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[Senate Report 113-318]
[From the U.S. Government Publishing Office]

113th Congress      }                             {         Report
                            SENATE                         
 2d Session         }                             {         113-318
______________________________________________________________________
                                   

                                                       Calendar No. 612

   A BILL TO IMPROVE THE TRANSITION BETWEEN EXPERIMENTAL PERMITS AND 
      COMMERCIAL LICENSES FOR COMMERCIAL REUSABLE LAUNCH VEHICLES

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 2140

               December 12, 2014.--Ordered to be printed
               
               
                       U.S. GOVERNMENT PRINTING OFFICE 

49-010 PDF                    WASHINGTON : 2014                
               
               
               
               
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                    one hundred thirteenth congress
                             second session

             JOHN D. ROCKEFELLER IV, West Virginia, Chairman
 BARBARA BOXER, California            JOHN THUNE, South Dakota
 BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
 MARIA CANTWELL, Washington           ROY BLUNT, Missouri
 MARK PRYOR, Arkansas                 MARCO RUBIO, Florida
 CLAIRE McCASKILL, Missouri           KELLY AYOTTE, New Hampshire
 AMY KLOBUCHAR , Minnesota            DEAN HELLER, Nevada
 MARK BEGICH, Alaska                  DANIEL COATS, Indiana
 RICHARD BLUMENTHAL, Connecticut      TIM SCOTT, South Carolina
 BRIAN SCHATZ, Hawaii                 TED CRUZ, Texas
 ED MARKEY, Massachusetts             DEB FISCHER, Nebraska
 CORY BOOKER, New Jersey              RON JOHNSON, Wisconsin
 JOHN WALSH, Montana
                     Ellen Doneski, Staff Director
                     John Williams, General Counsel
              David Schwietert, Republican Staff Director
              Nick Rossi, Republican Deputy Staff Director
               Rebecca Seidel, Republican General Counsel
               
               
                                                       Calendar No. 612
                                                       
113th Congress    }                                  {      Report
                                 SENATE
 2d Session       }                                  {      113-318
======================================================================
 
     A BILL TO IMPROVE THE TRANSITION BETWEEN EXPERIMENTAL
           PERMITS AND COMMERCIAL LICENSES FOR COMMERCIAL REUSABLE 
           LAUNCH VEHICLES

                                _______
                                

               December 12, 2014.--Ordered to be printed

                                _______
                                

     Mr. Rockefeller, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 2140]

    The Committee on Commerce, Science, and Transportation, to 
which was referred a bill to improve the transition between 
experimental permits and commercial licenses for commercial 
reusable launch vehicles (S. 2140), having considered the same, 
reports favorably thereon with an amendment (in the nature of a 
substitute) and recommends that the bill (as amended) do pass.

                          Purpose of the Bill

    The purpose of S. 2140, as reported, is to improve the 
transition between experimental permits and commercial licenses 
of commercial reusable suborbital launch vehicles.

                          Background and Needs

    Under the Commercial Space Launch Act (CSLA) (98 Stat. 
3055), as amended by the Commercial Space Launch Amendments Act 
of 2004 (118 Stat. 3974), the Federal Aviation Administration 
(FAA) Office of Commercial Space Transportation (AST) issues 
both experimental permits for launch vehicle testing and 
separate licenses for operational activities. Commercial space 
companies in the reusable suborbital vehicle (RSV) market are 
in the process of testing vehicle designs under AST 
experimental permits. These permits are valid for a one-year, 
renewable term and allow for unlimited testing of new design 
concepts, equipment, or operating techniques; for demonstrating 
compliance with requirements to obtain a launch or reentry 
license; and for training crew. AST also determines the scope 
of design changes permissible before requiring another, 
separate experimental permit. Under current law, experimental 
permits are limited to non-revenue flights or activities.
    After obtaining a license from AST, companies may initiate 
revenue-generating flights--carrying cargo or crew for 
compensation--and gain coverage under the Federal Government's 
launch indemnification regime. Under current law (51 U.S.C. 
50906), however, once AST issues a launch or reentry license 
for a particular vehicle design (including for an RSV), the 
experimental permit ceases to be valid. In practice, the 
issuance of a license for operational flights could therefore 
impede commercial companies from continuing flight tests to 
improve the vehicle design, even if operational and 
experimental flights occurred on different launch vehicles of 
the same design. Companies have expressed concern that this 
restriction, in forcing an immediate transition between vehicle 
testing and commercial operation, is inefficient and limits 
safety and performance improvements. Further, they argue that 
delaying a license application in order to continue 
experimental tests could complicate efforts to seek capital. 
The bill would therefore address these concerns by more clearly 
establishing the flexibility to continue vehicle testing after 
a launch license has been granted.
    On October 31, 2014, the RSV SpaceShipTwo disintegrated 
during a flight test as part of the development and test 
program by the vehicle's manufacturer, Scaled Composites. 
Tragically, the accident resulted in the injury of the pilot 
and in the death of the co-pilot. The flight test occurred 
under an experimental permit issued to Scaled Composites. 
Virgin Galactic, a commercial space company, had planned to 
obtain a license to begin operating the vehicle for revenue 
upon completion of the flight test and development program 
underway by Scaled Composites, as early as 2015. The accident 
and the ongoing National Transportation Safety Board 
investigation, however, will likely alter Virgin Galactic's 
flight schedule and testing plan, making S. 2140 less time 
sensitive. Nonetheless, the flexibility afforded by S. 2140 
could prove useful to other commercial space companies that 
eventually transition from experimental permits to commercial 
licenses.

