U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

88–133PDF 2014

NECESSARY UPDATES TO THE 

COMMERCIAL SPACE LAUNCH ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SPACE 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 4, 2014 

Serial No. 113–63 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

DANA ROHRABACHER, California 

RALPH M. HALL, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

FRANK D. LUCAS, Oklahoma 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

PAUL C. BROUN, Georgia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

LARRY BUCSHON, Indiana 

STEVE STOCKMAN, Texas 

BILL POSEY, Florida 

CYNTHIA LUMMIS, Wyoming 

DAVID SCHWEIKERT, Arizona 

THOMAS MASSIE, Kentucky 

KEVIN CRAMER, North Dakota 

JIM BRIDENSTINE, Oklahoma 

RANDY WEBER, Texas 

CHRIS COLLINS, New York 

VACANCY 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

FREDERICA S. WILSON, Florida 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

DAN MAFFEI, New York 

ALAN GRAYSON, Florida 

JOSEPH KENNEDY III, Massachusetts 

SCOTT PETERS, California 

DEREK KILMER, Washington 

AMI BERA, California 

ELIZABETH ESTY, Connecticut 

MARC VEASEY, Texas 

JULIA BROWNLEY, California 

MARK TAKANO, California 

ROBIN KELLY, Illinois 

SUBCOMMITTEE ON SPACE

HON. STEVEN M. PALAZZO, Mississippi, Chair 

RALPH M. HALL, Texas 

DANA ROHRABACHER, California 

FRANK D. LUCAS, Oklahoma 

MICHAEL T. MCCAUL, Texas 

MO BROOKS, Alabama 

LARRY BUCSHON, Indiana 

STEVE STOCKMAN, Texas 

BILL POSEY, Florida 

DAVID SCHWEIKERT, Arizona 

JIM BRIDENSTINE, Oklahoma 

CHRIS STEWART, Utah 

LAMAR S. SMITH, Texas 

DONNA F. EDWARDS, Maryland 

SUZANNE BONAMICI, Oregon 

DAN MAFFEI, New York 

JOSEPH KENNEDY III, Massachusetts 

DEREK KILMER, Washington 

AMI BERA, California 

MARC VEASEY, Texas 

JULIA BROWNLEY, California 

FREDERICA S. WILSON, Florida 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

February 4, 2014 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Steven Palazzo, Chairman, Subcommittee on 

Space, Committee on Science, Space, and Technology, U.S. House of Representatives ........................................................................................................... 8 

Written Statement ............................................................................................ 9 

Statement by Representative Donna F. Edwards, Ranking Minority Member, 

Subcommittee on Space, Committee on Science, Space, and Technology, 

U.S. House of Representatives ............................................................................ 10 

Written Statement ............................................................................................ 11 

Submitted statement of Representative Lamar S. Smith, Chairman, Committee on Science, Space, and Technology ......................................................... 12 

Written Statement ............................................................................................ 13 

Witnesses: 

Dr. George Nield, Associate Administrator for Commercial Space Transportation, Federal Aviation Administration 

Oral Statement ................................................................................................. 15 

Written Statement ............................................................................................ 18 

Dr. Alicia Cackley, Director of Financial Markets and Community Investment 

Team, Government Accountability Office 

Oral Statement ................................................................................................. 26 

Written Statement ............................................................................................ 28 

Dr. Henry Hertzfeld, Research Professor of Space Policy and International 

Affairs, Elliot School of International Affairs, George Washington University 

Oral Statement ................................................................................................. 59 

Written Statement ............................................................................................ 61 

Discussion ................................................................................................................. 72 

Appendix I: Answers to Post-Hearing Questions 

Dr. George Nield, Associate Administrator for Commercial Space Transportation, Federal Aviation Administration ............................................................ 84 

Dr. Alicia Cackley, Director of Financial Markets and Community Investment 

Team, Government Accountability Office .......................................................... 99 

Dr. Henry Hertzfeld, Research Professor of Space Policy and International 

Affairs, Elliot School of International Affairs, George Washington University ......................................................................................................................... 105 

(1) 

NECESSARY UPDATES TO THE COMMERCIAL 

SPACE LAUNCH ACT 

TUESDAY, FEBRUARY 4, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON SPACE

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:16 p.m., in Room 

2318 of the Rayburn House Office Building, Hon. Steven Palazzo 

[Chairman of the Subcommittee] presiding. 
2 
3 
4 
5 
6 
7 
8 

Chairman PALAZZO. The Subcommittee on Space will come to 

order. 

Good afternoon. Welcome to today’s hearing entitled ‘‘Necessary 

Updates to the Commercial Space Launch Act.’’ In front of you are 

packets containing the written testimony, biographies, and required truth-in-testimony disclosures for today’s witnesses. I recognize myself for five minutes for an opening statement. 

I want to take a moment to acknowledge the NASA Day of Remembrance, which was observed last Friday as a tribute to the 

crews of Apollo I and the Space Shuttles Columbia and Challenger. These men and women lost their lives in the pursuit of exploration 

and discovery and they will never be forgotten. 

In his 1984 State of the Union speech, President Reagan reminded us that our progress in space ‘‘is a tribute to American 

teamwork and excellence.’’ He challenged our best and brightest to 

develop launch companies ready to lift payloads to orbit regularly 

with minimal government interference. Shortly after his speech, 

Congress responded with passage of the Commercial Space Launch 

Act. 

As we once more consider changes to this groundbreaking legislation, President Reagan’s words ring just as true for us today as 

they did three decades ago. We must continue providing a framework for supporting the development of commercial space launch. 

As the commercial space industry evolves, so too should our laws 

and federal regulations. While there are many issues we will address in the next CSLA, it is my desire that we give special focus 

to issues surrounding launch indemnification and the regulatory 

learning period. 

The third-party liability risk-sharing regime, which we know 

today as indemnification, provided a much-needed safety net for 

new companies that were developing to fill the Nation’s launch 

needs after commercial satellite launches with Shuttle ended. Since 

it was first created in 1988, the regime has been extended six 

times, most recently a few weeks ago on the omnibus spending bill. 

I look forward to hearing what our witnesses have to say about this 

provision and any changes to it that might be helpful. 

In 2004, as part of the Commercial Space Launch Amendments 

Act, Congress placed a moratorium on most regulations related to 

spaceflight participants and vehicle design to ensure ample flexibility for a developing commercial human space launch industry. 

The need for this provision at the time was clear: How can the FAA 

regulate an industry that does not exist and has not flown a single 

paying customer? Today, the situation hasn’t changed much. The 

FAA still has no data to use for regulations and the commercial 

human space launch industry is still working hard to get off the 

ground. 

The Commercial Crew Development Program at NASA has done 

a lot to move the industry along by providing an anchor tenant for 

orbital commercial human spaceflight, funding for early stage development, and funding to mature spacecraft designs. While the 

suborbital market seems to be maturing rapidly, it is still not clear 

that there is a business case for nongovernment orbital human 

space tourism in the near future. What is clear is that if the FAA 

begins trampling on these companies with regulations based in 
9 

speculation instead of data, we may never see the promise of commercial human spaceflight realized. The learning period will expire 

in 2015 and I look forward to what our witnesses have to say about 

this provision and its relative importance to the industry. 

There are many other issues that may need to be addressed in 

a potential commercial space bill such as streamlining the permitting process, offering more flexibility for experimental aircraft, better defining the various types of spacecraft, and strengthening the 

informed consent provisions. We must also ensure that export controls and International Trafficking in Arms Regulations are rational and productive. We need to provide stable, certain, and competitive regulatory environments at the Federal Aviation Administration, the Federal Communications Commission, and the National 

Oceanic and Atmospheric Administration that facilitate domestic 

investment. 

I have to mention that as I prepared for this hearing I reviewed 

an article in the Journal of Space Law, which is published by the 

University of Mississippi School of Law. Ole Miss has a world premier space law program, and I am happy to know that Mississippi 

is at the forefront of these challenging issues. I look forward to 

working with both sides of the aisle in the next few months to come 

up with bipartisan solutions to these issues. There is a lot of promise in the future of commercial spaceflight, and if we work together, 

I know we can put in place policies that will help grow our economy and this great industry. 

With that, I yield to the Ranking Member, the gentlewoman from 

Maryland, Ms. Edwards. 

[The prepared statement of Mr. Palazzo follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE ON SPACE CHAIRMAN STEVEN PALAZZO

Chairman Palazzo: Good morning. I would like to welcome everyone to our hearing today and I want to thank our witnesses for taking time to appear before the 

Committee. 

