Behind the Scenes - Building Sustainable Stewardship of Lunar Resources Through a Trust
Throughout its history, humankind has relied solely on the resources available on Earth. In recent years the Moon has captured the interests of many because of the emerging potential to use its anticipated water and mineral resources. As the first steps towards extraction and utilization are being taken, the precise nature, usefulness and commercial value of lunar resources remains unknown. Further, as national appropriation is prohibited in outer space, there is as-yet no consensus on the legal framework for commercial utilization of lunar resources. There is a need to develop approaches to managing these resources in a sustainable and lawful way that provides clarity for governments and private actors alike. Given the unique legal environment in which these activities are taking place, there is an opportunity to explore new approaches to resource management, which might be different from familiar approaches taken on Earth.
In order to explore these approaches, Open Lunar and Purpose Economy set up an independent legal structure called a Perpetual Purpose Trust (PPT). The PPT itself is not new, but more commonly the PPT is used to implement steward ownership for purpose-driven companies. In this case, the PPT was used to create a general structure for independent multi-stakeholder governance with legal accountability mechanisms built in. This is quite different even from a democratically managed charity: by including accountability to the stakeholder process in the purpose statement itself this arrangement is self-reinforcing in a way that we believe hasn’t been previously explored.
Below, we describe how and why the trust was established, as a case study for those who may want to explore this application of the PPT model to other forms of multi stakeholder governance, or to resource management in different domains.
Momentum is growing around the question of lunar resource utilization
In 1967, the space faring nations signed the Outer Space Treaty (OST), which prevents any national appropriation of outer space. Fifty four years later, the international community is still unreconciled as to whether or not this prohibition applies to the extraction of resources from celestial bodies.
However in 2015, despite the different pro and con arguments, the United States passed the Commercial Space Launch Competitiveness Act which authorizes private US companies to own, operate and sell space resources. This initiative was soon followed by Luxembourg in 2017 which passed a similar law allowing the commercialization of space resources, and then by the UAE in 2020. Other countries such as Canada and Japan are contemplating similar laws.
In 2020, the US introduced the Artemis Accords, a set of principles between partners in the NASA-led Artemis program to return humans to the Moon. These principles aim to codify shared understandings and include an endorsement of space resource utilization. As of April 2021, nine countries have signed onto the Accords, aiming to lay the foundations for future collaboration regarding the exploration of the Moon.
That same year, NASA awarded 4 contracts to private partners to collect lunar regolith (the term for lunar soil) in-situ (without return to Earth), and demonstrate transfer of resource ownership to the agency. These are thought to be the first commercial purchases of a natural resource in space.
We need innovative models of lunar resource management if we are to stay on the Moon
International and bilateral agreements provide the fundamental framework for space activities, but these activities are currently outpacing policies and norms. Legal ambiguities and lacunae in international space law include not only permissibility of space resource utilization or commercial activities, but also the bases of jurisdiction and authority, and the rights and responsibilities of non-state actors.
Conflicts over resources, degradation of scientific sites, and early monopolization are all possibilities. If these were to happen, they could hinder markets and sustainable development of lunar activities.
NASA’s precedent setting contracts to purchase lunar regolith took a simple private property approach to resource transactions on the Moon. However, private property is but one of many ways to manage resources— in space or otherwise. Open Lunar Foundation sought to use the precedent as an opportunity to open up a wider conversation about approaches to property, resource rights and management of space resources. It conceived of the idea to pursue the same contracts as NASA, except that the purchases would be held in a trust, rather than by the government. The resulting rights and interests would then be assessed by experts and civil society, with the aim of maturing the bundle of rights framework for the Moon. By following in NASA’s footsteps, the purchases would have credibility that they might not have had otherwise. In the process, the trust established its own precedent: the first private-to-private (as opposed to private-to-government) commercial transaction for in-space resources.
