The United States is a party to the Outer Space Treaty, the Liability Convention, the Registration Convention, and the Rescue Agreement. The United States is not a signatory or party to the Moon Agreement. The USA is bound by and implements the fundamental principles of the aforementioned treaties to which it is a signatory through its space regulatory framework, policies, and space missions. These principles include the exploration and peaceful use of outer space, prohibition of weapons of mass destruction in outer space, co-operation, and responsible behaviour in space activities.

Together with other space agencies, the National Aeronautics and Space Administration (NASA) participates in the International Space Exploration Coordination Group and works closely with other countries on the International Space Station (ISS) Program. The importance of compliance with international treaties is also reflected in the Artemis Accords, a set of common principles, guidelines, and best practices that apply to the safe exploration of the Moon, signed by more than 40 countries participating in the NASA-led Artemis programme.

Upcoming US federal legislation is expected to address space traffic management, including the increasing volume of satellites, spacecraft, and debris in orbit, to prevent collisions and ensure the sustainability of space activities. In this regard, the Office of Space Commerce (OSC) within the Department of Commerce (DOC) manages the Traffic Coordination System for Space to provide basic space situational awareness data to civil and commercial space operators. Additionally, in 2023, the Senate passed the Orbital Sustainability Act, which aimed to decrease orbital debris and require the development of uniform orbital debris practices. If it passes the House and is signed into law, NASA, the National Space Council, and the Department of Commerce will carry out debris-related R&D, develop debris mitigation best practices, and facilitate space traffic management.

In November 2023, the Commercial Space Act of 2023 was introduced in the House. This bill would update, modernise, and streamline regulatory processes for commercial space activity. One key change is the designation of the OSC as the single authority responsible for space operator certification. In December 2023, the White House put forward a competing legislative proposal, as well as a Novel Space Activities Authorization and Supervision Framework, which would grant the Department of Transportation (DOT) and the DOC further authorities to oversee novel space activities depending on whether the space activities involve humans or not.

The United States continues to focus on space as a contested domain. The 2023 report by the Select Committee on the Strategic Competition Between the USA and the Chinese Communist Party emphasised the importance of countering Chinese space ambitions by prioritising US funding for space command and control, promoting US leadership in multilateral space governance, and fostering American innovation.

The United States has the most advanced and diverse space industry in the world. In 2023, the US government invested billions in space capabilities both directly and as a commercial customer.

The US space industry is characterised by both private and governmental market participants in both civil and defence sectors. While for decades NASA and the Department of Defense have played crucial roles in space research and development, both agencies now benefit from growing commercialisation within the space industry. Several well-established private players, in addition to new participants, have taken the lead in developing capabilities for crewed and uncrewed launch, orbital manufacturing, mining, and sensing.

The NewSpace economy is characterised by decreasing launch costs, increasing popularity and capability of small satellites, commercial applications of AI and robotics in outer space, reusable rockets, use of 3D printing in space, and more. In 2023, there were more US launches and satellites in orbit than ever before.

In 2017, NASA established the Artemis programme with the goal of sending astronauts back to the lunar surface and developing an ongoing presence there. The knowledge obtained from this programme is expected to assist in preparing for human exploration of Mars. NASA depends on domestic and international commercial partners for various stages of the Artemis programme.

The US commercial satellite market is rapidly growing, driven by advancements in communications and sensing technologies, improvements in materials and computing, and decreasing launch costs. Key players include established aerospace companies and innovative start-ups. Communication satellites support global internet, broadcasting, and secure communications, while sensing satellites offer critical data for weather, agriculture, and security. In 2023, the commercial satellite industry launched a record number of satellites into orbit and reached billions of dollars in revenue, with projections indicating continued growth.

US space law includes a combination of civil and common law features. The main sources of US space law include international treaties, executive orders, case law and the following federal statutes and regulations:

• The National Aeronautics and Space Act establishes NASA and defines its main functions.
• The Commercial Space Launch Act, as amended, authorises the Federal Aviation Authority (FAA) to license launch and re-entry activities. The Act also imposes insurance and financial responsibility requirements on licensees and encourages commercial space launch and re-entry by the private sector. It creates a mutual indemnification and risk-sharing regime, requires informed consent by spaceflight participants, and provides a learning period before the FAA can prospectively regulate for the safety of parties involved in a launch. It also provides a property rights framework for resources obtained from celestial bodies.
• The Communications Act authorises the Federal Communications Commission (FCC) to oversee and regulate radio communication activities by, and allocation of spectrum between, non-federal governmental and commercial entities.
• The Land Remote Sensing Policy Act authorises the Secretary of Commerce to license private sector parties to operate private remote sensing space systems.
• The Weather Research and Forecasting Innovation Act authorises commercial weather satellites and allows NOAA to purchase weather data from commercial weather satellite constellations.