                         Summary of Provisions

    S. 2140 would amend section 50906 of title 51, United 
States Code, clarifying the purposes and limitations of 
experimental permits for RSVs. The bill would expand 
eligibility for experimental permits to include reusable 
suborbital rockets or rocket designs that have been issued a 
license for operational activities. In addition, commercial 
companies would gain the ability to launch and reenter RSVs to 
test existing design concepts, equipment, and operating 
techniques under an experimental permit. Current law, 
conversely, restricts permit eligibility to the testing of new 
design concepts, equipment, or operating techniques.

                          Legislative History

    S. 2140 was introduced on March 13, 2014, by Senators 
Heinrich, Rubio, and Tom Udall and referred to the Committee on 
Commerce, Science, and Transportation. Senators Feinstein, 
Wicker, and Cornyn have since been added as cosponsors. On 
April 9, 2014, the Committee met in open Executive Session and, 
by voice vote, ordered S. 2140 to be reported favorably with an 
amendment in the nature of a substitute.
    On May 16, 2013, the Science and Space Subcommittee held a 
hearing on ``Partnerships to Advance the Business of Space.'' 
The hearing focused on Federal oversight of emerging orbital 
and suborbital commercial space companies and the potential 
economic benefits of these activities. In written testimony, 
multiple witnesses advocated for greater flexibility in the use 
of experimental permits, arguing that the current, legislative 
restrictions could stymie growth in the commercial space 
industry. According to a witness, removing the automatic 
revocation of experimental permits would help the industry grow 
by enabling ``flight-testing of new vehicles as they enter 
service, something required as the industry matures into 
operating fleets of vehicles.''\1\
---------------------------------------------------------------------------
    \1\Senate Committee on Commerce, Science, and Transportation, 
Written testimony of Commercial Spaceflight Federation President Capt. 
Michael Lopez-Alegria, (USN Ret.), Hearing on Partnerships to Advance 
the Business of Space, 113th Cong. (May 16, 2013).
---------------------------------------------------------------------------
    On August 2, 2013, in the House of Representatives, 
Representatives McCarthy and Posey introduced the Suborbital 
and Orbital Advancement and Regulatory Streamlining (SOARS) 
Act. The SOARS Act is broader than S. 2140, as it seeks to 
streamline the permit/license process overall, would revise the 
CSLA definition of ``launch services,'' and would establish a 
demonstration project related to the use of experimental 
aircraft in launch and reentry activities.

                            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:

S. 2140--A bill to improve the transition between experimental permits 
        and commercial licenses for commercial reusable launch vehicles

    The Department of Transportation (DOT) regulates commercial 
launches of orbital and suborbital rockets. Firms that engage 
in such launches must obtain either an experimental permit--
which allows repeated launches to test rocket design concepts 
and operating procedures--or a commercial license, which goes 
beyond an experimental permit by also allowing the licensee to 
transport commercial passengers. Under current law, obtaining a 
commercial license effectively negates the licensee's 
experimental permits.
    S. 2140 would amend current law to specify that a firm 
could obtain a commercial license without relinquishing its 
experimental permits, and make other clarifications to 
activities that could be pursued under experimental permits.
    CBO estimates that enacting the legislation would not 
significantly affect the federal budget. Based on information 
from DOT, we expect the proposed change would have a negligible 
effect on the department's administrative costs. S. 2140 would 
not affect direct spending or revenues; therefore, pay-as-you-
go procedures do not apply.
    S. 2140 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Megan Carroll. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                           Regulatory Impact

    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 bill would affect FAA's AST and those entities already 
subject to FAA rules and regulations. The number of persons 
covered should therefore be consistent with the current levels 
of individuals or businesses impacted under the provisions that 
are addressed in the bill. As a result of provisions under this 
bill, companies testing reusable suborbital vehicles should see 
increased flexibility for testing to continue to improve 
vehicle safety and performance, and crew training. Changes 
would include:
     Eliminating the prohibition on RSV or RSV designs 
holding both an experimental permit and operational license.
     Permitting RSV to test existing design concepts, 
equipment, and operating techniques under an experimental 
permit.

