Regulating Space: Innovation, Liberty, and International Obligations

Regulating Space: Innovation, Liberty, and International Obligations

Statement of
Henry B. Hogue
Specialist in American National Government
Before
Committee on Science, Space, and Technology
Subcommittee on Space
U.S. House of Representatives
Hearing on
“Regulating Space: Innovation, Liberty, and
International Obligations”
March 8, 2017
Congressional Research Service
https://crsreports.congress.gov
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Chairman Babin, Ranking Member Bera, and other distinguished members of the subcommittee, thank
you for the opportunity to appear before you today, in this hearing on regulating space, to testify on
regulatory organizational frameworks that currently exist in federal law, with a focus on those
organizational frameworks that involve participation by private entities.
This testimony begins with a discussion of traditional regulatory frameworks in which regulatory power
is delegated, by statute, to federal government entities. Selected regulatory organizational models that
involve quasi-governmental or non-governmental entities are then discussed, including government
corporations, non-governmental standards-setting, non-governmental entities with a federal charter, and
self-regulatory organizations. Examples of such entities are provided.1
Traditional Governmental Regulatory Frameworks
The most prominent means by which the federal government controls the conduct of private entities is
through a congressional delegation of regulatory power to a federal agency.2 Such delegations are often3
accompanied by the authority to implement the delegation through rulemaking.4 The agency, in an
exercise of the power provided to it by Congress, then issues rules (pursuant to certain required
procedures) that are consistent with the statutory delegation and have the force and effect of law.5 In
addition to the power to implement a statutory grant of authority through rulemaking, Congress will often
provide the federal agency with the authority to enforce the agency’s own regulations.6 The agency,
through enforcement actions and adjudications, may then impose penalties on members of the public for
noncompliance with agency regulations.7
In other instances, rather than providing an agency with the authority to issue general regulations,
Congress has given a federal agency the authority to control private entity conduct through the provision
of individual licenses. Licenses are generally provided for a specified term, subject to renewal by the
agency, and will typically require the licensee to comply with either statutorily or administratively
established conditions in order to maintain the license.8 The regulatory and licensing models are not