The US space regime is also shaped by a large number of policies and guidance documents, such as the National Space Policy, the United States Space Priorities Framework, Space Policy Directives 1-7, classified Space Security Guidance, and the NASA Strategic Plan.

In terms of case law, key cases and administrative proceedings include disputes over satellite licensing requirements, liability for space debris, and intellectual property rights in space technology. In 2023, the FCC for the first time took an enforcement action for violation of its orbital debris mitigation rules (see 3.3 Operators’ Responsibilities). 

The United States has a diverse system of federal agencies and departments responsible for the development of space policy and regulation of both civil and defence-related space activities. The government actively co-operates with businesses and, in addition to its regulatory functions, often acts as a participant or facilitator for different space missions, often through NASA or DOD.

Civil and Commercial Space Activities

In addition to NASA’s responsibility for civil space exploration, aeronautics, and space research, there are several additional authorities that play crucial roles in the US space sector:

• The FAA, within the DOT, issues commercial launch and re-entry licences, verifies that launch and re-entry vehicles operate as intended, and ensures flight crew qualifications and training.
• The FCC regulates radio communications, allocates spectrum and supervises its use, issues licences for Earth and space stations, and is beginning to address issues concerning orbital debris.
• Within the DOC, NOAA collects environmental information through satellites and regulates Earth observation capabilities on commercial satellites, while the OSC promotes economic activity in space. Additionally, the Bureau of Industry and Security (BIS) regulates export, re-export, and transfer of most commercial space items. The National Telecommunications and Information Administration (NTIA) is responsible for administering the radio spectrum for federal use.
• The United States Department of Energy develops, manufactures, tests, analyses, and delivers radioisotope power systems and other energy appliances and electronics for space exploration.

Defence Space Activities

The DOD is responsible for ensuring US national security as it relates to space programmes, military and intelligence missions, and space defence strategy. The DOD enforces its policies and operations through the following agencies and governmental branches:

• The United States Space Force, a newly established branch of the armed forces, organises, trains and equips personnel for defence space operations, manages space launch operations, and provides services for space launches.
• The United States Space Command employs joint forces from the United States Army, Marine Corps, Navy, Air Force and Space Force, and co-ordinates space surveillance and missile defence.
• The Space Development Agency designs and develops novel space technologies, including threat-driven constellations of small satellites, to enhance military capabilities.
• The Army Space and Missile Defense Command develops and provides global space, missile defence, and high-altitude capabilities to the US military.
• The National Geospatial-Intelligence Agency (NGA) analyses satellite images and geospatial data to produce intelligence for military operations, disaster relief, and environmental monitoring.
• The National Reconnaissance Office operates reconnaissance satellites to gather intelligence on foreign military capabilities.

In the United States, space activities are overseen primarily by the FAA through the Office of Commercial Space Transportation. The FAA is responsible for issuing the following licences, permits, and approvals for commercial space launches and re-entries, as mandated by the Commercial Space Launch Act:

Vehicle Operator Licence

This licence authorises a licensee to conduct one or more launches or re-entries using the same vehicle or family of vehicles (14 CFR 450.3).

To receive a licence, an applicant must obtain a policy approval (confirmation that launch/re-entry would not jeopardise US national security, foreign policy interests, or international obligations), favourable payload determination, safety approval, satisfy the environmental review requirements, and receive a maximum probable loss analysis (14 CFR 450.31).

The vehicle operator is also required to obtain liability insurance or demonstrate financial responsibility (see 2.8 Insurance and State Measures on Liability for Damages). For crewed missions, an operator must train each member of its crew and define standards for successful completion of the mission (14 CFR 460.7). While the FAA has plenary authority to regulate for the safety of uninvolved parties, Congress has limited its authority to issue prospective regulations related to safety of humans on commercial space flights.

Spaceport Licence

There are two types of licences: (i) licence to operate a launch site (14 CFR 420); and (ii) licence to operate a re-entry site (14 CFR 433).

To receive a licence, an applicant must provide information on the launch site, launch site operator, foreign ownership, comply with environmental requirements, conclude the agreements with the United States Coast Guard and FAA Air Traffic Control, obtain a policy approval, develop explosive site plan, and more (14 CFR 420.17).

Both vehicle operator and spaceport licences are valid for up to five years from the issuance date and must be obtained by US citizens seeking to engage in the activity, anywhere in the world.

Experimental Permit

This permit is issued for the following purposes:

• research and development to test new design concepts, equipment, or operating techniques;
• a showing of compliance with requirements for obtaining a licence as mentioned above; and
• crew training before obtaining launch/re-entry licence (14 CFR 437.5).

It authorises an unlimited number of launches or re-entries of a reusable suborbital rocket for a period of one year (14 CFR 437.9 and 437.11).

An applicant must provide a programme description, a flight test plan, and operational safety documentation (14 CFR 437.21).

To comply with US obligations under the Registration Convention, each licensee is required to submit information to the FAA concerning all objects placed in space by a licensed launch (14 CFR 450.271).

