II

106TH CONGRESS

1ST SESSION S. 469

To encourage the timely development of a more cost effective United States

commercial space transportation industry, and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 25, 1999

Mr. BREAUX (for himself, Mr. BURNS, and Mr. BAUCUS) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation

A BILL

To encourage the timely development of a more cost effective

United States commercial space transportation industry,

and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Commercial Space Transportation Cost Reduction Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

Sec. 4. Definitions.
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TITLE I—INCREASING THE AVAILABILITY OF PRIVATE SECTOR

FINANCING FOR THE UNITED STATES COMMERCIAL SPACE

TRANSPORTATION INDUSTRY THROUGH A LOAN GUARANTEE

PROGRAM

Sec. 101. United States Commercial Space Transportation Vehicle Industry Program.

Sec. 102. Functions of the Secretary of the Department of Transportation.

Sec. 103. Space Transportation Loan Guarantee Fund.

Sec. 104. Authorization of Secretary to Guarantee Obligations

Sec. 105. Eligibility for Guarantee

Sec. 106. Defaults

1 SEC. 2. FINDINGS.

2 Congress makes the following findings:

3 (1) The United States commercial space trans4 portation vehicle industry is an essential part of the

5 national economy and opportunities for U.S. com6 mercial providers are growing as international mar7 kets expand.

8 (2) The development of the U.S. commercial

9 space transportation vehicle industry is consistent

10 with the national security interests and foreign pol11 icy interests of the United States.

12 (3) United States trading partners have been

13 able to lower their commercial space transportation

14 prices aggressively either through direct cash pay15 ments for commercially targeted product develop16 ment or with indirect benefits derived from nonmar17 ket economy status.

18 (4) Because United States incentives for space

19 transportation vehicle development have historically

20 focused on civil and military rather than commercial
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1 use, U.S. launch costs have remained comparatively

2 high, and U.S. launch technology has not been com3 mercially focused.

4 (5) As a result, the U.S. share of the world

5 commercial market has decreased from nearly 100%

6 twenty years ago to approximately 47% in 1998.

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

8 space transportation services, the U.S. must strive

9 to have sufficient domestic capacity as well as the

10 highest quality and the lowest cost per service pro11 vided.

12 (7) A successful high quality, lower cost U.S.

13 commercial space transportation industry should

14 also lead to substantial U.S. taxpayer savings

15 through collateral lower U.S. government costs for

16 its space access requirements.

17 (8) The key to maintaining United States lead18 ership in the world market is not another massive

19 government program, but rather provision of just

20 enough government support on an incremental and

21 timely basis to enable the more cost effective U.S.

22 private sector to build lower-cost space transpor23 tation vehicles.

24 (9) Private sector companies across the United

25 States are already attempting to develop a variety of
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1 lower-cost space transportation vehicles, but lack of

2 sufficient private financing, particularly in the early

3 stages of development, has proven to be a major ob4 stacle, an obstacle our trading partners have re5 moved by providing direct access to government

6 funding.

7 (10) Given the strengths and creativity of pri8 vate industry in the United States, a more effective

9 alternative to the approach of our trading partners

10 is for the U.S. government to provide limited incen11 tives, including loan guarantees which would help

12 qualifying U.S. private-sector companies secure oth13 erwise unavailable private ‘‘bridge’’ financing for the

14 critical developmental stages of the project, while at

15 the same time keeping government involvement at a

16 minimum.

17 SEC. 3. PURPOSES.

18 Therefore the purposes of this Act are—

19 (1) to ensure availability of otherwise unavail20 able private sector ‘‘bridge’’ financing for U.S. pri21 vate sector development of commercial space trans22 portation vehicles with launch costs significantly

23 below current levels;

24 (2) and, as a result—
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1 (A) to avoid undue reliance on foreign

2 space transportation services;

3 (B) to reduce substantially United States

4 Government space transportation expenditures;

5 (C) to increase the international competi6 tiveness of the United States space industry;

7 (D) to encourage the growth of space-relat8 ed commerce in the United States and inter9 nationally; and

10 (E) to increase the number of high-value

11 jobs in United States space-related industries. .

