U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

19–010

" SENATE ! 108th Congress 

1st Session 

REPORT

2003

108–111

Calendar No. 232

THE COMMERCIAL SPACE 

TRANSPORTATION ACT OF 2003

REPORT

OF THE

COMMITTEE ON COMMERCE, SCIENCE, AND 

TRANSPORTATION

ON

S. 1260

JULY 24 (legislative day, JULY 21), 2003.—Ordered to be printed


congress.#13
(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

BARBARA BOXER, California 

BILL NELSON, Florida 

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—

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(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 comVerDate Jan 31 2003 22:22 Jul 25, 2003 Jkt 019010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6601 E:\HR\OC\SR111.XXX SR111
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pensate 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. 

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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. 

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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.

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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 

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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

§ 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 

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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 resoVerDate Jan 31 2003 19:41 Jul 25, 2003 Jkt 088568 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\SR111.XXX SR111
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lution. 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 øDecember 31, 2004.¿

December 31, 2009. 

* * * * * * *

§ 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; øand¿

(2) $16,478,000 for fiscal year ø2002.¿ 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.

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