"According to documents obtained by Reuters, U.S. companies can stake claims to lunar territory through an existing licensing process for space launches."
With these words, Reuters this week led off a story of interplanetary proportions. In essence, the U.S. Federal Aviation Administration appears to have appointed itself the arbiter of who owns what on the moon.
The documents in question refer to an application from start-up "expandable module" maker Bigelow Aerospace, which is lining up customers to develop the world's first privately owned commercial space station, among other projects.
One such project, as revealed in the FAA documents, appears aimed at installing the company's inflatable habitats on the moon itself, as part of a privately operated lunar colony. The FAA seems to be saying that such a project would not only be legal, but would grant Bigelow (or anyone else doing similar work) "exclusive rights to that territory" upon which the colony is built.
"To the moon, Alice!"
As you can imagine, this is causing quite a stir internationally, where the only governing law in place is the 1967 United Nations "Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies." (Emphasis added.)
Now, the FAA expressly denied it has given Bigelow "a license to land on the moon," saying it only conducted a "payload review that would potentially be part of a future launch license request." But the one does seem likely to lead to the other. And, according to Reuters, the U.S. Departments of State, Defense, and Commerce -- along with NASA and "other agencies" -- were all involved in the FAA's decision. So when you get right down to it, the U.S. government does appear to be laying the groundwork for privately operated (and owned) commercial exploitation of the moon.
Such a move will certainly please companies planning to involve themselves in moon mining, exploration or colonization. But the FAA's move also raises some questions. Most importantly:
Is it legal?
It depends on whom you ask. At last report, 102 of the globe's 196 countries had become official parties to the U.N. treaty -- which is a majority, and probably enough to give the treaty binding authority under international law. More so, given that all the major players that could conceivably reach the moon in the near future, including the U.S. itself, France, Germany, Italy, and the U.K., and farther abroad, Japan, South Korea, China, and Russia, have all signed on.
As for what the treaty says, here are few of the more telling clauses:
The exploration and use of ... the moon ... shall be carried out for the benefit and in the interests of all countries.
So far, so good. Despite being written more than two years before anyone had even set foot on the lunar surface, the treaty was written with the assumption that "use" of the moon would eventually happen.
The moon and other celestial bodies, shall be free for exploration and use by all States.
What's more, the treaty expressly permits use of the moon.
The moon and other celestial bodies shall be used by all States Parties to the Treaty exclusively for peaceful purposes.
Translation: no nukes. But mining the moon, and blowing up inflatable habitats, should still be kosher.
The activities of non-governmental entities [on] the moon ... shall require authorization and continuing supervision by the appropriate State Party to the Treaty.
So not only does the FAA have the right to regulate lunar operations by U.S. corporations. It has a treaty obligation to do so.
With caveats and provisions
Now let's look at a few clauses that are more problematic:
All stations, installations, equipment and space vehicles on the moon ... shall be open to representatives of other States Parties to the Treaty on a basis of reciprocity.
Read in context, the treaty guarantees access to facilities on the moon -- visiting privileges, if you will. But this kind of clause could, in time, and with the addition of sufficient billable hours by a sufficient number of lawyers, eventually reinterpret the treaty to limit a company's exclusive rights to lunar real estate.
The moon ... shall be free for exploration and use by all States without discrimination of any kind, on a basis of equality and in accordance with international law, and there shall be free access to all areas.
Again, this kind of clause could be used to inhibit a company's ability to post "No Trespassing" signs around its lunar landscape.
The moon ... is not subject to national appropriation.
Does this include "appropriation" by a nation's companies, too? It might. Or the clause might mean no more than what it says. As in, the United States can't plant a flag on the moon and declare it the 51st state. But if Bigelow wants to build there, or someone else wants to dig for Moon minerals there -- that might all be totally kosher.
What it means for investors
When you get right down to it, at 48 years old and counting, the Outer Space Treaty is clearly in need of some updating if companies (and one day, individuals?) are to be expected to rely on it to protect future investments on the moon -- because the size of those investments could be substantial. Just getting to the moon and establishing a permanent station would be a project that Russia's Roscosmos recently estimated to cost $6 billion. Boeing (NYSE:BA) is building a new space launch system for lunar launches, at a cost of $2.8 billion.
Given the sums at stake, you can bet corporate America (and corporate Earth) will be pushing for clearer regulation of lunar legal rights. At the FAA the process has already begun.
Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 284 out of more than 75,000 rated members.
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