Previously, Orion territory was the ill-defined 'Orion space', the areas surrounding the Orion Colonies and where they habitually traveled, and not including the Outer Dark. The collection of Orion Colonies was not imperialistic, and often co-existed with other races. It was in this nebulous area that the Botchok Planetary Congress (BPC) decreed the terms of their Orion Neutrality Act.
After the Four Years War saw the Klingon Empire invade the Federation via Orion space, the Federation formed the Rigel Demilitarized Zone Commission on reference stardate 1/9709.01 to decide the fate of Orion refugees and determine official boundaries for Orion territory, in which the BPC could carry out their neutrality. When the Axanar Peace Treaty on stardate 1/9806.13 called for the removal of all Klingon forces "to the opposite side of Orion space" this became a necessity.
The Commission considered several possible solutions. Once, a region of roughly 40 by 80 parsecs had been considered by the Federation Council to be adequate room for the Orions, but the free passage of a Klingon invasion force removed any generosity towards them. The mildest option put forth was to turn the whole of the Orion Arm into a demilitarized zone under Orion authority. The harshest involved full-scale military occupation of the Rigel system and all Orion Colonies.
- As the Orion Arm is a significant portion of the galaxy including all major powers of the Alpha and Beta Quadrants, this may actually refer to some part of the Orion constellation. See Orion Arm (region) for more information.
In the end, they proposed a simple 20-parsec-wide sphere centered on Rigel that would act as an enclave or reservation where Orions could live by their own rules under the terms of their neutrality. This was intended to be beneficial and mutually protective: it was considered ample room for a home-land, and preventing them from becoming a Klingon vassal state, with Starfleet maintaining the Federation side of the border. On the other hand, it would also contain and neutralize the Orions, and coincidentally allow the Federation to annex over 80% of the Orion Arm and many Orion Colonies. The Orion Space Navy was also restricted to this region.
The Commission visited Botchok (Rigel VIII) on stardate 1/9806.29 to meet with the BPC in a closed session. Here they laid out the plan and demanded its acceptance. It was met with rioting in the Congress that left two dead, but ultimately the BPC capitulated, under protest and with a narrow majority. Orion space legally, by unilateral treaty, became the Orion Neutrality Area.
On stardate 2/0801.24 (2267), the Organian Peace Treaty was imposed upon the Federation and the Klingon Empire, and lead to the formation of the Klingon Neutral Zone between the two powers. The Orions were ignored, but their Neutrality Area was left intact, overlapping the Neutral Zone and bordering both powers. They were still caught between the two superpowers, but fortunately, the Orions gained the Neutral Zone to explore.
The formation of the Orion Neutrality Area did not solve all the problems of the past, however, and created new ones for the Federation. The region remained disputed and the borders were difficult to patrol, and allowed Orion pirates and Klingon vessels to sneak across and go where they could. Additionally, the laws did little to stop the spread of Orions, nor affected those living on Federation worlds.
A great deal of confusion was also generated. Legally, the term 'Orion Colonies' referred only to Orion worlds within the Neutrality Area, and no longer included those outside. In blatant propaganda, the Klingons and Romulans used the name for all Orion worlds in Federation space as well, while those they'd conquered no longer counted as Orion. Even most Federation citizens could not distinguish between the two sets. This confusion was predicted to cause future troubles (FASA RPG modules: The Orions: Book of Common Knowledge, The Orions: Book of Deep Knowledge).