1 For purposes of this testimony, quasi-governmental entities are those entities that feature characteristics of both governmental
and private control, while non-governmental entities are those which, while perhaps sanctioned by the federal government in
some way, are not controlled by federal authority.
2 See, e.g., Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (“It is axiomatic that an administrative agency’s power
to promulgate legislative regulations is limited to the authority delegated by Congress.”).
3 Delegations to agencies can also be implied based on the nature and ambiguity of the statutory text. See Chevron U.S.A., Inc. v.
Nat. Res. Def. Council, 467 U.S. 837, 844 (1984) (“Sometimes the legislative delegation to an agency on a particular question is
implicit rather than explicit.”).
4 See e.g., 26 U.S.C. § 7805 (providing the Secretary of the Treasury with the authority to “prescribe all needful rules and
regulations ...”); 33 U.S.C. § 1607 (authorizing the promulgation of “such reasonable rules and regulations as are necessary to
implement the provisions of this Act”); 42 U.S.C. § 3614a (authorizing the Secretary of Housing and Urban Development to
“make rules ... to carry out this subchapter”).
5 See Chrysler Corp. v. Brown, 441 U.S. 281, 301 (1979) (“In order for a regulation to have the ‘force and effect of law,’ it must
have certain substantive characteristics and be the product of certain procedural requisites.”).
6 See, e.g., 8 U.S.C. § 1103 (“The Secretary of Homeland Security shall be charged with the administration and enforcement of
this Act ....”); 25 U.S.C. § 282 (“The Secretary of the Interior is authorized to make and enforce such rules and regulations as
may be necessary to carry out” the referenced chapter).
7 See, e.g., 15 U.S.C. § 45 (providing the Federal Trade Commission with authority to “prevent ... unfair methods of competition
... or deceptive acts or practices in or affecting commerce”); 49 U.S.C. § 20111(a)(1) (providing the Secretary of Transportation
the “exclusive authority to impose and compromise a civil penalty for a violation of a railroad safety regulation prescribed or
order issued by the Secretary”).
8 See, e.g., 51 U.S.C. § 50904 (providing for the licensing of commercial space launch activities by the Department of
Transportation).
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mutually exclusive, but instead are often complementary. Congress may, for example, provide an agency
with both general regulatory authority and more individualized licensing authority. For example, the
Nuclear Regulatory Commission has been delegated the general authority both to issue regulations
ensuring the safe operation of nuclear facilities and use of nuclear materials and to provide private entities
with individual licenses to operate nuclear reactors or to possess nuclear materials. 9
Congress may also delegate regulatory authority over a single topic to multiple agencies. In such a case, a
lead agency may be provided regulatory authority that must be exercised in “consultation” with other
agencies.10 The lead agency in this arrangement is not bound by comments received through the
consultation process. For example, the Administrator of the Environmental Protection Agency is required
to “solicit the views” of the Secretaries of Agriculture and Health and Human Services before issuing
regulations pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act.11 In contrast, Congress
may delegate authority to multiple agencies to issue rules and regulations jointly after reaching consensus.
For example, various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act
require various agencies to issue joint or coordinated rules.12
It should be noted that even when rulemaking authority is provided to a federal agency, participation by
private entities and the general public in the rulemaking process can be significant. For example, most
agency rules are issued pursuant to the notice and comment rulemaking procedures established under the
Administrative Procedure Act (APA).13 These procedures require agencies to publish a proposed rule in
the Federal Register and provide the general public with a meaningful opportunity to comment on the
regulation.14 The agency is further required to respond to significant comments it receives.15 Thus, private
parties are permitted an opportunity to participate in, and at times influence, the promulgation of federal
rules by federal agencies.
Regulatory Models Involving Quasi-Governmental or Non-
Governmental Entities
Government Corporations
A government corporation is an entity of the federal government established by Congress in corporate
form. In general, such entities are intended to perform a public purpose and are given this form to provide
the flexibility necessary to carry out that purpose.16 They often provide a market-oriented product or
service, have the power to use and reuse revenues and to own assets, are intended to produce revenue that

9 See 42 U.S.C. § 2201(b) (rulemaking); 42 U.S.C. §§ 2232-2237 (licensing).
10 See 40 U.S.C. § 1315(c) (“The Secretary [of Homeland Security], in consultation with the Administrator of General Services,
may prescribe regulations necessary for the protection and administration of property owned or occupied by the Federal
Government and persons on the property.”)
11 7 U.S.C. § 136s.
12 See, e.g., 12 U.S.C. § 1851(b)(2) (requiring coordinated rulemaking issued by various banking regulators); 15 U.S.C. § 8302
(requiring joint rulemaking issued by Commodity Futures Trading Commission and the Securities and Exchange Commission).
13 5 U.S.C. § 553.
14 Id. § 553(b)-(c).
15 See Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 375, 394 (D.C. Cir, 1973) (“[C]omments must be significant enough to
step over a threshold requirement of materiality before any lack of agency response or consideration becomes of concern.”).
16 For a broader discussion of government corporations see CRS Report RL30365, Federal Government Corporations: An
Overview, by Kevin Kosar.
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meets or approximates their expenditures, and have the power to sue and be sued.17 Each government
corporation is either wholly owned by the government or of mixed ownership.
In some cases, government corporations engage in regulatory activities pertaining to the products or
services they provide and the constituencies they serve. One example of a mixed ownership government
corporation that operates in this manner is the Federal Deposit Insurance Corporation (FDIC).18 Mixed
ownership means that the corporation is owned both by the government and other parties. The FDIC
insures bank and thrift deposits, examines state-chartered commercial and savings banks that are not
members of the Federal Reserve System, and disposes of the assets and liabilities of failed banks.19 In the
course of carrying out these responsibilities, the FDIC exercises significant authority over certain private
sector activities. It
approves or disapproves of mergers, consolidations, and acquisitions ...; approves or disapproves of
proposals by banks to establish and operate a new branch, close an existing branch, or move its main
office from one location to another; and approves or disapproves of requests to engage as principal
in activities and investments that are not permissible for a national bank.20
Over time, the FDIC has promulgated a number of regulations related to these functions.21
Non-Governmental Standards Setting
Federal agencies may incorporate standards developed by non-governmental entities, thereby forming a
quasi-governmental regulatory mechanism. Private standard-setting entities establish voluntary consensus
standards through an established process that seeks to give voice to divergent viewpoints.22 In many
cases, federal agencies then promulgate regulations in which these standards are incorporated by
reference.23 The standards set by these private entities generally lack the force of law until implemented
by a government actor. The types of non-governmental organizations that get involved in standard-setting
include testing laboratories (e.g., Underwriters’ Laboratories), professional societies (e.g., American
Society for Mechanical Engineers), membership organizations (e.g., American Society for Testing and
Materials), and independent committees affiliated with trade associations or other sector-specific
organizations.24
Congress has mandated the practice, by federal regulators, of incorporating privately developed standards
under certain circumstances, both with regard to specific agencies and more generally. One example of an