The FAA consults with the DOD, the State Department, and other federal agencies, including NASA, when issuing licences and permits. A special permit from NOAA’s Commercial Remote Sensing Regulatory Affairs Office is required if a satellite is equipped with remote sensing capabilities. Additionally, the FCC plays a crucial role in the regulation of space activities through allocation of radio spectrum and licensing of Earth and space stations (see 2.5 Role of the State in Co-ordinating the Use of Radio Frequencies and Orbital Slots).

In the United States, the radio spectrum is administered by the NTIA and the FCC, which are responsible for federal and non-federal use, respectively.

Spectrum allocations by both authorities are reflected in the United States Table of Frequency Allocations (the “Table”), which is amended regularly to meet evolving spectrum needs. The Table is divided based on frequency bands, type of radio services, including primary and secondary classification, exclusive/shared federal and non-federal use.

Licence applicants and licensees subject to renewal must comply with frequency tolerance requirements, emission limits, power limits, transmission standards and spectrum sharing requirements. Satellite operators must comply with “equivalent power flux density” (total power directed by satellites), and limits established by the International Telecommunication Union (ITU). The Spectrum Enforcement Division within the FCC is responsible for consideration of interference complaints and other spectrum-related issues.

Similarly to other market participants, space operators are generally required to obtain space station and Earth station (if applicable) licences which also authorise the use of particular spectrum. To facilitate growth of the commercial space industry, in 2023, the FCC:

• streamlined the licence application process for new satellites and satellite Earth stations;
• authorised ground-to-launch vehicle telecommand communications in the 2025-2110 MHz band and telemetry uses of the 2200-2290 MHz band in support of commercial space launches; and
• sought comment on potential new frequency allocations for communications with cargo and crew capsules and payload communications with the space stations.

Due to the increasing number of satellite licence applications (mostly low Earth orbit, or LEO), the FCC established the Space Bureau and the Office of International Affairs for processing applications, addressing orbital debris, and contributing to the NewSpace international regulatory regime.

Space launches in the United States include both state and commercial components. Depending on the mission, the USA acts as a provider, facilitator, regulator, and/or user of space assets. The DOD, NASA and other agencies have issued various strategies on integration of commercial space solutions and co-operation with the private sector.

There are several FAA-licensed spaceports in Alabama, Alaska, California, Colorado, Florida, Georgia, New Mexico, Oklahoma, Texas, and Virginia with varying capabilities to support vertical and horizontal rocket launches and re-entries. The USA leases federally-owned launch pads, often through a bidding process, to commercial launch companies. The lease contracts are normally concluded for several years on an exclusive or non-exclusive basis, and generally allow launch companies to make improvements to the launch pads. In addition, the USA provides and facilitates the provision of test facilities, integration facilities, transportation services, hangars, launch control systems, plumbing for rocket liquids, and more, to commercial launch companies. NASA astronauts have routinely participated in missions aboard commercial space vehicles, beginning in 2020.

The USA also acts as a major customer for the commercial space industry. NASA, the DOD, and other civilian and intelligence agencies procure launches, payloads, and a wide variety of services using commercial contracts. Among the highest-profile commercial contracts are NASA’s Commercial Crew and Commercial Resupply Programs, in which commercial launchers ferry NASA astronauts and cargo to and from the ISS, and the Space Force’s National Security Space Launch Program, which provides critical launch services for DOD and Intelligence Community missions. Currently, NASA has more than 1,300 active Space Act Agreements, a special type of agreement under the National Aeronautics and Space Act authorising NASA to engage with commercial industry. Finally, many commercial space companies are participating in key aspects of the Artemis programme.

The United States is a party to the principal UN space treaties, except for the Moon Agreement (see 1.1 The New Space and Space Tech Economy). The USA is also a member of the UN Committee on the Peaceful Uses of Outer Space and UN Conference on Disarmament, where it works to advance US national security through multilateral diplomacy.

The United States supports (and complies with) the formulation in the Outer Space Treaty that outer space, including the Moon and other celestial bodies, shall be free for exploration and use by all states. The Competitiveness Act provides that US citizens are entitled to property rights, including the right to possess, own, transport, use, and sell, asteroid and space resources obtained by them (see 4.1 Nature of Space Resource Rights).

The United States has in place several laws and regulations designed to carry out its responsibilities under the Outer Space Treaty. These include rules governing the calculation of maximum probable loss caused by licensee activities, binding financial and insurance obligations (see 2.8 Insurance and State Measures on Liability for Damages), and space traffic management and debris mitigation and removal requirements.

Although not directly defined, the principle of due regard is implemented by the USA in various ways, including through NASA policies and programmes, FCC debris removal requirements, FAA licensing requirements, and more. 

Damages are addressed by the Liability Convention and federal legislation. The Liability Convention requires state parties to compensate for damage caused by their space objects. If damage occurs beyond the surface of the Earth, compensation is required only in case of fault.

