NEEP 602 Lecture #38

NEEP533 Course Notes (Spring 1999)
Resources from Space

Lecture #34 First, we kill all the lawyers!

Title: Legal Regimes for Space Enterprises - Background (largely based on Bilder, et al., 1989)

Major Approaches to Implementation of a Lunar Enterprise

Management Components for a ³He Enterprise

Financial and Management Approaches to a ³He Enterprise

Semi-qualitative Rankings for Various Approaches a ³He Enterprise

Private Initiative priority sequence

Financial Environment
Management Environment
Regulatory Environment
Treaty Environment
U S. Political Environment

National Government Initiative or Government/Private Initiative

U.S. Political Environment
Treaty Environment
Financial Environment
Management Environment
Regulatory Environment

International Initiative priority sequence

Treaty Environment
Management Environment
Financial Environment
U.S. Political Environment

General Status: Current international treaty environment for either a private, government, government/private, or an international initiative to develop and utilize lunar resources is currently permissive, for the most part.

That is, no treaties to which the United States is a party would, on their face, prevent such development.
Political pressures, however, might be felt, depending on the nature of the initiative.

Relevant Law and Precedents

What counts as International Law

Law of present international political system "governing" the coexistence of nations

body of principles
rules
institutions
procedures and precedents

Benefits

regulation of relations
predictability of interactions
resolution of disputes

Does it work?

Most states comply with most of international law most of the time.

Sources

treaties or formal agreements
international customary law
general principles of law recognized by most major national legal systems

Treaties and Agreements

most important component of international law
legally binding only on those who expressly ratify
may require minimum number to "enter into force"
"reservations" related to particular provisions may be taken by individual states

Customary Law

widespread practice or common to most legal systems
"rule" followed as binding rather than convenient

Terrestrial Mining Law

National Systems

Essentially all "international" mining law derives from national law.
Alternative situations for a prospective miner:

owns land and mineral rights
owns only the mineral rights
leases mineral rights from owner

Public ownership of mineral bearing lands has its roots in "sovereign" rights, i.e., the rights of the crown.
Access to public mineral rights:

mining claims system (miner has title to minerals)
concession or leasing system (state has title to minerals)
state production
state-private partnerships
state managed contracts with private entities

Regulatory control may be exerted by the state

Historical Background

United States

Private enterprise under regulatory framework (General Mining Law of 1872)

claims system (metallic and non-metallic minerals)
bidding/leasing system (fossil fuels)

No effective national minerals policy except during war-time (W.W.II and Korea)

strategic materials "policy" driven by the international marketplace and domestic politics
strategic stockpile no longer a priority issue

Soviet Union/Russia

Original objectives of state production

self-sufficiency
economic base for settlement of Siberia
foreign exchange

Current objectives of state-private partnerships

foreign exchange
criminal and/or political control
re-emergence of nationalism

China

State production through military subdivisions (warlord tradition)
State emphasis on energy supply growth
Some transition to concession system?

Japan

"Private" enterprise with close state cooperation
Dependent on imports from foreign producers or from concessions

Western Europe

Spectrum of approaches

United Kingdom: mix between US. and Japan
France: similar to Japan
Norway: private internally, concessions in the off-shore
Sweden: state-private partnerships

Third/Fourth World Nations

Largely through concessions to private or foreign state-run entities

Implications for a Lunar Enterprise

Current situation is permissive, i.e., private enterprise could go the moon, extract resources, and sell them subject to national regulations and taxes.
Any future negotiated system for the development of lunar resources may or may not have a role for private enterprise, depending on the national political environment at the time of negotiation.
If there is international governance, possible, not mutually exclusive, roles are:

hired as contractor
given concession, based on bidding process, in return for rent and/or royalties
non-competitive concession in return for rent and/or royalties
concession to national entities or consortia who may contract to private enterprise

Antarctic Treaty System

"...Antarctica shall continue forever to be used exclusively for peaceful purposes and shall not become the scene or object of international discord."
Popular analog for future space law

Long standing international cooperation without conflict
Harsh and hostile environment
Unique environmental features
No established territorial jurisdictions, although disputed claims to sovereignty exist
No true human settlement
Important location for scientific research
High cost and technologically complex operations to survive
Management complexity
Potentially abundant resources

