II

★(Star Print)

105TH CONGRESS

2D SESSION S. 2121

To encourage the development of a more cost effective commercial space

launch industry in the United States, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 22, 1998

Mr. BREAUX introduced the following bill; which was read twice and referred

to the Committee on Commerce, Science, and Transportation

A BILL

To encourage the development of a more cost effective commercial space launch industry in the United States, 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 ‘‘Space Launch Cost Reduction Act of 1998’’.

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 COMMERCIAL SPACE LAUNCH INDUSTRY

Sec. 101. Commercial Space Launch Industry Program.

Sec. 102. Functions of the National Aeronautics and Space Administration.

Sec. 103. Space Launch Vehicle Loan Guarantee Fund.

Sec. 104. Authorization of administrator to guarantee obligations.

Sec. 105. Eligibility for guarantee.

Sec. 106. Defaults.

Sec. 107. Escrow fund.

1 SEC. 2. FINDINGS.

2 Congress makes the following findings:

3 (1) The commercial space launch industry is an

4 essential part of the United States economy and op5 portunities for United States companies are growing

6 as international markets expand.

7 (2) United States trading partners have been

8 able to aggressively lower their commercial space

9 launch prices either through direct cash payments

10 for commercially targeted product development or

11 with indirect benefits derived from nonmarket econ12 omy status.

13 (3) Because United States incentives for launch

14 vehicle development have historically focused on civil

15 and military rather than commercial use, United

16 States launch costs have remained comparatively

17 high, and United States launch technology has not

18 been commercially focused.

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

20 world commercial market has decreased from nearly
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1 100 percent twenty years ago to approximately 40

2 percent in 1998.

3 (5) In order to avoid reliance on foreign launch

4 services, the United States must strive to have suffi5 cient domestic launch capacity as well as the highest

6 quality and the lowest cost per launch.

7 (6) The key to regaining United States leader8 ship in the world market is not another massive gov9 ernment program, but rather provision of just

10 enough government support to enable the more cost

11 effective private sector to build lower-cost space

12 launch vehicles.

13 (7) Private sector companies across the United

14 States are already attempting to develop a variety of

15 lower-cost space launch vehicles, but lack of suffi16 cient private financing has proven to be a major ob17 stacle, an obstacle our trading partners have re18 moved by providing direct access to government

19 funding.

20 (8) Given the unique strength of private indus21 try in the United States, a more effective alternative

22 to the approach of our trading partners is for the

23 United States Government to provide limited finan24 cial incentives in the form of loan guarantees, which

25 would help qualifying private-sector companies se-
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1 cure otherwise unattainable private financing, while

2 at the same time keeping government involvement at

3 an absolute minimum.

4 SEC. 3. PURPOSES.

5 Therefore the purposes of this Act are—

6 (1) to ensure availability of otherwise unattain7 able private sector financing for private sector devel8 opment of commercial space launch vehicles with

9 launch costs significantly below current levels;

10 (2) and, as a result—

11 (A) to avoid reliance on foreign launch

12 services;

13 (B) to increase the international competi14 tiveness of the United States space industry;

15 (C) to encourage the growth of space-relat16 ed commerce in the United States and

17 internationlly;

18 (D) to increase the number of high-value

19 jobs in United States space-related industries;

20 and

21 (E) to reduce United States Government

22 space launch expenditures.

23 SEC. 4. DEFINITIONS.

24 In this Act:
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1 (1) ACTUAL COST.—The term ‘‘actual cost’’ of

2 a space launch vehicle as of any specified date

3 means the aggregate, as determined by the Adminis4 trator, of—

5 (A) all amounts paid by or the account of

6 the obligor on or before that date; and

7 (B) all amounts which the obligor is then

8 obligated to pay from time to time thereafter,

9 for the construction, reconstruction, or recondi10 tioning of such space launch vehicle.