Companies applying for launch or re-entry licences in the USA are obligated to obtain liability insurance or demonstrate financial responsibility. Apart from this requirement, space operators are free to purchase additional types of insurance at their discretion.

Mandatory Insurance

In the USA, there is a risk-sharing regime and mutual indemnification between the federal government and launchers. Under Title 51, Chapter 509 of the United States Code, licensees are required to obtain liability insurance or demonstrate financial responsibility in the following amounts (per one launch or re-entry):

• up to USD500 million for third-party claims for death, bodily injury, property damage, or other loss resulting from an activity under the licence;
• up to USD100 million for damage or loss to government property resulting from an activity under the licence; or
• maximum liability insurance available in the world market at reasonable cost, if the amount is less than the applicable amounts mentioned above.

The licensees’ insurance should also cover the government and its affiliates, the licensees’ contractors, subcontractors, and customers, the customers’ contractors and subcontractors, and space flight participants.

Further, the US government, licensee, and any other parties related to the launch, are required to sign a reciprocal waiver of claims. To the extent the government is involved, the waiver applies only to amounts above USD100 million (ie, in case of damages, the licensee would be required to compensate the government for any losses up to USD100 million).

In addition, the government will cover any successful claims against the licensee and its contractors/subcontractors exceeding the insurance amount of USD500 million, but not more than USD1.5 billion (plus additional amounts taking post-1988 inflation into account), except in cases of wilful misconduct by the licensee.

Optional Insurance

In addition to the mandatory insurance, companies often purchase manufacturing, pre-launch, launch, in-orbit, and other types of insurance which are often syndicated. The common package includes launch plus one year in-orbit insurance. Currently, the space insurance market is volatile, with premiums varying from 5% to 20% of launching costs, depending on the type of space object, reliability of the rocket, historical performance, scope of coverage, design, operational lifetime, and other factors. Due to orbital debris and emerging experimental technologies, many insurers are reluctant to cover LEO satellites.

The US regulatory framework does not include broad limitations on space activities, other than activities proscribed by the Outer Space Treaty, such as weapons of mass destruction in outer space and military activities on celestial bodies.

Commercial space activities in the USA are currently authorised and supervised by the United States Government through multiple licensing regimes: the FAA oversees and licenses space launch and re-entry activities, the FCC licenses the use of radiofrequency spectrum, and NOAA licenses the operations of private space-based remote sensing systems.

With regard to data processing, the United States Commercial Remote Sensing Space Policy (51 U.S.C 60101) delineates the licensing requirements for operators of private remote sensing space systems subject to US jurisdiction. Because US monitoring products and systems are valuable to its national security and foreign policy, the operation of commercial remote sensing space systems requires appropriate security measures, including licensing conditions (eg, delaying or restricting the transmission or distribution of data, obfuscation, encryption of the data, or other means to control the use of the data) and limits on data collection or dissemination during periods of increased national security concerns (15 CFR Part 960).

NOAA is authorised to license private sector parties operating private remote sensing space systems. The NGA is the primary agency responsible for acquiring commercial remote sensing space products and services for US national security and foreign policy requirements, and the Secretaries of Commerce and the Interior, as well as the Administrator of NASA, are primarily responsible for procurement of civil remote sensing space capabilities.

Additionally, the Communications Act of 1934, an expansive statute regulating the US communications and broadcasting industry, imposes data privacy and security requirements on cable operators and satellite carriers.

With regard to cybersecurity, although the US regulatory framework does not specifically address cybersecurity risks, there are various guidelines and soft law mechanisms to help private businesses and organisations manage cybersecurity risks in space operations. For example, the National Institute of Standards and Technology (NIST), an agency within the DOC, has developed a voluntary Hybrid Satellite Network Cybersecurity Framework, intended to provide a foundational set of guidelines for organisations operating space systems. The purpose of the framework is to provide practical cybersecurity-related guidance for organisations and stakeholders engaged in the design, acquisition, and operation of satellite buses or payloads. Additionally, the Space Information Sharing and Analysis Center (“Space ISAC”) monitors emerging threats in the space sector and aims to provide an increased capability for collection, analysis, and dissemination of actionable information for the space community.

The United States has in place legislation and rules aimed at preventing harmful interference, regulated and enforced throughout its various governmental agencies.

In line with its commitments under the ITU Radio Regulations and ITU Constitution (No 197 of Article 45), which provide that stations must operate in such a manner as to not cause harmful interference to radio services or communications of other Members, the FCC has in place rules and regulations implementing the ITU and prohibiting harmful interference. 47 C.F.R. Part 25 covers satellite communications and includes authorisation requirements from the FCC as well as protection from impermissible levels of interference with other systems. For example, operators of space stations applying for a licence must prove that the space station can be commanded “to immediately cease transmissions,” and that the operator is capable of eliminating harmful interference when required (47 CFR 25.123(b)(8)).