12 SEC. 4. DEFINITIONS.

13 In this Act:

14 (1) TOTAL CAPITAL REQUIREMENT.—The term

15 ‘‘total capital requirement’’ of a United States com16 mercial space transportation provider means the ag17 gregate, as determined by the Secretary, of all Cash

18 Requirements paid or to be paid by or on the ac19 count of the Obligor prior to the achievement by the

20 Obligor of positive cash flow generation. For the

21 purposes of this definition, the term ‘‘Cash Require22 ments’’ shall include all cash expended or invested

23 by the Obligor (including but not limited to design,

24 development, testing and evaluation (DDT&E)), con25 struction, reconstruction, reconditioning, placing into
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1 operation, working capital, interest expense and ini2 tial operating and marketing expenses in connection

3 with space transportation prior to the achievement

4 of positive cash flow generation from ongoing oper5 ations.

6 (2) LOAN.—The term ‘‘loan’’ means an obliga7 tion.

8 (3) OBLIGEE.—The term ‘‘obligee’’ means the

9 holder of an obligation.

10 (4) OBLIGOR.—The term ‘‘obligor’’ means any

11 party primarily liable for payment of the principal of

12 or interest on any obligation.

13 (5) OBLIGATION.—The term ‘‘obligation’’

14 means any note, bond, debenture, or other evidence

15 of indebtedness issued for one of the purposes speci16 fied in section 105(a) of this Act.

17 (6) SECRETARY.—The term ‘‘Secretary’’ means

18 the Secretary of the United States Department of

19 Transportation.

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

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

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

24 which are necessary to conduct a launch, whether on
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1 land, sea, in the earth’s atmosphere, or beyond the

2 earth’s atmosphere.

3 (8) SPACE TRANSPORTATION VEHICLE.—The

4 term ‘‘space transportation vehicle’’ includes all

5 types of vehicles, whether in existence or under de6 sign, development, construction, reconstruction or

7 reconditioning; constructed in the United States by

8 United States commercial space transportation vehi9 cle providers as defined below and owned by those

10 commercial providers, for the purpose of operating

11 in, or transporting a payload to, from, or within,

12 outer space, or in suborbital trajectory, and includes

13 any component of such vehicle not specifically de14 signed or adapted for a payload.

15 (9) STATE.—The term ‘‘State’’ means each of

16 the several States of the Union, the District of Co17 lumbia, the Commonwealth of Puerto Rico, the Vir18 gin Islands, Guam, American Samoa, the Common19 wealth of the Northern Mariana Islands, and any

20 other commonwealth, territory, or possession of the

21 United States.

22 (10) UNITED STATES COMMERCIAL PRO23 VIDER.—The term ‘‘United States commercial pro24 vider’’ means a commercial provider, organized
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1 under the laws of the United States or of a State,

2 which is—

3 (A) more than 50 percent owned by United

4 States nationals; or

5 (B) a subsidiary of a foreign company and

6 the Secretary of Transportation finds that—

7 (i) such subsidiary has in the past evi8 denced a substantial commitment to the

9 United States market through—

10 (I) investments in the United

11 States in long-term research, develop12 ment, and manufacturing (including

13 the manufacture of major components

14 and subassemblies); and

15 (II) significant contributions to

16 employment in the United States; and

17 (ii) the country or countries in which

18 such foreign company is incorporated or

19 organized, and, if appropriate, in which it

20 principally conducts its business, affords

21 reciprocal treatment to companies de22 scribed in subparagraph (A) comparable to

23 that afforded to such foreign company’s

24 subsidiary in the United States, as evi25 denced by—
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1 (I) providing comparable oppor2 tunities for companies described in

3 subparagraph (A) to participate in

4 Government sponsored research and

5 development similar to that authorized

6 under this Act;

7 (II) providing no barriers, to

8 companies described in subparagraph

9 (A) with respect to local investment

10 opportunities, that are not provided to

11 foreign companies in the United

12 States; and

13 (III) providing adequate and ef14 fective protection for the intellectual

15 property rights of companies de16 scribed in subparagraph (A).