11 (2) ADMINISTRATOR.—The term ‘‘Adminis12 trator’’ means the Administrator of the National

13 Aeronautics and Space Administration with respect

14 to all space launch vehicles as provided by this Act.

15 (3) COMMERCIAL SPACE LAUNCH INDUSTRY.—

16 The term ‘‘commercial space launch industry’’

17 means all companies developing, producing, or oper18 ating commercial space launch vehicles.

19 (4) CONSTRUCTION, RECONSTRUCTION, OR RE20 CONDITIONING.—The terms ‘‘construction’’, ‘‘recon21 struction’’, or ‘‘reconditioning’’ shall include, but

22 shall not be limited to, designing, inspecting, outfit23 ting, and equipping;

24 (5) DEPRECIATED ACTUAL COST.—The ‘‘depre25 ciated actual cost’’ of a space launch vehicle means
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1 the actual cost of the space launch vehicle depre2 ciated on a straightline basis over the useful life of

3 the space launch vehicle as determined by the Ad4 ministrator, not to exceed twenty-five years from the

5 date the space launch vehicle was delivered by the

6 space launch vehicle builder, or, if the space launch

7 vehicle has been reconstructed or reconditioned, the

8 actual cost of the space launch vehicle depreciated

9 on a straightline basis from the date the space

10 launch vehicle was delivered by the space launch ve11 hicle builder to the date of such reconstruction or re12 conditioning on the basis of the original useful life

13 of the space launch vehicle and from the date of

14 such reconstruction or reconditioning on a

15 straightline basis and on the basis of a useful life of

16 the space launch vehicle determined by the Adminis17 trator, plus all amounts paid or obligated to be paid

18 for the reconstruction or reconditioning depreciated

19 on a straightline basis and on the basis of a useful

20 life of the space launch vehicle determined by the

21 Administrator.

22 (6) OBLIGEE.—The term ‘‘obligee’’ means the

23 holder of an obligation.
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1 (7) OBLIGOR.—The term ‘‘obligor’’means any

2 party primarily liable for payment of the principal of

3 or interest on any obligation.

4 (8) OBLIGATION.—The term ‘‘obligation’’

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

6 of indebtedness issued for one of the purposes speci7 fied in section 105(a) of this Act.

8 (9) SPACE LAUNCH SITE.—The term ‘‘space

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

10 or landing takes place and includes all facilities lo11 cated on, or components of, a launch or landing site

12 which are necessary to conduct a launch, whether on

13 land, sea, in the Earth’s atmosphere, or beyond the

14 Earth’s atmosphere.

15 (10) SPACE LAUNCH VEHICLE.—The term

16 ‘‘space launch vehicle’’ includes all types, whether in

17 existence or under construction, of vehicles con18 strued for the purpose of operating in, or placing a

19 payload or passengers in, outer space, and which are

20 or will be documented under the laws of the United

21 States.
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1 TITLE I—INCREASING THE

2 AVAILABILITY OF PRIVATE

3 SECTOR FINANCING FOR THE

4 COMMERCIAL SPACE LAUNCH

5 INDUSTRY

6 SEC. 101. COMMERCIAL SPACE LAUNCH INDUSTRY LOAN

7 GUARANTEE PROGRAM.

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

9 a Commercial Space Launch Industry Loan Guarantee

10 program to provide loan guarantees to support the private

11 development of qualified commercial space launch vehicle

12 initiatives.

13 (b) ADMINISTRATION OF PROGRAM.—The program

14 shall be carried out by the Administrator of the National

15 Aeronautics and Space Administration.

16 (c) SCOPE OF PROGRAM.—

17 (1) EXCLUSION OF SPACE LAUNCH SITES.—The

18 program does not provide for loan guarantees per19 taining to the construction, reconstruction, or recon20 ditioning of space launch sites.

