On the Federal Government's Key Issues Paper for a Future German Space Act

On 4 September 2024, the German government published key points for a future German Space Act ("WRG") under the heading "For a Stronger Space Industry"

the so called „key issues paper“.

In the introduction, the WRG is primarily placed in the context of international regulatory obligations, the defence against threats to public safety and order, and the strengthening of security autonomy. This is supplemented by an affirmation of the intention to "strengthen the space industry and make it more competitive."

The key issues paper describes the following key contents of the WRG:

• Definition of the scope of application of the WRG
• Authorization requirements for space activities
• Liability recourse and cover for damages
• Monitoring and request rights and registration obligations
• Implementation, enforcement, and responsibility issues

The regulatory content comprises the standard minimum content of general space law. These topics are neither unexpected nor do they deviate from the standard topics of general space laws in other European countries.

The detailed content of the planned regulation is necessarily presented in abbreviated form in the key issues paper. An assessment will have to include the full, well-founded draft. However, the following can be noted at first glance:

1. Area of Application

In accordance with other European space laws, space activities of domestic persons and organizations also fall within the scope of the WRG if the space activities are carried out from abroad. This may make it necessary to consider both the German and one or more other applicable legal systems in parallel. The WRG therefore provides for the possibility of waiving its application if an equivalent level of protection exists in another applicable legal system. However, these cases are likely to be more complex and are linked to the issues surrounding the definition of the "launching state" in international law.

A waiver of the application of the WRG will, moreover, be differentiated and should not expected to be a general exemption from the WRG. Even with the same level of protection in other countries, the possibility of recourse under the WRG and the need to avert risks to national interests (point 2.d of the key issues paper) will still be relevant as an authorization requirement.

It would be desirable if a plannable waiver catalogue could be developed quickly for certain countries or, better in terms of plannability, would already be available when the WRG comes into force.

2. Authorization Requirements

The WRG provides for a general authorization requirement for space activities, which is also to apply to "partial(?)" space activities.

So far, there are no specific provisions for general simplifications regarding authorization requirements for SMEs and start-ups (except for the calculation of the coverage amount, see below) or for certain types of space activities. Other legal systems sometimes provide very specific exemptions regarding certain authorization requirements, which are linked to the specific space activity, its scope, or also, depending on the situation, the operator.

The authorization requirements themselves are partly characterized using very broad, undefined legal terms that still require considerable interpretation. Particularly in an area characterized by constant innovation and the need for long-term planning, requirements such as "...the necessary precautions have been taken in accordance with the state of the art..." or "...there is no reason to assume..." in the WRG or associated legal ordinances/technical guidelines will not only have to be more specific, but also ensure that no contradictions in interpretation arise. It would be necessary that these other legal sources will be fully differentiated and complete when the WRG comes into force; otherwise, the WRG would practically not functionally.

A license issued in accordance with the WRG will, as it is foreseen, relate exclusively to the space sector and not replace parallel licensing requirements from other sectors. This means that several authorization procedures may have to be carried out in parallel, possibly even at different levels and in addition to the authorizations of other countries. This raises questions about the uniformity of assessment principles, the coordination of requirements, and the overall duration of an authorization procedure. Overlaps are conceivable, for example, with the Aviation Act, the Telecommunications Act, NIS2, KRITIS assessments, and environmental compatibility issues, unless these matters are already covered in the WRG.

The requirement for authorization to take precautions for sustainable use and to avoid contamination (defined as space debris; point 2.c of the key issues paper) is particularly striking. The complex wording suggests a compromise after debate. The WRG will need to clarify what exactly is meant by precautionary measures for sustainable space utilization, whether contamination only includes space debris or more, and how far environmental concerns on Earth (e.g., the value chain?) must be considered. In any case, the wording of this authorization requirement makes it a potential gateway for possibly far-reaching, difficult-to-anticipate requirements. It should be emphasized, however, that this authorization requirement as a whole is subject to the proviso that innovation should not be inhibited. Given the backdrop of the EU Space Act, announced for 2025, and the many European initiatives on safety, security, and sustainability, this authorization requirement is expected to have significant content.

With regard to similar projects, the key issues paper sensibly stipulates that authorization for satellite constellations does not necessarily have to be applied for each individual satellite. The question will arise as to whether other projects with similar functions and implementations by the same actor can also be treated jointly.