Treaty of 1959 (entered into force in 1961)

Negotiated and initially signed by 12 nations
Established:

a limited framework of principles and rules for the parties to follow
a mechanism for continued consultation
a requirement for unanimous approval of any changes
periodic Consultative Meetings
a provision for other nations to join in the treaty

Actions taken since have expanded the Treaty into a distinctive legal and political regime
Over 38 nations participate in close cooperation
Other specific agreements have arisen from the Treaty

Convention on Mineral Resources of 1988

Primarily a framework, under the Antarctic Treaty, for making decisions relative to mineral activity, if and when proposed.
Regulated activities by or for a sponsoring state:

mineral prospecting (notification but no prior authorization required)
exploration and development (after prior authorization)
logistical support

Regulations included:

environmental impact assessment, monitoring, and contingency plan
safeguards
removal and site rehab
annual reports
inspection
liability
response actions

Includes all islands and seabed of the continental shelf
Excludes scientific research
Not a detailed mining code
Contemplates activities by private enterprise if sponsored
Fees, etc., can be set but use is restricted to scientific research in Antarctica or to other Antarctic interests of the parties.

Note: Ratification not achieved due to opposition of the environmental community to any mineral related activity in the Antarctic (CRS 1995)

Protocol on Environmental Protection of 1991

Note: Failure of gaining ratification of the Convention on Mineral Resource Activities led to negotiations that led to this Protocol. In addition, in 1990, US law made it a criminal act for US persons to participate in Antarctic mineral resource activity (CRS 1995)

Definitive treaty arrangement relative to previous Antarctic agreements.
Consolidated, comprehensive framework for a regime of environmental protection for the Antarctic

expedition amendment possible

Antarctica is designated "as a natural reserve, devoted to peace and science."
Supersedes the Convention on Mineral Resources of 1988
Nations can opt out at any time in the future
Requires:

environmental impact assessments for almost any activity

however, national discussion allowed on which activities require assessments, and
there is no independent review

protection of flora and fauna
waste disposal and management
marine pollution control
area protection and management
prohibition of mineral resource activities

Concern that by superseding the regulatory regime of the Convention on Mineral Resources, the Protocol may ultimately damage the Antarctic environment when minerals are discovered and nations opt out of the Protocol to mine them (Vicuna, 1994)

Note: The US Senate has ratified this Protocol, however, the President (as of4/5/95) had not deposited the instruments of ratification pending action on implementing legislation which will impact the NSF's administration of the US Antarctic Program (CRS 1995)

Lessons Learned?

relative simple, pragmatic, and flexible approach
largely based on the interests of the "user" states
bypass troublesome issues of principle not requiring an immediate solution
tailored, decentralized, evolutionary institution
rely on competent scientific information and advice
recommending interim guidelines or voluntary restraints pending further experience and consultation
consultative mechanism with incentives to participate
pooling of research efforts and resources
notice, consultation and inspection to build confidence
up-front consideration of environmental concerns
open to all states with an interest
recognition of the international community as a whole
some regulation may be better than outright prohibition

Law of the Sea Convention of 1982

Jurisdiction Over Mineral Resources

No internationally accepted general law governing mineral resources of the sea.
National jurisdictions established by actions and conventions
Position of the US. is that under international law:

no state may claim or exercise sovereignty over the seabed beyond the limits of national jurisdiction
unless prohibited by international agreement, a state may authorize activities related to mineral resources of the sea, provided that:

no sovereignty is claimed or exercised
reasonable regard is given for the rights of other states

minerals extracted become the property of the mining state or person

"National jurisdiction"

originally 3 miles, or cannon shot distance
gradually extended to l2 miles
Truman extended US. jurisdiction to the continental shelf in 1945
other states took similar actions
fishing jurisdiction has been extended to 200 miles in many cases

Discovery, in 1950, of large areas of phosphate and of manganese-rich nodules containing copper, nickel, and cobalt in the deep sea began the attempt to frame an international treaty governing access to these and other resources.