The role of Open Lunar in creating the Breaking Ground trust
As a non-profit focused on developing new approaches to the management and governance of the lunar environment for the benefit of all life, Open Lunar took on the challenge to think about an innovative way to envision how we could manage lunar resources in a sustainable and yet economically viable way.
Open Lunar Foundation holds the position that solutions to lunar policy issues are best when they are adaptive, plural, polycentric and allow for agentic participation of many stakeholder types. When Open Lunar contemplated the purchase of lunar resources, the goal was to motivate questions of governance: that is, to “steward and demonstrate formal and effective institutional management of lunar resources between different stakeholders.” In order to demonstrate accountability to that goal, the idea of conducting this activity through an independent organization arose. Such an entity could focus on this mission without being constrained by the programmatic priorities or charitable purpose of Open Lunar Foundation itself. Further, Open Lunar sought to create an accountable, neutral platform where resource management approaches beyond its own internal values might come to the fore. However, setting this up as another charity would constrain these approaches to charitable ones. Similarly, a for-profit entity - despite every good intention - might also send a one-sided signal. The organization sought a way to indicate a legal commitment to pursuing “good governance” and the many forms that that might bring.
As part of its charitable purpose, this trust is meant to be “open-sourced” so that it can be adapted to different matters if proven viable. The case study will show the ‘behind the scenes’ of how we created the Breaking Ground Lunar Resource Trust.
Getting a Grasp on the Perpetual Purpose Trust Idea
The Open Lunar Foundation is a 501(c)(3) non-profit organization, so one of the very first issues encountered with creating a trust was to know which trust structure would be best suited legally to fill the goal of managing lunar resources. Open Lunar’s team partnered with Purpose Economy, due to its experience and leadership in developing new models of ownership for purpose-driven companies. The trust structure held a natural appeal due to the basic structure of stewarding assets for a beneficiary. Eventually two types of structures emerged as options: a Charitable Trust or a Perpetual Purpose Trust.
A Charitable Trust holds assets for charitable purposes, while a Perpetual Purpose Trust allows its stated purpose to be the sole beneficiary of the trust. Open Lunar decided to create Breaking Ground under the format of a PPT because it allowed for a greater flexibility in the goals of the trust.
Historically, “trusts'' originate from the need to have a structure to hold assets for the benefit of designated parties named as the beneficiaries. But the difference between a traditional trust and a PPT is that the beneficiary is the purpose itself, as defined in its founding documents (the “trust agreement”). A PPT is governed by a trust stewardship committee, also defined by the trust agreement. Another fundamental aspect of a PPT is the role of the trust enforcer. The trust enforcer serves as an independent arbitrator who can be seized by any interested party of the trust if there are concerns regarding the decisions made by the trust stewardship committee. The trust enforcer has a power of investigation and decides whether or not the purpose was respected. This accountability mechanism helps ensure that the purpose of the trust is respected at all times, which helps build the legitimacy of Breaking Ground.
This structure was appealing for the lunar regolith project because absent any precedents or clarity on jurisdiction, the Perpetual Purpose Trust offered a legal, yet self-contained, mechanism for accountability, without relying on national or international recognition or legislation. It also allowed for truly diverse and plural approaches to resource management, including for-profit and not-for-profit treatments. The trust could undertake multiple purchases and manage them each in different ways.
This trust is not meant to be a universal solution, but rather aims to open a field of possibilities and generate dialog on multiple ways to manage lunar regolith, where as many actors as possible can have a say on the matter.
Writing the Purpose of the Trust
The core of a PPT is its purpose. This purpose needs to be specific enough to be legally enforceable, and general enough to allow for some flexibility in implementation. There is no hard rule to achieving this balance but experienced lawyers will help guide the specific formulation that is chosen. One of the key considerations in spelling out the purpose, is to identify those qualities that the trust will be legally accountable to. These are the elements of the trust that cannot be changed without full consensus of the trustees and the trust enforcer (see below). It is an opportunity to encode certain values, principles or goals.
