[Senate Report 108-111]
[From the U.S. Government Publishing Office]
Calendar No. 232
108th Congress Report
SENATE
1st Session 108-111
_______________________________________________________________________
THE COMMERCIAL SPACE TRANSPORTATION ACT OF 2003
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 1260
July 24 (legislative day, July 21), 2003.--Ordered to be printed
______
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred eighth congress
first session
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois RON WYDEN, Oregon
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
FRANK LAUTENBERG, New Jersey
Jeanne Bumpus, Staff Director and General Counsel
Ann Begeman, Deputy Staff Director
Robert W. Chamberlin, Chief Counsel
Kevin D. Kayes, Democratic Staff Director
Gregg Elias, Democratic General Counsel
Calendar No. 232
108th Congress Report
SENATE
1st Session 108-111
======================================================================
COMMERCIAL SPACE TRANSPORTATION ACT OF 2003
_______
July 24 (legislative day, July 21), 2003.--Ordered to be printed
_______
Mr. McCain, from the Committee on Commerce, Science, and
Transportation, submitted the following
R E P O R T
[To accompany S. 1260]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 1260) to promote the
development of the commercial space transportation industry, to
authorize appropriations for the Office of the Associate
Administrator for Commercial Space Transportation, and for
other purposes, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
Purpose of the Bill
The purpose of this legislation, as reported, is to authorize
the Office of Commercial Space Transportation within the
Federal Aviation Administration (FAA) for a period of five
years beginning in fiscal year (FY) 2004. The legislation also
would extend the authorization for indemnification offered to
the commercial space launch industry through the Commercial
Space Launch Amendments Act for a period of five years, until
December 31, 2009.
Background and Needs
The Office of the Associate Administrator for Commercial
Space Transportation (AST) is the only space-related office
within the FAA. Established in 1984 as the Office of Commercial
Space Transportation (OCST) in the Department of Transportation
(DOT), AST was transferred to the FAA in November 1995.
Under Title 49, United States Code, Subtitle IX, Sections
70101-70119 (the Commercial Space Launch Act), AST was given
the responsibility to--
(1) regulate the commercial space transportation
industry, only to the extent necessary, to ensure
compliance with international obligations of the United
States and to protect the public health and safety,
safety of property, and national security and foreign
policy interests of the United States;
(2) encourage, facilitate, and promote commercial
space launches and re-entries by the private sector;
(3) recommend appropriate changes in Federal
statutes, treaties, regulations, policies, plans, and
procedures; and
(4) facilitate the strengthening and expansion of the
United States space transportation infrastructure.
In fulfilling its responsibilities under the Commercial Space
Launch Act, AST issues launch licenses for commercial launches
of orbital rockets and suborbital sounding rockets. The first
United States licensed launch was a suborbital launch of a
Starfire vehicle on March 29, 1989. Since then, AST (including
its predecessor, OCST) has licensed more than 100 launches.
AST also licenses the operations of non-Federal launch sites,
or ``spaceports''. Since 1996, AST has issued site operator
licenses to four spaceports--
(1) California Spaceport at Vandenberg Air Force Base;
(2) Spaceport Florida at Cape Canaveral Air Force
Station;
(3) Virginia Space Flight Center at Wallops Island; and
(4) Kodiak Launch Complex at Kodiak Island, Alaska.
The first launch from a licensed, non-Federal facility was
that of National Aeronautics and Space Administration's (NASA)
Lunar Prospector aboard a Lockheed Martin Athena 2 rocket on
January 6, 1998, from Spaceport Florida.