21 (2) EXCLUSION OF EVOLVED EXPENDABLE

22 LAUNCH VEHICLE PROGRAM.—The Commercial

23 Space Launch Industry Loan Guarantee Program

24 shall not remove, restrict, or replace funding pro25 vided by the Department of Defense to companies
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1 participating in the Evolved Expendable Launch Ve2 hicle (EEV) Program. Companies already receiving

3 Department of Defense funding for the development

4 of expendable launch vehicles under the Evolved Ex5 pandable Launch Vehicle Program shall not be eligi6 ble to apply for loan guarantees pertaining to these

7 same vehicles, under the Commercial Space Launch

8 Industry Loan Guarantee Program. Such companies

9 shall, however, be eligible to apply for loan guaran10 tees under the Commercial Space Launch Industry

11 Loan Guarantee Program pertaining to commercial

12 space launch vehicles not receiving funding from the

13 Department of Defense under the Evolved Expend14 able Launch Vehicle Program.

15 SEC. 102. FUNCTIONS OF THE NATIONAL AERONAUTICS

16 AND SPACE ADMINISTRATION.

17 The Administrator shall carry out the following func18 tions:

19 (a) CONSULTATION.—Consultation with appropriate

20 Federal agency and space launch industry representatives

21 concerning—

22 (1) assessments of international competition,

23 potential markets for space launch vehicles, and

24 availability of private investment capital; and
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1 (2) recommendations of commercial entities,

2 partnerships, joint ventures, or consortia regarding

3 effective implementation of the loan guarantee pro4 gram.

5 (b) PROGRAM MANAGEMENT.—Management of the

6 loan guarantee program consistent with the purposes of

7 this Act.

8 SEC. 103. SPACE LAUNCH VEHICLE LOAN GUARANTEE

9 FUND.

10 There is hereby created a Space Launch Vehicle Loan

11 Guarantee Fund (hereinafter referred to as the Fund)

12 which shall be used by the Administrator as a revolving

13 fund for the purpose of carrying out the provisions of this

14 Act, and there shall be allocated to such Fund the sum

15 of $400,000,000. Moneys in the Fund shall be deposited

16 in the Treasury of the United States to the credit of the

17 Fund or invested in bonds or other obligations of, or guar18 anteed as to principal and interest by, the United States.

19 SEC. 104. AUTHORIZATION OF ADMINISTRATOR TO GUAR20 ANTEE OBLIGATIONS.

21 (a) PRINCIPAL AND INTEREST.—The Administrator

22 is authorized to guarantee, and to enter into commitments

23 to guarantee, the payment of the interest on, and the un24 paid balance of the principal of, any obligation which is

25 eligible to be guaranteed under this Act. A guarantee, or
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1 commitment to guarantee, made by the Administrator

2 under this Act shall cover 100 percent of the amount of

3 the principal and interest of the obligation.

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

5 guaranteed under this Act unless the obligor conveys or

6 agrees to convey to the Administrator such security inter7 est, which may include a mortgage or mortgages on a

8 space launch vehicle or space launch vehicles, as the Ad9 ministrator may reasonably require to protect the interests

10 of the United States. If the Administrator determines that

11 the mortgage on the vehicle(s) is not sufficient to provide

12 adequate security, the Administrator, as a condition of

13 processing or approving the loan application, may require

14 additional collateral, such as a mortgage(s) on other vehi15 cle(s) or on other assets, special escrow funds, pledges of

16 stock, charters, contracts, notes, letters of credit, accounts

17 receivable assignments, and guarantees. If the Adminis18 trator determines that the assets of the obligor are insuffi19 cient to constitute adequate security, and a parent com20 pany of the obligor can be identified, the Administrator

21 may require an unconditional and irrevocable promise by

22 the parent company to pay the full cost of the obligation

23 in the event of default by the obligor on the obligation.

24 The parent company thus acting as guarantor of the obli25 gation must agree to waive any defenses, against the pay-
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1 ment of the obligation, which it might otherwise claim

2 under equity or law.