17 See, e.g., 16 U.S.C. § 831c(b) (providing that the Tennessee Valley Authority may “sue and be sued in its corporate name.”);
22 U.S.C. § 2199(d) (providing that the Overseas Private Investment Corporation is authorized “to sue and be sued in its
corporate name.”).
18 31 U.S.C. § 9101(2)(B) (defining the FDIC as a “mixed-ownership Government corporation” rather than a “wholly owned
Government corporation”).
19 OFFICE OF THE FED. REGISTER, UNITED STATES GOVERNMENT MANUAL 360 (2013) (“Federal Deposit Insurance Corporation”).
20 Id.
21 See 12 C.F.R. Parts 323-391 (FDIC Regulations and Statements of General Policy).
22 A standard setting organization is a “voluntary membership organizations whose participants develop ‘technical specifications
to ensure that products from different manufacturers are compatible with each other,’ address certain threshold safety concerns,
or serve other beneficial functions.” SD3, LLC v. Black & Decker Inc., 801 F.3d 412, 435 (4th Cir. 2015). For a discussion of
agency adoption of privately developed standards see Jody Freeman, The Private Role in Public Governance, 75 N.Y.U. L. REV.
543, 638-43 (2000).
23 See, e.g., 6 C.F.R. § 37.19 (incorporating a standard by reference for the machine readable portion of the REAL ID driver’s
license or identification card); 7 C.F.R. § 1755.505(f)(6) (incorporating the ANSI/NFPA 70-1999, NEC® standard by reference).
24 See Robert W. Hamilton, Prospects for the Nongovernmental Development of Regulatory Standards, 32 AM. U. L. REV. 455,
461 (1983).
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agency-specific mandate to use voluntary consensus standards pertains to the Occupational Safety and
Health Administration (OSHA) at the Department of Labor. OSHA’s enabling legislation provides that:
the Secretary [of Labor] shall ... by rule promulgate as an occupational safety or health standard any
national consensus standard, and any established Federal standard, unless he determines that the
promulgation of such a standard would not result in improved safety or health for specifically
designated employees. In the event of conflict among any such standards, the Secretary shall
promulgate the standard which assures the greatest protection of the safety or health of the affected
employees.25
Another law speaks to the issue more generally. Section 12(d) of the National Technology Transfer and
Advancement Act,26 as amended, provides that “all Federal agencies and departments shall use technical
standards that are developed or adopted by voluntary consensus standards bodies, using such technical
standards as a means to carry out policy objectives or activities determined by the agencies and
departments.”27 In order to do so, they shall “consult with voluntary, private sector, consensus standards
bodies and shall, when such participation is in the public interest and is compatible with agency and
departmental missions, authorities, priorities, and budget resources, participate with such bodies in the
development of technical standards.”28 The law provides for an exception if compliance is “inconsistent
with applicable law or otherwise impractical.”29
Standard-setting and standard adoption practices are the subject of guidance from both governmental and
nongovernmental authorities. The Office of Management and Budget (OMB) provides guidance to
executive branch agencies in this area through OMB Circular A-119, “Federal Participation in the
Development and Use of Voluntary Consensus Standards and Conformity Assessment Activities,” which
address applicable statutes, executive orders, and other relevant authorities.30 On the nongovernmental
side, the American National Standards Institute (ANSI), a private not-for-profit organization, serves as
“administrator and coordinator of the United States private sector voluntary standardization system.”31 It
does this by accrediting the procedures of standards-developing organizations.
Non-Governmental Entity with a Federal Charter
Another quasi-governmental model entails the establishment of a federally chartered corporation with
congressionally sanctioned, exclusive jurisdiction over activity in a specific quarter of American life. In
general, whereas the government corporations discussed above generally are viewed as entities of the
federal government, the federally chartered organizations discussed here are not. In contrast to regulation
through a government corporation, Congress generally does not vest federally chartered organizations
with specific statutory regulatory authorities or mandates. Rather, the entity has been charged with

