I 

108TH CONGRESS 

1ST SESSION H. R. 2358

To amend the Internal Revenue Code of 1986 to encourage the timely development of a more cost effective United States commercial space transportation industry, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 5, 2003

Mr. CALVERT (for himself, Mr. ORTIZ, Mr. SENSENBRENNER, Mr. 

CUNNINGHAM, Mr. SANDLIN, Mr. BARTLETT of Maryland, Mrs. CAPPS, 

Mr. WELDON of Florida, Mr. PAUL, Mr. FOLEY, Mr. HINOJOSA, Mr. 

LUCAS of Oklahoma, Mr. BARTON of Texas, Mr. DOOLITTLE, and Mr. 

BURGESS) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to encourage 

the timely development of a more cost effective United 

States commercial space transportation industry, and for 

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Invest in Space Now Act of 2003’’. 

6 (b) TABLE OF CONTENTS.—
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Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

Sec. 3. Purposes. 

Sec. 4. Definitions. 

Sec. 5. Credit for purchase of space transportation vehicle provider stock. 

Sec. 6. United States commercial space transportation vehicle authorization.

1 SEC. 2. FINDINGS. 

2 The Congress hereby finds that: 

3 (1) The United States commercial space trans4 portation industry is an essential part of the na5 tional economy. 

6 (2) Opportunities for United States commercial 

7 providers are growing as international markets ex8 pand. 

9 (3) The development of the United States com10 mercial space transportation industry is consistent 

11 with the national security needs and foreign policy 

12 interests of the United States. 

13 (4) United States trading partners have been 

14 able to lower their commercial space transportation 

15 prices aggressively either through direct cash pay16 ments for commercially targeted product develop17 ment or with indirect benefits derived from non18 market economy status. 

19 (5) Because United States incentives for space 

20 transportation development have historically focused 

21 on civil and military rather than commercial use, 

22 United States space transportation costs have re-
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1 mained comparatively high, and United States space 

2 transportation technology has not been commercially 

3 focused. 

4 (6) As a result, the United States share of the 

5 world commercial market for space transportation 

6 has decreased from nearly 100 percent 20 years ago 

7 to approximately 47 percent in 1998. 

8 (7) In order to avoid undue reliance on foreign 

9 space transportation services, the United States 

10 must strive to have sufficient domestic capacity as 

11 well as the highest quality and the lowest cost per 

12 service provided. 

13 (8) A successful high quality, lower cost United 

14 States commercial space transportation industry 

15 should also lead to substantial United States tax16 payer savings through collateral lower United States 

17 Government costs for its space access requirements. 

18 (9) Opening the commercial opportunities of 

19 space to the American aerospace industry must be a 

20 high priority of the United States Government as we 

21 begin the 21st century. 

22 (10) Opening space and maintaining United 

23 States leadership in the world market does not re24 quire massive Government intrusion, but enough 

25 Government support on an incremental and timely 
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1 basis to enable the more cost effective United States 

2 private sector to build lower cost space transpor3 tation vehicles. 

4 (11) Private sector companies across the United 

5 States are already attempting to develop a variety of 

6 lower cost space transportation vehicles, but lack of 

7 sufficient private financing, particularly in the early 

8 stages of development, has proven to be a major ob9 stacle, an obstacle our trading partners have re10 moved by providing direct access to government 

11 funding. 

12 (12) Given the strengths and creativity of pri13 vate industry in the United States, a more effective 

14 alternative to the approach of our trading partners 

15 is for the United States Government to provide lim16 ited incentives industry wide to assist qualifying 

17 United States private sector companies obtain other18 wise unavailable private equity financing for the crit19 ical development stages of a project, while at the 

20 same time keeping Government involvement at a 

21 minimum. 

22 SEC. 3. PURPOSES. 

23 The purposes of this Act are—

24 (1) to ensure availability of otherwise unavail25 able private sector equity financing for United 
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1 States private sector development of commercial 

2 space transportation vehicles which will have trans3 portation costs significantly below current levels; and 

4 (2) as a result—

5 (A) to avoid undue reliance on foreign 

6 space transportation services; 

7 (B) to reduce substantially United States 

8 Government space transportation expenditures; 

9 (C) to increase the international competi10 tiveness of the United States space industry; 

11 (D) to encourage the growth of space-re12 lated commerce in the United States and inter13 nationally; and 

14 (E) to open the space frontier to the 

15 American people. 

16 SEC. 4. DEFINITIONS. 

17 In this Act: 

18 (1) SECRETARY.—The term ‘‘Secretary’’ means 

19 the Secretary of Transportation. 