Additionally, any person or entity subject to US jurisdiction (ie, operators launching from the territory of the USA, US citizens, or entities organised under US law) must obtain a licence from the FAA. In order to obtain and maintain a launch licence, operators must adhere to the FAA regulations. Generally, a launch or re-entry operator “must prevent the collision between a launch or re-entry vehicle stage or component and people or property on orbit” (14 CFR 450.101(e)). The FAA Launch Safety Regulations also include various obligations for operators, including undertaking safety measures (eg, launch plans, rehearsals, tests, and reviews) and reporting requirements, to ensure launch vehicles’ processing and flights are conducted without adversely affecting public safety (14 CFR Part 417). Additionally, the FAA regulations include launch and re-entry collision avoidance analysis requirements, under which operators must meet certain collision avoidance requirements (14 C.F.R. 450.169) and critical asset protection requirements (14 C.F.R. 450.101(a)(4) and (b)(4)) for orbital or suborbital launches and re-entries.

The OSC is currently developing a Traffic Coordination System for Space, to provide space situational awareness data and services to civil and private space operators and to promote spaceflight safety, sustainability, and operation in outer space free from physical or radio-frequency interference.

Section 11 of the Artemis Accords reiterates signatories’ commitment to the Outer Space Treaty’s provisions relating to due regard and harmful interference.  Signatories commit to seek to refrain from any intentional actions that may create harmful interference with each other’s use of outer space in their activities under the Accords.  The Accords include information-sharing, best practices, and the creation of safety zones in order to minimise harmful interference.

Although the USA does not have ESG guidelines that apply to space activities, it does impose certain environmental requirements with regard to launch and re-entry, as well as responsibilities over operators with respect to orbital debris. Additionally, the USA has in place frameworks aimed at preserving and protecting lunar heritage sites.

Launch and Re-entry Requirements

As stated in 3.2 Principles of Non-interference and Prevention of Harmful Interference, the FAA prescribes requirements for obtaining and maintaining a licence to launch and/or re-enter a launch or re-entry vehicle. These include several conditions and obligations for applicants, including following the application procedures delineated in 14 C.F.R. Part 413, obtaining policy and safety approvals, satisfying environmental review requirements, and more.

The Commercial Space Launch Amendments Act of 2004 provided the FAA with the authority to regulate the launch and re-entry of commercial spacecraft for the safety of involved parties, following a learning period, which has been extended several times. Upon the expiration of the learning period, the FAA will be able to impose licensing requirements on commercial human spaceflight operations to ensure the protection of human occupants.

Notably, the FAA’s authority under the safety regulations (51 U.S.C. §50905(c)) is not subject to the learning period. Therefore, the FAA may impose certain restrictions, prohibit design features, or preclude operating practices when those have resulted in, or pose a high risk of, serious or fatal injury. The FAA may also impose requirements for spacecraft crew to protect public safety (14 C.F.R. §460), and the agency has established requirements regarding crew qualifications, medical screening, life support, and other safety elements. Additionally, 14 C.F.R §460.45 requires disclosure of potential risks to commercial spaceflight participants.

Operations in orbit, following launch and prior to re-entry, are currently not under FAA jurisdiction.

Orbital Debris

FAA regulations require each licence application to contain a flight safety analysis characterising any hazardous debris that would be generated from vehicle flight, including a quantitative description of any physical, aerodynamic, and harmful characteristics of the hazardous debris. Additionally, the analysis must account for the distribution of people for the region where there is a significant probability of impact of hazardous debris. Operators must comply with FAA Orbital Debris Mitigation requirements for all vehicles or components that reach Earth orbit (14 C.F.R. Part 450). Notably, in December 2023, the FAA published a Notice of Proposed Rulemaking (NPRM) which, if passed, would mandate the removal of segments of commercial launch vehicles that reach orbit, along with other components resulting from launch or re-entry, within 25 years after launch.

In July 2022, the National Science and Technology Council’s Orbital Debris Interagency Working Group Subcommittee on Space Weather, Security, and Hazards, issued a National Orbital Debris Implementation Plan. This plan aims to provide guidance and ensure governmental co-ordination in addressing orbital debris challenges, and outlines action items for US governmental agencies on orbital debris mitigation, tracking and characterisation, and remediation.

The FCC also adopted a comprehensive set of regulations which impose certain debris mitigation obligations, plans, and disclosure requirements on satellite communication providers (47 CFR 25). Under the FCC’s rules, applicants for satellite licences and entities requesting access to non-US-licensed space stations must submit an orbital debris mitigation plan to the Commission in connection with its request. The required mitigation plan must include design and operational strategies intended to mitigate orbital debris.

Notably, in 2023, the FCC initiated its first enforcement action for an alleged failure to mitigate orbital debris. The case involved an operator’s failure to place its satellite in a specified disposal orbit altitude in violation of the commitment made in its orbital mitigation plan.