Before we get started I want to take a moment to acknowledge the NASA Day 

of Remembrance, which was observed last Friday, as a tribute to the crews of Apollo 

1 and the space shuttles Columbia and Challenger. These men and women lost their 

lives in the pursuit of exploration and discovery, and they will never be forgotten. 

In his 1984 State of the Union speech, President Reagan reminded us that our 

progress in space ‘‘is a tribute to American teamwork and excellence.’’ He challenged 

our best and brightest to develop launch companies ready to lift payloads to orbit 

regularly with minimal government interference. Shortly after his speech, Congress 

responded with passage of the Commercial Space Launch Act. 

As we once more consider changes to this ground-breaking legislation, President 

Reagan’s words ring just as true for us today as they did three decades ago. We 

must continue providing a framework for supporting the development of commercial 

space launch. As the commercial space industry evolves, so too should our laws and 

federal regulations. While there are many issues we will address in the next CSLA, 

it is my desire that we give special focus to issues surrounding launch indemnification and the regulatory learning period. 

The third-party liability risk-sharing regime, which we know today as indemnification, provided a much needed safety net for new companies that were developing to fill the nation’s launch needs after commercial satellite launches with shuttle ended. Since it was first created in 1988, the regime has been extended six 

times, most recently a few weeks ago on the omnibus spending bill. I look forward 

to hearing what our witnesses have to say about this provision and any changes to 

it that might be helpful. 

In 2004, as part of the Commercial Space Launch Amendments Act, Congress 

placed a moratorium on most regulations related to space flight participants and vehicle design to ensure ample flexibility for a developing commercial human space 
10 

launch industry. The need for this provision at the time was clear, how can the FAA 

regulate an industry that does not exist and has not flown a single paying customer? Today, the situation hasn’t changed much. The FAA still has no data to use 

for regulations and the commercial human space launch industry is still working 

hard to get off the ground. 

The Commercial Crew Development Program at NASA has done a lot to move the 

industry along by providing an anchor tenant for orbital commercial human 

spaceflight, funding for early stage development, and funding to mature spacecraft 

designs. While the suborbital market seems to be maturing rapidly, it is still not 

clear that there is a business case for non-government orbital human space tourism 

in the near future. What is clear is that if the FAA begins trampling on these companies with regulations based in speculation instead of data, we may never see the 

promise of commercial human spaceflight realized. The learning period will expire 

in 2015 and I look forward to what our witnesses have to say about this provision 

and its relative importance to the industry. 

There are many other issues that may need to be address in a potential commercial space bill such as streamlining the permitting process, offering more flexibility 

for experimental aircraft, better defining the various types of spacecraft, and 

strengthening the informed consent provisions. We must also ensure that export 

controls and International Trafficking in Arms Regulations (ITAR) are rational and 

productive. We need to provide stable, certain, and competitive regulatory environments at the Federal Aviation Administration (FAA), the Federal Communications 

Commission (FCC), and the National Oceanic and Atmospheric Administration 

(NOAA) that facilitate domestic investment. 

I have to mention that as I prepared for this hearing I reviewed an article in the 

Journal of Space Law, which is published by the University of Mississippi School 

of Law. Ole’ Miss has a world premier space law program, and I’m happy to know 

that Mississippi is at the forefront of these challenging issues. I look forward to 

working with both sides of the aisle in the next few months to come up with bipartisan solutions to these issues. There is a lot of promise in the future of commercial 

spaceflight. If we work together I know we can put in place policies that will help 

grow our economy and this great industry. 

With that I recognize the ranking member, Ms. Edwards, for an opening statement. 

Ms. EDWARDS. Thank you very much, Mr. Chairman. And I hope 

you all will bear with my voice. I promised the Chairman of the 

full Committee that I would go easy on him today because I don’t 

have a voice and I will honor that promise. 

I appreciate all our witnesses here today. Looking back to when 

the Commercial Space Launch Act was passed in 1984 and I think 

it is—and then amendments of course in 1988 and 2004, and I 

think it is fair to say that the commercial space industry indeed 

has come a long way. Not only has it come a long way but it is 

growing and changing every day as companies and entrepreneurs 

continue to generate new ideas and technical concepts for potential 

commercial space transportation systems. Mr. Chairman, I think 

this type of ingenuity and innovative spirit that defines our Nation 

and our economic potential is great and I want to see it succeed. 

And as I said before, I am one of those adventurers who wants 

to be a passenger, but of course I want it to be safe. And of course 

my enthusiasm is tempered by the recognition that there are a 

number of questions that remain outstanding in this growing industry that need to be answered and issues that need to be resolved. 

The recently passed extension in the third-party liability indemnification regime for three years I think means that we have the 

time for a thorough and thoughtful examination of these questions, 

and I look forward to our Subcommittee conducting future hearings 

to address them. For example, should we be providing indemnification permanently or should we be laying the groundwork for an insurance-based regime? How might such a transition occur and on 
11 

what timeline? What would such a transition mean for the insurance industry? And what other industry models can we examine for 

good practices? There are also questions about how liability should 

be treated for passengers or spaceflight participants as they are 

called, and that brings me to the question of whether the policy 

and regulation for commercial spaceflight with humans should differ from that for commercial launches carrying satellites, cargo, or 

other payloads, which have comprised the commercial space industry to date. 

In short, the real question is whether a one-size-fits-all approach 

to commercial space transportation and policy and regulation are 

appropriate for this industry or should we consider different frameworks for commercial human and commercial un-crewed space 

transportation systems? Already we are seeing existing statute 

being tested every day by the evolving nature of the industry. So 

I hope that we are going to be able to answer some of these questions. 

I am going to enter my full statement into the record so that I 

can relieve your ears of my voice, but I will say that I think this 

sampling of the range of questions for our witnesses today tells us 

that we have so much more to learn, and I really do hope that this 

Committee will do what is intended and, that is, really thoroughly 

and thoughtfully examine all of these questions, because I think it 

is important both for the maturing and growing industry but it is 

also important for any potential passenger and crews. 

And I know that we hadn’t had that time before, but certainly 

with this three-year extension in place, we have the time for that 

kind of thoughtful consideration right now. And we also have the 

time to examine other industries that have evolved and we have 

examples of them that may show us some window into the way 

that we need to deal with the potential liabilities of this industry. 

And with that, I yield. 

[The prepared statement of Ms. Edwards follows:] 

PREPARED STATEMENT OF SUBCOMMITEE ON SPACE

RANKING MEMBER DONNA EDWARDS

Thank you, Mr. Chairman, for holding today’s hearing on ‘‘Necessary Updates to 

the Commercial Space Launch Act,’’ and welcome to our witnesses. Looking back to 

when the Commercial Space Launch Act (CSLA) was passed in 1984, followed by 

the Commercial Space Launch Act Amendments in 1988, and the Commercial Space 

Launch Amendments Act in 2004, it is fair to say that the commercial space industry has come a long way. Not only has it come a long way, but it’s growing and 

changing as companies and entrepreneurs continue to generate new ideas and technical concepts for potential commercial space transportation systems and related operations. 

Mr. Chairman, this is the type of ingenuity and innovative spirit that defines our 

nation and our economic potential; and I want to see it succeed. I’ve said it before 

and I’ll say it again, I want to fly as a passenger one day. However, Mr. Chairman, 

my enthusiasm is tempered by the recognition that there are number of questions 

about this growing industry that remain unanswered, and issues that need to be 

resolved. I raise them because they are questions of national policy and safety that 

deserve our due diligence and that help us, as Members of Congress, to fulfill our 

responsibilities to the American taxpayers. 

Commercial space transportation, in fact, draws heavily on government support 

through contracts for launches, use of infrastructure, technical assistance, and financial support for the development of government-required transportation services. 

I want to recognize the significant taxpayer investments involved in supporting this 

industry as we consider any direction on policy or regulation. 
12 

Mr. Chairman, the recently passed extension of the third-party liability and indemnification regime for three years means that we have the time for a thoughtful 

examination of these questions, and I look forward to our Subcommittee conducting 

future hearings to address them. For example, should we be providing indemnification permanently or should we be laying the groundwork for a shift toward an insurance-based regime? How might such a transition occur and on what timeline? 

What would such a transition mean for the insurance industry? What other industry 

models should we examine? 

There are also questions about how liabilities should be treated for passengers, 

or space flight participants as they are called. And that brings me to the question 

of whether the policy and regulations for commercial space flights with humans 

should differ from that for commercial launches carrying satellites, cargo or other 

payloads, which have comprised the commercial space launch industry to date. In 

short, is a ‘‘one-size-fits-all’’ approach to commercial space transportation policy and 

regulation appropriate? Or should we consider different frameworks for commercial 

human and commercial uncrewed space transportation systems? 

