SpaceNews : The end of Chevron deference and what Loper Bright means for the space industry

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On June 28, the United States Supreme Court issued its ruling in Loper Bright Enterprises v. Raimondo, seizing for both itself and lower court judges a key role in determining how federal agencies interpret the laws they carry out. In overturning the 40-year-old precedent of Chevron deference, the federal judiciary will no longer defer to the expertise of federal agencies in how they craft policy. With the Loper Bright decision, the Supreme Court stripped many federal agencies of their power to interpret the laws. As Justice Kagan remarked, “in one fell swoop, the majority today gives itself exclusive power over every open issue — no matter how expertise-driven or policy-laden — involving the meaning of regulatory law.” With the death of Chevron, we are seeing the birth of a new administrative czar, and the ushering in of a new era of regulatory uncertainty. 

Perhaps no corner of American industry will experience this more acutely than the nascent space industry. Its reliance on novel technologies and new business models means the space industry is particularly exposed to the actions, or inactions, of federal agency decisions. Moreover, the space industry’s vibrant startup ecosystem, key to the success of America’s future space economies, is even more vulnerable to latent policy uncertainty or resulting investor skepticism. 

The evolution of modern governance

Every American schoolchild is taught that the legislative branch is the part of the government tasked with drafting the laws of the land. But Congress is not intrinsically endowed with the specialized knowledge required to intelligently dictate the day-to-day administrative minutiae of running the federal agencies. As the American enterprise grew increasingly complex during the second half of the 20th century, so, too, the functions of governance grew increasingly nuanced. Within the federal bureaucracy, specialized teams with unique expertise evolved in order to translate legislative concepts to enforceable and effective laws. The federal judiciary, although imbued with certain undeniable aptitudes, possesses no such expertise. 

For the last 40 years, the legislative, executive and judicial branches yielded to federal agencies a wide ambit of responsibility. That independence was constrained by a simple test. Within the breadth of topics to be regulated by federal agencies, courts would only intercede and overrule an agency in two instances. First, if a regulator promulgated a rule which was in contradiction to clear legislative intent, the court would force the regulator to follow the letter of the law. And second, if the legislative intent were ambiguous, such as if it had two or more reasonable interpretations, the judiciary would defer to the agency’s chosen approach — so long as the agency’s construction is reasonable and permissible. As a result, space industry regulators like the NOAA, FCC and FAA, supported by their teams of space policy experts, have enjoyed fundamental and expanding roles in regulating ever greater swathes of their orbital domains. 

With the Loper Bright decision, Chevron is expressly overruled. As Chief Justice Roberts writes for the majority, today’s law requires the judiciary to resolve “all relevant questions of law” when assessing agency decisions. This means the judiciary now assumes as a matter of law that there is a single “best reading” of any law, no matter how nebulously drafted or how technically complex — and that that best reading is the “one the court … concludes is best.” The majority opinion relies in part on a thematic return to the principles in place at our nation’s founding, when the steam engine was in its infancy and the lighting rod was the latest gadget for the American homeowner. It is in this context that the justices reserve for themselves the right to decide how the federal agencies should apply each statute — except those for which Congress has expressly delegated the authority to interpret to a federal agency.

It would be easy to underestimate the impact of such seemingly academic changes. But the changes announced in Loper Bright entirely upend a very complex body of law and place the responsibility to make regulatory decisions for the space industry at best on the unqualified judiciary and at worst on woefully inexperienced Congressional staffs. And even as the government and American industry begin to grapple with these unfolding changes, the impacts may already have already begun.

Loper Bright’s impact on the space industry

With Chevron overruled, it is anticipated that federal agencies may adopt a more circumspect posture, moving more slowly and taking more narrowly tailored steps with new regulations. This presents direct and potentially immediate impacts to the space industry. For example, the industry today suffers from a shortage of available launch ranges. Decisionmakers may now be less willing to authorize launches of new vehicles or launches from non-traditional ranges — two types of authorizations desperately needed to increase the vertical lift capacity of the U.S. and to support the companies competing to field new launch options. Similarly, smaller constellation operators who were impacted by the debris mitigation rules triggered by the proliferation of megaconstellations may now see an opportunity to challenge the application of those well-meaning rules to their businesses. Reentry companies may see longer reviews for reentry licenses. Facilitative technologies, like docking or refueling interfaces, may endure less efficient regulatory assessments. The list goes on. 

With Chevron reversed, businesses, especially businesses operating in frontier fields subject to new and evolving regulation, will be less likely to rely with confidence on federal agency announcements regarding new regulations. For one, this presents operational risk to businesses working at the mercy of the licenses necessary to operate in the orbital domains. What’s more, it drives uncertainty into the investment community, the lifeblood of the nascent space firms. Investors, less certain of the future operating environment for their potential portfolio companies, may decide to hold back or slow investments in the space industry until key regulatory decisions are codified in Congressionally driven statutes, for fear of reversal or ex post facto reinterpretation. 

Reevaluating regulatory roles in the space industry

Despite the very real potential impacts the Loper Bright decision may trigger for the space industry, the Supreme Court’s decision does raise some reasonable questions about how America regulates its space operators. Is it truly in the best interests of the nation for the FCC, tasked primarily with managing radio frequency matters, to be the regulator for space debris? Should NOAA, with its stated focus on weather and fisheries, be regulating the imaging of objects in space? Should the FAA, responsible for the safety of our nation’s air routes, assign resources to assess the environmental impact of space launch activity on plovers? 

Loper Bright does, despite its flaws, present an interesting potential turning point for space regulation. Perhaps, a well meaning contrarian might hope, last week’s Supreme Court decision might push Congressional leadership to finally put their pens where their voices have been and provide an insightful and business supportive regulatory framework for the 21st century American space industry. There is an urgent need for Congressional action to secure America’s space leadership.

While the sun will still rise tomorrow, this decision presents the tangible risk of profound injury to the space industry. With space becoming one of the most strategically important domains of the 21st century, the industry desperately needs bolder and more forward thinking regulation to ensure America maintains its leading position. The overturning of Chevron may very well water down the exact administrative structures necessary for the space industry’s continued success.

Congress should act swiftly and decisively to provide federal agencies with the express direction or the delegated authority necessary to regulate the future of space, lest that task be instead left to unelected jurists.

Philip Hover-Smoot is the Chief Executive Officer at Scout Space Inc, a in-space observation service provider focused on space security and comprehensive Space Domain Awareness (SDA) based out of Reston, Virginia. Hover-Smoot previously served as the General Counsel at Spaceflight Inc., best known for pioneering orbital transfer vehicles and commercial rideshare missions. Prior to that, he held the roles of Deputy General Counsel and Chief Ethics and Compliance Officer at Momentus Inc., an in-space services provider. Hover-Smoot holds a JD/MBA from Drake University and has completed postdoctoral work at Stanford’s Spogli Institute for International Security Studies, with an emphasis on national security and intelligence.

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