With regard to end-of-life disposal requirements, in October 2023, the United States Senate unanimously passed the Orbital Sustainability Act, which if passed by the House and signed into law would establish a programme for the removal of debris from orbit and advance the development of required technologies to remediate orbital debris.

Lunar Heritage Sites

The United States, through its Apollo missions, has over the years created lunar sites and artifacts which hold great historic, cultural, and scientific value. The US government recognises the importance of protecting and preserving the Apollo sites, especially in light of the increasing number of crewed and uncrewed lunar missions in the upcoming years.

In 2011, NASA published recommendations for “space-faring entities” concerning the protection and preservation of US government lunar artifacts. Subsequently, in December 2020, Congress enacted the One Small Step to Protect Human Heritage in Space Act, requiring NASA to incorporate these recommendations into its contracts with partners, and to communicate relevant information to federal agencies relating to the principle of due regard and the limitation of harmful interference with historic lunar landing sites. In October 2022, NASA’s Office of Technology, Policy, and Strategy (OTPS) released a Lunar Landing and Operations Policy Analysis, proposing additional measures to conserve lunar landing sites. Furthermore, NASA integrated outer space heritage site preservation into the Artemis Accords, wherein signatories pledge to uphold and contribute to the development of international practices and rules aimed at safeguarding outer space heritage.

In 2015, Congress passed the Competitiveness Act, designed to encourage commercial spaceflight and innovation by, inter alia, granting private companies the right to own resources collected in space. This Act was the first domestic law to authorise the exploitation of space resources by private actors. While the USA is subject to obligations under the Outer Space Treaty, including the principle of non-appropriation of territory, the USA and numerous other signatories hold a longstanding view that the utilisation of space resources is consistent with the Outer Space Treaty.

Title IV of the Act, also named the “Space Resource Exploration and Utilization Act of 2015”, describes the right of US citizens to engage in commercial exploration and recovery of space resources free from harmful interference, subject to authorisation and supervision by the federal government (51 U.S.C. 51302). Moreover, the Act asserts that US citizens are entitled to any asteroid resource or space resource obtained (51 USC 51303).

In April 2020, the President issued Executive Order (EO) 13914, which underscores US policy regarding the recovery and use of resources, such as water and certain minerals, in outer space, and clarifies that the USA does not view outer space as a “global commons”.

In line with the Space Resource Exploration and Utilization Act of 2015 (51 U.S.C. 51302(b)), the President issued EO 13914, providing that the Secretary of State, in consultation with the Secretary of Commerce, the Secretary of Transportation, the Administrator of NASA, and the head of any other appropriate executive department or agency, shall take all appropriate measures to encourage international support for the public and private recovery and use of resources in outer space. In carrying out this responsibility, the Secretary of State shall seek to negotiate joint statements and bilateral and multilateral arrangements with foreign states regarding safe and sustainable operations for the public and private recovery and use of space resources.

Additionally, the Artemis Accords implement principles related to the extraction and utilisation of space resources, affirming the US view that the extraction of space resources does not constitute national appropriation (Section 10(2)). Section 10(4) of the Accords further states that signatories intend to develop international practices and rules applicable to the extraction and utilisation of space resources.

In line with this, NASA initiated several space activities to leverage commercial involvement and generate new practices relating to the commercial extraction and sale of space resources, including public-private partnerships for missions involving the collection of space resources.

The US regulatory regime underscores the importance of space operations and missions being conducted in a manner that would ensure that the outer space environment remains suitable for exploration and use by current and future generations, as well as the long-term sustainability of space activities. This effort is evident, for example, in US regulations aimed to mitigate, track, and remediate space debris (see 3.3 Operators’ Responsibilities).

The National Environmental Policy Act of 1969 (NEPA) was the first major environmental law in the United States, and it requires federal agencies to assess the environmental effects of proposed major federal actions prior to making decisions. NEPA established the Council on Environmental Quality (CEQ) to ensure that federal agencies, such as NASA, meet their obligations.

NASA implements the NEPA through 14 CFR Part 1216 Subpart 1216.3 (“Procedures for Implementing the National Environmental Policy Act”). Some of the key rules outlined in these procedures include conducting environmental impact statements to evaluate the potential environmental impacts of proposed projects and activities, preparing environmental assessments for proposed actions without expected significant effects or when the significance of the effects is unknown, and developing and implementing mitigation measures to minimise adverse environmental impacts.

Additional federal laws that regulate space-related activities on Earth include the Clean Air Act, the Safe Drinking Water Act, the Resource Conservation and Recovery Act, and the National Historic Preservation Act.

The body in charge of developing policies and providing guidance on environmental issues at NASA is the Environmental Management Division (EMD).

