A small federal agency responsible for managing the booming commercial space industry is facing an uncertain future. The Office of Space Commerce, or OSC, has been targeted by significant budget cuts and staffing reductions throughout 2025, creating questions about its ability to oversee a global space economy now valued at over $600 billion.
Despite its critical role in licensing satellites and preventing orbital collisions, the agency's funding has been dramatically reduced, even as a recent executive order sought to elevate its status within the federal government. This has left industry leaders and policymakers concerned about the U.S.'s ability to support and regulate private space activities.
Key Takeaways
- The Office of Space Commerce (OSC) is facing an 85% proposed budget cut for fiscal year 2026 and recently lost 40% of its 2025 funding through a rescission.
- The agency is responsible for licensing commercial satellites, advocating for the space industry, and developing a crucial space traffic management system.
- These cuts come despite the global space economy growing to $613 billion in 2024 and a presidential executive order intended to elevate the OSC's importance.
- The future of the agency and its ability to prevent satellite collisions is now in question.
The Growing Pains of a Multi-Billion Dollar Industry
The global space economy has expanded rapidly, reaching an estimated $613 billion in 2024, an increase of nearly 8% from the previous year. This sector encompasses everything from launch providers and satellite manufacturers to the data services they enable, such as satellite internet and Earth imaging.
To manage this growth, the U.S. government relies on the Office of Space Commerce. Established in the 1980s under President Ronald Reagan, the OSC operates within the National Oceanic and Atmospheric Administration (NOAA) with a staff of about 50 people. Its mission is to foster a healthy commercial space sector in the United States.
What Does the OSC Do?
The agency's responsibilities are divided into three core areas:
- Licensing: It is the primary body for licensing and monitoring private U.S. companies that capture and sell images of Earth from orbit.
- Advocacy: The OSC works to simplify the regulatory landscape for space companies, coordinating with agencies like the FAA on launches and the FCC on radio frequencies.
- Traffic Management: Its largest and most critical task is developing a system to manage the flight paths of thousands of commercial satellites to prevent catastrophic collisions in orbit.
A Mandate for Orbital Traffic Control
One of the most significant tasks assigned to the OSC is taking over space traffic management for commercial and civil satellites from the Department of Defense. A 2018 directive, known as Space Policy Directive-3, initiated this transfer of responsibility.
In response, the OSC has been developing the Traffic Coordination System for Space, or TraCSS. This system is designed to monitor objects in orbit and issue collision warnings to satellite operators. With mega-constellations like SpaceX's Starlink adding thousands of satellites to low-Earth orbit, such a system is considered essential for the long-term sustainability of space activities.
TraCSS entered a beta testing phase in 2024, with major constellation operators participating. However, a government audit that same year found the project was significantly behind schedule and potentially years from full implementation.
The Department of Defense has long sought to hand off this responsibility to a civil agency to focus on its primary national security mission. The OSC was designated as that civil agency, making its success crucial for both commercial operators and the military.
Conflicting Signals from Washington
The OSC's recent history has been marked by contradictory government actions. In August 2025, a presidential executive order titled "Enabling Competition in the Commercial Space Industry" directed that the OSC be elevated. The order proposed moving the office out from under NOAA to report directly to the Secretary of Commerce, a move that would significantly raise its profile and influence.
This directive echoed a failed 2018 legislative attempt to create a similar, more powerful entity. The executive order was seen by many in the industry as a positive step toward prioritizing commercial space.
"Elevating the OSC would give it higher stature in setting more of the rules regarding commercial use of space, and it would make space commerce more visible across the broader economy."
However, this apparent vote of confidence was immediately undermined by severe financial pressures. The challenges began earlier in the year. In February 2025, a government efficiency initiative resulted in the termination of eight OSC employees, representing a 30% reduction in its workforce when accounting for contractors.
Budgetary Black Hole
The financial situation worsened dramatically as the year progressed. In March, the presidential budget request for fiscal year 2026 proposed slashing the OSC's annual budget by 85%, from $65 million down to approximately $9.75 million. This proposal sent shockwaves through the space industry, with leaders publicly urging Congress in July to restore the funding.
The most immediate blow came in September. The administration requested a 40% rescission—a "clawback"—of the OSC's already-approved budget for fiscal year 2025. Because the request was made late in the fiscal year, Congress did not have time to act before the September 30 deadline, and the funds were lost.
This loss of funding could force further staff reductions and may compel the agency to scale back its core functions, including the development of the critical TraCSS system. The contradictory actions—simultaneously elevating the office's status while stripping its funding—have created deep uncertainty.
With its budget decimated and its workforce reduced, the future of the small office tasked with policing the increasingly crowded highways of space is unknown. The question remains whether the OSC will be restructured, further downsized, or if it can recover to fulfill its essential mission for the burgeoning space economy.