INTERVIEW: Timothy Hughes, SpaceX Chief CounselJanuary 14, 2008 at 5:32 pm | Posted in Interview | 2 Comments
Timothy Hughes serves as Chief Counsel for Space Exploration Technologies Corporation (SpaceX). SpaceX is an emerging launch services provider developing a family of launch vehicles intended to reduce the cost and increase the reliability of access to space. As lead corporate attorney for SpaceX, Mr. Hughes is responsible for the company’s legal, regulatory, and legislative affairs. Prior to joining SpaceX, Mr. Hughes served as Majority Counsel to the Committee on Science in the U.S. House of Representatives, providing counsel to the Science Committee generally, with a particular focus on the Space Subcommittee, and drafting and managing legislation, including the 2005 NASA Authorization Act (later enacted as P.L. 109-155), amendments to the Iran Nonproliferation Act, and space prize legislation, and drafting and shepherding the passage of commercial human spaceflight legislation, H.R. 3752 and H.R. 5382, the Commercial Space Launch Amendments Act of 2004 (enacted as P.L. 108-492). He also provided legal counsel to Science Committee during its review of the Space Shuttle Columbia accident and implementation of CAIB recommendations. Mr. Hughes was a senior associate with the Telecommunications and Litigation groups of Drinker Biddle & Reath, LLP, and an attorney in the Office of the Chief Counsel for the United States Secret Service. He is a graduate of William and Mary Law School and Georgetown University’s School of Foreign Service. Mr. Hughes is a member of the Bar in both Maryland and the District of Columbia. Mr. Hughes is the co-author of “Space Travel Law and Politics: The Commercial Space Launch Amendments Act of 2004,” JOURNAL OF SPACE LAW, Vol. 31, No. 1 (2005).
Res Communis: Let’s start with Commercial Orbital Transportation Services (COTS). It is being discussed a lot these days. As a practitioner and as an attorney with a client engaged in COTS, could you tell us what you see as some of the advantages and disadvantages of using a National Aeronautics and Space Act Agreement (Space Act Agreement) versus a regular procurement contract?
Hughes: Yes, certainly. I am a practitioner that represents a small business in the aerospace field. SpaceX has fewer than 500 employees at this point, so it falls in the small business category. Agreements authorized by NASA’s “other transaction authority” like the Space Act Agreements are really important for us. They serve to eliminate a number of clauses that would be associated with a Federal Acquisition Regulation (FAR) based contract. For instance, they are not contracts; they are not procurement contracts; or cooperative basis contracts; thus, they are exempt from the FARs. They are exempt from government cost accounting standards and various Federal statutes. Because they do not have the requirements associated with the FAR costs and standards, they are more flexible and more cost effective. Therefore, they better suit an emerging company like ours.
Res Communis: Is there a disadvantage to an emerging company?
Hughes: They don’t offer the same protection in terms of protests or challenges, so we are certainly glad to have our COTS agreement. Had we not secured a COTS agreement, I think the avenues are rather small for those who would protest the award of a Space Act Agreement. That might be a disadvantage for another party, but it certainly wasn’t for SpaceX in the context of COTS.
Res Communis: Would you consider yourself to be a space lawyer?
Hughes: I consider myself to be a business lawyer.
Res Communis: When you were working in Congress how would you characterize yourself as a lawyer at that point?
Res Communis: Ok, would it be a frazzled space lawyer or a frazzled staff attorney? Or something else?
Hughes: I worked with the full committee but focused on the space subcommittee. To put a finer point on it, I started exclusively with the space subcommittee and then I moved to the full committee. I had the portfolio for the entire science committee, so I had much broader experience than space. In terms of characterizing myself, I was a majority counsel so the work that I did there was subject-matter specific as to space and public policy. Majority counsel work also had broader Congressional reach: into parliamentarian activities; moving bills through the committee whether they were space-related or related to other issues within the committee’s jurisdiction; moving bills through the committee starting with the subcommittee, up through the committee, up through to the House floor, and then, ideally, moving them through Conference. So it was a mix of public policy related to space and broader work related to the mechanics of legislating.
Res Communis: When you were an attorney in the House, you worked with legislation that was designed to encourage commercial space. Now that you are actually working with a company do you see other legislation that may be needed that you didn’t see when you were in the House?