NASA has a broad climate research programme, involving studies and information gathering in various areas such as solar activity, sea level rise, air pollution, ocean ecology, and more. Initially charged with conducting aeronautical and space activities as they relate to phenomena in the atmosphere and space, over the years NASA’s research shifted to include energy efficiency, pollution, ozone depletion, and climate change. Currently, NASA is developing the Earth System Observatory, which is comprised of five satellite missions providing critical data on climate change, severe weather and other natural hazards, wildfires, and global food production.

NOAA and the United States Geological Survey (USGS) also carry out climate change related space activities.

NOAA’s mission is to observe, collect, and analyse environmental data, and the agency holds a key role in policymaking concerning issues related to climate and weather. NOAA has in place various research programmes, educational projects, and resources aimed at providing climate services and information to decision-makers and the community. NOAA’s operations with respect to climate include collaborations with coastal communities to adapt to sea level rise, drought warnings, predictions and services related to water resources, and development of strategic plans to tackle the climate crisis.

The USGS is the scientific agency of the United States Department of the Interior (DOI), which utilises, inter alia, space-based Earth observation, to provide scientific data and support decision-making on environmental, resource, and public safety issues.

The Internal Revenue Code of 1986 and the regulations thereunder define space activity as “any activity conducted in space”, while space is defined as “any area not within the jurisdiction of the United States, its possessions, or a foreign country” (IRC § 863(d); Treas. Reg. § 1.863-8(d)). Space activity includes performance of services in space, leasing of equipment located in space (eg, spacecraft and satellites), licensing of intellectual property for use in space, production of property in space, certain communications occurring in space, sales of property in space, and underwriting income from insurance of risks on activities that produce space income (Treas. Reg. § 1.863-8(d)(1)(i)).

A United States person (ie, corporation or individual) is taxed on income wherever earned. However, if a US person earns space income, the source of such income will be treated as foreign only to the extent the facts and circumstances demonstrate that the functions performed, resources employed, or risks assumed are in a foreign country (Treas. Reg. § 1.863-8(b)(1)).

Space income derived by a controlled foreign corporation of a US person is treated as US source income and subject to US tax, unless the facts and circumstances demonstrate it is attributable to foreign sources. The normal Controlled Foreign Corporation (CFC) rules apply if the space income is from a foreign source. Space income derived by a foreign person engaged in a US trade or business is considered US source income to the extent the facts and circumstances show the activities are attributable to activities performed within the United States. US taxpayers must also allocate expenses based on the sourcing rules.

Space activities do not include income from: (i) activities giving rise to transportation income; (ii) international communications; (iii) activities with respect to mines, oil and gas wells, or other natural deposits if located in the United States or a foreign country (Treas. Reg. § 1.863-8(d)(3)).

No tax incentives exist in the USA for investing in space activities, other than research credit. The research credit is generally applicable to activities and can apply to research and development in space. 

Taxpayers follow the sourcing rules (see 6.1 Tax System for Space Activities) for the sale of purchased property where the purchased property is sold in space. If purchased property is treated as inventory and is sold for use, consumption, or disposition outside space, the source of the income will depend on the regulations in Treas. Reg. 1.861-7(c). 

The rules are different for the sale or transfer of property that is manufactured by the taxpayer. The sourcing rules will depend on whether the property is produced only in space or both in and outside of space. If produced solely within space, then the above sourcing rules apply. For property produced both in and outside of space, the source of gross income is allocated based on all of the facts and circumstances related to the space production activities and the non-space production activities. Then, the sourcing rules apply to categorise domestic or foreign source income (Treas. Reg. § 1.861-8(b)(3)).

The private space industry, or “NewSpace”, is highly prevalent in the United States and is continuously evolving. Historically, the space sector relied on government funding, but significant changes have occurred over the past decades facilitating private investment in the industry. These include:

• technological progress facilitated by federal investment;
• a more streamlined regulatory environment;
• a commitment to purchasing from and partnering with the commercial sector; and
• the development of a broader commercial space ecosystem that has enabled further growth.

The US space industry is characterised by the commercialisation of the space sector, facilitating the emergence of new companies and start-ups supported by private investments. This framework enables numerous companies to undertake and develop unprecedented activities, such as space mining, space solar power, and the removal of space debris. The development of technologies and innovations in the NewSpace sector creates new commercial opportunities and expands access to space for various entities, including start-ups, academic institutions, and private individuals.

The NewSpace industry has also attracted the attention of venture capital (VC) funds, particularly focusing on emerging technologies such as reusable rockets, space tourism, novel satellite networks, and in-space manufacturing. Numerous start-up companies and newly established businesses in the space industry are experiencing unprecedented investments from angel and VC funds.

US space agencies, such as the Space Force and NASA, are actively supporting the development of commercial space technologies, including orbital debris removal systems.

Notably, a substantial percentage of capital today is directed towards NewSpace, and some VC firms specialise exclusively in the space community. Moreover, there is a growing interest in the space industry among VC firms focusing on defence technology and national security.