17 (11) SMALL BUSINESS.—For the purposes of

18 this Act, a ‘‘small business’’ is a commercial pro19 vider as defined by the Secretary according to cri20 teria established in consultation with the commercial

21 space transportation vehicle industry and profes22 sional associations.

23 (12) UNITED STATES COMMERCIAL SPACE

24 TRANSPORTATION VEHICLE PROVIDER.—The term

25 ‘‘United States commercial space transportation ve-
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1 hicle provider’’ means a United States commercial

2 provider engaged in designing, developing, produc3 ing, or operating commercial space transportation

4 vehicles.

5 (13) UNITED STATES COMMERCIAL SPACE

6 TRANSPORTATION VEHICLE INDUSTRY.—The term

7 ‘‘United States commercial space transportation ve8 hicle industry’’ means the collection of United States

9 commercial providers of space transportation vehi10 cles.

11 (14) COST TO THE GOVERNMENT.—‘‘Cost to

12 the Government’’ means the Risk Rate multiplied by

13 the amount of the guarantee issued by the Sec14 retary. The Cost to the Government reduces the

15 amount of the Fund until such time as part or all

16 of the guarantee has been retired as described in

17 Section 103 of the Act.

18 (15) RISK RATE.—‘‘Risk Rate’’ means the per19 centage applied to a guarantee of an entity assigned

20 to a specific Risk Category by the Secretary and

21 used in calculating the Cost to the Government of

22 the guarantee.

23 (16) RISK CATEGORY.—‘‘Risk Category’’ means

24 the category into which the Secretary assigns an en25 tity applying for a guarantee based on the risk fac-
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1 tors identified in Section 104(f). The Risk Category

2 is assigned for the purpose of arriving at a Risk

3 Rate in the calculation of the Cost to the Govern4 ment.

5 (17) FUND.—The ‘‘Fund’’ means the amount

6 appropriated under the Act as described under Sec7 tion 103 of the Act.

8 TITLE I—INCREASING THE AVAILABILITY OF

9 PRIVATE SECTOR FINANCING FOR THE

10 UNITED STATES COMMERCIAL SPACE

11 TRANSPORTATION VEHICLE INDUSTRY

12 THROUGH A LOAN GUARANTEE PROGRAM

13 SEC. 101. UNITED STATES COMMERCIAL SPACE TRANSPOR14 TATION VEHICLE INDUSTRY LOAN GUARAN15 TEE PROGRAM.

16 (a) ESTABLISHMENT OF PROGRAM.—There shall be

17 a United States Commercial Space Transportation Vehicle

18 Industry Loan Guarantee program to provide loan guar19 antees to support the private development of multiple

20 qualified United States commercial space transportation

21 vehicle providers with launch costs significantly below cur22 rent levels.

23 (b) ADMINISTRATION OF PROGRAM.—The program

24 shall be carried out by the Secretary of Transportation

25 under a streamlined application process pursuant to the
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1 terms of this Section and any regulations that may be pro2 mulgated hereunder, in consultation with other U.S. Gov3 ernment officials, and private sector representatives, as

4 necessary, to ensure fair, effective and timely program ad5 ministration.

6 (c) SCOPE OF PROGRAM.—

7 (1) TEMPORARY GOVERNMENT SUPPORT.—The

8 United States Commercial Space Transportation Ve9 hicle Industry Loan Guarantee program is intended

10 to provide loan guarantees to support financing of

11 qualified commercial space transportation vehicle de12 velopment ventures during their startup phases and

13 is not intended as a permanent source of financing

14 for such ventures. Applications for guarantees under

15 this program must include specific plans for the

16 timely transition from guaranteed financing to

17 standalone private sector financing as soon as the

18 venture becomes commercially viable.

19 (2) EXCLUSION OF SPACE LAUNCH SITES.—The

20 program does not provide for loan guarantees per21 taining to the construction, reconstruction, or recon22 ditioning of space launch sites.