3. Liability Recourse and Coverage Provision

The WRG will provide for the possibility of recourse against those responsible for damage for which the German state is liable under international principles. As part of the authorization requirements, a space operator must prove that it is financially liable for the recourse (Section 2.f of the Key Issues Paper). Such liability exists under the Outer Space Liability Convention of 29 March 1972 (UN Liability Convention).

The following points stand out: According to the key issues paper, the space operator must provide security in the form of insurance or a bank guarantee. Other forms of cover that could be cheaper or more liquidity-friendly for the space operator—e.g., in comparison to a bank guarantee or insurance—are not considered in the brevity of the key issues paper. There is practical experience and discussions on this in other countries, for example in the USA and—according to recent consultations—the UK, which should be included.

The possible recourse in cases of slight and medium negligence is foreseen to correspond to a maximum amount equivalent to 10% of the space operator's three-year average annual turnover, but not to exceed EUR 50 million. The standard recourse may therefore be significantly lower than the maximum limit of EUR 60 million in various European space laws, particularly for SMEs and start-ups with low turnover. As turnover has nothing to do with risk potential, this can be seen as supporting smaller and younger companies. However, the distinction between negligent and grossly negligent behaviour, which could still result in unlimited risk for SMEs and start-ups, remains difficult and is not found in the regulations of other European countries or the UN Liability Convention.

Only the limited maximum amounts mentioned above can be relevant for the cover amount within the scope of the authorization. If insurance is not possible or too expensive due to the tight insurance market for new technologies, limiting alternatives to a bank guarantee may represent an unnecessary hurdle; necessary funds may be withdrawn from innovation, contrary to the WRG's objectives. Other countries' experiences or ongoing discussions about adapting such rigid regulations should be considered.

So far, no provision seems to be planned for varying the cover amount depending on the risk, scope of the activity, or compliance with criteria beyond the law, such as promoting innovation. This is somewhat surprising, given that sustainability principles are supposed to be particularly important for the WRG. It may make sense to include, for example, the UK model, which ties cover amounts to criteria like sustainability or safety in space, thus incentivizing better practices. Other countries also differentiate based on the space activity or its scope.

Moreover, the key issues paper makes no reference to limiting the space operator's liability toward private third-party claims. In principle, such liability remains unlimited. However, a model used in other countries, where the state acts as a guarantor and limits liability, has not been adopted in the key issues paper.

4. Authorizing Authority

The BMWK is responsible for the authorization procedure. However, all "interested" departments must be involved in a condensed procedure at their request. Authorization is to be granted in "agreement" with these interested departments, implying that they hold veto rights. While the involvement of other departments is not unique to the WRG, when combined with the use of undefined legal terms and references to new technical developments, it increases planning risks. It would be beneficial if the ministries to be involved were defined in advance, ensuring also the built up of expertise. This is especially important since other approval requirements may apply separately, as noted in the key issues paper.

In competition with other countries, the duration, complexity, and clarity of the authorization procedure are critically important. Predicting the duration, outcome, and indirect costs of an authorization process will be decisive for German space companies when implementing space activities. The greatest possible concentration of clear responsibilities, beyond mere contact points, appears necessary to truly strengthen the German space industry.

5. General: Strengthening the German Space Industry, SMEs, and the Start-up Landscape

The Federal Government's communication on the key issues paper is summarized under the heading "Strengthening German Aerospace." This is repeated in the introduction to the key issues paper but is hardly reflected in the specific regulatory content presented.

In market statements on the regulation of space activities, concerns about bureaucracy and restrictive requirements, especially for SMEs and start-ups, play a significant role. This sentiment is also echoed in initial reactions to the key issues paper.
The notion that a legal and secure framework alone strengthens competitiveness in the long term appears not to be convincing enough (yet). For a market already characterized by high costs, high barriers to entry, and a reliance on innovation from SMEs and start-ups, additional statutory regulation initially has a negative impact. This was a central theme in the discussions surrounding the postponed draft of the EU Space Act, where deadlines for regulations, exemptions, and incentives linked to exemplary behaviour were proactively addressed by the EU during consultation. Such considerations may not apply to all aspects of the WRG but are relevant in some areas.

Essentially, however, these adjustments are minor and aim solely to mitigate short-term burdens. What is needed to strengthen the German space industry in the long term has already been sufficiently and frequently presented by stakeholders and interest groups. It would also significantly increase the acceptance of new regulations in the space sector and better align with the heading "For a Stronger Space Industry" if the WRG were embedded in a broader concept of measures with a direct strengthening effect, as announced, for instance, regarding Italy's new space law (currently in the stages of the parliamentarian process).