Space activities in the United States are funded through a combination of public and private financing channels.

Regarding US government funding, governmental bodies such as NASA and the United States Space Force allocate annual budgets that detail funding allocations for programmes and initiatives encompassing human spaceflight, space science, aeronautics, technology advancement, and educational activities. These governmental entities frequently engage in collaborative efforts with the commercial space sector, aiming to streamline costs and ensure supply chain resilience while fostering research and development in pivotal technological domains critical to US national security objectives.

Additionally, private investment constitutes a significant portion of funding within the space industry. Various strategies are employed by space companies to secure private capital, including:

• Venture capital funds: The increasing technological innovations and business prospects within the space domain have spurred the emergence of numerous VC-backed start-ups throughout the space supply chain (see 7.1 Impact of “NewSpace”).
• Special-purpose acquisition companies (SPACs): SPACs serve as vehicles for private enterprises to merge with, or be acquired by, publicly traded entities. SPACs provide avenues for space companies to access stock market funding, and a multitude of NewSpace ventures have garnered funding through utilising SPACs. Notably, the SPAC market in the US space sector has been struggling over the past few years, with most shares underperforming (see 7.5 Role of Securities Markets in Space Financing).
• Leveraging existing federal funding: Companies receiving federal funding can leverage their contractual engagements with the government to tap into private markets.
• Partnerships: Many aerospace firms forge alliances with private investment entities. These collaborative ventures prove mutually advantageous, enabling companies to access capital for development while providing investment firms with access to novel technologies, expertise, and industry affiliations.
• Space asset finance: Currently, new sources of funding are emerging for space activities, in an attempt to fill in the financing void that has arisen due to challenges with traditional space financing methods. One such source is debt financing through the space asset market. Similar to financing methods in related industries such as aviation and maritime, space asset finance transactions provide secured debt capital for space assets (such as satellites and other space vessels) with a repayment schedule.

Federal and state incentives play a crucial role in the attraction of investments into space activities and support of the space industry amid a challenging and changing US macroeconomy. Government demand for space capabilities is one of the factors that boosts interest among private parties.

On the federal level, several departments and independent agencies provide early funding, contracting opportunities, and partnership programmes.

Every year, NASA consolidates its anticipated procurements in the Acquisition Forecast with the aim of increasing industries’ advance knowledge of NASA requirements and needs. Through Space Act Agreements, its most common legal instrument, NASA regularly enters into reimbursable and nonreimbursable partnerships with early-stage start-ups and experienced market players. Also, utilising procurement contracts, NASA acquires property or services for the direct benefit of the federal government. NASA uses its Commercial Lunar Payload Services and the second Collaborations for Commercial Space Capabilities initiatives to co-operate with the private sector.

Further, under Small Business Innovation Research and Small Business Technology Transfer initiatives, NASA, the DOT, and the DOD award contracts to domestic small businesses to pursue research on, and develop, innovative solutions. As a result, such companies become more attractive for private investors. The Department of Energy, the DOC, and the DOD also have their own initiatives that attract investment into civil and defence space sectors. 

The US government is committed to creating a favourable investment environment through modernising the current oversight regime, simplifying the licensing process, and providing a consistent approach with non-duplicative government functions.

On the state level, nearly all spaceport states offer space launch incentives, from tax exemptions and transferable tax credits for space operators, to local financial assistance for space launch infrastructure.

The Committee on Foreign Investment in the United States (CFIUS) is an interagency committee chaired by the Secretary of the Treasury authorised to review specific foreign investment transactions in the United States that present national security concerns. Among its responsibilities, CFIUS is authorised to assess certain non-passive, non-controlling foreign investments in US businesses engaged in critical technologies, critical infrastructure, or the personal data of US citizens (referred to as “TID businesses”). The rationale behind scrutinising such non-controlling investments lies in the potential for foreign investors to gain access to sensitive technical data or participate in decision-making processes related to technology, infrastructure, or data management. Certain covered transactions involving “TID businesses” necessitate reporting to CFIUS via either a declaration or a formal notice filing.

Given the substantial capital required for space activities, which is often sourced internationally, coupled with the inherently sensitive nature of the space sector characterised by dual-use technologies (ie, technologies applicable for both military and civilian purposes), there is a high likelihood that space-related ventures entail critical technology, thereby triggering CFIUS oversight and, in some instances, mandatory reporting obligations. Consequently, CFIUS regulations pertaining to foreign investment in critical technologies impose heightened regulatory requirements on the private space industry, rendering it more challenging for space companies to secure funding from foreign investors.

The number of US space companies going public is relatively low. Large, well-known market players tend to self-finance their space projects or use other financing instruments available to them, while the public market is dominated by early-stage start-ups.

Out of those publicly traded companies, some prefer listing shares through a traditional IPO process, however, about 90% go through SPAC mergers, which often bring questionable results for early-stage space firms, missing revenue targets and significantly underperforming on the public market.