As the space economy develops, the problem of orbital debris becomes more significant and more important to solve. A recent Further Notice of Proposed Rulemaking from the Federal Communications Commission seeks to address this problem, but the indemnification proposal it includes would exceed the authority granted it by Congress and, therefore, would be unconstitutional. 

The proposal would require that satellite operators indemnify the U.S. government for damages incurred under two treaties to which the United States is a party – normally called the Outer Space Treaty and the Liability Convention – which render a country liable for damages caused by space objects launched in or by the country.

The authority the Commission cites for its rule is its “public interest analysis in issuing licenses for space station communications.” Communication by radio transmissions is at the heart of the FCC’s authority which means that its power to regulate orbital debris in the first place is already indirect: the FCC licenses satellites to use radio frequencies in the public interest and thereby claims authority to “ensure that space systems reviewed by the Commission have sufficient plans to mitigate orbital debris, consistent with the public interest.”

The indemnification proposal now attempts a double bank shot: the indirect authority over orbital debris is now said to allow the FCC to dictate who pays damages owed by the United States under its treaties. Such an attenuated statutory hook is akin to the FCC claiming authority to impose product liability rules for garage door manufacturers on the grounds that the doors’ remote controls use radio frequencies: such a rule may or may not be in the public interest, but it is a stretch to say that the decision belongs to the FCC.

Administrative agencies may only exercise that authority that is delegated to them by Congress. Admittedly, courts have been loath to find limits on agency authority based on the nondelegation doctrine in recent decades, and they have held the seemingly vague “public interest” standard is a sufficiently “intelligible principle” for how agencies should exercise their authority. But a principle for how an agency exercises its power is different than a grant of that power in the first place.

Indeed, even as courts continually reject nondelegation challenges to “public interest” standards, they do so by pointing to where the agency’s organic act authorized the administrative action in question. In New York Central Securities Corporation v. United States, for example, the Supreme Court held that a provision similar to the FCC’s public interest standard is not “a mere general reference to public welfare without any standard to guide determinations” because “the purpose of the Act, the requirements it imposes, and the context of the provision in question show the contrary.” Another example: in United States v. Lowden, the Court held, with regard to the “public interest” provision in a transportation statute, “the phrase ‘public interest’ … does not refer generally to matters of public concern … it is used in a more restricted sense defined by reference to the purposes of the Transportation Act.”  In other words, the public interest standard is hemmed in by the rest of the statute’s provisions.

The Court applied the same reasoning to the FCC’s licensing activities in NBC v. United States, holding that the Communications Act’s public interest standard was likewise not an unconstitutional delegation because the Act explicitly prescribed the broadcast licensing function. There again, the public interest standard dictates how to carry out an enumerated power: the licensing process should take place “in the public interest” as opposed to for someone’s private interest.

The FCC’s proposed indemnification requirement gets this backwards: here, the Commission seeks to use “public interest analysis” as a tool to implement its view on how the U.S. should pay on treaty obligations. But the “public interest” relates strictly to the means and process for allocating radiofrequency licenses and does not give the Commission a blank check to act carte blanche so long as the proposed end is – in the Commission’s view – in the “public interest.” The nondelegation problem here is, therefore, more salient than in the usual challenge because, unlike in the usual rejection of nondelegation challenges, the indemnification proposal does not point to the statutory context or boundaries that justify its foray into the policy area.

Further, the present indemnification proposal deals with damages under the U.S. government’s treaty obligations. While jurisprudence on whether a treaty is self-executing has been less than clear, since Edwards v. Carter,  it is unmistakable that a treaty cannot be self-executing in a way that abrogates a power reserved exclusively to Congress.  Edwards specifically brackets appropriations as requiring Congressional authorization, regardless of a treaty: “expenditure of funds by the United States cannot be accomplished by self-executing treaty; an appropriation by Congress can only occur through statute.” Since damages – and indemnification of treaty damages – are inextricably bound up in Congress’ power of the purse, they are unavailable for FCC administration.

None of the above is to say that regulation of the space ecosystem is undesirable. There are great benefits to having clear rules for the economic use of space and even greater benefits to the United States, as opposed to foreign adversaries, taking the lead on the creation of standards and norms for this inherently transnational enterprise. There has been broad support both within the government and from industry to empower the Office of Space Commerce to take the helm on this front. Such a move would be a better policy choice and more legally defensible.

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. To join the debate, please email us at [email protected].