23 (3) EXCLUSION OF EVOLVED EXPENDABLE

24 LAUNCH VEHICLE PROGRAM.—The United States

25 Commercial Space Transportation Vehicle Industry
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1 Loan Guarantee program shall not remove, restrict,

2 or replace funding provided by the Department of

3 Defense to commercial providers participating in the

4 Evolved Expendable Launch Vehicle (EELV) pro5 gram. Commercial providers already receiving De6 partment of Defense funding for the development of

7 specific expendable launch vehicles under the

8 Evolved Expendable Launch Vehicle program shall

9 not be eligible to apply for loan guarantees pertain10 ing to this same program, under the United States

11 Commercial Space Transportation Vehicle Industry

12 Loan Guarantee program.

13 (4) SMALL BUSINESS SET ASIDE.—Depending

14 upon the number of applications, not less than ten

15 percent and up to 20 percent of the loan guarantee

16 fund shall be set aside for small businesses as de17 fined by the Secretary. In no event shall a single

18 commercial provider be the sole beneficiary of loan

19 guarantees available under this Act.

20 (5) COMPETITION ENCOURAGED ON INITIA21 TIVES ATTEMPTING TO MEET UNIQUE U.S. GOVERN22 MENT SPECIFICATIONS.—When possible and eco23 nomically feasible, in order to allow U.S. taxpayers

24 to receive the benefits and disciplines of private sec25 tor competition, the Secretary shall administer the
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1 loan guarantee program to permit the participation

2 of multiple United States space transportation vehi3 cle commercial providers that are targeting unique

4 U.S. government specifications.

5 (6) NONDISCLOSURE OF CONFIDENTIAL MATE6 RIALS.—Materials that are submitted by a United

7 States commercial space transportation vehicle pro8 vider to the Secretary in connection with an applica9 tion submitted under the United States Commercial

10 Space Transportation Vehicle Industry Loan Guar11 antee program and deemed by the commercial pro12 vider to be confidential, and that contain trade se13 crets or proprietary commercial, financial, or tech14 nical information of a kind not customarily disclosed

15 to the public, shall not be disclosed by the Secretary

16 to persons other than Government officers, employ17 ees or contractors notwithstanding any other provi18 sion of law.

19 (d) SUNSET.—This Act shall sunset 10 years

20 from date of enactment.

21 SEC. 102. FUNCTIONS OF THE SECRETARY OF TRANSPOR22 TATION.

23 The Secretary shall carry out the following functions:

24 (1) CONSULTATION.—Consultation, to the ex25 tent deemed necessary for effective implementation
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1 of the Act with appropriate federal agencies, Con2 gressional, and space transportation industry rep3 resentatives, and members of the risk management

4 industry concerning—

5 (A) assessments of international competi6 tion, potential markets for space transportation

7 vehicles, and availability of private investment

8 capital;

9 (B) recommendations of commercial enti10 ties, partnerships, joint ventures, or consortia

11 regarding effective implementation of the loan

12 guarantee program; and,

13 (C) recommendations on how to make U.S.

14 government space access requirements more

15 compatible with U.S. commercial space trans16 portation assets.

17 (2) PROGRAM MANAGEMENT.—Management of

18 the loan guarantee program consistent with the pur19 poses of this Act.

20 SEC. 103. AUTHORIZATION OF APPROPRIATION OF FUNDS.

21 (a) The Act authorizes the appropriation of the sum

22 of $500,000,000 and such other annual sums as may be

23 necessary to be deposited in a Fund to be used by the

24 Secretary for the purpose of carrying out the provisions

25 of the Act. The Fund will be reduced by the Cost to the
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1 Government (as defined) of each loan guarantee extended

2 by the Secretary as further described in Section 104(f).

3 As an Obligor releases its government guarantees on the

4 schedule agreed to up front with the Secretary, this Cost

5 to the Government shall be reduced or eliminated, thus

6 replenishing the Fund for new guarantees.

7 SEC. 104. AUTHORIZATION OF SECRETARY TO GUARANTEE

8 OBLIGATIONS.

9 (a) PRINCIPAL AND INTEREST.—The Secretary is au10 thorized to guarantee, and to enter into commitments to

11 guarantee, the payment of the interest on, and the unpaid

12 balance of the principal of, any obligation which is eligible

13 to be guaranteed under this Act. A guarantee, or commit14 ment to guarantee, made by the Secretary under this Act

15 shall cover 100 percent of the amount of the principal and

16 interest of the obligation.