Already, we are seeing the existing statute being tested by the evolving nature 

of the industry. For example, the current statute does not allow a commercial 

launch provider to hold a license on a launch vehicle design being used for paid 

flights, while also holding an experimental permit to test out improvements or modifications on another vehicle of the same design that is not being used for paid 

flights. This would seem to be something that could be remedied quickly through 

either legislative or administrative action, and I look forward to getting the FAA’s 

thoughts on the matter at today’s hearing. 

In addition, when will Congress allow FAA to issue safety regulations for these 

new vehicles? I know that some in industry would like to put that date off for as 

long as possible. But, Mr. Chairman, we all know that spaceflight involves risk, and 

I don’t think we should wait until there is an accident to put sensible safety regulations in place. 

Finally, I also hope we can begin serious consideration of how we are going to 

handle accident investigation of commercial space launches, because we are getting 

closer to the day when humans will be flying on commercial suborbital, and eventually orbital systems. And when inevitably there is a ‘‘bad day,’’ I don’t think the government, the industry, or the families of those who might potentially be lost will 

benefit if we wind up developing an accident investigation framework under pressure and in reaction to a catastrophic event. 

We have the opportunity and the time to thoughtfully consider what is needed 

to develop a structure for accident investigation, including the expertise that would 

be required and the data that industry should be collecting to facilitate a potential 

investigation, should an accident occur, and how other high-risk operations handle 

accident investigation. 

Well, this is just a sample of questions that I hope we can explore with industry, 

government, academia and other stakeholders through hearings and dialogue, over 

at least the coming year, to inform what will be important legislation. So, let’s not 

rush a bill, Mr. Chairman, when there are too many critical questions and issues 

that need our careful consideration. Let’s take the time to get it right. I look forward 

to working with you to ensure the safety and success of the commercial space transportation industry. 

Thank you, and I yield back the balance of my time. 

Chairman PALAZZO. Thank you, Ms. Edwards. 

I now recognize the Chairman of the full Committee for a statement. 

Chairman SMITH. Thank you, Mr. Chairman. 

Let me confess at the outset and say to the Ranking Member 

Donna Edwards that there are some days I wish she had laryngitis 

but today is actually not one of them. Furthermore, now that she 

is engaged to a Texan, I assume she will be voting with me more 

often. 

Ms. EDWARDS. Mr. Chairman, that was not really public. 

Chairman SMITH. Oh, well, I was looking at your engagement 

ring. I thought that was a giveaway. Sorry. 

Ms. EDWARDS. In that case, thank you. 
13 

Chairman SMITH. We will scratch that for the record just for 

the—thank you, Mr. Chairman, for having this hearing. Also, I 

want to say we have excellent witnesses today. 

Americans’ record of ingenuity is filled with examples of entrepreneurs who pushed the boundaries of the possible. The commercial space industry relies on this same creative spirit. Three decades ago, Congress and President Reagan worked together to pass 

the Commercial Space Launch Act. This legislation paved the way 

for American entrepreneurs to reach for the stars. 

America has always been a nation of innovators and explorers. 

We continue to remain on the forefront of new discoveries and technologies. Members of Congress were looking toward the future 

when they passed the Commercial Space Launch Act. They had the 

foresight to understand that space may not be the final frontier, 

but it is certainly the next frontier. 

Were it not for this legislation, perhaps we would not have some 

of the modern conveniences that we take for granted today. The 

Space Subcommittee recently held a hearing with representatives 

of the commercial space industry. The message from those witnesses was clear. They need the government to be consistent in its 

policy and regulations need to allow them flexibility to develop 

their businesses and hire more American workers. 

In 1984, there were 18 federal agencies involved in every launch. 

The system was inefficient and suffocated the industry. Congress 

passed the Commercial Space Launch Act to get government out of 

the way and reduce bureaucracy so American businesses could be 

innovative and develop. Perhaps we can continue to learn from that 

strategy. 

Today, the Subcommittee will examine various aspects of the 

commercial space launch industry and how it is affected by the act. 

There are several provisions of the law that need to be updated, 

and the industry continues to evolve, so must the laws that govern 

it. 

So, Mr. Chairman, I look forward to working with you and the 

Ranking Member and our friends on the other side of the aisle to 

draft a commercial space bill that will encourage the growth of the 

commercial space industry. 

Before I yield to the gentleman from California, Mr. Rohrabacher, I would like to single out and recognize Stu Witt in the 

front row there, who is the Chairman of the Commercial 

Spaceflight Federation and is here from California. Stu, welcome to 

the hearing. 

With that, Mr. Chairman, I will yield to the Vice Chairman of 

the full Committee, the gentleman from California, Mr. Rohrabacher. 

[The prepared statement of Mr. Smith follows:] 

PREPARED STATEMENT OF COMMITTEE ON SCIENCE, SPACE AND TECHNOLOGY

CHAIRMAN LAMAR S. SMITH

Thank you Chairman Palazzo for holding this hearing. And I thank the witnesses 

for being here to share their expertise on this topic. 

Americans’ record of ingenuity is filled with examples of entrepreneurs who 

pushed the boundaries of the possible. The commercial space industry relies on this 

same creative spirit. Three decades ago, Congress and President Reagan worked to-
14 

gether to pass the Commercial Space Launch Act. This legislation paved the way 

for American entrepreneurs to reach for the stars. 

America has always been a nation of innovators and explorers. We continue to remain on the forefront of new discoveries and technologies. Members of Congress 

were looking toward the future when they passed the Commercial Space Launch 

Act. They had the foresight to understand that space may not be the final frontier, 

but it is certainly the next one. 

Were it not for this legislation, perhaps we would not have some of the modern 

conveniences that we take for granted today. The Space Subcommittee recently held 

a hearing with representatives of the commercial space industry. The message from 

those witnesses was clear. They need the government to be consistent in its policy. 

And regulations need to allow them flexibility to develop their businesses and hire 

more American workers. 

In 1984, there were 18 federal agencies involved in every launch. The system was 

inefficient and suffocated the industry. Congress passed the Commercial Space 

Launch Act to get government out of the way and reduce bureaucracy so American 

businesses could be innovative and develop. Perhaps we can continue to learn from 

that wise strategy. 

Today the subcommittee will examine various aspects of the commercial space 

launch industry and how it is affected by the act. There are several provisions of 

the law that need to be updated. As the industry continues to evolve, so must the 

laws that govern it. 

As Chairman Palazzo pointed out, by working together we can develop bipartisan 

solutions to the various issues that face the commercial space sector. 

I look forward to working with him and our friends on the other side of the aisle 

to draft a commercial space bill that will encourage the growth of the commercial 

space industry. 

Thank you Mr. Chairman, I yield back. 

Mr. ROHRABACHER. Thank you very much, and let me just note, 

as the author of the Commercial Space Launch Act of 2004, I would 

like to briefly touch on just three aspects of today’s hearing, first, 

the regulatory learning period of commercial space regulations. 

Overcoming the challenges of creating and perfecting new space 

technologies has taken longer than we predicted ten years ago 

when we passed this act and we expected flights to begin much 

earlier than they actually have begun. What we should have done 

is structure this so the eight-year timeline started with the first 

commercial flight carrying a spaceflight participant. The most important point, however, is that we move forward, and that as we 

are moving forward, that regulating in the absence of actual flight 

data is the worst choice that we can make. 

So item number two is the limits on testing of space vehicles 

once launch licenses have been issued. Virgin Galactic is continuing their powered test flights on SpaceShipTwo and the FAA 

is close to a decision on their license application. Their ability to 

complete their test programming, however, may be at risk once 

they have received the license. So I mean the last thing I can assure everyone here that we never intended a company’s ability to 

test their vehicle or gather additional safety information to be limited simply because the license has been approved. 

And finally, the current law indemnifies launch providers from 

claims above the insurance requirements but it also indemnifies 

government against the most probable claims in the case of an incident. This shared indemnification is important to both the government and the industry and we should make sure that we look at 

it as such. 

And so I look forward to our hearing of our witnesses. I have to 

leave at three o’clock but I am really looking forward to your testimony and I may not be able to stay for the question period, but 
15 

thank you very much for yielding time and letting me put this on 

the record. 

Chairman PALAZZO. Thank you. If there are Members who wish 

to submit additional opening statements, your statements will be 

added to the record at this point. 