Hughes: Well, obviously the key legislation that is needed for broader civil and military space activities is, of course, the annual appropriations bill. On the appropriations front, I see a need for more money; certainly for NASA to achieve the objectives set out by Congress in the 2005 Authorization Bill. That was rather an ambitious task list that Congress voted into law. Absent the influx of additional moneys to the space budget and, candidly—it appears that this is unlikely to occur—but absent additional moneys, NASA would be very hard pressed to achieve the objectives that Congress has laid out for it. There will probably be a significant gap between the retirement of the Shuttle and the arrival of the Orion vehicle. Obviously, this is where SpaceX comes in.
Res Communis: As you know, there are a number of individual states in the U.S. that are getting more active in establishing spaceports and encouraging space activities. They include Florida, Virginia, California, New Mexico, and a few others. What do you see as the role of states as they try to pass state space laws and how should these laws fit in with the Federal law?
Hughes: I am quite aware of the Virginia legislation that would create a liability waiver for entities launching from the state of Virginia, or rather, launching human passengers from the state of Virginia. I know that Florida is also considering legislation. I think the efforts in other states are likely in the earliest stages. The role that they should play, I think, is consistent with what Virginia is doing. It is taking the right approach. I think the actual wording of the legislation they passed might have been different if we had had our preferences, but SpaceX wasn’t active in that process. I think the idea is that the states should conform their legislation to the Federal legislation; signing on to it by saying that in the context of a Federally licensed launch of a vehicle carrying a human passenger, the state wants to encourage emerging companies to operate from the state. Therefore, the state needs to create, at least in the short term, some protection that will enable companies to operate and develop their vehicles and that also recognizes the dangers associated with these vehicles and carrying humans. I think it is important for the states that might have viable launch sites for the very few companies that are likely to do this, to pass this type of legislation within the next few years.
Res Communis: At some point, these state laws may trigger the U.S. Federal Constitutional doctrine of preemption. The U.S. Federal Government has the responsibility to implement a licensing regime, in part, because of international space treaty obligations. If there are a number of states trying to get into an activity for which the Federal Government is internationally responsible, do you think preemption might happen one day? Should individual U.S. states be writing their laws with an eye toward preemption? Or does the doctrine not play in the equation at all?
Hughes: To be quite honest, I don’t think we really know at this point. I think states should be writing laws with an eye toward preemption. But this [industry] has such a “wild west” atmosphere in so many ways that we do not know when these launches will take place. We do not know what vehicles are going to be successful in terms of taking humans into space. SpaceX certainly thinks it has a viable plan and it has a time frame laid out for it, but there are other companies that are operating on their own or in secret. Blue Origin comes to mind. In some ways, I think that the legislation that was passed, even when I was in Congress, might have been a bit premature in so far as we have not seen any Federally licensed human space flight attempts since that legislation was passed in 2004. [Editor’s note: The Space Launch Amendments Act of 2004.] But at the time it passed, we thought we would see these launches in the very near term. I think that the one reality is that rocket science is hard; it is harder than it looks; and, it has taken longer than people thought it would. So there is no rush at this point for states to lock in legislation immediately, in my opinion. I think as companies continue to mature and their technologies become more robust the need for state legislation will become more profound. But as of December 2007, is it critical for any state to take action on this front at this point? Probably not.
Res Communis: Speaking of the 2004 legislation, one of the forces at play in that legislative process was the action of space advocacy groups. These are not the people that have companies or who are putting up capital, rather they are the people who philosophically believe that the private sector should be commercially active in space. If the law was a bit premature, was it in response to advocate action?
Hughes: To a large measure, I think the law was in response to the success of SpaceShipOne. Let me put a finer point on the notion of prematurity. I think that the law served a critical purpose at the time and that was to create an atmosphere and a concept by which industries could grow the personal space flight industry. The atmosphere and concept that I am talking about are a “hands off” approach, to the extent that third parties are not adversely affected by the actions of these companies as they pursue their broader goals. Although I say the legislation was premature, the concepts are valid and the concepts have given greater inertia to the whole forward movement. The finer points of how to regulate and what state level activity should be undertaken are probably a bit premature, given where technology has turned out to be.