20 (2) SPACE LAUNCH SITE.—The term ‘‘space 

21 launch site’’ means a location from which a launch 

22 or landing takes place and includes all facilities lo23 cated on, or components of, a launch or landing site,

24 whether real or personal property, which are nec25 essary to conduct a launch, whether on land, sea, 
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1 in the Earth’s atmosphere, or beyond the Earth’s 

2 atmosphere. 

3 (3) SPACE TRANSPORTATION VEHICLE.—The 

4 term ‘‘space transportation vehicle’’ includes all 

5 types of vehicles, whether now in existence, devel6 oped in the future, or currently under design, devel7 opment, construction, reconstruction, or recondi8 tioning, which are constructed in the United States 

9 by a United States commercial provider and owned 

10 by the commercial provider, for the purpose of oper11 ating in, or transporting a payload to, from, or with12 in, outer space, or in suborbital trajectory. 

13 (4) SUBORBITAL TRAJECTORY.—The term 

14 ‘‘suborbital trajectory’’ means a trajectory that has 

15 a significant phase of flight during which the vehicle 

16 generates neither thrust nor significant aerodynamic 

17 nor aerostatic lift and which occurs in some part 

18 above 150,000 feet above mean sea level. 

19 (5) STATE.—The term ‘‘State’’ means any 

20 State in the United States, the District of Columbia, 

21 the Commonwealth of Puerto Rico, the Virgin Is22 lands, Guam, American Samoa, the Commonwealth 

23 of the Northern Mariana Islands, and any other 

24 commonwealth, territory, or possession of the United 

25 States. 
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1 (6) UNITED STATES COMMERCIAL PROVIDER.—

2 The term ‘‘United States commercial provider’’ 

3 means a commercial provider organized under the 

4 laws of the United States or of a State as a corpora5 tion or a Limited Liability Company (LLC). 

6 (7) UNITED STATES COMMERCIAL SPACE

7 TRANSPORTATION VEHICLE PROVIDER.—The term 

8 ‘‘United States commercial space transportation ve9 hicle provider’’ means a United States commercial 

10 provider engaged in designing, developing, and pro11 ducing commercial space transportation vehicles.

12 (8) UNITED STATES COMMERCIAL SPACE

13 TRANSPORTATION VEHICLE INDUSTRY.—The term 

14 ‘‘United States commercial space transportation ve15 hicle industry’’ means the collection of United States 

16 commercial space transportation vehicle providers. 

17 (9) SPACE TRANSPORTATION COSTS SIGNIFI18 CANTLY BELOW CURRENT LEVELS.—The term 

19 ‘‘space transportation costs significantly below cur20 rent levels’’ means at the time of application, for 

21 that market segment for which, or in which, the 

22 space transportation vehicle is designed, developed, 

23 produced, maintained, or operated, the cost of pro24 ducing, maintaining, and operating the vehicle is 50 

25 percent of the then space transportation costs in 
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1 that market segment as estimated by the Secretary. 

2 If no market exists for the transportation proposed 

3 at the time of application, the 50 percent require4 ment of the preceding sentence shall be treated as 

5 being met if the vehicle has a reasonable possibility 

6 of creating the market proposed. 

7 SEC. 5. CREDIT FOR PURCHASE OF SPACE TRANSPOR8 TATION VEHICLE PROVIDER STOCK. 

9 (a) IN GENERAL.—Part IV of subchapter A of chap10 ter 1 of the Internal Revenue Code of 1986 (relating to 

11 credits against tax) is amended by adding at the end the 

12 following new subpart: 

13 ‘‘Subpart H—Space Transportation Credit 

14 ‘‘SEC. 54. CREDIT FOR PURCHASE OF SPACE TRANSPOR15 TATION VEHICLE PROVIDER STOCK. 

16 ‘‘(a) ALLOWANCE OF CREDIT.—

17 ‘‘(1) IN GENERAL.—There shall be allowed as a 

18 credit against the tax imposed by this chapter for 

19 the taxable year an amount equal to the applicable 

20 percentage of the aggregate amount paid by the tax21 payer during the taxable year for the purchase of 

22 qualified space transportation vehicle provider stock. 

23 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

24 of paragraph (1), the applicable percentage is the 
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1 percentage determined in accordance with the fol2 lowing table:

‘‘For taxable years beginning The applicable 

in calendar year— percentage is—

2004, 2005, and 2006 .................................................. 50

2007 ............................................................................. 40

2008 ............................................................................. 35

2009 ............................................................................. 30

2010 and 2011 ............................................................. 20

2012 and thereafter ..................................................... 0.