25 The Occupational Safety and Health Act of 1970, Pub. L. No. 91-596, § 6, 84 Stat. 1593.
26 Pub. L. No. 104-113, 110 Stat. 783 (1996) (codified as amended at 15 U.S.C. § 272 note).
27 Technical standards are “performance-based or design-specific technical specifications and related management systems
practices.” Pub. L. No. 104-113, § 12(d)(5), 110 Stat. 783 (1996) (codified as amended at 15 U.S.C. § 272 note.).
28 Id. at § 12(d)(2).
29 In such a case “a Federal agency or department may elect to use technical standards that are not developed or adopted by
voluntary consensus standards bodies if the head of each such agency or department transmits to the Office of Management and
Budget an explanation of the reasons for using such standards.” Pub. L. No. 104-113, § 12(d)(3), as amended. (Codified as
amended at 15 U.S.C. § 272 note.).
30 U.S. EXEC. OFFICE OF THE PRESIDENT, OFFICE OF MGMT. AND BUDGET, OMB Circular A-119, Federal Participation in the
Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities, available at
https://www.whitehouse.gov/sites/default/files/omb/inforeg/revised_circular_a-119_as_of_1_22.pdf.
31 See Introduction to ANSI, ANSI, https://ansi.org/about_ansi/introduction/introduction.aspx?menuid=1 (last visited Nov. 9,
2016).
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operating in the given arena consistent with private arrangements, existing statutes, and other legal
authorities.
One notable example of this kind of mechanism is the United States Olympic Committee (USOC), which
is a federally chartered corporation with circumscribed jurisdiction. In 1950, an existing organization, the
United States Olympic Association, was established by law as a federal corporation.32 Among other
effects, this charter empowered the organization “to exercise exclusive jurisdiction, either directly or
through its constituent members or committees, over all matters pertaining to the participation of the
United States in the Olympic Games and in the Pan-American Games, including the representation of the
United States in such games, and over the organization of the Olympic Games and the Pan-American
Games when celebrated in the United States.”33
As amended and codified, the organization’s enabling statute arguably broadens the scope of its reach by
authorizing it to recognize subordinate entities that govern particular sports. It states, “[f]or any sport
which is included on the program of the Olympic Games, the Paralympic Games, or the Pan-American
Games, the corporation [USOC] is authorized to recognize as a national governing body ... or as a
paralympic sports organization ... an amateur sports organization which files an application and is eligible
for such recognition.”34
The history of the United States Anti-Doping Agency (USADA) illustrates a different path by which an
organization and its authority over private actors might be statutorily recognized. USADA was created in
2000 “as a result of the recommendations made by the United States Olympic Committee’s Select Task
Force on Externalization in order to bring credibility and independence to the anti-doping [efforts] in the
U.S.” 35 In 2006, a provision of the Office of National Drug Control Policy Reauthorization Act
established that the USADA was designated as “the independent anti-doping organization for the amateur
athletic competitions recognized by the United States Olympic Committee.”36
Self-Regulatory Organizations
A self-regulatory organization (SRO) is another regulatory model that is characterized by significant
private involvement. Although there is no formal definition of what constitutes an SRO, these
organizations are generally viewed as private entities formed by members of an industry in an effort to
“self-regulate,” either because traditional governmental regulation is impractical or because the industry
wishes to deter governmental regulation by demonstrating that the industry can effectively supervise
itself.37
SROs generally take two forms: either the organization is truly private, with no involvement from the
federal government, or the SRO is imbued with some federal powers and maintains a relationship with the
government, generally through a supervising agency. An example of a purely private SRO is the
International Association of Antarctica Tour Operators (IAATO).38 That organization was formed in 1991
by private tour operators as a means of ensuring safe and environmentally appropriate travel to the