17 (b) SECURITY INTEREST.—No obligation shall be

18 guaranteed under this Act unless the obligor conveys or

19 agrees to convey to the Secretary a security interest such

20 as the Secretary may reasonably require to protect the in21 terests of the United States.

22 (c) PRIVATE INSURANCE.—If the Secretary deter23 mines that other potential measures, as described in this

24 Act, are not sufficient to provide adequate security, the

25 Secretary, as a condition of processing or approving an
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1 application for guarantee of an obligation, may require

2 that the obligor obtain private insurance with respect to

3 a portion of the government’s risk of default by the obligor

4 on the obligation, including both the amount of the obliga5 tion still outstanding and the accrued interest. Such pri6 vate insurance may be funded from the proceeds of any

7 obligation guaranteed under this Act. If the obligor fails

8 to renew such private insurance on a timely basis, the Sec9 retary may take such action as deemed necessary, with

10 regard to seizure of security interest conveyed by the obli11 gor or the assessment of additional fees to the obligor,

12 to ensure that the appropriate insurance renewal is ob13 tained without delay.

14 (d) PLEDGE OF UNITED STATES.—The full faith and

15 credit of the United States is pledged to the payment of

16 all guarantees made under this Act with respect to both

17 principal and interest, including interest, as may be pro18 vided for in the guarantee, accruing between the date of

19 default under a guaranteed obligation and the payment

20 in full of the guarantee.

21 (e) PROOF OF OBLIGATIONS.—Any guarantee, or

22 commitment to guarantee, made by the Secretary under

23 this Act shall be conclusive evidence of the eligibility of

24 the obligations for such guarantee, and the validity of any

25 guarantee, or commitment to guarantee, so made shall be
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1 incontestable. Notwithstanding an assumption of an obli2 gation by the Secretary under section 106(a) or (b) of this

3 Act, the validity of the guarantee of an obligation made

4 by the Secretary under this Act is unaffected and the

5 guarantee remains in full force and effect.

6 (f) DETERMINATION OF ESTIMATED BENEFIT AND

7 COST TO GOVERNMENT FOR LOAN GUARANTEE PRO8 GRAM.—

9 (1) The Secretary shall in consultation with the

10 private risk management industry and consistent

11 with the Federal Credit Reform Act of 1990 (2

12 U.S.C. 661a et seq.).—

13 (A) establish in accordance with this sub14 section a system of risk categories for obliga15 tions guaranteed under this Act, that cat16 egorizes the relative risk of guarantees made

17 under this Act with respect to the risk factors

18 set forth in paragraph (3); and

19 (B) determine for each of the risk cat20 egories a risk rate equivalent to the cost of obli21 gations in the category, expressed as a percent22 age of the amount guaranteed under this Act

23 for obligations in the category.

24 (2) Before making a guarantee under this sec25 tion for an obligation, the Secretary shall apply the
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1 risk factors set forth in paragraph (3) to place the

2 obligation in a risk category established under para3 graph (1)(A).

4 (3) The risk factors referred to in paragraphs

5 (1) and (2) are the following:

6 (A) The technological feasibility of the pro7 posed venture and the magnitude of its pro8 jected overall space launch cost reduction;

9 (B) The period for which an obligation is

10 to be guaranteed, such period not exceeding 12

11 years;

12 (C) The amount of obligations which are

13 guaranteed or to be guaranteed, in relation to

14 the Total Capital Requirement of the proposed

15 venture;.

16 (D) The financial condition of the appli17 cant;

18 (E) The availability of private financing,

19 including guarantees (other than the guarantees

20 issued pursuant to this Act) and private insur21 ance, for the proposed venture;

22 (F) The projected commercial and govern23 ment utilization of each space transportation

24 vehicle or other article to be financed by debt

25 guaranteed pursuant to this Act (including any
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1 contracts, letters of intent, or other expressions

2 of agreement under which the applicant will

3 provide launch services using a space transpor4 tation vehicle or other article financed by debt

5 guaranteed pursuant to this Act);

6 (G) The adequacy of collateral provided in

7 exchange for a guarantee issued pursuant to

8 this Act;

9 (H) The management and operating expe10 rience of the applicant;

11 (I) Commercial viability of the business

12 plan for the venture of the Obligor.