Chairman PALAZZO. At this time, I would like to introduce our 

panel of witnesses. Our first witness is Dr. George Nield, Associate 

Administrator for Commercial Space Transportation at the Federal 

Aviation Administration. Dr. Nield came to the FAA from the Orbital Sciences Corporation where he served as senior scientist for 

the Advanced Programs Group. He was the manager of the Flight 

Integration Office for the Space Shuttle Program at Johnson Space 

Center, a graduate of the United States Air Force Academy. He 

holds an M.S. and Ph.D. in aeronautics and astronautics from 

Stanford University and an MBA from George Washington University. 

Our second witness is Dr. Alicia Cackley, Director of the Financial Markets and Community Investment Team at the Government 

Accountability Office. She oversees policy research and program 

evaluation on a broad range of insurance, consumer protection, 

housing, and finance issues. Dr. Cackley received her Ph.D. in economics from the University of Michigan and has been with the 

GAO since 1990. 

Our third witness is Dr. Henry Hertzfeld, Research Professor of 

Space Policy and International Affairs at the Elliott School of International Affairs at George Washington University. He is also an 

adjunct professor of law at GW. Dr. Hertzfeld has served as a senior economist and policy analyst at both NASA and the National 

Science Foundation and is a consultant to both U.S. and international agencies and organizations. Dr. Hertzfeld is a member of 

the bar in Pennsylvania and the District of Columbia. He received 

his Ph.D. from Temple University. 

As our witnesses should know, spoken testimony is limited to 

five minutes each after which Members of the Committee have five 

minutes each to ask questions. Your written testimony will be included in the record of the hearing. 

I now recognize our first witness, Dr. Nield, for five minutes. 

TESTIMONY OF DR. GEORGE NIELD, 

ASSOCIATE ADMINISTRATOR FOR COMMERCIAL 

SPACE TRANSPORTATION, FEDERAL AVIATION 

ADMINISTRATION 

Dr. NIELD. Chairman Palazzo, Ranking Member Edwards, and 

distinguished Members of the Subcommittee, thank you for inviting 

me to speak with you today. This is an exciting time for commercial space transportation, and I appreciate having the opportunity 

to provide you with an update. 

Since I last testified before the Subcommittee in 2012, the level 

of commercial space transportation activity in the United States 

has increased significantly. For example, in Fiscal Year 2012 there 

were only three FAA licensed or permitted launches. In Fiscal Year 

2013 there were 18, a sixfold increase. 

The prospects for continued growth are solid. Both SpaceX and 

Orbital Sciences Corporation are now conducting launches under 
16 

FAA licenses in order to deliver supplies to our astronauts onboard 

the International Space Station. Sierra Nevada Corporation, Boeing, and SpaceX are all developing systems to carry NASA astronauts to and from the Space Station as part of NASA’s Commercial 

Crew Program. The development of suborbital vehicles is also continuing with a number of flight tests expected during the coming 

year. 

Virgin Galactic and XCOR Aerospace have signed up nearly 

1,000 potential participants, yet space tourism is just the tip of the 

iceberg. Potential suborbital missions include conducting scientific 

research, demonstrating new technologies, media and public relations, educational outreach, and satellite deployment. New ideas 

and plans are coming our way with increasing frequency. Right 

now, we have about 25 ongoing pre-application consultations. This 

number includes proposals for new vehicles, new spaceports, safety 

approvals, and requests for payload reviews. All of these indicators 

are signs of industry growth. 

The FAA Office of Commercial Space Transportation has a twofold mission: To ensure protection of the public, property, and the 

national security and foreign-policy interests of the United States 

during commercial launch and reentry activities; and to encourage, 

facilitate, and promote commercial space transportation. To carry 

out our safety responsibilities, we develop and issue regulations, 

grant licenses, permits, and safety approvals, and conduct safety 

inspections during every licensed or permitted launch. 

With the advent of on-orbit commercial space transportation, the 

FAA has begun a dialogue with our stakeholders to explore the 

need for adjustments to the FAA’s statutory authority. As the number of commercial space transportation vehicles increases, it is appropriate to consider closing the current regulatory and safety gap 

between launch and reentry. The FAA believes it is time to explore 

the orbital safety of commercial space transportation under the 

Commercial Space Launch Act licensing regime. 

As the popular film Gravity was able to illustrate so dramatically, collisions in space can have devastating effects. The FAA’s 

experience with collision avoidance includes conducting analyses 

and implementing orbital debris mitigation practices for U.S. licensed launches. The National Space Transportation Policy, which 

was issued in November of 2013, calls on the FAA to execute exclusive authority in this area. Should the FAA’s authority be increased, we would work to ensure that appropriate levels of orbital 

safety are maintained in addition to our responsibility for launches 

and reentries. The goal would be for the FAA to address orbital 

transportation safety, including for orbital debris mitigation, for 

spacecraft whose primary function was transportation. 

Finally, I would like to assure the Subcommittee that our partnership with NASA with respect to its commercial activities is proceeding very smoothly. We strongly support the Administration’s 

requested changes for the Commercial Space Launch Act that 

would add a third category of occupants called government astronauts. The changes would complement our existing definitions of 

crew and spaceflight participants, and would increase transparency 

and ease the administration of our regulations in the context of 

NASA astronauts serving as crew. 
17 

Mr. Chairman, this concludes my prepared remarks. I will be 

pleased to answer any questions that you may have. 

[The prepared statement of Dr. Nield follows:] 
18 
19 
20 
21 
22 
23 
24 
25 
26 

Chairman PALAZZO. Thank you, Dr. Nield. 

I now recognize our next witness, Dr. Cackley, for five minutes. 

TESTIMONY OF DR. ALICIA CACKLEY, 

DIRECTOR OF FINANCIAL MARKETS AND 

COMMUNITY INVESTMENT TEAM, 

GOVERNMENT ACCOUNTABILITY OFFICE 

Dr. CACKLEY. Chairman Palazzo, Ranking Member Edwards, and 

Members of the Subcommittee, I am pleased to be here today to 

talk about the Federal Aviation Administration’s Commercial 

Space Launch Indemnification Program. 

As you are aware, a catastrophic commercial launch accident 

could have a significant impact on the uninvolved public or third 

parties in the form of personal injuries or property damage. In anticipation of such an event, a launch company must purchase a 

fixed amount of insurance for each launch per calculation by the 

FAA. According to the 1988 amendments of the Commercial Space 

Launch Act, or CSLA, the federal government is then potentially 

liable for claims above that amount up to an additional $3 billion 

as adjusted for inflation and subject to Congressional appropriations. 

My statement today is based on work that we completed in July 

of 2012 at the request of this Committee and the Senate Committee on Commerce, Science, and Transportation, with some updates as of January 2014 of FAA launch data and insurance industry capacity, as well as FAA’s progress on implementing our recommendation. 

In July 2012 we compared the U.S. Government’s indemnification policy with those of other countries and found that the United 

States provides less indemnification for third-party losses than key 

competitors such as China, France, and Russia because these countries put no upper limit on the amount of their coverage, while in 

the United States, coverage stops at about $3 billion per launch. 

However, for a given launch, the point at which the U.S. Government starts to cover losses, the maximum probable loss, may be 

lower than in other countries. 

In all these countries, including the United States, these commitments to pay have never been tested because there has never been 

a third-party claim that exceeded the launch companies’ insurance 

and thus reached the level of government indemnification. As a result, the potential cost to the federal government of indemnification 

for third-party losses is unclear. Estimating probable losses from a 

rare catastrophic event is difficult, but how accurate that calculation is depends on the soundness of the methodology that generates 

it. 

In July 2012, insurance industry officials and risk modeling experts told us that FAA’s method of calculating maximum probable 

loss was outdated, had not been reviewed by outside experts, and 

may not be sound. An inaccurate calculation that understates the 

amount of insurance a launch provider must obtain would increase 

the likelihood of cost to the federal government and lower insurers’ 

cost, whereas a calculation that overstates the amount of insurance 

would decrease the likelihood of federal costs and raise insurers’ 

costs. In addition, the possible growth in commercial launches, in-
27 

cluding manned launches, could increase the number of launches 

eligible for CSLA coverage and thus potential costs for the federal 

government. 

In July 2012, FAA officials said that their method for calculating 

maximum probable loss was reasonable and conservative but they 

agreed that a review could be beneficial and that involvement of 

outside experts might be helpful for improving their methodology. 

In January 2014, FAA told us they have taken some initial steps 

toward revising and updating their maximal probable loss methodology but that budget constraints had prevented further progress 

in the short term. We continue to believe that our July 2012 recommendation that FAA periodically review and update as appropriate its methodology for calculating launch providers’ insurance 

requirements has merit and should be fully implemented. 