Provisions of the Convention

Vague principle of "common heritage of mankind"
International Seabed Authority (ISA) under the UN
ISA is a one nation, one vote body

governed by an assembly of parties with an executive council
former Soviet Union given three seats on the executive council

Formation of an international mining company, the "Enterprise"
Industrialized nations required to sell their technology to the Enterprise
Private companies may be licensed by the ISA

fees of up to $1 million/year
tax rate of up to 70%

Revenues to be distributed to developing nations

US objections

Treaty would deter development

lack of certainty in granting contracts
artificial limitations on production
financial burden of fees and taxes
mandated transfer of technology

Inadequate role for US in decision making and in amending process
Funds could go to so-called national liberation movements

Status

117 nations signed originally
40 more later
65 ratifications by September 1994 (with 60 required for entry into force in November 1994)
15 did not sign, including the US, UK, Holland, Italy, Japan
US Deep Seabed Hard Minerals Act passed in 1980

NOAA authorized to license US nationals for deep seabed mining

Reagan proclamation in 1983 created the Exclusive Economic Zone (EEZ), extending 200 NM offshore
US, UK, France, Belgium, Germany, Holland, and Japan agreed in 1984 to respect each other's licensing operations

Re-negotiated Convention submitted by the President in October1994 for Senate ratification (U.S. Senate, 1994)

Confirms territorial limit of 12 nautical miles
Confirms exclusive economic zone out to 200 nautical miles
Addresses ocean pollution issues
Addresses scientific research
Enhances dispute settlement provisions
Changes mineral resources development provisions (Part XI)

provides guaranteed access by U.S. firms
eliminates mandatory transfer of technology
eliminates production controls
scales back administrative structure
activation of the Convention's operating arm can be blocked "by U.S. and a few of its allies."
the Convention's operating arm subject to same requirements that apply to private sector
U.S. has no obligation to finance the Convention's operating arm
subsides inconsistent with GATT are prohibited
existing seabed mine sites claims by U.S. licensed firms are grandfathered
environmental impact consideration strengthened

Potential problems

"common heritage of mankind" remains undefined, however, the President's message to the Senate indicates that it means:

the oceans and its floor are not subject to national appropriation
private economic activity is consistent with this concept
only mining activity is subject to regulation by the Convention's International Seabed Authority

the existence of the International Seabed Authority
the potential existence of the Convention's own operating arm, The Enterprise, as internationally supported competition. The President's statement contends that they have made this harmless
potential for inhibiting litigation

The U.S. is applying the Convention provisionally pending ratification and entry into force

provisional application will lapse in November 1998 if a sufficient number of industrialized States not become parties to the Convention.

Status

120 nations agreed to re-negotiated Convention (the Agreement)
50 states and the EC have signed the Agreement (19 had previously ratified the Convention and 18 industrialized nations, including the U.S.)
Senate has not ratified nor is it on the agenda of the Foreign Relations Committee (April 1999)

United States deep seabed mining law (DSHMRA)

stated to be similar to provisions in the re-negotiated Convention, however, mining remains subject to international regulation and competition from The Enterprise under the Convention so this statement is misleading

Text:

(see Bilder, et al., 1989)

References:

Bilder, et. al., 1989, Legal Regimes for the Mining of Helium-3 from the Moon, WCSAR-TR-AR3-8901-1

Congressional Research Service (CRS), 1995, Antarctica: Environmental Protection, Research, and Conservation of Resources, Issue Brief, 4/5/95.

Kiss, A, 1994, The Moon and Antarctica: Implications of and Experiences with International Law, in International Lunar Workshop, ESA SP-1170, p83-90.

U.S. Senate, 1994, Message from the President of the United States, Treaty Document 103-39.

Reynolds, G.H., and Merges, R.P., 1997, Outer Space: Problems of Law and Policy, Second Edition, Westview Press, 446 p.

Vicuna, F.O., 1994, The Protocol On Environmental Protection To The Antarctic Treaty: Questions Of Effectiveness, Georgetown International Environmental Law Review, 7, p1-13.

Proceedings of the Colloquia on The Law of Outer Space, International Institute of Space Law of the International Astronautical Federation, Published by the American Institute of Aeronautics and Astronautics

NEEP533 Syllabus

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University of Wisconsin-Madison

Fusion Technology Institute

Lecture #34 First, we kill all the lawyers!

Title: Legal Regimes for Space Enterprises - Background (largely based on Bilder, et al., 1989)

Text:

References: