New tool helps startups navigate numerous space regulations

Bayley Reichert We developed what we call the Space Regulation Calculator. It’s a free tool that’s on our website that was created by the regulatory lawyers at Aegis Space law. We wanted to develop a tool that would let our clients easily know what the regulatory timelines and costs are before they go down the route of engaging with an attorney or talking to regulators, so we developed this tool. Aegis Space law is a niche boutique law firm. We work with a lot of space startup clients. Over the last four years that we’ve been working with these startups, it’s become increasingly clear to them what sort of regulatory valley of death they face, because they’re so focused on technology and on getting investment. And they leave regulation as that last step, and then when they get to regulation, they suddenly realize that some of these timelines are two years away. And they’ve already got commercial agreements in place. And they’re trying to get launch agreements in place commercially. It can take a very long time to get spectrum allocations from the FCC. So they don’t fully understand how long these timelines are or how expensive they can be. The State Department export license costs money, the SEC license costs money, and that’s just the regulatory fees and the application fees, and hiring someone to help you write this stuff can be just as expensive. So we built this tool. It’s a very simple logic, a decision tree. It answers three key questions for a U.S.-based space company as they start their regulatory journey. This tool tells you what key agencies, federal agencies you need to talk to, and what the timeline is from application to submission to getting your license. This tool takes into account the time it takes to submit and not the time it takes to write the application. And it gives you the regulatory fees as to how much it’s going to cost. So just putting that out on the internet is hopefully going to give people at least some idea of ​​the road ahead and help them be a little more prepared. That will hopefully lead to less space startups falling into the regulatory valley of death.

Eric White Yeah, you know, you use the word startup, right? So generally speaking, you mean, maybe you have some business experience, but you’re a beginner at this point? In working with a lot of your clients, have you ever noticed that they’re not aware of the regulatory burden that this kind of work requires? Or, you know, what I really want to ask is, when you tell somebody your timeline, do they get a shock where they’re like, “Huh?”

Bayley Reichert Well, it’s common for them to be really shocked, especially if they worked for a large company and they had a department that used to handle this for them. And then they went out and started their own business, and they had no concept whatsoever, and they were insulated from this information. Or some people say they came from a foreign country and started a company here. This is a big part of our commercial space sector, foreigners coming here and bringing their innovations to the United States. It’s not like you’re going to be informed about U.S. export control laws when you go through immigration. That doesn’t happen. So no one is going to tell you about it unless you run into it somewhere in the U.S. industry. So it’s pretty unreasonable to expect most people to even know how much regulation they’re going to be dealing with. And even if you talk to authorities, they don’t necessarily understand the hassle of other authorities in regulating this process. For example, the State Department and the Commerce Department have worked together quite a bit on the export side. But the FAA often doesn’t know anything about the export licensing part, and the SEC has no reason to know about other regulators. They don’t understand how all of the licensing requirements stack up, what the timelines are, how they run in parallel. So hopefully regulators will gain some understanding of how difficult it is for private space companies to navigate this process.

Eric White Yeah, just think about what you just made me do. Do you have to deal with all of this? I mean, all the variables that you just described, multiple regulators involved in the launch of a new technology. You would say this doesn’t have to be super accurate, but how can you ensure the accuracy of this new tool when you have all the variables that you have to consider, like paperwork getting lost in the shuffle or even things like that?

Bayley Reichert Yeah, of course, you can’t guarantee anything. Especially when it comes to regulatory timelines, because some are more fixed than others. Regulators can often stop their timelines. For example, if you go back to the applicant and ask for more information, that timeline stops until you respond. Otherwise, your application may be sent back. And you have to start over. There are so many variables. This is just for people to start asking the right questions and getting ideas, but I do anticipate that there may be a second version of the calculator released that has more sophisticated knowledge or more sophisticated evaluations. But building that will take much longer because it will actually require more than just yes-no questions and branching logic. So we’re working on that right now. But, certainly, we can’t guarantee these timelines. There are too many variables. But we need to have some idea of ​​whether it’s going to take a month or it’s going to take two years. Still, it’ll be helpful.

Eric White Well, with all the talk about AI taking over jobs, it’s just serving to set expectations, or is this a new tool that might actually ease your workload a bit?