A number of private and commercial companies are planning to
develop, or in the process of developing, reusable launch
vehicles (RLVs). Many of these companies have shifted their
focus toward suborbital market opportunities where the
technical challenges and costs to develop a suborbital RLV are
not as great as an orbital RLV. As discussed in a report
entitled ``Suborbital Reusable Launch Vehicles and Applicable
Markets,'' published by the Department of Commerce's Office of
Space Commercialization, there are a number of current and
emerging suborbital markets, which include military
surveillance, commercial/civil earth imagery, fast package
delivery, high speed passenger transportation, media,
advertising, and space tourism. The privately sponsored X PRIZE
competition will award $10 million to the first person or team
to fly a privately funded RLV to an altitude of 100 km, return
safely, and fly again within 2 weeks. The prize was created to
jump start the space tourism industry, but also serves as a
catalyst for the suborbital commercial space transportation
industry. Based upon information provided to the Committee, it
is expected that three United States teams will attempt
launches before January 1, 2005.
In 1988, Congress passed the Commercial Space Launch
Amendments Act (the Act) that, among other things, established
an insurance risk-sharing regime by which the Federal
government would provide indemnification against catastrophic
third-party losses resulting from licensed launch activities.
The Act established insurance requirements for persons licensed
to provide launch services. It allows the licensees, as an
alternative to obtaining liability insurance, to demonstrate
financial responsibility sufficient to compensate third-party
claims arising from death, bodily injury, or loss of or damage
to property resulting from licensed activities. This
requirement is limited to the lesser of $500 million or the
amount of the maximum probable loss (as determined by AST).
Under the Act, in no case will a licensee have to provide
insurance in excess of the maximum liability insurance
available on the world market at a reasonable cost.
The Act also required the Secretary to provide for the
payment of successful third-party claims against parties to the
extent such claims are not compensated by insurance, including
self-insurance. These payments are subject to advance
appropriations. With respect to the claims arising out of any
particular launch incident, payments are limited to $1.5
billion in excess of the required insurance amount. Since 1989,
this amount is indexed to reflect inflation.
The Act established a framework to govern third-party
liability compensation plans in cases where aggregate claims
are likely to exceed the required financial responsibility
amounts. The Secretary is directed to survey the causes and
extent of damages in such cases and to submit the results to
Congress. The President is required to submit to Congress a
plan outlining the dollar value of the claims and recommending
funding sources. The Act describes the procedures and
timetables applicable to Congressional consideration of the
plan, which must be approved by a joint resolution. Expedited
procedures are prescribed for any plan that requires additional
appropriations or legislative authority. The compensation plan
provisions apply only with respect to licenses issued or
transferred for which the Secretary receives a complete and
valid application no later than December 31, 2004.
The United States commercial space launch industry continues
to demonstrate a solid safety record and there has been no
event requiring implementation of statutory indemnification
provisions. However, a number of insurance market-driven
factors are coalescing at a time of decreased commercial launch
demand and heightened price sensitivity, reinforcing the
findings set forth in the FAA report, ``Liability Risk-Sharing
Regime for United States Commercial Space Transportation: Study
and Analysis'' (FAA Liability Study), dated April 2002, that
the existing risk allocation regime is adequate, proper, and
effective, as well as necessary to maintain a near-level
playing field with foreign competitors.
The FAA Liability Study included an evaluation of the effects
of the events of September 11, 2001, on the commercial space
transportation insurance market. The report noted the
increasing reluctance of underwriters and re-insurers to
participate in aerospace risks after September 11, reflecting a
re-evaluation of space risk in general. Their participation in
space risk is critical to this market segment. Insurance market
reactions have continued to evolve in this direction and
difficulties in insuring space risk in general have increased
due to recent satellite failures while in orbit, in addition to
the overall reduction in the aviation liability insurance
market following September 11. Although space insurance
covering satellite assets is different from launch liability
coverage, industry has advised the FAA that it is becoming
increasingly difficult and costly to cover any aerospace risk,
including launch liability.
Because of the decline in demand for worldwide commercial
launch services since 1999, competition between international
launch providers is fierce and prices have dropped. Further
increases in the cost of doing business would seriously hurt
United States launch competitiveness. Foreign launch providers
receive indemnification support from their governments. The
industry has indicated that paying the expense of any
additional insurance coverage requirements would not allow them
to stay in business, even under the best market conditions.
