This article was originally published on Law 360 on July 8, 2026 (paywall).

Space nuclear power is often framed as an engineering problem. It is also a deal architecture problem.

Companies that want to build orbital reactors, lunar surface systems or critical components cannot rely on standard joint venture or supply agreement templates when foreign investment constraints, export controls and treaty-linked liability are part of the picture. This article reviews these issues at a high level and provides guidelines for negotiating and drafting deals.

 The emerging market for space nuclear power is usually discussed in terms of technology, mission need and federal policy. Those are visible pieces. The less visible, but highly important, commercial question is whether the transaction documents can handle national security, export controls, foreign investment review, launch oversight and international responsibility concerns.

 The White House's recent focus on space nuclear power makes answering that question an immediate and important need. In April, the White House issued NSTM-3 establishing the National Initiative for American Space Nuclear Power and directing an interagency push to accelerate space nuclear development and deployment.[1] For companies pursuing orbital reactors, lunar surface systems, enabling subsystems or critical component manufacturing, the transaction structure may matter almost as much as technical design.

 This is not only a space story. Similar structuring issues are beginning to appear in terrestrial advanced nuclear projects, including small reactor concepts tied to data center power demand. In both settings, investors and counterparties want access, governance, milestones, and downside protection; regulators want control over who sees what, who owns what, and how risk is contained.

Why Standard Templates Break Down

 A conventional JV agreement assumes the parties can negotiate governance, information rights, vetoes, board composition and transfer rights largely as a matter of private ordering. In space nuclear power, those provisions can trigger regulatory consequences and, in some cases, determine whether a deal is viable at all.

The result is that ordinary commercial drafting can fail for reasons that have nothing to do with price or performance. The problem is not that the base forms are badly written. The problem is that they are written for a world in which the business deal and the national security overlay are separate. In many space nuclear transactions, they are not.

 Foreign access rights, negative controls, observer seats and bespoke consent rights may affect whether a deal presents an issue with the Committee on Foreign Investment in the United States or requires closer scrutiny of foreign influence over a sensitive business. For example, a foreign investor's board observer seat with access to technical briefings may be enough to raise concerns under the CFIUS if the company handles controlled nuclear or propulsion-related technology.

Similarly, negative control rights over budgets and research and development direction, which are routine in many industrial JVs, can be viewed as conferring control or impermissible influence over a sensitive business. Even information rights that permit access to design data, simulation outputs or fuel-cycle assumptions may implicate export controls or U.S. Department of Energy Part 810 restrictions, requiring those rights to be narrowed, conditioned or removed entirely.

 These concerns have practical consequences. Transactions can stall or die where governance terms must be restructured late in a deal process to address CFIUS risk, or where foreign investors are required to accept significant, nonstandard limitations, such as U.S.-only boards, proxy arrangements or technical firewalls that materially change the economics of the deal.

 The same dynamics can affect component supply agreements. A standard long-form supply contract often focuses on specifications, acceptance testing, quality control, delay risk, intellectual property ownership and warranty scope. In a space nuclear context, the parties must also address export classification of components, Part 810 authorizations, Nuclear Regulatory Commission-related issues for reactor equipment or materials, strict technical data segregation protocols.

 For example, a supplier's obligation to provide detailed engineering support may need to be conditioned on export approvals and failure to obtain that approval may need to be treated as a regulatory risk rather than a contractual breach. Thinking through, and documenting appropriately, the operational consequences of delayed or denied governmental approvals, is key.

JV Structuring Issues

 For JVs, control analysis should come first, not last. A foreign investor may hold a minority stake and still receive rights that matter for regulatory purposes, especially where the venture handles controlled technical data, reactor-related know-how, or mission-critical subsystems.

Three deal negotiation and drafting choices deserve particular attention:

• Board and observer rights: Board representation, committee rights and observer access should be examined not only through a governance lens but also through a foreign-access lens.

• Information rights: Technical reporting, engineering reviews and diligence packages should be tiered so that controlled information is disclosed only on a need-to-know and authorization-cleared basis.

• Transfer and financing mechanics: Convertible securities, warrants, side letters, step-up rights and default remedies can reshape the practical control picture long after the initial closing.

For early-stage companies, this also becomes a capitalization table design issue. The cap table is the record of who owns the company's equity and what rights attach to each class of ownership. Founders often think of it purely as a financing tool. In sensitive sectors, it is also a forward-looking compliance map. Who can invest, what rights attach to that investment, when those rights vest, and what technical visibility they bring are all questions that may affect strategic flexibility later.

 For example, a foreign investor's passive investment can evolve into a CFIUS-relevant position if convertible instruments, board rights or enhanced information rights vest over time. Similarly, granting board observance or reporting rights at an early stage may require later restructuring if the company's technology becomes export-controlled or subject to DOE or NRC oversight. Designing the cap table with these contingencies in mind (limiting certain rights, staging access to information, or conditioning rights/access on regulatory clearance) can preserve strategic flexibility and avoid costly renegotiations at critical points of growth or exit.

Component Supply Agreements

 Component supply agreements for space nuclear projects should be treated as commercial or regulatory risk documents, not just procurement documents. That is especially true where the supplier touches reactor-adjacent hardware, control systems, shielding, thermal management, mission integration or specialized engineering support.