Res Communis: So would you identify a next step or would it be appropriate to wait and see how things unfold for a while?
Hughes: I think we need to wait and see how things unfold.
Res Communis: At the international level, there is a lot of debate about personal commercial space flight and it revolves around a number of issues. One issue is that the U.S. legislation only addresses suborbital flight, which, the argument goes, is not by definition, spaceflight—even with the statutory distinction between “lift” and “thrust”. Some argue that because the flights are suborbital, they are more akin to aviation and therefore the International Civil Aviation Organization would be an appropriate venue in which to be address what is called personal commercial space flight at the international level. Do you have any response to that?
Hughes: I really don’t. SpaceX doesn’t focus on suborbital flight so this is not an area that I have put a lot of thought into since leaving Congress. However, the debate over aviation regulation versus space launch regulation was one that was vigorously undertaken when I was in Congress. The definitions of “suborbital flight” as they appeared in various drafts of legislation, I think H.R. 3752 and H.R. 5382, are quite different. Some definitions that were not made public were significantly different. In the end, the decision was made to regulate for the most part from the perspective of a launch vehicle as opposed to aviation. Domestically, I think that decision has been largely made. Internationally, I am sure that debate will be engaged.
Res Communis: What is the focus of SpaceX?
Hughes: Space X’s primary objective is to reduce the cost of access to space. We hope to do so by creating at least two lines of highly reliable launch vehicles, the Falcon 1 and the Falcon 9 and offering them at a price point that is certainly competitive in the international market but also significantly less expensive than U.S. domestic competitors. So far we have had two launches of the Falcon 1. The first was terminated after 29 seconds because of a leak in the first stage engine. The second launch made it to space but it fell short of the velocity needed to make the intended orbit. So SpaceX has had good progress with the Falcon 1. We hope to have continued full success with the Falcon 1 in 2008. We are proceeding with our Falcon 9 which is SpaceX’s significantly larger, I’d say intermediate, lift vehicle carrying about 9300 kilograms to about 3400 kilograms to geosynchronous transfer orbit. That will be our work horse for the broader mission and certainly for the COTs mission. When SpaceX talks about reducing the cost of access to space, for us that means we are also taking steps that will eventually allow SpaceX to safely carry human beings into orbit. The COTS program that we are working on with NASA has obviously been a real financial boost to the company, but more importantly it has also been a real opportunity to have a successful demonstration of the Falcon 9 vehicle and now the Dragon capsule — even more rapidly than we originally thought we would. So when asked about what SpaceX is and where it is going, I’d say that it is a company that is focused on reducing the cost of access to space and with the longer term aspirations of carrying passengers into space as well. The intermediate steps will be to demonstrate the COTS capabilities to NASA and to service the international space station market, which is a great market for SpaceX. SpaceX will also service other markets, for instance, the Bigelow market that looks to exist and continue to evolve the SpaceX capsule. Hopefully, in the near term if NASA exercises the options under our contract to begin ferrying astronauts to and from the International Space Station. And then beyond that, if you’ll excuse the pun, “the sky is the limit” for SpaceX.
Res Communis: You have a career that many of my students say they want to have.
What would you tell a law student that aspires to have a career similar to yours? What kinds of things should she study? What should she do?
Hughes: I think finding an area of specialty in space law would be the most helpful avenue to pursue. Developing an expertise in contracts, both commercial or government, would be very helpful. An expertise in export control law would be incredibly helpful. SpaceX spends a lot of its time, energy, and resources on ITAR related work. So ITAR expertise—especially as it relates to satellites or launch vehicles—would be a real benefit. Beyond that I think legislative work is certainly very helpful. Frankly, my career path was not one that I plotted out. I know some folks that do that in advance, 10 years before they make their assault on the world. This is certainly not what I did. I started off in the United States Secret Service at the Office of General Counsel and had some great experiences. I happened to be there when the [President Clinton and Monica] Lewinsky matter was being dealt with by the Secret Service in the White House.
Res Communis: Do you still have your sunglasses and ear wire?