3 ‘‘(b) MAXIMUM CREDIT.—

4 ‘‘(1) LIMITATION FOR EACH PROVIDER.—

5 ‘‘(A) LARGE CAPITALIZATION PRO6 VIDERS.—The credit allowed under this section 

7 with respect to the stock of each large capital8 ization space transportation vehicle provider 

9 purchased during a calendar year shall not ex10 ceed—

11 ‘‘(i) $50,000,000 for 2004, 

12 ‘‘(ii) $100,000,000 for 2005, 

13 ‘‘(iii) $125,000,000 for 2006, 

14 ‘‘(iv) $175,000,000 for 2007, 

15 ‘‘(v) $200,000,000 for 2008, 

16 ‘‘(vi) $50,000,000 for 2009, and 

17 ‘‘(vii) $0 for 2010 and 2011. 

18 ‘‘(B) SMALL CAPITALIZATION PRO19 VIDERS.—The credit allowed under this section 

20 with respect to the stock of each small capital21 ization space transportation vehicle provider 
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1 purchased during a calendar year shall not ex2 ceed—

3 ‘‘(i) $35,000,000 for 2004, 

4 ‘‘(ii) $40,000,000 for 2005, 

5 ‘‘(iii) $45,000,000 for 2006, 

6 ‘‘(iv) $50,000,000 for each of 2007 

7 and 2008, 

8 ‘‘(v) $40,000,000 for 2009, and 

9 ‘‘(vi) $35,000,000 for each of 2010 

10 and 2011. 

11 ‘‘(2) AGGREGATE LIMIT.—The aggregate credit 

12 allowed under this section with respect to the stock 

13 of all space transportation vehicle providers pur14 chased during a calendar year shall not exceed—

15 ‘‘(A) $395,000,000 for 2004, 

16 ‘‘(B) $580,000,000 for 2005, 

17 ‘‘(C) $690,000,000 for 2006, 

18 ‘‘(D) $875,000,000 for 2007, 

19 ‘‘(E) $950,000,000 for 2008, 

20 ‘‘(F) $430,000,000 for 2009, 

21 ‘‘(G) $245,000,000 for 2010, and 

22 ‘‘(H) $245,000,000 for 2011.

23 ‘‘(c) QUALIFIED SPACE TRANSPORTATION VEHICLE

24 PROVIDER STOCK.—For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified space 

2 transportation vehicle provider stock’ means any 

3 common stock in a C corporation or any membership 

4 unit in a State-registered limited liability company 

5 (LLC) if—

6 ‘‘(A) as of the date of issuance, such cor7 poration is a qualified space transportation ve8 hicle provider, 

9 ‘‘(B) such stock is acquired by the tax10 payer at its original issue (directly or through 

11 an underwriter) in exchange for money or other 

12 property (not including stock), and 

13 ‘‘(C) the proceeds of such issue are used 

14 by such issuer during the 36-month period be15 ginning on the date of issuance in substantial 

16 compliance with the issuer’s projected usage 

17 submitted to the Secretary of Transportation 

18 under section 6 of the Invest in Space Now Act 

19 of 2003 with its application for authorization. 

20 ‘‘(2) QUALIFIED SPACE TRANSPORTATION VEHI21 CLE PROVIDER.—The term ‘qualified space transpor22 tation vehicle provider’ means any United States 

23 commercial space transportation vehicle provider (as 

24 defined in section 4 of the Invest in Space Now Act 
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1 of 2003) for which an authorization is in effect 

2 under section 6 of such Act. 

3 ‘‘(3) CAPITALIZATION STATUS OF QUALIFIED

4 PROVIDERS.—For purposes of applying the limits 

5 under subsection (b)—

6 ‘‘(A) DESIGNATION.—The Secretary shall, 

7 using the guidelines developed under subpara8 graph (B), designate each qualified space trans9 portation vehicle provider as a large capitaliza10 tion space transportation vehicle provider or a 

11 small capitalization space transportation vehicle 

12 provider. 

13 ‘‘(B) GUIDELINES.—The Secretary of 

14 Transportation shall, not later than 6 months 

15 after the date of the enactment of the Invest in 

16 Space Now Act of 2003, publish guidelines 

17 under which qualified space transportation vehi18 cle providers are classified into large capitaliza19 tion providers and small capitalization pro20 viders. The guidelines shall be based on factors 

21 particular to the space transportation industry, 

22 including—

23 ‘‘(i) the capital requirements nec24 essary to support the type of provider the 

25 taxpayer is or is trying to become, 
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1 ‘‘(ii) the payload size of space trans2 portation vehicles developed or used by the 

3 taxpayer, 

4 ‘‘(iii) the markets in which the tax5 payer is participating, and 

6 ‘‘(iv) whether human spaceflight is in7 cluded. 