Bayley Reichert If we can find a way for AI to provide more information to the industry, I think we will pursue that. Right now, I’m not that concerned. There are so many variables and the human element is so large that when you start talking to regulators, there is a lot of discretion on the regulatory side. Again, for example, the AI ​​is not making the decisions. Oh, you need to ask more questions, or let’s apply a different definition of the word and say the AI ​​is not necessarily making those decisions. Then that extends the timeline. So I’m very concerned.

Eric White Last time we spoke, you mentioned how your law firm is in a niche area and you’re helping people in the commercial space sector and all the regulatory areas, but can you tell us a little bit about how regulators have been acting over the last few years? This is new for everybody. And they’re trying to make adjustments to make sure commercial space entities are successful and not hindering progress too much. Is that the case? Are they starting to work a little bit more with people who are just starting out?

Bayley Reichert That’s an interesting question. I don’t think regulators are necessarily thinking about how to cater to the burgeoning commercial space industry. They’re thinking about streamlining the whole regulation thing, and how do we keep the U.S. economy competitive in leading global innovation, and how do we protect national security, and make it easier for industry to work with us, and make sure we’re all on the same team. That’s one of the issues with this space industry being super niche, we tend to think at a very granular level, but regulators are actually thinking about so much more beyond the little space industry. So I think that’s part of what we need to think about differently. For example, in export control, there are reforms being made to move a lot of things out of ITAR and hopefully out of ITAR and into the EAR, because those are technologies that are no longer controlled for military applications and have become so widespread and used around the world. So it’s not the same need to have national security protections to keep them on the U.S. State Department’s U.S. Munitions List. I think the government is increasingly asking the industry for input on what should be less regulated or less restrictive. But it doesn’t seem like the motivation is specifically geared towards improving the convenience of commercial space rather than the economy as a whole.

Eric White Okay. And you said that you expect regulators to use this tool to demonstrate what the regulatory burden is for startups. Does that mean that regulators will reach out to you and use this tool themselves and even work with you to make this tool a little more precise?

Bayley Reichert So, we actually just released it last Tuesday, June 5th. I don’t know how many days it’s been, but we just released it. And we’ve already had some regulators reach out to us and ask about a second edition. So, I think that may be it. And I just want to be clear, the Office of Space Commerce in the Department of Commerce is pretty interested in streamlining regulations and they’re on a mission to streamline the regulation of commercial space. So, in my mind, that’s prominent among the regulators, and I don’t know how they’re going to do that. I don’t know for sure yet. This tool may be part of it. I want people to know about this tool. We’re going to be releasing a suite of tools for Aegis over the rest of the year. We’re going to be providing more medical information to lower the regulatory barriers. So that people can get their resources in one place. If you want to start a space company, the barrier should be innovation, not regulations or laws. So we’re trying our best to provide the tools to lower that barrier. Making things accessible to companies that aren’t yet cash flow positive. We are very aware that the market could shrink that. And commercial space investment is shrinking right now. So we’re doing everything we can. We’re going to provide a lot of tools if people want to use the regulation calculator or if they have any feedback or ways that they think we can improve. I welcome that feedback. And of course, our contact details are on the website.

Eric White So, I’m curious, have you ever worked with a client who has told you that they received a timeline that they had no idea about? And then they said, “Okay, this is kind of too long, so I’ve got to move on to something else.” Maybe even the client did? But have you heard a story like that?

Bayley Reichert Yes, one that is very clear to me is the area of ​​export control. I spend a lot of time on that. Let’s say someone comes to me and says, I want to hire a foreign national to work with me on this program. And if I say, you know, we can get you permission to access the controlled information, but it will take about six months, in many cases, that changes the equation of who you hire when you know that that person is going to be waiting six months for regulatory approval before they can start working. But we’ve really been trying to get more aggressive with licensing, especially in the telecommunications space. And, frankly, we’ve been able to turn things around a lot quicker than we thought we would. So, hopefully, we find a way to get licenses and negotiate with regulators quickly. If we think we have an opportunity, we’ll take that opportunity. But we’ve also tried to be realistic with people.