A useful drafting approach is to build milestone gates around approvals and compliance status. Instead of tying obligations solely to design completion or factory readiness, parties can tie data release, prototype transfer, manufacturing commencement, and final delivery to export authorization status, end-use review, applicable launch approval milestone, and agreed safety review checkpoints.

 That approach does two things. First, it reduces the chance that one party breaches for failing to do something the law or a regulator temporarily prevents. Second, it forces the commercial timetable to reflect the real sequencing of a highly regulated program.

Indemnification and Treaty-Linked Risk

Indemnification is where private contract logic meets public law reality. Under Article VI of the Outer Space Treaty, states bear international responsibility for national activities in outer space, including activities carried out by nongovernmental entities.[2] That does not mean private parties cannot allocate risk among themselves. It does mean the contract should be drafted with an awareness that state responsibility and international claims frameworks exist in the background.

 The U.N. principles on nuclear power sources in outer space provide guidance for project and contract design.[3] The principles focus on reduction of risk to the public and the environment of harmful radiation or radioactive materials when nuclear power sources are used in outer space, through safety assessments, probabilistic risk analysis and adherence to the "general concept of defence-in-depth" or safety through redundancy.

 For nuclear reactors specifically, the principles provide that nuclear reactors should not be "made critical" or reach criticality, i.e., have their reaction chains become self-sustaining, before reaching operating orbit or an interplanetary trajectory.[4]

Another principle holds that design and construction should test possible accident scenarios that might occur pre-orbit, including launch failure, to ensure that reactors do not become critical before reaching orbit.[5] Translated to contractual terms, the parties can use the

U.N. principles' safety assessments and risk analysis to create a risk matrix that allocates responsibility between the parties for different failure scenarios, including pre-critical launch events, ascent anomalies, orbital commissioning failures, operational malfunctions, and reentry or debris scenarios.

 A well-structured indemnity package for these projects may need to address at least four categories of exposure:

• Launch and ascent failure risk, including failure before criticality;

• In-orbit malfunction, contamination or mission loss scenarios;

• Regulatory noncompliance tied to unauthorized transfers of controlled data or assistance; or

• Third-party claims and government enforcement or claims exposure that may not map neatly onto ordinary supplier indemnity language.

The key practical point is that indemnity language should be synchronized with insurance assumptions, launch arrangements, export control obligations and operational safety protocols. Boilerplate mutual indemnities will not be enough.

 Export Controls and Milestone-Linked Commercialization

 DOE Part 810 deserves special attention because it can apply to unclassified nuclear technology and assistance provided to foreign atomic energy activities, including assistance to foreign nationals. Part 810 is a federal regulation that controls the transfer of unclassified nuclear technology and assistance (not classified information, nuclear propulsion technology, hardware or uranium/fuel) to foreign (non-U.S.) atomic (nuclear) energy activities.[6]

 Even where parties are familiar with the International Traffic in Arms Regulations and Export Administration Regulations from the broader space sector, Part 810 can change the analysis for reactor-related design collaboration, engineering support and technical data exchange.

Transfers to persons located in countries that have an agreement for peaceful nuclear cooperation with the U.S., known as 123 agreements, are covered by a general authorization for assistance or transfers of technology.[7]

 Other activities that fall under Part 810, including assistance and transfers of technology to destinations without a 123 agreement and any assistance involving sensitive nuclear technologies (enrichment, reprocessing, plutonium fuel and heavy water production) regardless of the destination's status, require specific authorizations by the secretary of the Department of Energy.[8]

 The complex interplay between DOE Part 810, NRC Part 110, ITAR and EAR is one reason commercialization milestones should be drafted with precision by reference to specific regulatory approvals and compliance conditions. A prototype-complete milestone may be meaningless if technical data cannot yet be shared with a foreign-linked investor, if a cross-border engineering workstream lacks the necessary authorization, or if component exportability remains unresolved.

 This has a terrestrial analogue as well. Small nuclear systems proposed for data centers may involve many of the same investor, data-sharing and supply chain issues even if the mission profile is different. The legal lesson carries over: Commercialization schedules need to reflect regulatory sequence, not just engineering ambition.

Practical Drafting Takeaways

 A practical drafting framework for these deals should include:

• A control rights review that treats governance, observer access and consent rights as possible regulatory triggers, not just bargaining points;

• Technical data segregation rules that separate commercial reporting from controlled information and define escalation procedures for cross-border collaboration;

• Milestone definitions that are tied to approvals, authorizations and safety gates, as well as technical achievement;

• Transfer restrictions and financing covenants that account for future changes in the cap table; and

• Indemnity and limitation-of-liability provisions tailored to launch, orbital, contamination and treaty-adjacent risk, not generic industrial project provisions.

Closing Thought

For space nuclear companies and their investors, the core legal task is to structure a business relationship that can survive the combined pressures of national security review, export control compliance, launch and mission oversight, and public law liability. The same discipline applies to adjacent strategically sensitive satellite and terrestrial advanced energy markets.

For market participants in these industries, while the complexities are many, the opportunities and potential rewards are great. As JFK said, "The exploration of space will go ahead, whether we join in it or not, and it is one of the great adventures of all time."

About the Author

Kristie M. Blase is a shareholder at Frazer + Blase, P.C., with offices in Houston and New York. Kristie studied engineering and worked at an energy research center before law school. Her experience includes working at NASA, winning the Manfred Lachs International Space Law Moot Court competition, and twenty years of providing commercial legal advice to investors and businesses.