13 (J) The extent of private equity capital in

14 the project;

15 (K) The applicant’s plans for achieving a

16 transition from Government-guaranteed financ17 ing to private financing;

18 (L) The likelihood that the venture would

19 serve an identifiable national interest;

20 (M) The likelihood that the successful com21 pletion of the project would result in savings

22 that would offset anticipated Government ex23 penditures for space-related activities;
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1 (N) The likelihood that the project will

2 open new markets or result in the development

3 of significant new technologies;

4 (O) other relevant criteria; and

5 (4) The amount of appropriated funds required

6 by the Federal Credit Reform Act of 1990 in ad7 vance of the Secretary’s issuance of a guarantee of

8 an obligation, or a commitment to guarantee an obli9 gation, may be provided, in whole or in part, by a

10 non-Federal source and deposited by the Secretary

11 in the financing account established under the Fed12 eral Credit Reform Act of 1990 for obligation guar13 antees issued by the Secretary. These non-Federal

14 source funds may be in lieu of or combined with

15 Federal funds appropriated for the purpose of satis16 fying the requirements of the Federal Credit Reform

17 Act of 1990. The non-Federal source funds depos18 ited into that financing account shall be held and

19 applied by the Secretary in accordance with the pro20 visions of the Federal Credit Reform Act of 1990,

21 in the same manner as that legislation controls the

22 use and disposition of Federally appropriated funds.

23 Non-Federal source funds must be paid to the Sec24 retary in cash prior to the issuance of any guarantee

25 or commitment to guarantee an obligation. The pay-
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1 ment of said non-Federal source funds shall not, in

2 any way, relieve any entity from its responsibility to

3 meet any other provision of this Act or its imple4 menting regulations relating to the application for,

5 issuance of, or administration of a guarantee of an

6 obligation.

7 (5) In this subsection, the term ‘‘cost’’ has the

8 meaning given that term in the Federal Credit Re9 form Act of 1990 (2 U.S.C. 661a).

10 SEC. 105. ELIGIBILITY FOR GUARANTEE.

11 (a) PURPOSE OF OBLIGATIONS.—Pursuant to the au12 thority granted under section 104(a) of this Act, the Sec13 retary, upon such terms as he shall prescribe, consistent

14 with the provisions and purpose of the Act, may guarantee

15 or make a commitment to guarantee, payment of the prin16 cipal of and interest on an obligation for the purpose of—

17 (1) financing the Total Capital Requirement, as

18 defined, of the DDT& E, construction, reconstruc19 tion, reconditioning, placing into operation, working

20 capital, interest expense, and initial operating and

21 marketing expenses in connection with space trans22 portation vehicles with launch costs significantly

23 below current levels.

24 (2) financing the purchase, reconstruction, or

25 reconditioning of space transportation vehicles to
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1 achieve launch costs significantly below current lev2 els for which obligations were guaranteed under this

3 Act that, under the provisions of section 106 of this

4 Act are space transportation vehicles for which obli5 gations were accelerated and paid and that have

6 been repossessed by the Secretary or sold at fore7 closure instituted by the Secretary.

8 (b) CONTENTS OF OBLIGATIONS.—Obligations guar9 anteed under this Act—

10 (1) shall have an obligor approved by the Sec11 retary as responsible and possessing or having the

12 ability to obtain the technical capability, experience,

13 financial resources, and other qualifications nec14 essary to the adequate development, operation and

15 maintenance of the space transportation vehicle or

16 space transportation vehicles which serve as security

17 for the guarantee of the Secretary;

18 (2) subject to the provisions of subsection (c)(1)

19 of this section, shall be in an aggregate principal

20 amount which does not exceed 80 per centum of the

21 Total Capital Requirement, as determined by the

22 Secretary, of the space transportation vehicle which

23 is used as security for the guarantee of the Sec24 retary;
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1 (3) shall have maturity dates satisfactory to the

2 Secretary but, subject to the provisions of paragraph

3 (2) of subsection (c) of this section, not to exceed

4 twelve years from the date of the issuance of the

5 guarantee.

