New spaceport facility and updated space regulation

In this newsletter, we examine the current and future legal landscape concerning space. The new regulation will impact Norwegian and foreign market players within the space industry.

• The expected rapid growth within the space sector as well as the opening of the new spaceport triggers a need for sufficient regulation of space activities taking place within, or from, Norwegian Territory, or otherwise connected to Norway.
• A revised Norwegian Space Act is currently in the works and is expected to regulate legal issues such as the requirements for permission to perform space activities, duties of the operator as well as liability and insurance.
• Investments in satellite companies may trigger change of control requirements such as consent from authorities. Investors should also consider export control regulations as well as Norway's foreign direct investment (FDI) rules before taking steps that may impact a satellite company's shareholding.

The current Act on the launching of objects from Norwegian territory and more into space (the "Space Act") entered into force in 1969 - the same year as the USA put a man on the moon. The Space Act prohibits anyone from launching an object into space from Norwegian territory, Norwegian vessels or aircrafts, or from areas that are not subject to another state's sovereignty, such as the open sea, provided that the launch is made by a Norwegian citizen or person domiciled in Norway. The exception to this being if the Norwegian Government has given prior permission to the launch.

Although the Government may issue more detailed regulations directed at players that intend to launch, there are regulations regulating the ground stations for satellites located at Svalbard (Spitsbergen) and Antarctica today. However, since these are limited to specific geographical areas, they are of less relevance to Norwegian and foreign market players that intend to launch satellites from the new spaceport in northern Norway.

Based on the rapid growth within the space sector, as well as the opening of the new spaceport, it is safe to say that it will be beneficial to have legislation explicitly addressing important questions that may arise in the future. This is not the situation today, as the Space Act is long overdue. Luckily, a revised Space Act is now in the works.

The Government's space report of 6 February 2020 provides insight on what to expect, although changes may be expected before the final version of the Act is released. Below we have summarized the key takeaways from the report, along with our observations on certain topical issues.

Applicability
The expected Space Act will most likely be limited to activities such as the launching and operation of the object as well as the activity of returning the object from space. Further, other activities with a "substantial connection" to the launching, operating or return of the object, will also likely be within the scope of the expected legislation. Whether an activity falls within the scope, shall be decided on a case-by-case basis. The proposed guidelines for this assessment are whether the activity triggers a similar type of risk as the launch, operation or return of an object and the need for an effective enforcement of the expected Space Act. 

Space projects are characterized by cooperation between several players and a complex value chain of various suppliers of products and services. One company might provide the space launch service, while a second company may own the satellite being launched and a third company may oversee the operation of the satellite on behalf of the owner. The expected Space Act includes conditions related to the satellite in addition to the launching activity. It should thus be expected that authorities will seek to enforce the regulations directly towards the owner of the satellite, instead of the space launch service provider. Since the purchase of a space launch service may be deemed as an activity with a "substantial connection" to the launching activity, the owner of the satellite may be held directly liable under the expected Space Act. 

Another example is that a company purchases a satellite that already is in orbit but outsources the operation of the satellite. The purchase and ownership of the satellite may be deemed as an activity with a "substantial connection" to the operation of the satellite, provided that the owner influences actual control over the operation of the satellite. 

Further, the expected Space Act will likely be limited to Norwegian territory, Svalbard, Jan Mayen and dependencies of Norway. However, it will most likely also govern activity outside of Norwegian territory if the activity is performed on a Norwegian vessel or Norwegian contraption, such as an oil rig or similar, or by a Norwegian citizen or legal entity established in Norway.

Requirements for permission
The main rule will continue to be that no outer space activities may be performed without the authority's prior consent. What sort of space activities that may be performed by an operator, will depend on the specific conditions set by the Government. There are likely several requirements that must be fulfilled, such as:

• The applicant must have sufficient qualifications, economical resources and insurance;
• The activity must be performed in a reasonable way, without unnecessary or disproportionate consequences for the environment on earth or in space;
• The applicant must be able to evidence risks related to the activity and document a plan on how to systematically control the identified risks, in addition to a detailed statement on environmental consequences resulting from the activities and a plan on how to end the planned activities;
• The applicant must be able to comply with rules on export control and the International Telecommunication Union' rules on satellite registration; and
• The activity must not conflict with Norway's foreign or security policy interests.

Even though an applicant fulfils all the above requirements, the authority may refuse to give its consent or may lay down further conditions to allow the applicant to perform the requested activities.

Duties of the operator
The main rule will be that all space activities must be performed in a responsible manner. Further, space debris resulting from the activity shall be limited to what is strictly necessary and any unnecessary or unduly harm to the environment shall be avoided. In this context, space debris refers to non-functioning space objects that may cause harm to other satellites. Space debris shall be reduced by sufficient measures that e.g. minimize the likelihood of an object breaking apart and reduces the risk of collisions when the object is in orbit. 

Furthermore, all space activities must be performed in a secure and safe manner. A reasonable system for risk management must be deployed. The identified risks and the plan on how to handle the identified risks, will likely constitute a starting point for the safety work. The risk management system must however be updated continuously as the activities go on.

A transfer of the permission between companies will need consent from the authorities. This specific rule only applies to the transfer of the rights to carry out space activities and do not apply to change of control scenarios (as further explained below). Further, it will be necessary to collect a consent from the authorities for any transfer of responsibility of the satellite operation out of Norway.

Operators will also have a duty to inform the authority of any changed circumstances that may be of significance for the permission and notify the authority about any serious deviations from the normal operations. A change of control, e.g. an investment that impacts the ownership of the satellite operator, is a circumstance that may be of significance for the permission. This may be particularly relevant in transactions involving foreign investors, which may also trigger export control rules or even conflict with Norway's security policy interests. 

The operator shall also allow the authority to perform inspections on the premises. Moreover, the operator must provide information, documents, and other material upon request if necessary for the inspection.

Liability and insurance
The proposal stipulates that the operator shall be liable for damages on persons and property on earth and aircrafts caused by the space object during the launch, in operation or during the return of the object from orbit, except when the damaged party has shown gross negligence or intent or was harmed during the participation in the launch project. For any other damages, such as a collision between two Norwegian satellites, general principles of liability will apply.

The authority may seek legal remedy from the operator of the space object if the Government has paid compensation to a third party pursuant to an international agreement. This includes already entered into agreements and future agreements between Norway and other countries. 

The proposed Space Act also includes a limitation of liability of NOK 600,000,000 for the operator. The limitation will apply unless the authority has decided otherwise when the permission was issued or if the operator has shown gross negligence or intent. An operator must have an insurance that covers the above liability unless the operator is covered by the Government's self-insurer arrangement. The authority will also be entitled to seek remedy directly from the insurance company if needed.

The modernized Space Act will arrive not a moment too soon. Major players in the USA, Europe and China continue their efforts to develop space capacity including manned missions on the Moon and Mars. The maintenance and expansion of these initiatives in 2024 is massive in terms of investments and research. Norway is well positioned to meet demand with its new spaceport facility. It remains to be seen whether the updated Space Act will provide suppliers, customers and operators in the space industry a business-friendly and reliable regulatory framework.