Recommendation 5-2 from "A Journey to Inspire, Innovate, and Discover," the report of the President's Commission on the Implementation of United States Space Exploration Policy, June 2004
The following is the complete text of Recommendation 5-2, along with the section of the report that considers each point of the recommendation in detail.
RECOMMENDATION 5-2:
The Commission recommends that Congress increase the potential for commercial opportunities related to the national space exploration vision by providing incentives for entrepreneurial investment in space, by creating significant monetary prizes for the accomplishment of space missions and/or technology developments, and by assuring appropriate property rights for those who seek to develop space resources and infrastructure.
Section III - B. Encouraging Commercial Activities
Although many companies exist and more are emerging in the field of space, an increase in both the number and variety of such businesses would vastly increase the processes and materials available for space exploration. The private sector will continue to push the envelope to succeed competitively in the space field. It is the stated policy of the act creating and enabling NASA that it encourage and nuture private sector space. The Commission heard testimony on both positive incentives and potential bottlenecks encountered by the private sector as they attempt to exploit these commercial opportunities.
A space industry capable of contributing to economic growth, producing new products throught the creation of new knowledge and leading the world in invention and innovation, will be a national treasure. Such an industry will rely upon proven players with aerospace capabilities, but increasingly should encourage entrepreneurial activity.
Prizes. The Commission heard testimony from a variety of sources commenting on the value of prizes for the achievement of technology breakthroughs. Examples of the success of such an approach include the Orteig Prize, collected by Charles Lindbergh for his solo flight to Europe, and the current X-Prize for human suborbital flight. It is estimated that over $400 million has been invested in developing technology by the X-Prize competitors that will vie for a $10 million prize - a 40 to 1 payoff for technolgy.
The Commission strongly supports the Centennial Challenge program recently established by NASA. This program provides up to $50 million in any given fiscal year for the payment of cash prizes for achievement of space or aeronautical technologies, with no single prize in excess of $10 million without the approval of the NASA Administrator. The focus of cash prizes should be on maturing the enabling technologies associated with the vision. NASA should expand its Centennial prize program to encourage entrepreneurs and risk-takers to undertake major space missions.
Give the complexity and challenges of the new vision, the Commission suggests that a more substantial prize might be appropriate to accelerate the development of enabling technologies. As an example of a particularly challenging prize concept, $100 million to $1 billion could be offered to the first organization to place humans on the Moon and sustain them for a fixed period before they return to Earth. The Commission suggests that more substantial prize programs be considered and, if found appropriate, NASA should work with the Congress to develop how the funding for such a prize would be provided.
Tax Incentives. A time-honored way for government to encourage desired behavior is through the creation of incentives in the tax laws. In this case, an increase in private sector involvement in space can be stimulated through the provision of tax incentives to companies that desire to invest in space or space technology. As an example, the tax law could be changed to make profits from space investment tax free until they reach some pre-determined multiple (e.g., five times) of the original amount of the investment. A historical precedent to such an effort was the use of federal airmail subsidies to help create a private airline industry before World War II. In a like manner, corporate taxes could be credited or expenses deducted for the creation of a private space transportation system, each tax incentive keyed to a specific technical milestone. Creation of tax incetives can potentially create large amounts of investement and hence, technical progress, all at very little expense or risk to the government.
Regulatory Relief. Government regulation of the nascent private sector space industry is ongoing and will be necessary in the future, but it is important to ensure that this industry not become over-regulated. A key issue in the private space flight business is liability. There is a pressing need for a change in liability laws to set a reasonable standard for implied consent. People throughout society do dangerous things for fun and profit; it is not reasonable to impose governmental risk standards on people who are willing and eager to undertake dangerous or hazardous activities. In addition, numerous laws covering occupational safety and environmental concerns should be reviewed carefully to make sure that the government is not burdening new space industry unduly with irrelevant or unobtainable compliance requirements.
Property Rights in Space. The Unites States is signatory to many international treaties, some of which address aspects of property ownership in space. The most relevant treaty is the 1967 UN Treaty on the Peaceful Uses of Outer Space (the "Space Treaty"), which prohibits claims of national sovereignty on any extraterrestrial body. Additionally, the so-called "Moon Treaty" of 1979 prohibits any private ownership of the Moon or any parts of it. The United States is a signatory to the 1967 Space Treaty; it has not ratified the 1979 Moon Treaty, but at the same time, has not challenged its basic premises or assumptions.
Because of this treaty regime, the legal status of a hypothetical private company engaged in making products from space resources is uncertain. Potentially, this uncertainty could strangle a nascent space-based industry in its cradle; no company will invest millions of dollars in developing a product to which their legal claim is uncertain. The issue of private property rights in space is a complex one involving national and international legal issues. However, it is imperative that these issues be recognized and addressed at an early stage in the implementation of the vision, otherwise there will be little significant private sector activity associated with the development of space resources, one of our key goals.
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