisions.

The public comment period on the NPRM was recently extended to July 30, 2019. Given the breadth, significance, and complexity of the proposed rule, the FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Please contact the Global Regulatory Transportation team at Hogan Lovells if you are interested in commenting on the NPRM.