6 (4) shall provide for payments by the obligor

7 satisfactory to the Secretary;

8 (5) shall provide, or a related agreement shall

9 provide that the space transportation vehicle shall

10 meet such safety, reliability, and performance stand11 ards as are necessary for U. S. commercial licensing;

12 and

13 (6) shall provide that the space transportation

14 vehicle provider guarantee to the United States Gov15 ernment, launch services at the targeted significantly

16 reduced launch cost or the prevailing commercial

17 launch cost, which ever is lower.

18 (c) SECURITY.—

19 (1) The security for the guarantee of an obliga20 tion by the Secretary under this Act may relate to

21 more than one space transportation vehicle and may

22 consist of any combination of types of security. The

23 aggregate principal amount of obligations which

24 have more than one space transportation vehicle as

25 security for the guarantee of the Secretary under
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1 this Act may equal, but not exceed, the sum of the

2 principal amount of obligations permissible with re3 spect to each space transportation vehicle.

4 (2) If the security for the guarantee of an obli5 gation by the Secretary under this Act relates to

6 more than one space transportation vehicle, such ob7 ligation may have the latest maturity date permis8 sible under subsection (b) of this section with re9 spect to any of such space transportation vehicles:

10 Provided, that the Secretary may require such pay11 ments of principal, prior to maturity, with respect to

12 all related obligations as he deems necessary in

13 order to maintain adequate security for the guaran14 tee.

15 (d) RESTRICTIONS.—

16 (1) RESTRICTION ON USED SPACE TRANSPOR17 TATION VEHICLES.—No commitment to guarantee,

18 or guarantee of an obligation may be made by the

19 Secretary under this Act for the purchase of a used

20 space transportation vehicle unless—

21 (A) the used space transportation vehicle

22 will be reconstructed or reconditioned in the

23 United States and will contribute to the devel24 opment of the United States commercial space

25 transportation vehicle industry; and
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1 (B) the reconstruction or reconditioning of

2 the used space transportation vehicle will result

3 in a magnitude of projected space transpor4 tation cost reduction comparable to that which

5 development of new space transportation vehi6 cles would be required to project, in order to be

7 eligible for guarantee of obligations.

8 (e) APPLICATION AND ADMINISTRATIVE FEES.—

9 (1) The Secretary may assess a fee for applica10 tions for loan guarantees submitted under this Act

11 and/ or a fee for administration of an obligation

12 under this Act.

13 (2) Application fees under this subsection shall

14 be assessed and collected at the time a U.S. com15 mercial space transportation vehicle provider sub16 mits an application for loan guarantees an applica17 tion for loan guarantees under this Act. Administra18 tive fees under this section shall be assessed and col19 lected not later than the date of issuance of the debt

20 guaranteed pursuant to this Act

21 (3) Administrative fees collected under this sub22 section shall not exceed one-eighth of one percent of

23 the guaranteed amount of the face value of the debt

24 covered by the guarantee.
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1 (4) A fee paid under this subsection is generally

2 not refundable. However, an obligor shall receive

3 credit for the amount paid for the remaining term

4 of the guaranteed obligation if the obligation is refi5 nanced and guaranteed under this Act after such re6 financing.

7 (5) A fee paid under this subsection shall be in8 cluded in the amount of the actual cost of the obli9 gation guaranteed under this Act and is eligible to

10 be financed under this Act.

11 (6) There are authorized to be appropriated

12 such sums as may be necessary for salaries and ex13 penses to carry out the responsibilities under this

14 title.