Breaking Ground’s purpose is “to steward and demonstrate formal and effective institutional management of lunar resources between different stakeholders,” with the following clarifications:
To steward lunar resources should be understood as managing the resources in a responsible and stakeholder-informed way.
The trust aims to create a prototype open for others to use. The open sourced process will aim to role model transparency and knowledge sharing for the common good.
The trust affirms the need for and value of multiple and diverse approaches to lunar resource management, and will explore and support the demonstration of multiple approaches to cooperative and peaceful resource management.
The trust affirms and acknowledges the breadth and diversity of pursuits on the Moon and seeks to incorporate and include views and interests of science, engineering, policy, politics and other issues.
The trust aims to benefit the communities investing in, building, developing, working and living on the Moon, as well as all life on Earth, now or in the future.
The trust aims to demonstrate the viability and the efficiency of multiple forms of resource management depending on criteria including, but not limited to, scarcity, geographical region, economic and scientific value.
The trust may use a variety of techniques including, but not limited to, commercial transactions, delegated representation and cooperation with other organizations in order to establish management regimes.
Composition of the Trust Stewardship Committee
The Trust Stewardship Committee is analogous to the board of directors for a corporation. It is composed of trust stewards who are chosen by the settlor and serve as individuals. While the trust, like any entity, may have a team executing day to day operations, the trust stewards are fiduciarily responsible for ensuring that the trust respects and fulfills its purpose across all activities undertaken.
The composition of the trust stewardship committee (TSC) is defined by the trust agreement document. The composition of this committee can only be changed by modifying the trust agreement after having a consensus of all the trustees and the trust enforcer. Depending on the nature of the trust and its remit, efficiency might be the guiding principle in committee design. In other cases, the guiding principle might be representation. Breaking Ground wanted to prioritise the representation of diverse viewpoints. In order to do so, the trust stewardship committee was designed to be composed of five trustees representing industry, science, civil society, and diplomacy. A fifth was designated as an “open” seat in order for the trust to be adaptive and meet any gaps in representation that emerge.
The trustee roles are further defined as follows:
Industry seat: Someone who is working with, or has worked with, a private company that wants to use lunar resources.
Science seat: Someone who is working closely with, or has worked with, a company, an organization or an agency that focuses on studying lunar resources, or related scientific questions.
Civil Society seat: Someone who is working with, or has worked with, a non-profit organization whose mission is aligned with the purpose of the trust.
International diplomacy seat: Someone who has links, or has had links, with the UNCOPUOS.
Fifth seat: Someone to complement one of the roles described above depending on the direction the trust stewardship committee wants to take.
Because the trustees are required to be in place before incorporation of the trust, the trust stewardship committee was designed with an initial composition of three seats only and a one year term. During that time, the three appointed members are to fill the two remaining seats. The complete trust stewardship committee will be formed after that initial year, with five seats each for a term of three years. The trustees are limited to two terms.
The PPT is governed by the trustees, who make decisions to guide the direction of the trust. Each trustee has one vote and decisions are made with a majority as defined in the trust agreement. The quorum shall consist of two voting members during the first year where the initial committee is only composed of three members. Once the full committee is appointed, the quorum shall consist of three votes out of five.
Determining the Settlor
The settlor is the person or company that creates the trust. The settlor shall provide the initial funds to the PPT, sign the trust agreement, and choose the initial trust stewardship committee members. The settlor shall remain a stakeholder of the trust but has no decision-making power over it or over the trust stewardship committee. Once appointed, the settlor can never be part of the trust steward committee nor fill the role of trust enforcer.