Hughes: I was the opposite of that. They keep the attorneys locked up in a room. We didn’t get any of the paraphernalia. We were the nerds of the Secret Service. Moving from the Secret Service to a big law firm was the next step and obviously none of that had space related focus. However, I focused on telecommunications. Telecom law and my exposure to the gamut of telecom law: wire, line, wireless, and satellite has served me well. I not only developed somewhat of an expertise in that area but I also learned the administrative law process and that applies to so much of what I do at SpaceX. Then moving to Capital Hill from there was something I had always dreamed of doing. When that opportunity arose, I snapped it up and encountered Elon Musk and SpaceX while there. I was actually going to return back to my law firm and try to make a run at making partner. Instead, the SpaceX opportunity was presented to me and I took it. It was always my intention to develop subject matter expertise where I could and pursue my passion. My passion was not so much space, but legislative political work. It just so happened that space peaked my interest and has now become my passion. It has allowed me to take the administrative and political leanings that I have and integrate them into one job here at SpaceX. It has been a real dream come true for me.
Res Communis: What do you think is the most important issue for space law today?
Hughes: This will sound rather trite because it is an idea that I hear regularly. The biggest impediment in space law and business is export control. I think it is critical certainly on the satellite side of things, as well as on the launch vehicle side of things. I think the International Traffic in Arms Regulations (ITAR) reform is less likely to occur but I do think there are ways that ITAR can be reformed to encourage and enable emerging launch vehicle companies to succeed. ITAR reform is something that needs to be addressed and I am clearly not saying anything new here. There is an article in Space News this week calling for the very same thing. I have yet to see any serious, reform-minded approach. I have yet to hear of any political figure in the House, the Senate, or in the [Bush] Administration who is willing to take on this issue. There seems to be a lot of talk right now but very little apparent traction to reform ITAR.
Res Communis: If you talk to some people in the big aerospace companies they say that the ITAR is with us; it will never go away; all that can be done is learn how to live with them. Is that true for small companies?
Hughes: Well again, I work for a launch services company. I think there needs to be a distinction made between launch services and satellite manufacturing. With satellite manufacturing, I would be surprised if any large company would say, “Well this makes sense from our perspective” because the domestic satellite industry is hemorrhaging under ITAR, or at least that is what reports indicate. On the launch services side, I think ITAR is something that we have to live with. That notion is probably valid and accurate. I think working within the ITAR requires advanced planning, significant attention to details, and the outlay of significant personnel and financial resources. Invariably ITAR requires a small business like SpaceX to engage outside counsel for assistance. I think that one way that ITAR could be reformed to help emerging businesses like ours—and again I am speaking in the context of launch services companies—would be to eliminate some of the fees associated with ITAR. For instance, whenever SpaceX executes a technical assistance agreement, it almost invariably it requires a Directorate of Defense Trade Controls monitor to be present when we interact with a foreign entity. When those monitors come to SpaceX, or wherever else the meeting might be held, SpaceX, as every other company has to do, foots the bill for their time. That starts to add up. It has always surprised me that these individuals are being paid for the work they are doing not only by the taxpayer but also by individual companies like ours. A way to lighten the burden of ITAR compliance on small companies would be to wipe out some of these fees for small businesses. It wouldn’t reduce the time associated with ITAR compliance or the paperwork burden, but it would reduce the financial burden. I think this makes good policy sense.
Res Communis: Is there anything you want to add?
Hughes: I appreciate your wanting to chat with me. This is going to be a big year for SpaceX. We are anticipating having a few Falcon 1 launches and making progress on our Falcon 9 vehicle. From our perspective, 2008 and 2009 will be very telling years. As we look forward, we see an imminent gap in cargo in human space flight. SpaceX is hoping to close that gap for the Nation. We see ourselves as the company that will do that, so we are looking forward to the next few years because that means exciting times. As SpaceX continues to develop it is also so exciting to see other new aerospace companies pursue their goals. We are looking forward to seeing Virgin Galactic’s suborbital vehicles fly within the next two years. I believe Blue Origin is making tremendous progress, and the folks at Bigelow have had probably among the greatest successes so far with their inflatable habitats. So there is traction in this area. Sometimes I feel that we are on the cusp of an absolute explosion of growth. Then some days there is the realization that rocket science is indeed described as one of the most difficult things to do: it is awfully hard and it does take time. So time will tell and these are exciting times.
Res Communis: Thank you.