At its October 2002 meeting, the Commercial Space
Transportation Advisory Committee (COMSTAC) adopted a report
effectively endorsing the FAA Liability Study's analysis of the
issues and most notably its assessment that maintaining the
current liability risk-sharing regime is the only option that
achieves four out of the five objectives delineated by the FAA
in its study. In forwarding its report, the COMSTAC Chairman,
Livingston L. Holder, Jr., stated that ``continuation of this
regime is critical to the viability and global competitiveness
of United States space launch providers, which--along with
their subcontractors and suppliers--provide assured access to
space for military, civil, as well as commercial missions.''
COMSTAC also recommended in its report amending the
Commercial Space Launch Act by eliminating the sunset provision
applicable to indemnification authority or, alternatively, by
extending the indemnification authority for 10 years.
Legislative History
S. 1260 was introduced on June 13, 2003, by Senator McCain
and Senator Brownback and was referred to the Committee on
Commerce, Science, and Transportation. A hearing on the FAA
Reauthorization was held on April 10, 2003. On June 19, 2003,
the Committee met in open executive session and, by a voice
vote, ordered S. 1260 reported without amendment.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 1, 2003.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1260, the Commercial
Space Transportation Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
Gramp.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
S. 1260--Commercial Space Transportation Act of 2003
Summary: S. 1260 would authorize appropriations for fiscal
years 2004 through 2008 for the Department of Transportation's
(DOT's) regulatory and programmatic activities related to
commercial space transportation systems. In addition, the bill
would provide a five-year extension of DOT's authority to
indemnify nonfederal entities that are licensed by DOT to
provide such services.
Assuming appropriation of the specified amounts, CBO
estimates that implementing S. 1260 would cost a total of $65
million over the 2004-2008 period. Enacting this bill would
have no effect on direct spending or revenues.
S. 1260 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, and tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1260 is shown in the following table.
The costs of this legislation fall within budget function 400
(transportation).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2003 2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending under current law:
Budget authority \1\.................................. 12 0 0 0 0 0
Estimated outlays..................................... 12 1 0 0 0 0
Proposed changes:
Authorization level................................... 0 13 13 13 14 14
Estimated outlays..................................... 0 11 13 13 14 14
Spending under S. 1260:
Authorization level \1\............................... 12 13 13 13 14 14
Estimated outlays..................................... 12 12 13 13 14 14
----------------------------------------------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year for the Office of Commercial Space Transportation.
Basis of estimate: For this estimate, CBO assumes that the
amounts authorized will be appropriated near the start of each
fiscal year and that outlays will follow historical trends for
those activities. Based on information from DOT, we estimate
that extending the department's indemnification authority
through 2009 would have no significant budgetary effect over
the next five years. DOT has had this indemnification authority
since 1988 but has never had to pay claims to third parties for
accidents involving commercial space vehicles or services.
Intergovernmental and private-sector impact: S. 1260
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, and tribal governments.
Estimate prepared by: Federal costs: Kathleen Gramp; impact
on state, local, and tribal governments: Gregory Waring; impact
on the private sector: Lauren Marks.
Estimate approved by: Paul R. Cullinan, Chief for Human
Resources Cost Estimates Unit, Budget Analysis Division.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
NUMBER OF PERSONS COVERED
The Committee believes that the bill would not subject any
individuals or businesses affected by the legislation to any
additional regulation.
ECONOMIC IMPACT
This legislation would not have an adverse impact on the
Nation. It would extend the third party liability
indemnification offered by the Federal government to the
commercial space launch industry for an additional 5 years.
There have been no claims under this indemnification provision
since its inception in 1988.
PRIVACY
This legislation would not have a negative impact on the
personal privacy of individuals.