With respect to the ability and willingness of the insurance market to provide additional third-party liability coverage, industry 

representatives we contacted in July 2012 told us the market was 

generally willing and able to provide up to $500 million per launch, 

and one insurer recently confirmed this is still the case. Because 

the amount of insurance FAA requires launch providers to obtain 

averages about $82 million per launch as of 2014 and coverage 

available through CSLA is about $3 billion above a given launch’s 

maximum probable loss, insurers could provide some of the coverage currently available through CSLA, namely, the difference between the maximum probable loss and the $500 million the industry indicated was the most they might provide. However, industry 

representatives cautioned that the amount and price of insurance 

that they might provide could change quickly if a large loss were 

to occur. If those costs are passed on to customers, U.S. launch 

companies could be more expensive and therefore less competitive 

than their foreign counterparts. 

Oh, I am sorry. Let me start this last part over. 

Finally, while ending indemnification could potentially decrease 

U.S. competitiveness, this depends on many factors and the actual 

effects are currently unknown. Launch companies and customers 

GAO contacted in July 2012 believe that ending federal indemnification could lead to higher launch costs for U.S. launch companies. If those costs are passed on to customers, U.S. launch companies could be more expensive, and therefore, less competitive than 

their foreign counterparts. However, it is unclear exactly how much 

the cost of third-party liability insurance, which brokers told us is 

about one percent of the total insurance coverage purchased by 

launch companies, might increase in the absence of federal coverage. And while launch customers said that price and vehicle reliability were key factors in their choice of a launch company, it is 

also not clear whether the increase in insurance costs alone would 

be sufficient reason for a launch customer to choose a foreign 

launch company over a U.S. company. 

Mr. Chairman, this concludes my prepared statement. I would be 

happy to respond to any questions. 

[The prepared statement of Dr. Cackley follows:] 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 

Chairman PALAZZO. Thank you, Dr. Cackley. 

I now recognize our final witness, Dr. Hertzfeld, for five minutes. 

TESTIMONY OF DR. HENRY HERTZFELD, 

RESEARCH PROFESSOR OF SPACE POLICY 

AND INTERNATIONAL AFFAIRS, 

ELLIOT SCHOOL OF INTERNATIONAL AFFAIRS, 

GEORGE WASHINGTON UNIVERSITY 

Dr. HERTZFELD. Thank you very much. Thank you for the opportunity to testify today on the topic of updating the Commercial 

Space Launch Act. 

Chairman PALAZZO. Microphone, please. 

Dr. HERTZFELD. I am sorry. I will start again. 

Thank you for the opportunity to testify today on the topic of updating the Commercial Space Launch Act. This act has proven to 

be a very powerful and productive force in stimulating commercial 

space transportation in the United States. The Department of 

Transportation through the Federal Aviation Administration has 

carried out its obligations well and the United States is recognized 

as a responsible nation in administering commercial space launch 

activities. The FAA has also been successful in promoting commercial space endeavors. The fact that regulations have remained predictable, stable, consistent, and have been administered with fairness and transparency is alone enough to provide confidence in the 

domestic and international commercial communities. 

But there are some considerations that the Congress should address as commercial space activities evolve. The first is jurisdictional. The DOT is an agency with expertise in administering rules 

concerning all types of transportation but it has no special expertise in the fields of resource extraction, energy generation, or Moon 

landings, all of which are being seriously proposed for outer space 

commercial projects. In fact, Congress has not granted to any agency specific regulatory powers over most activities in outer space. 

And examples of that include launching a payload from a platform 

in space; oversight of a commercial payload landing on an asteroid 

or other celestial body; extracting, moving, or returning Earth resources from space. 

It is important to remember that by treaty agreements, the 

United States Government as a launching state is ultimately liable 

for damages from these activities should something go wrong. 

Rather than expand the scope of the CSLA, I would recommend 

that Congress consider allocating future jurisdiction over nontransportation issues to agencies with the required expertise in those 

areas. That has been the approach Congress has chosen in the 

past, witnessed by the Department of Commerce licensing of remote sensing payloads in the earlier FCC licensing of telecommunications satellites. 

The—at the same time, Congress should clearly define the jurisdictional limits of the CSLA in order to avoid overlaps. The topic 

of indemnification, if there were a catastrophic accident in space involving a U.S. Government or corporate asset, politics and international relations rather than any Congressional limit would likely 

determine who would pay and how much. The good news of course 

is that the probability of such a catastrophic accident in space is 
60 

relatively small. The bad news is that some orbits are becoming 

crowded and there is a growing probability that an accident with 

large economic consequences could happen. 

This coupled with emerging space capabilities such as satellite 

servicing, active debris removal, or moving asteroids will raise new 

insurance and indemnification issues. Examples again are, although launch insurance is required, satellite insurance is not. The 

United States could undertake an effort to negotiate international 

agreements for limits to liability for damages in space. There is no 

international enforceable and binding dispute resolution system for 

commercial accidents in outer space. Binding arbitration might be 

one to consider. The United States Government should adopt incentives for private industry to develop its own insurance pool to possibly eliminate the need for government indemnification. 

Regarding the experimental period for suborbital human flight, 

there is no clear answer to when the experimental period should 

end, but it certainly will have to be extended beyond 2015. There 

are a number of companies developing human suborbital systems. 

Each company has a different technological approach making any 

end to an experimental period unique to each. Congress is faced 

with a dilemma. If it ends the experimental period when the first 

company is deemed to be successful, it penalizes late starters, but 

if it continues it indefinitely, then final regulations for safety in 

suborbital vehicles will be greatly delayed, possibly risking lives 

and damage. 

In regard to other nations, all launching states are parties to the 

Outer Space Treaty, have agreed to assume liability and indemnify 

launches, but there is no guarantee that if a problem occurs in 

space, all will handle it the same way or in a way that will be satisfactory to other nations. With the exception of a major unilateral 

shift in the indemnification regime such as terminating the U.S. 

Government’s guarantee, it is unlikely that the current CSLA or 

any changes to it will significantly alter the competitiveness of U.S. 

launch companies. 

In summary, the CSLA has proven to be effective and responsive 

to U.S. industry’s needs. However, because of the diverse spread of 

expertise and responsibility among different federal agencies, the 

Congress should address the interagency coordination of all United 

States space activities so that future commercial space licenses will 

be handled effectively, efficiently, and quickly with the maximum 

transparency that is possible. 

Thank you very much. 

[The prepared statement of Dr. Hertzfeld follows:] 
61 
62 
63 
64 
65 
66 
67 
68 
69 
70 
71 
72 

Chairman PALAZZO. Thank you, Dr. Hertzfeld. 

I thank the witnesses for being available for questioning today. 

Reminding Members that Committee rules limit questioning to five 

minutes, the Chair will at this point open the round of questions. 

The Chair recognizes himself for five minutes. 

When Congress enacted the law to promote commercial human 

spaceflight in 2004, it included an eight-year learning period to 

allow industry to innovate without excessive regulation while allowing the FAA to write rules based on actual problems during licensed flights. Unfortunately, it has taken a long time for the industry to emerge so Congress extended this for the full duration of 

the FAA Reauthorization Act in 2012, basically until September 30, 

2015. It is my understanding that FAA’s Commercial Space Transportation Advisory Committee, COMSTAC, has recommended that 

the learning period be restored to a full eight years from the first 

licensed flight of a spaceflight participant. Do you agree with the 

FAA advisory committee’s recommendation? I would like to start 

with Dr. Nield. 

Dr. NIELD. Mr. Chairman, if I could, I would like to tell you a 

little bit about what the FAA has been doing since Congress extended the learning period to give some context to the question 

itself. 

When we were asked to engage with industry about this subject, 

we went out and consulted with industry, specifically with 

COMSTAC, with NASA, with the Civil Aerospace Medical Institute 

(CAMI) as part of the FAA, and with academia, specifically the 

Center of Excellence for Commercial Space Transportation, and 

asked for their help and advice. We then held a series of eight public teleconferences to discuss what the FAA’s oversight should look 

like, what levels of safety are appropriate, abort systems, fault tolerance, design margins, medical best practices, communications, 

and many other topics. 

And after reviewing the data and the lessons learned from the 

last 50 years of human spaceflight, we developed a draft document 

entitled ‘‘The Established Practices of Human Spaceflight Occupant 

Safety.’’ We posted that on our website and asked for comments 

from industry and from NASA. We are currently in the process of 

reviewing those comments and we hope to finalize the document 

this year. The ultimate goal is to gain the consensus of government, industry, and academia. And really, the document has two 

purposes, first of all, to serve as a framework and a benchmark for 

industry to use in developing industry consensus standards, and 

secondly, to serve as a baseline and a starting point should there 

be a need for government to issue regulations at some point in the 

future once the moratorium has expired. So, that sets the stage for 

where we are. I would be happy to expand on that later if you have 

time. 