8 ‘‘(d) RECAPTURE OF CREDIT.—If—

9 ‘‘(1) the taxpayer fails to hold qualified space 

10 transportation vehicle provider stock for the 3-year 

11 period beginning on the date such stock was pur12 chased by the taxpayer, or 

13 ‘‘(2) during such 3-year period, the issuer of 

14 such stock ceases to meet the requirements of sec15 tion 6 of the Invest in Space Now Act of 2003, 

16 then notwithstanding any other provision of this subtitle, 

17 the tax imposed by this chapter on the taxpayer for the 

18 taxable year beginning in the calendar year in which such 

19 cessation occurred shall be increased by the amount of 

20 credit allowed under subsection (a) to the taxpayer with 

21 respect to such stock. 

22 ‘‘(e) SPECIAL RULES.—For purposes of this sec23 tion—
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1 ‘‘(1) CERTAIN PURCHASES BY CORPORATION OF

2 ITS OWN STOCK.—Rules similar to the rules of sec3 tion 1202(c)(3) shall apply. 

4 ‘‘(2) RELATED PERSONS.—

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B), for purposes of subsection 

7 (b) the taxpayer and any person related to the 

8 taxpayer shall be treated as one person. 

9 ‘‘(B) EXCEPTION.—A taxpayer may elect 

10 to treat not more than one other person who is 

11 related to such taxpayer as unrelated for pur12 poses of this section. A person treated as unre13 lated to the taxpayer under the previous sen14 tence shall not be the same capitalization status 

15 (determined under subsection (c)(3) as the tax16 payer. 

17 ‘‘(C) RELATED PERSONS.—For purposes 

18 of this paragraph, a person is a related person 

19 to another person if—

20 ‘‘(i) the relationship between such per21 sons would result in a disallowance of 

22 losses under section 267 or 707(b), or 

23 ‘‘(ii) such persons are members of the 

24 same controlled group of corporations (as 

25 defined in section 1563(a), except that 
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1 ‘more than 50 percent’ shall be substituted 

2 for ‘at least 80 percent’ each place it ap3 pears therein). 

4 ‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 

5 subtitle, if a credit is allowed under this section for the 

6 purchase of any stock—

7 ‘‘(1) the increase in the basis of such stock 

8 which would (but for this subsection) result from 

9 such purchase shall be reduced by the amount of the 

10 credit so allowed, and 

11 ‘‘(2) the basis of such stock shall be increased 

12 by the amount of the increase under subsection (d). 

13 ‘‘(g) APPLICATION WITH OTHER CREDITS.—The 

14 credit allowed under subsection (a) for any taxable year 

15 shall not exceed the excess of—

16 ‘‘(1) the sum of the regular tax liability (as de17 fined in section 26(b)) plus the tax imposed by sec18 tion 55, over 

19 ‘‘(2) the sum of the credits allowable under this 

20 part (other than subpart C thereof, relating to re21 fundable credits).’’

22 (b) CONFORMING AMENDMENT.—Subsection (a) of 

23 section 1016 of such Code is amended by striking ‘‘and’’ 

24 at the end of paragraph (27), by striking the period at 
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1 the end of paragraph (28) and inserting ‘‘; and’’, and by 

2 adding at the end the following new paragraph: 

3 ‘‘(29) to the extent provided in section 54(f), in 

4 the case of amounts with respect to which a credit 

5 has been allowed under section 54 or a recapture 

6 imposed under section 54(d).’’.

7 (c) CLERICAL AMENDMENT.—The table of subparts 

8 for part IV is amended by adding at the end the following 

9 new item:

‘‘Subpart H. Space transportation credit.’’.

10 (d) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to amounts paid after December 

12 31, 2003. 

13 SEC. 6. UNITED STATES COMMERCIAL SPACE TRANSPOR14 TATION VEHICLE AUTHORIZATION. 

15 (a) UNITED STATES COMMERCIAL SPACE TRANS16 PORTATION VEHICLE INDUSTRY AUTHORIZATION PRO17 GRAM.—

18 (1) ESTABLISHMENT OF PROGRAM.—There 

19 shall be a United States Commercial Space Trans20 portation Vehicle Industry Authorization Program to 

21 provide authorization for tax credit qualification 

22 under section 54 of the Internal Revenue Code of 

23 1986 to multiple United States commercial space 

24 transportation vehicle providers developing vehicles 
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1 with space transportation costs significantly below 

2 current levels. 