PAPERWORK
This legislation would not increase the paperwork
requirements for private individuals or businesses. This
legislation would require the FAA to submit a report to
Congress on the need for a distinct regulatory regime for
suborbital vehicles.
Section-by-Section Analysis
Section 1. Short title
Section 1 would entitle the bill as the ``Commercial Space
Transportation Act of 2003''.
Sec. 2. Office of Commercial Space Transportation
Section 2 would authorize appropriations for AST of
$12,601,000 for FY 2004, $12,979,000 for FY 2005, $13,368,000
for FY 2006, $13,769,000 for FY 2007, and $14,183,000 for FY
2008.
Sec. 3. Commercial space transportation indemnification extension
Section 3 would extend the indemnification available to the
commercial space launch industry until December 31, 2009,
providing an additional five years of coverage beyond the
current expiration date of December 31, 2004.
Sec. 4. Suborbital vehicle regulations
Section 4 would require the Secretary of Transportation to
submit a report to Congress on the need for a distinct
regulatory regime for suborbital vehicles. The report would be
due within 6 months of enactment of the bill.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
TITLE 49. TRANSPORTATION
SUBTITLE IX. COMMERCIAL SPACE TRANSPORTATION
CHAPTER 701. COMMERCIAL SPACE LAUNCH ACTIVITIES
Sec. 70113. Paying claims exceeding liability insurance and financial
responsibility requirements
(a) General Requirements.--(1) To the extent provided in
advance in an appropriation law or to the extent additional
legislative authority is enacted providing for paying claims in
a compensation plan submitted under subsection (d) of this
section, the Secretary of Transportation shall provide for the
payment by the United States Government of a successful claim
(including reasonable litigation or settlement expenses) of a
third party against a licensee or transferee under this
chapter, a contractor, subcontractor, or customer of the
licensee or transferee, or a contractor or subcontractor of a
customer, resulting from an activity carried out under the
license issued or transferred under this chapter for death,
bodily injury, or property damage or loss resulting from an
activity carried out under the license. However, claims may be
paid under this section only to the extent the total amount of
successful claims related to one launch or entry--
(A) is more than the amount of insurance or
demonstration of financial responsibility required
under section 70112(a)(1)(A) of this title; and
(B) is not more than $1,500,000,000 (plus additional
amounts necessary to reflect inflation occurring after
January 1, 1989) above that insurance or financial
responsibility amount.
(2) The Secretary may not provide for paying a part of a
claim for which death, bodily injury, or property damage or
loss results from willful misconduct by the licensee or
transferee. To the extent insurance required under section
70112(a)(1)(A) of this title is not available to cover a
successful third party liability claim because of an insurance
policy exclusion the Secretary decides is usual for the type of
insurance involved, the Secretary may provide for paying the
excluded claims without regard to the limitation contained in
section 70112(a)(1).
(b) Notice, Participation, and Approval.--Before a payment
under subsection (a) of this section is made--
(1) notice must be given to the Government of a
claim, or a civil action related to the claim, against
a party described in subsection (a)(1) of this section
for death, bodily injury, or property damage or loss;
(2) the Government must be given an opportunity to
participate or assist in the defense of the claim or
action; and
(3) the Secretary must approve any part of a
settlement to be paid out of appropriations of the
Government.
(c) Withholding Payments.--The Secretary may withhold a
payment under subsection (a) of this section if the Secretary
certifies that the amount is not reasonable. However, the
Secretary shall deem to be reasonable the amount of a claim
finally decided by a court of competent jurisdiction.
(d) Surveys, Reports, and Compensation Plans.--(1) If as a
result of an activity carried out under a license issued or
transferred under this chapter the total of claims related to
one launch or entry is likely to be more than the amount of
required insurance or demonstration of financial
responsibility, the Secretary shall--
(A) survey the causes and extent of damage; and
(B) submit expeditiously to Congress a report on the
results of the survey.
