Is America Too Bound by Red Tape to Support Space Entrepreneurs?

Regulators haven't kept up with the times when it comes to the changing nature of ventures into space.

Does the United States still have what it takes to venture into a new frontier? It's a question we need to ask as SpaceX and its founder, Elon Musk, face off with regulators over when and how the government will permit the pioneering commercial space company to test its rockets. While there's little question that humans will continue exploring beyond the Earth, Americans may be too bound by red tape to lead such efforts.

In December, SpaceX conducted a test of its Starship SN8 prototype that saw the Buck Rogers-looking craft rise and descend as hoped, with the small problem of an explosion on landing. The "rapid unscheduled disassembly" (RUD) wasn't unexpected, though. Elon Musk had earlier warned that it was a very real possibility for the experimental craft.

Recently, we discovered that the test flight wasn't supposed to happen at all in the eyes of regulators.

"Prior to the Starship SN8 test launch in December 2020, SpaceX sought a waiver to exceed the maximum public risk allowed by federal safety regulations," a Federal Aviation Administration (FAA) spokesperson told journalists. "After the FAA denied the request, SpaceX proceeded with the flight. As a result of this non-compliance, the FAA required SpaceX to conduct an investigation of the incident. All testing that could affect public safety at the Boca Chica, Texas, launch site was suspended until the investigation was completed and the FAA approved the company's corrective actions to protect public safety."

After a regulator-induced delay, the next test flight—of the Starship SN9—launched on February 2, with an outcome similar to that of its predecessor.

"During the landing flip maneuver, one of the Raptor engines did not relight and caused SN9 to land at high speed and experience a RUD," the company reports.

As the test flights continue, so do disputes between SpaceX and the FAA.

"Unlike its aircraft division, which is fine, the FAA space division has a fundamentally broken regulatory structure," Musk protested before the SN9 launch. "Their rules are meant for a handful of expendable launches per year from a few government facilities. Under those rules, humanity will never get to Mars."

The SpaceX founder isn't alone in pointing out that regulators haven't kept up with the times when it comes to the changing nature of ventures into space.

"The era of commercial space travel and the rise of abundant spacefaring nations has led to an increase in space activity, which has outpaced international space laws—laws that were originally imagined for state-sponsored space travel in an arena with only two spacefaring states," Juan Davalos wrote in a 2015 article for Emory International Law Review.

"Existing space law has not kept up with the growth in the private sector, and the United States lacks a comprehensive regulatory regime," Brianna Rauenzahn, Jasmine Wang, Jamison Chung, Peter Jacobs, Aaron Kaufman, and Hannah Pugh chimed in last summer in the University of Pennsylvania Law School's The Regulatory Review.

Worse, the regulatory regime that the U.S. does have, inherited from an era of government-dominance of space, lends itself (as do all intrusive rules) to abuse. That can come from "you will respect mah authoritah" resentment of anybody who bucks bureaucracy. But it can also reflect government seat warmers' discomfort with the unfamiliar and threatening world of private entrepreneurial activity.

"While at first glance the FAA/SpaceX dust-up over their rapid rocket development might be looked at as a rich entrepreneur breaking the rules, and a federal agency trying to keep the public safe, it is actually an example of a government organization—the FAA—unable to distinguish between innovation and execution," cautions Silicon Valley's Steve Blank, for whom Elon Musk once interned. "In innovation failure is part of the process. Test rockets blow up, test airplanes may crash. If you do not push the envelope and discover the limits of your design you're not innovating fast enough or far enough."

The aviation industry got its start in an entrepreneurial culture that balanced risk and reward to the satisfaction of innovators, not regulators. Orville Wright was badly injured, and a passenger killed in a disastrous early flight. Otto Lilienthal was one of the early pioneers who died as a result of his efforts. Their experiments might well have exceeded the "maximum public risk allowed" by government regulations had those rules existed at the time, but fortunately they did not. Instead, the innovators and their supporters did much as they pleased within their own risk tolerances, to the world's benefit.

That's certainly not the case today, though even the FAA's political masters recognize that the agency needs to change. The FAA is under orders "to streamline the regulations governing commercial space launch and reentry licensing" under rulemaking that "replaces prescriptive requirements with performance-based criteria."

But there's no assurance that "streamline" means easing regulation rather than making it more restrictive.

Advocates of reform with regards to commercial space flight have widely varying ideas. Georgetown University Law Center's Hope Babcock wants to prevent the extension of private property rights to space so that everything beyond the Earth's surface is held in common. By contrast, the Mercatus Center's Eli Dourado urged Congress "to consider blanket authorization for all nongovernmental operations in space that do not cause tangible harm to other parties."

Space's X's Elon Musk is pretty clear about what he wants. When the Wall Street Journal asked him in December 2020 what government could do to foster innovation, he replied that "a lot of the time, the best thing that government can do is just get out of the way."

If U.S. regulators won't get out of the way of space entrepreneurs, then maybe this is no longer the right country for those entrepreneurs. Modern innovators might be best served by moving their efforts to locales that are more willing to let them decide which risks are worth taking.