                            economic impact

    The bill would not authorize any new funding and is 
therefore not expected to have an inflationary or adverse 
impact on the Nation's economy. It is anticipated that there 
would be a positive economic impact for companies testing and 
operating reusable suborbital vehicles since the language would 
allow for ongoing improvements for vehicle safety and 
performance.

                                privacy

    S. 2140 would not have an adverse impact on the personal 
privacy of individuals.

                               paperwork

    S. 2140 is not expected to increase the paperwork 
requirements for private individuals or businesses since the 
bill would only impact businesses already subject to the FAA's 
permitting and licensing requirements.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis

Section 1. Commercial space launch licensing.

    This section would amend the current limitation where an 
experimental permit for a suborbital rocket design ceases to be 
valid when a license is issued for launch or reentry of that 
same design. Allowable testing under an experimental permit 
would be broadened to include research and development for 
existing--rather than solely for new--design concepts, 
equipment, or operating techniques.

                        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 51. NATIONAL AND COMMERCIAL SPACE PROGRAMS

        SUBTITLE V. PROGRAMS TARGETING COMMERCIAL OPPORTUNITIES

            CHAPTER 509. COMMERCIAL SPACE LAUNCH ACTIVITIES

Sec. 50906. Experimental permits

  (a) A person may apply to the Secretary of Transportation for 
an experimental permit under this section in the form and 
manner the Secretary prescribes. Consistent with the protection 
of the public health and safety, safety of property, and 
national security and foreign policy interests of the United 
States, the Secretary, not later than 120 days after receiving 
an application pursuant to this section, shall issue a permit 
if the Secretary decides in writing that the applicant 
complies, and will continue to comply, with this chapter and 
regulations prescribed under this chapter. The Secretary shall 
inform the applicant of any pending issue and action required 
to resolve the issue if the Secretary has not made a decision 
not later than 90 days after receiving an application. The 
Secretary shall transmit to the Committee on Science of the 
House of Representatives and Committee on Commerce, Science, 
and Transportation of the Senate a written notice not later 
than 15 days after any occurrence when the Secretary has failed 
to act on a permit within the deadline established by this 
section.
  (b) In carrying out subsection (a), the Secretary may 
establish procedures for safety approvals of launch vehicles, 
reentry vehicles, safety systems, processes, services, or 
personnel that may be used in conducting commercial space 
launch or reentry activities pursuant to a permit.
  (c) In order to encourage the development of a commercial 
space flight industry, the Secretary may when issuing permits 
use the authority granted under section 50905(b)(2)(C).
  (d) The Secretary may issue a permit only for reusable 
suborbital rockets that will be [launched or reentered] 
launched or reentered under that permit solely for--
          [(1) research and development to test new design 
        concepts, new equipment, or new operating techniques;]
          (1) research and development to test design concepts, 
        equipment, or operating techniques;
          (2) showing compliance with requirements as part of 
        the process for obtaining a license under this chapter; 
        or
          (3) crew training [prior to obtaining a license] for 
        a launch or reentry using the design of the rocket for 
        which the permit would be issued.
  (e) Permits issued under this section shall--
          (1) authorize an unlimited number of launches and 
        reentries for a particular [suborbital rocket design] 
        suborbital rocket or rocket design for the uses 
        described in subsection (d); and
          (2) specify the type of modifications that may be 
        made to the suborbital rocket without changing the 
        design to an extent that would invalidate the permit.
  (f) Permits shall not be transferable.
  [(g) A permit may not be issued for, and a permit that has 
already been issued shall cease to be valid for, a particular 
design for a reusable suborbital rocket after a license has 
been issued for the launch or reentry of a rocket of that 
design.]
  (g) The Secretary may issue a permit under this section 
notwithstanding any license issued under this chapter. The 
issuance of a license under this chapter may not invalidate a 
permit under this section.
  (h) No person may operate a reusable suborbital rocket under 
a permit for carrying any property or human being for 
compensation or hire.
  (i) For the purposes of sections 50907, 50908, 50909, 50910, 
50912, 50914, 50917, 50918, 50919, and 50923 of this chapter--
          (1) a permit shall be considered a license;
          (2) the holder of a permit shall be considered a 
        licensee;
          (3) a vehicle operating under a permit shall be 
        considered to be licensed; and
          (4) the issuance of a permit shall be considered 
        licensing.
This subsection shall not be construed to allow the transfer of 
a permit.
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