32 Pub. L. No. 81-805, 64 Stat. 899 (1950) (codified as amended at 36 U.S.C. §§ 220501-220529).
33 Id. at § 3(3). This statute, as amended and codified, now also includes such jurisdiction with regard to Paralympic Games. See
36 U.S.C. § 220503(3)-(4).
34 36 U.S.C. § 220521(a).
35Independence and History, U.S. ANTI-DOPING AGENCY available at http://www.usada.org/about/independence-history/ (last
visited Nov. 9, 2016).
36 Pub. L. No. 109-469, title VII, 120 Stat. 3533 (2006).
37 For a broader discussion of the role of SROs see, Freeman, supra note 22, at 644-52.
38 What is IIATO?, INT’L ASS’N OF ANTARCTICA TOUR OPERATORS, http://iaato.org/what-is-iaato (last visited Nov. 9, 2016).
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Antarctic. Members of the organization, which currently includes all companies providing commercial
passenger vessel tours of the Antarctic, must “meet all of the association’s standard operating procedures
and established procedures and guidelines designed to promote safe and responsible operations in
Antarctica.”39 Membership in the organization is voluntary, and the IAATO has been delegated no
governmental authority by the United States government.
Other SROs are more significantly intertwined with the federal government. The Financial Industry
Regulatory Authority (FINRA), the self-regulatory body for broker-dealers, is such an example.40 FINRA
was not created by federal law, but federal law does require individual broker-dealers to register with
FINRA and comply with its rules.41 The Securities and Exchange Commission (SEC), however, plays a
significant role in supervising and overseeing FINRA’s promulgation and enforcement of rules.42 For
example the agency may “abrogate, add to, and delete from” any FINRA rule and can “relieve” the
organization of its enforcement powers.43 Thus, although FINRA has effectively been provided with
regulatory and enforcement authority, the SRO exercises those powers under the supervision of the
SEC.44
This concludes my statement for this hearing on regulating space, in which I testified on regulatory
organizational frameworks that currently exist in federal law, with a focus on those organizational
frameworks that involve participation by private entities. I will respond to any questions you might have
at the appropriate time.

Disclaimer
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CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
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permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

39 Frequently Asked Questions, INT’L ASS’N OF ANTARCTICA TOUR OPERATORS, http://iaato.org/frequently-asked-questions (last
visited Nov. 9, 2016).
40 About FINRA, FIN. INDUS. REGULATORY AUTH., http://www.finra.org/about (last visited Nov. 9, 2016).
41 15 U.S.C. § 780(b)(8).
42 Id. § 78o.
43 Id. § 78s.
44 See Sorrell v. SEC, 679 F.2d 1323 (9th Cir. 1982) (rejecting claim that delegation to National Association of Securities Dealers
(FINRA predecessor) was unconstitutional).
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