15 (f) ADDITIONAL REQUIREMENTS.—Obligations guar16 anteed under this Act and agreements relating thereto

17 shall contain such other provisions with respect to the pro18 tection of the financial security interests of the United

19 States as the Secretary may, in his or her discretion, pre20 scribe.

21 SEC. 106. DEFAULTS.

22 (a) RIGHTS OF OBLIGEE.—In the event of a default,

23 which has continued for thirty days, in any payment by

24 the obligor of principal or interest due under an obligation

25 guaranteed under this Act, the obligee or his agent shall
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1 have the right to demand (unless the Secretary shall, upon

2 such terms as may be provided in the obligation or related

3 agreements, prior to that demand, have assumed the obli4 gor’s rights and duties under the obligation and agree5 ments and shall have made any payments in default), at

6 or before the expiration of such period as may be specified

7 in the guarantee or related agreements, but not later than

8 ninety days from the date of such default, payment by the

9 Secretary of the unpaid principal amount of said obliga10 tion and of the unpaid interest thereon to the date of pay11 ment. Within such period as may be specified in the guar12 antee or related agreements, but not later than thirty days

13 from the date of such demand, the Secretary shall prompt14 ly pay to the obligee or his agent the unpaid principal

15 amount of said obligation and unpaid interest thereon to

16 the date of payment: Provided, That the Secretary shall

17 not be required to make such payment if prior to the expi18 ration of said period he shall find that there was no de19 fault by the obligor in the payment of principal or interest

20 or that such default has been remedied prior to any such

21 demand.

22 (b) NOTICE OF DEFAULT.—In the event of a default

23 under a mortgage, loan agreement, or other security

24 agreement between the obligor and the Secretary, the Sec-
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1 retary may upon such terms as may be provided in the

2 obligation or related agreement, either:

3 (1) assume the obligor’s rights and duties

4 under the agreement, make any payment in default,

5 and notify the obligee or the obligee’s agent of the

6 default and the assumption by the Secretary; or

7 (2) notify the obligee or the obligee’s agent of

8 the default, and the obligee or the obligee’s agent

9 shall have the right to demand at or before the expi10 ration of such period as may be specified in the

11 guarantee or related agreements, but not later than

12 60 days from the date of such notice, payment by

13 the Secretary of the unpaid principal amount of said

14 obligation and of the unpaid interest thereon. Within

15 such period as may be specified in the guarantee or

16 related agreements, but not later than 30 days from

17 the date of such demand, the Secretary shall

18 promptly pay to the obligee or the obligee’s agent

19 the unpaid principal amount of said obligation and

20 unpaid interest thereon to the date of payment.

21 (c) TO COMPLETE, SELL OR OPERATE PROPERTY.—

22 In the event of any payment or assumption by the Sec23 retary under subsection (a) or (b) of this section, the Sec24 retary shall have all rights in any security held by him

25 relating to his guarantee of such obligations as are con-
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1 ferred upon him under any security agreement with the

2 obligor. Notwithstanding any other provision of law relat3 ing to the acquisition, handling, or disposal of property

4 by the United States, the Secretary shall have the right,

5 in his discretion, to complete, recondition, reconstruct,

6 renovate, repair, maintain, operate, charter, or sell any

7 property acquired by him pursuant to a security agree8 ment with the obligor. The terms of the sale shall be as

9 approved by the Secretary.

10 (d) ACTIONS AGAINST OBLIGOR.—In the event of a

11 default under any guaranteed obligation or any related

12 agreement, the Secretary shall take such action against

13 the obligor or any other parties liable thereunder that, in

14 his discretion, may be required to protect the interests of

15 the United States. Any suit may be brought in the name

16 of the United States or in the name of the obligee and

17 the obligee shall make available to the United States all

18 records and evidence necessary to prosecute any such suit.

19 The Secretary shall have the right, in his discretion, to

20 accept a conveyance of Act to and possession of property

21 from the obligor or other parties liable to the Secretary,

22 and may purchase the property for an amount not greater

23 than the unpaid principal amount of such obligation and

24 interest thereon. In the event that the Secretary shall re25 ceive through the sale of property an amount of cash in
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1 excess of the unpaid principal amount of the obligation

2 and unpaid interest on the obligation and the expenses of

3 collection of those amounts, the Secretary shall pay the

4 excess to the obligor.

Æ