3 (2) ADMINISTRATION OF PROGRAM.—The pro4 gram shall be carried out by the Secretary of Trans5 portation under a streamlined application process 

6 pursuant to the terms of this section and any regu7 lations that may be promulgated hereunder, in con8 sultation with other United States Government offi9 cials, and private sector representatives, as nec10 essary, to ensure fair, effective, and timely program 

11 administration and streamlined authorization. 

12 (3) SCOPE OF PROGRAM.—

13 (A) TEMPORARY GOVERNMENT SUP14 PORT.—The United States Commercial Space 

15 Transportation Vehicle Industry Authorization 

16 Program is intended to provide eligibility for 

17 tax credits under section 54 of the Internal 

18 Revenue Code of 1986 to investors to support 

19 financing of qualified commercial space trans20 portation vehicle development ventures during 

21 their startup phases. 

22 (B) EXCLUSION OF SPACE LAUNCH

23 SITES.—The program does not provide author24 ization pertaining to the construction, recon-
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1 struction, or reconditioning of space launch 

2 sites. 

3 (C) EXCLUSION OF NONRELATED ACTIVI4 TIES.—The program does not provide author5 ization for any corporation unless its business 

6 plan provides that the main core mission of the 

7 corporation is the construction, reconstruction, 

8 reconditioning, sale, or distribution of any prod9 uct which is integral to the design, develop10 ment, construction, reconstruction, or recondi11 tioning of a space transportation vehicle as de12 scribed in subsection (b). 

13 (4) NONDISCLOSURE OF CONFIDENTIAL MATE14 RIALS.—Materials that are submitted by a United 

15 States commercial space transportation vehicle pro16 vider to the Secretary in connection with an applica17 tion submitted under the United States Commercial 

18 Space Transportation Vehicle Authorization Pro19 gram and deemed by the commercial provider to be 

20 confidential, and that contain trade secrets or pro21 prietary commercial, financial, or technical informa22 tion of a kind not customarily disclosed to the pub23 lic, shall not be disclosed by the Secretary to persons 

24 other than Government officers or employees not25 withstanding any other provision of law. 
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1 (5) CONSULTATION.—The Secretary shall con2 sult to the extent deemed necessary for effective im3 plementation of this Act with appropriate Federal 

4 agencies and congressional and space transportation 

5 industry representatives. 

6 (6) PROGRAM MANAGEMENT.—The Secretary 

7 shall manage the authorization program consistent 

8 with the purposes of this Act. 

9 (b) AUTHORIZATION OF VEHICLE PROVIDERS.—

10 (1) AUTHORIZATION BASED ON REASONABLE

11 POSSIBILITY OF SUCCESS.—

12 (A) IN GENERAL.—The Secretary shall au13 thorize vehicle providers who demonstrate by 

14 the submission of technical and financial infor15 mation that they have a reasonable possibility 

16 of developing, operating, and maintaining a 

17 space transportation vehicle or vehicles with 

18 space transportation costs significantly below 

19 current levels. 

20 (B) RESPONSE BY SECRETARY.— Author21 ization by the Secretary is deemed granted un22 less within 120 days of application submission 

23 the Secretary determines that the provider has 

24 no reasonable possibility of significantly low25 ering space transportation costs. 
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1 (2) POSSIBLE COMMERCIAL VIABILITY AND

2 CAPITAL REQUIREMENT TO QUALIFY STOCK FOR

3 CREDIT.—To demonstrate possible commercial via4 bility the United States commercial space transpor5 tation vehicle provider must raise $5,000,000 of eq6 uity investment during the year of application in 

7 order to qualify its stock investors for credit under 

8 this Act. Equity raised in order to meet commercial 

9 viability tests is eligible for credit once authorization 

10 has been completed. The United States commercial 

11 space transportation vehicle provider may qualify ad12 ditional stock for investor credit up to the maximum, 

13 as provided, in section 54(b) of the Internal Revenue 

14 Code of 1986, as added by section 5 of this Act. 

15 (3) ANNUAL VERIFICATION OF SUBSTANTIAL

16 COMPLIANCE.—

17 (A) IN GENERAL.—Once authorized, a ve18 hicle provider must submit to the Secretary 

19 each year a certified audit opinion letter 

20 verifying its use of funds in substantial compli21 ance with its application. 

22 (B) CONSEQUENCE OF FAILURES.—

23 (i) Failure to submit a certified audit 

24 opinion letter verifying substantial compli-
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1 ance with its application will result in de2 authorization of the vehicle provider. 

3 (ii) Failure to use funds received after 

4 authorization for the development of a 

5 space transportation vehicle or vehicles 

6 with the goal to reduce space transpor7 tation costs significantly below current lev8 els will result in deauthorization. Failure 

9 to achieve success will not result in de10 authorization.

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