Chairman PALAZZO. Well, thank you, Dr. Nield. 

Dr. Hertzfeld, would you like to add anything to that? 

Dr. HERTZFELD. No, I don’t think I can. I think that an arbitrary 

extension at this point such as the eight years that you had mentioned in your question might not be wise, but I think there is at 

some point a judgment call that will have to be made to end that 

period, and it should be based I think on the technical basis of the 
73 

experience that we have had, particularly from the early flights 

and the expectations from any of the companies that might be in 

the wings to begin to start. 

Chairman PALAZZO. The FAA interprets the CSLA to require a 

company with a licensed vehicle design to forfeit its ability to continue testing and improving that design once it has been put into 

service. Can you explain why the FAA believes it does not have the 

flexibility to allow these vehicles to continue testing, Dr. Nield? 

Dr. NIELD. Yes. Our interpretation of the current law is that an 

experimental permit can only be used for specified purposes, basically for training or for demonstrating compliance, whereas a license can be used for compensation and hire, basically for commercial use. And although it has been mentioned already today that 

the intent was not to prevent or make difficult the opportunity to 

go back and forth, the way we read the current law, once a license 

is issued for a vehicle of the same design that currently has a permit, the permit would no longer be valid. Now, there is a way forward, which is you can still continue to do testing under a launch 

license, but under current law, we can’t go back and forth. 

Chairman PALAZZO. In 2012, GAO recommended that FAA 

should review the MPL calculation to ensure it is sound. How far 

along is FAA in the process and what have you found so far, again, 

Dr. Nield? 

Dr. NIELD. We completely agree with the GAO recommendations. 

We believe we have a reasonable process which has been conservative, but we solicited and welcomed outside scrutiny and recommendations on how to improve the process. We have come up in 

house with what we think is a more objective and more accurate 

way of calculating the maximum probable loss. What we would like 

to do is spend the next 12 months basically to do an IV&V—independent verification and validation—of that software to make sure 

that it can be used for these very important decisions, basically 

how much insurance each company has to go get, and, again, we 

think it would be also valuable to have outside experts critique 

that, although there may be some funding requirements that are 

associated with that. So we would be happy to come back to the 

Committee later on in the year and give you a better progress report, but that is where we are right now. 

Chairman PALAZZO. Thank you. 

I now recognize Ms. Bonamici for five minutes. 

Ms. BONAMICI. Thank you very much, Mr. Chairman, and thank 

you to the witnesses for bringing your expertise to the Subcommittee. 

Dr. Hertzfeld, I want to ask about accident investigation involving commercial space operations. What will we need to know if we 

needed to determine what entity, whether it be an existing or new 

entity, should have the authority to investigate commercial 

spaceflight accidents, including those involving human spaceflight 

participants? How should investigations be handled? What type of 

expertise would be needed? And are there other high-risk industries that can serve as models? 

Dr. HERTZFELD. I really have not given that any thought in preparation for the testimony today, but when I testified in 2011, I believe I did address a couple of issues related to that. And I think 
74 

the National Transportation Safety Board generally has authority 

to investigate accidents related to transportation. Unless the law 

has been changed, space was left out of the actual list of those 

modes to which they would investigate. But I believe there is an 

MOU between the Commercial Space Office and the National 

Transportation Safety Board for accidents above a certain limit 

amount or those involving human beings would be under their jurisdiction. And if we go back to the Shuttle Columbia accident, I 

believe they were also involved because they had a lot of expertise 

in this area. NASA of course in the human spaceflight has had experience as well in accident investigation, but when something like 

this happens, the expertise within the government is found among 

the various agencies and I don’t think any agency would decline to 

participate. 

Ms. BONAMICI. Thank you. And I am going to ask Dr. Nield, 

what data should industry be required to collect in order to facilitate a potential accident investigation should an accident occur? 

Dr. NIELD. We currently require a lot of information as part of 

a launch license process in terms of the vehicle and toxic propellants and the trajectories, what the hazards are, and so forth, so 

we already have that in place. And as Dr. Hertzfeld mentioned, we 

currently have MOUs, Memorandums of Understanding, between 

the FAA, the National Transportation Safety Board, and the Department of the Air Force to conduct investigations should there be 

an accident that occurs in the future. 

Ms. BONAMICI. Can you think of any data that isn’t being collected that might facilitate an accident investigation or it is your 

position that everything that should be collected is already being 

collected? 

Dr. NIELD. I think we have a good set of requirements in terms 

of what information we need upfront. To build on your question 

though I think what could really help the industry going forward 

is a greater willingness to share information about close calls and 

incidents and accidents that do occur among the various companies. And of course that could be a difficult issue when you talk 

about proprietary data— 

Ms. BONAMICI. Right. 

Dr. NIELD. —and competition, but that could really help the safety. 

Ms. BONAMICI. Terrific. Thank you. 

And for all the members of the panel, the Commercial Space 

Launch Act requires that space operators, before receiving compensation or agreeing to fly a spaceflight participant, inform each 

participant in writing about the risks of the launch and reentry, 

and it is my understanding that that is according to the vehicle 

type. 

Now, some say that informed consent is not a waiver of liability 

for any enhanced exposure to injury caused by the operator’s carelessness, if any, and they advocate having each spaceflight participant exchange a liability waiver with the commercial launch provider. So basically, parties would agree not to file claims against 

the other party if there is an accident. Now, there are concerns 

about the rights of the passengers and their families and that they 

should be protected in the event of an accident. So what are your 
75 

views on whether there should be cross waivers between 

spaceflight participants and commercial launch providers? Is informed consent still appropriate as we move to regularly scheduled 

and paid suborbital flights? 

And I think I will start with Dr. Hertzfeld. I don’t know if the 

other of you are lawyers. It is a bit of a legal question. 

Dr. HERTZFELD. The way the system works today is the wording 

of the informed consent statement is left to the companies, I believe. Many states that have spaceports or are considering spaceports have passed legislation with wording on the informed consent, and each one is slightly different. And I think that is something of concern. 

Looking ahead, it is quite fine for states to compete against each 

other for economic reasons, but some of these laws are aimed at 

protecting the operator from a suit by one of the passengers if 

something went wrong and with the exception I believe of willful 

actions or gross negligence. They read differently and this may be 

something that the federal government should consider for preemption and it might be—because the FAA has more data, more information on all of the companies and all of the risks, wording that 

perhaps should be drafted by the FAA and be uniform throughout 

the country. 

Ms. BONAMICI. Thank you very much. 

And I see my time is expired. I yield back. Thank you, Mr. Chairman. 

Chairman PALAZZO. I now recognize Mr. Rohrabacher for five 

minutes. 

Mr. ROHRABACHER. Thank you very much. And I am going to 

have to be out of here in five minutes so I will get right to it. Dr. 

Nield, now, you are going to have to correct me if I am wrong in 

my assessment on what the law says, but right now, when some 

company like I guess Virgin Galactic gets a space launch license, 

at that point their ability to continue testing is highly restricted, 

is that correct? 

Dr. NIELD. Just to be precise, currently Scaled Composites has 

the permit for SpaceShipTwo. 

Mr. ROHRABACHER. All right. 

Dr. NIELD. Virgin will be the eventual customer and they have 

applied for a launch license. 

Mr. ROHRABACHER. Right. 

Dr. NIELD. But once that license is issued, the use of a permit 

is invalidated. 

Mr. ROHRABACHER. So they can’t go—so what we are saying is 

that it makes sense to restrict the testing of something that has 

already been approved—well, we can’t—we don’t believe in perfecting it anymore or make it even a little more safer. Does that 

make any sense to you, that we are actually stopping a company 

that might want to test to see if there is more perfections they can 

do of their technology? 

Dr. NIELD. That doesn’t make any sense at all, and I would certainly not recommend that. Now— 

Mr. ROHRABACHER. Okay. So—— 

Dr. NIELD. —additional testing could take place under a license, 

but—— 
76 

Mr. ROHRABACHER. Yeah. 

Dr. NIELD. —if there is bureaucracy involved here, then we ought 

to take a look at improving that. 

Mr. ROHRABACHER. Mr. Chairman, I guess that means that what 

we—something we can do in the law to make sure that because 

someone has received a license, that they are not cut off then from 

improving what they have, the technology that they have, but that 

is necessary right now for us to change the law for that to happen. 