The question for Open Lunar was then to choose who would fill the role of the settlor. It seemed natural for Open Lunar to fill the role of the settlor given their role in catalysing the project, but this raised questions about the initial fund transfer due to its 501(c)(3) status. Open Lunar consulted with Stoel Rives, a law firm specialized in setting up PPTs, and Karl Mill, a lawyer specialized in non-profit organizations. Together, they found no issue for Open Lunar to be the settlor, as long as the initial funds were allocated through a “restricted grant agreement.” This type of grant can be made to non-charitable entities as long as it is made exclusively for charitable, educational, and scientific purposes including scientific research in the public interest and the advancement of public awareness and understanding in furtherance of the creation of a peaceful and self-sustaining human presence on the Moon, and the preservation of Earth’s biodiversity and knowledge.
Determining the Trust Enforcer
The trust enforcer is an independently appointed role within the trust, which has the authority and responsibility to ensure the trustees are upholding the purpose of the Trust. The trust enforcer reviews annual meeting notes of the Trust Stewardship Committee, and must be responsive and available in order to fulfill its role as per the trust agreement.
The trust enforcer does not have any decision-making power, but is crucial in the interpretation of Breaking Ground’s purpose. The trust enforcer helps balance the power of trustees while playing a guardrail role regarding the actions taken by the trust. The trust enforcer must be able to grasp the concepts and activities of the trust while remaining objective regarding the trustees’ decisions and their validity in relation to the purpose.
Breaking Ground’s Activities and Role
Looking ahead, Breaking Ground plans to undertake activities in three different areas.
1. Developing resource management policies
The goal is to find ways of managing lunar resources through innovative property rights regimes. The proposed policies will be created, analyzed, and published. In order to do so, Breaking Ground will be organizing and hosting consultative processes with a group of experts taking on an advisory role who will be working with Breaking Ground on these issues.
Breaking Ground will host curated expert consultations, drawing from relevant fields considered beneficial to fulfilling the purpose of the trust. Participants will serve at the invitation of the Trust Stewardship Committee, which will emphasize an international, interdisciplinary and intercultural composition. Participants will serve in their individual capacity based on their expertise and knowledge.
The consultative process will help Breaking Ground gain new insights, opportunities and advice. Those involved will not have any legal accountability nor formal governance power over the trust, but rather provide knowledge, skills and expertise towards the bigger task of defining regimes for space resources on the Moon.
2. Testing the viability of these policies by applying them to purchased regolith
The management regimes developed by the consultative processes will be applied to regolith purchased by Breaking Ground. These purchases are being made through contracts with spacecraft companies sending commercial landers to the Moon within the next 1-3 years. The wording of these contracts has also required special attention, as there was no precedent for this kind of transaction, nor precise guidance on the nature of property in this context. The contracts aimed to be as similar as possible to NASA’s wording, while intentionally leaving flexibility where interpretive details are central to the work of the trust. The draft purchase agreement was developed by the Breaking Ground team in collaboration with the firm B C Burr McCabe Law specialized in contract law, the details of which will be the topic of a future report.
The purchased regolith will then be managed according to the proposed policy, to test its viability on a concrete case study.
3. Advocating for a broader adoption of the created policies
As the viability of these policies becomes clear, the model can be adapted to other resources, or other multi-stakeholder governance processes, whether they are located in space or on Earth. These policies will be documented in an open manner, and designed to be as adaptative as possible.
With that approach, Breaking Ground wants to create a prototype open for others to use that includes the policies that the trust will be testing. This open-source process intends to role model transparency and knowledge sharing, while providing concrete management approaches that real world operators can draw upon to increase confidence and clarity, whether it be for commercial activity, life support services, preservation, or access regimes that address resource contention or help to ensure the integrity of scientific results.
Towards Resource Regimes for the Moon
Breaking Ground does not aim to be a single and universal solution to the question of how best to manage lunar resources. It is a small initiative that seeks to demonstrate that a model based on multilateralism and a bottom-up approach can be lawful and sustainable, for the benefit of all.
Breaking Ground will do its best to welcome as many voices and points of view as possible, and affirms the fact that the Moon holds a special and important place in the heart of every culture around the world. We are all stakeholders of the Moon and it is a global responsibility to ensure that we use its resources in a sustainable, lasting and respectful way.