(2) Not later than 90 days after a court determination
indicates that the liability for the total of claims related to
one launch or entry may be more than the required amount of
insurance or demonstration of financial responsibility, the
President, on the recommendation of the Secretary, shall submit
to Congress a compensation plan that--
(A) outlines the total dollar value of the claims;
(B) recommends sources of amounts to pay for the
claims;
(C) includes legislative language required to carry
out the plan if additional legislative authority is
required; and
(D) for a single event or incident, may not be for
more than $1,500,000,000.
(3) A compensation plan submitted to Congress under paragraph
(2) of this subsection shall--
(A) have an identification number; and
(B) be submitted to the Senate and the House of
Representatives on the same day and when the Senate and
House are in session.
(e) Congressional Resolutions.--(1) In this subsection,
``resolution''--
(A) means a joint resolution of Congress the matter
after the resolving clause of which is as follows:
``That the Congress approves the compensation plan
numbered -------- submitted to the Congress on --------
, 20--.'', with the blank spaces being filled
appropriately; but
(B) does not include a resolution that includes more
than one compensation plan.
(2) The Senate shall consider under this subsection a
compensation plan requiring additional appropriations or
legislative authority not later than 60 calendar days of
continuous session of Congress after the date on which the plan
is submitted to Congress.
(3) A resolution introduced in the Senate shall be referred
immediately to a committee by the President of the Senate. All
resolutions related to the same plan shall be referred to the
same committee.
(4)(A) If the committee of the Senate to which a resolution
has been referred does not report the resolution within 20
calendar days after it is referred, a motion is in order to
discharge the committee from further consideration of the
resolution or to discharge the committee from further
consideration of the plan.
(B) A motion to discharge may be made only by an individual
favoring the resolution and is highly privileged (except that
the motion may not be made after the committee has reported a
resolution on the plan). Debate on the motion is limited to one
hour, to be divided equally between those favoring and those
opposing the resolution. An amendment to the motion is not in
order. A motion to reconsider the vote by which the motion is
agreed to or disagreed to is not in order.
(C) If the motion to discharge is agreed to or disagreed to,
the motion may not be renewed and another motion to discharge
the committee from another resolution on the same plan may not
be made.
(5)(A) After a committee of the Senate reports, or is
discharged from further consideration of, a resolution, a
motion to proceed to the consideration of the resolution is in
order at any time, even though a similar previous motion has
been disagreed to. The motion is highly privileged and is not
debatable. An amendment to the motion is not in order. A motion
to reconsider the vote by which the motion is agreed to or
disagreed to is not in order.
(B) Debate on the resolution referred to in subparagraph (A)
of this paragraph is limited to not more than 10 hours, to be
divided equally between those favoring and those opposing the
resolution. A motion further to limit debate is not debatable.
An amendment to, or motion to recommit, the resolution is not
in order. A motion to reconsider the vote by which the
resolution is agreed to or disagreed to is not in order.
(6) The following shall be decided in the Senate without
debate:
(A) a motion to postpone related to the discharge
from committee.
(B) a motion to postpone consideration of a
resolution.
(C) a motion to proceed to the consideration of other
business.
(D) an appeal from a decision of the chair related to
the application of the rules of the Senate to the
procedures related to a resolution.
(f) Application.--This section applies to a license issued or
transferred under this chapter for which the Secretary receives
a complete and valid application not later than [December 31,
2004.] December 31, 2009.
* * * * * * *
Sec. 70119. Office of Commercial Space Transportation
There are authorized to be appropriated to the Secretary of
Transportation for the activities of the Office of the
Associate Administrator for Commercial Space Transportation--
(1) $12,607,000 for fiscal year 2001; [and]
(2) $16,478,000 for fiscal year [2002.] 2002;
(3) $12,601,000 for fiscal year 2004;
(4) $12,979,000 for fiscal year 2005;
(5) $13,368,000 for fiscal year 2006;
(6) $13,769,000 for fiscal year 2007; and
(7) $14,183,000 for fiscal year 2008.