And let me ask, right now, you have got 18 federal agencies that 

in some way have something to do with the launch industry, and 

it was decided and we tried to focus most of this regulation on the 

Department of Transportation and the FAA Commercial Space Office. Doctor, you seem to be suggesting that we need to have more 

offices and more different bureaucrats involved complicating the 

process more rather than facilitating something that we need to develop in our country. You know what they say is bureaucracy is the 

most efficient system ever devised to turn creative energies into 

solid waste. And you seem to be advocating more government bureaucrats than less. 

Dr. HERTZFELD. Not exactly. I used the word agencies in my testimony—— 

Mr. ROHRABACHER. Yeah. 

Dr. HERTZFELD. —that is correct, but I am focusing more on expertise, wherever that might come from and however it might be 

best coordinated throughout the federal government. And even 

with 18 agencies involved, there is an intergovernmental review of 

all these licenses that goes to a number of agencies, and that process is apparently not working quite as well as it might and has 

slowed down some licenses so that whether the—there is also, as 

I mentioned, a void in the law about on-orbit and in outer space 

activities—— 

Mr. ROHRABACHER. Right. 

Dr. HERTZFELD. —so that we are going to have to close that at 

some point, and when we do, many of these areas of other expertise 

will be necessary, and I think we have to—— 

Mr. ROHRABACHER. Well, I would hope that when we have areas 

of expertise that we don’t set up a system in which someone who 

wants to participate in this incredible new avenue for human 

entrepreneurism, that we have them going to 20 different offices in 

order to talk to 20 different government officials in order to get— 

curry favor with each one of them, and if one of them doesn’t put 

the stamp on the paper, well, you can’t do what you want to do. 

And, believe me, there are a lot of businesses in our country that 

face this kind of overregulation and we should be very cautious not 

to put that type of burden on this new entrepreneurial effort in 

space. 

Dr. HERTZFELD. I agree with you. On the other hand, safety is 

one of the things that we do have to be very much aware of and 

that we do have to get the right information and have people who 

understand what is going on, work with those who are regulating. 

Mr. ROHRABACHER. Well, maybe we could put them in the same 

office so they don’t have to walk across town or something or—— 

Dr. HERTZFELD. Could happen. 
77 

Mr. ROHRABACHER. Thank you very much. Thank you. And, Mr. 

Chairman, thank you. 

Chairman PALAZZO. I now recognize Mr. Schweikert for five minutes. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

Educate me a little bit. How many countries right now are 

launch-capable or part of the international treaty, the compact? 

Dr. NIELD. There are a number of countries who are involved in 

space in some way, but today, only China and Russia are able to 

launch people into space. 

Mr. SCHWEIKERT. But how many are part of some of the treaty 

mechanisms out there? 

Dr. NIELD. Over 100. 

Mr. SCHWEIKERT. Okay. Out of those 100, how many of them 

have a liability mitigation mechanic? Do they all take it as a government indemnification? Are there others that have bifurcated it 

or created a reinsurance mechanic? How do other countries also 

deal with this? 

Dr. CACKLEY. Most of the other countries that we looked at—and 

we looked most specifically at China, Russia, France. Those are 

some of the main countries, and they all have a government indemnification program. 

Mr. SCHWEIKERT. Is there any one that you know of—sorry, 

Mr.—Doctor—anyone out there who has actually broken that model 

of sort of a national insurance? 

Dr. CACKLEY. Not that I am aware of but that doesn’t mean it 

doesn’t exist, but it certainly isn’t among the largest companies 

that have the most launches that we have tracked. 

Mr. SCHWEIKERT. Okay. To my other doctors—and this is easy, 

doctor, doctor, doctor. 

Dr. HERTZFELD. There are about—there are 180—28 countries 

that have signed to ratify the Outer Space Treaty. There are about 

11 countries with launch capabilities. Most other countries other 

than the ones mentioned are launching their own government satellites, so we are not really talking about the commercial end of it. 

And they have obligated themselves through the treaties to indemnify. 

I will point out though that the definition of a launching state 

extends to countries that purchase a launch as well—— 

Mr. SCHWEIKERT. Well, you beat me to my next question. Is there 

bifurcation? You know, I am a private concern out of Taiwan. I approach the French. They are going to have—be my lift vehicle to 

put up a satellite. Do I carry a proportionality of risk? How is that 

mitigated? 

Dr. HERTZFELD. Potentially, but the French—— 

Mr. SCHWEIKERT. Or—well, you only used the French but— 

Dr. HERTZFELD. No, and I am using it as an example. They 

would require insurance of some sort or indemnification for the 

launch and—— 

Mr. SCHWEIKERT. How is that being acquired? So you are telling 

me if I am buying lift capacity, that as that purchaser, part of 

my—as I am out there in the market buying? 

Dr. HERTZFELD. It would be included in the price of the launch. 
78 

Mr. SCHWEIKERT. Okay. And—but ultimately, I am paying the 

French Government for that? 

Dr. HERTZFELD. Yes. 

Mr. SCHWEIKERT. Okay. Just as a philosophical sort of touch, 

Congressman Rohrabacher was actually coming close to something 

and then let’s see if I sort of express from a personal view and you 

tell me where I am right or wrong. I look at the internet, one of 

the most amazing sort of economic curves we can get our heads 

around, how it has changed the world, changed our lives, changed 

everything we are discussing and how we do our businesses. It is 

also something that had a very, very soft touch of government regulation, government intrusion, government control, government 

definitions. Why does that model not work in this world? 

Dr. NIELD. In general, I think it does work and you need to look 

at the particular application. So when you are talking computers, 

then privacy and information scams and so forth are a concern, and 

the government has a role there—— 

Mr. SCHWEIKERT. But you also see what a great job the government does in managing that and stopping it. I mean at some point 

we have to deal with the reality of incentives and smart people 

committing bad acts. 

Dr. NIELD. Good point, and I am all for industry designing, developing, operating space vehicles. I think the government does have 

an important role to ensure public safety, and to the extent appropriate, to encourage, facilitate, and enable the industry to be successful. 

Mr. SCHWEIKERT. But if I was going to maximize public safety, 

does that safety really come from a command-and-control regulatory environment or does it come by actually sort of indemnification and insurance environment where the insurance world is actually able to think outside the box, think of other types of mitigation? My best example is that we regulate against securities fraud. 

You know, we have the entire SEC. We have all sorts of robustness 

out there, but somehow, bad things keep happening, but we do go 

in and bayonet the wounded after it is all over. So my fear is command-and-control regulatory environment often is at the back end 

of the disaster instead of the front end. 

So, Mr. Chairman, with that, I am over my time. I yield back. 

Thank you. 

Chairman PALAZZO. I now recognize Mr. Bridenstine from Oklahoma for five minutes. 

Mr. BRIDENSTINE. Thank you, Mr. Chairman. 

Just a couple of questions, Dr. Nield. When you talk about permitting, under a permit, that is when you do your testing, right? 

And then when you get licensed, that is when you do your operational flights? 

Dr. NIELD. Yes, although a permit is voluntary. You can go right 

to license if you would like. 

Mr. BRIDENSTINE. Okay. But you mentioned that under a license 

you can still do testing? 

Dr. NIELD. Absolutely correct. 

Mr. BRIDENSTINE. So how is that different than permitting? 

Dr. NIELD. Congress established permitting somewhat similar to 

the way we have Experimental Airworthiness Certificates in avia-
79 

tion before or instead of having a formal certification process for 

the aircraft itself. So under commercial space, if you want to do 

commercial ops, you need to have a license. If you just want to do 

some testing or training, you can operate under a permit and it is 

a little bit easier, a little bit—— 

Mr. BRIDENSTINE. So even if you have a license, you can still 

modify your aircraft for the betterment of the crew and the safety 

of the crew and everything else. 

Dr. NIELD. Absolutely. And with your help, that would continue. 

Mr. BRIDENSTINE. Okay. And then as far as the—we were talking 

about the learning period. The Chairman asked a question about 

extending it up to eight years after the first spaceflight participant 

flight. It—now, eight years—do you agree that we need to have the 

learning period extend beyond where we currently are in 2015 and 

extend it to eight years after the first spaceflight or I guess the 

first participant spaceflight? 

Dr. NIELD. Thank you for that question, and I have to say, no, 

I do not agree with that and let me tell you why. The United States 

has over 50 years of experience in human spaceflight. Alan 

Shepard had his suborbital flight back in 1961. The X–15 was making rocket-powered suborbital flights back in 1962. The Space Shuttle, 135 flights over 30 years. Now, it is true that none of those carried a spaceflight participant who actually bought a ticket, but as 

far as I am concerned, the design and the operation of those vehicles really were independent of who was riding on board. Now, we 

had lots of lessons learned, data, problems solved, challenges overcome during that 50 years, and for us to just put that aside and 

say, well, let’s start over without taking advantage of what we have 

learned I think is irresponsible. 

Mr. BRIDENSTINE. Okay. So having that eight-year period originally would have been incorrect then, right? 

Dr. NIELD. That would be my position, yes. 

Mr. BRIDENSTINE. Okay. So we shouldn’t have had the eight 

year—in your opinion, we shouldn’t have had the eight years to 

begin with, let alone eight years going forward? 

Dr. NIELD. That is correct. However, I am very sensitive to the 

concerns that industry has about government being overreaching 

and burdensome and holding things back. That is not what we 

want to do in the Office of Commercial Space Transportation. We 

want to enable safe and successful commercial operations. 

Mr. BRIDENSTINE. Okay. Mr. Chairman, I yield back. 

Chairman PALAZZO. Thank you. At this time we are going to go 

into a second round of questioning if there are no objections. 

All right. I will yield myself five minutes. 

And according to the experts in the insurance industry, there is 

a large pool of capital available for launch and payload insurance 

but this pool is also used for various other types of specialty insurance and is susceptible to quickly changing world events. Does 

GAO believe there is a sufficient amount of capital in the insurance 

market to allow for insurance at a reasonable cost within indemnification, Dr. Cackley? 

Dr. CACKLEY. When we did our work in 2012, we spoke to a number of insurance companies and insurance brokers. We looked very 

carefully at the question of industry capacity to cover more than 
80 

the maximum probable loss that launch companies are currently 

required. And we very much discovered that there is more capacity 

than what is currently required, and the insurance companies told 

us that they had the capacity to go as high as $500 million in coverage, but they did talk about the fact that that ability was very 

much dependent on future events. So as soon as there—if there 

were to be a large event—large impact event, that could change 

very quickly, and therefore, there isn’t necessarily stability of provision of insurance going forward that the launch companies could 

necessarily count on. So we don’t have a position as to whether 

there is and will always be greater capacity, but there certainly is 

a possibility for greater capacity of—than what insurance companies are currently providing. 

Chairman PALAZZO. Okay. And my final question, and this is 

going to be for Dr. Nield, CSLA envisioned a single license to 

launch for commercial spaceflight companies, essentially a one-stop 

shop. It seems that FAA is having difficulty with how to regulate 

hybrid space vehicles which are part aircraft and part spacecraft. 

As I understand it, these vehicles are required to operate under different sets of regulations at different times of operation. This type 

of process is inefficient and expensive. Additionally, any time there 

are two sets of rules, gaps and conflicts can develop which can impact safety. How could the Office of Commercial Space Transportation and the Aviation Safety Office cooperate so that the aviation 

office provides all necessary input and expertise on airplane technology but the commercial space office has the one-stop shop role 

for the industry? 

Dr. NIELD. Thank you for that question, and let me just say that 

the Office of Commercial Space Transportation and the Office of 

Aviation Safety do cooperate and do provide support to one another 

as appropriate. In terms of specific legislation, we certainly support 

a flexible regulatory structure which promotes growth, safely integrates operations into the National Airspace System, and leverages 

all the capabilities of the FAA. And we welcome the opportunity to 

provide additional technical assistance to the Committee as you 

consider avenues to correct the perceived obstacles to a streamlined 

operation. 

Chairman PALAZZO. Thank you. 

At this time I recognize Ms. Bonamici for five minutes. 

Ms. BONAMICI. Thank you, Mr. Chairman, and thank you for allowing this second round of questions, especially since Members 

over here had to leave before they got to ask questions. 

So for all of the distinguished panel, think back to the airline industry, the FAA previously had dual roles as both advocate and 

regulator of the airline industry, and that was eventually split and 

the FAA only retained the regulatory role. But in contrast now, the 

FAA has both roles regarding commercial space. So the Office of 

Space Commercialization in the Department of Commerce seems to 

complicate the issue as that office also has responsibilities that include industry advocacy. So what are the pros and cons of removing the advocacy role of the FAA, and if that decision is made, 

what entity or entities would be—or could be given that responsibility effectively? Dr. Nield, I will start with you. 
81 

Dr. NIELD. Thank you. I would point out that from the first passage of the Commercial Space Launch Act 30 years ago, there has 

been this dual role, on one hand, promote safety and on the other 

encourage, facilitate, and promote the industry. And that sounds to 

a lot of people like it could be a conflict and that question has come 

up over the years. Congress has asked for report. We have done 

independent studies. We have had debates about that. But as I 

look back, I think it has worked very well. To me, the ‘‘encourage, 

facilitate, and promote’’ role is a way of thinking. It is not a compromise of safety in any way. And if you look at the record, there 

have been 254 licensed or permitted launches in the last 30 years 

and none of them have ever had a fatality, serious injuries, or significant property damage. So I think we have the balance about 

right. 

Ms. BONAMICI. Dr. Cackley or Dr. Hertzfeld, do you have the 

same opinion? 

Dr. CACKLEY. Well, we haven’t looked at the duplication across 

FAA and the Department of Commerce in particular, so I don’t 

have an opinion specifically on them, but I do know that GAO has 

looked at duplication across the federal government and a lot of different areas and it is something we identify as a concern and something that should always be reviewed and considered as to whether 

there is something that could be done differently. 

Ms. BONAMICI. Thank you. Dr. Hertzfeld? 

Dr. HERTZFELD. Yes, certainly industry has not complained at 

this point, and I agree, it has worked fine up to now. I think there 

are a couple of issues that require monitoring in this area. When 

the agency was established in—the commercial space—launch regulation, we had one type of launch vehicle, ELVs. And then there 

was at a point which could come back at some day in the future 

reusable and relaunch and reentry vehicles that can come, land, 

and take off again. We don’t have that now. But if we begin to have 

a series of different technologies, a series of different types of vehicles all regulated by one agency, then there could be an issue of 

some regulations favoring one type over another, all of them wellmeaning but not coordinating in a way that—and it could affect 

companies in terms of promoting space. 

Ms. BONAMICI. Thank you. And I am going to try to get one more 

quick question in, Dr. Hertzfeld. With the likelihood of more frequent commercial launches, I wanted to ask about your position on 

whether developing incentives for private industry to develop insurance pools rather than—as an alternative to government indemnification. So in your view, are there some examples of incentives 

that can have the potential for encouraging those insurance pools? 

Are they a possible alternative to indemnification, especially in 

light of the need for newer launch vehicles to pay higher premiums 

until they establish reliability? 

Dr. HERTZFELD. I think the major test will be the growth of the 

industry. If there are enough launches, then there is possibly 

enough business to warrant that. In a slightly different way but 

the same scheme of indemnification was applied with the civil nuclear area and eventually they were able when we built enough nuclear power plants to have their own pool and cover their own insurance. I think it is a ways off but it is possible. 
82 

Ms. BONAMICI. Thank you very much, and I yield back. Thank 

you, Mr. Chairman. 

Chairman PALAZZO. I now recognize Mr. Bridenstine for five minutes. 

Mr. BRIDENSTINE. Thank you, Mr. Chairman. 

Dr. Nield, your title, Associate Administrator for Commercial 

Space Transportation of the Federal Aviation Administration, and 

it was my understanding that—and correct me if I am wrong—that 

the FAA’s Commercial Space Transportation Advisory Committee, 

COMSTAC, has recommended that the learning period be restored 

to a full eight years from the first licensed flight of a spaceflight 

participant. So what is your relationship with the advisory committee, and do you and the advisory committee differ in that opinion? 

Dr. NIELD. The COMSTAC provides advice to the Administrator 

and to me about issues of interest to commercial space transportation, and we very much appreciate their advice. We are not looking for a rubberstamp or a validation of what we are trying to do. 

In this particular case, there is a difference that you pointed out 

between their recommendation and my recommendation to the 

Congress. 

Mr. BRIDENSTINE. That is all I had, Mr. Chairman. Thank you. 

Chairman PALAZZO. I want to thank the witnesses for their valuable testimony and the Members for their questions. The Members 

of the Committee may have additional questions for you, and we 

will ask you to respond to those in writing. The record will remain 

open for two weeks for additional comments and written questions 

from Members. 

The witnesses are excused and this hearing is adjourned. 

[Whereupon, at 3:25 p.m., the Subcommittee was adjourned.] 
(83) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
84 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. George Nield 
85 
86 
87 
88 
89 
90 
91 
92 
93 
94 
95 
96 
97 
98 
99 

Responses by Dr. Alicia Cackley 
100 
101 
102 
103 
104 
105 

Responses by Dr. Henry Hertzfeld 
106 
107 
108 
109 
110 
111 
112 
113 
114 
115 

Æ