3 (c) PRIVATE DEFAULT INSURANCE.—If the Adminis4 trator determines that other potential measures, as de5 scribed in this Act, are not sufficient to provide adequate

6 security, the Administrator, as a condition of processing

7 or approving the loan guarantee application, may require

8 that the obligor obtain private bond insurance with respect

9 to all or part of the government’s risk of default by the

10 obligor on the obligation. Such private bond insurance

11 may be funded from the proceeds of any obligation guar12 anteed under this Act. If the obligor fails to renew such

13 private bond insurance on a timely basis, the Adminis14 trator may take such action as deemed necessary, with re15 gard to seizure of security interest conveyed by the obligor

16 or the assessment of additional fees to the obligor, to en17 sure that the appropriate insurance renewal is obtained

18 without delay.

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

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

21 all guarantees made under this Act with respect to both

22 principal and interest, including interest, as may be pro23 vided for in the guarantee, accruing between the date of

24 default under a guaranteed obligation and the payment

25 in full of the guarantee.
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1 (e) PROOF OF OBLIGATIONS.—Any guarantee, or

2 commitment to guarantee, made by the Administrator

3 under this Act shall be conclusive evidence of the eligibility

4 of the obligations for such guarantee, and the validity of

5 any guarantee, or commitment to guarantee, so made shall

6 be incontestable. Notwithstanding an assumption of an ob7 ligation by the Administrator under section 106 (a) or (b)

8 of this Act, the validity of the guarantee of an obligation

9 made by the Administrator under this Act is unaffected

10 and the guarantee remains in full force and effect.

11 (f) DETERMINATION OF ESTIMATED COST TO GOV12 ERNMENT FOR LOAN GUARANTEE PROGRAM.—

13 (1) The Administrator shall—

14 (A) establish in accordance with this sub15 section a system of risk categories for obliga16 tions guaranteed under this Act, that cat17 egorizes the relative risk of guarantees made

18 under this Act with respect to the risk factors

19 set forth in paragraph (3); and

20 (B) determine for each of the risk cat21 egories a subsidy rate equivalent to the cost of

22 obligations in the category, expressed as a per23 centage of the amount guaranteed under this

24 Act for obligations in the category.
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1 (2)(A) Before making a guarantee under this

2 section for an obligation, the Administrator shall

3 apply the risk factors set forth in paragraph (3) to

4 place the obligation in a risk category established

5 under paragraph (1)(A).

6 (B) The Administrator shall consider the aggre7 gate amount available to the Administrator for mak8 ing guarantees under this Act to be reduced by the

9 amount determined by multiplying—

10 (i) the amount guaranteed under this Act

11 for an obligation, by

12 (ii) the subsidy rate for the category in

13 which the obligation is placed under subpara14 graph (A) of this paragraph.

15 (C) The estimated cost to the Government of a

16 guarantee made by the Administrator under this Act

17 for an obligation is deemed to be the amount deter18 mined under subparagraph (B) for the obligation.

19 (D) The Administrator may not guarantee obli20 gations under this Act after the aggregate amount

21 available to the Administrator under appropriations

22 Acts for the cost of loan guarantees is required by

23 subparagraph (B) to be considered reduced to zero.

24 (3) The risk factors referred to in paragraphs

25 (1) and (2) are the following:
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1 (A) The technological feasibility of the

2 project being proposed, including the probable

3 overall magnitude of space launch cost reduc4 tion to be achieved.

5 (B) The period for which an obligation is

6 guaranteed or to be guaranteed, such period not

7 exceeding 25 years.

8 (C) The amount of an obligation, which is

9 guaranteed or to be guaranteed, in relation to

10 the total cost of the project financed or to be

11 financed by the obligation.

12 (D) The financial condition of an obligor

13 or applicant for a guarantee.

14 (E) If applicable, any guarantee related to

15 the project, other than the guarantee under this

16 Act for which the risk factor is applied.

17 (F) If applicable, the projected employ18 ment of each space launch vehicle or equipment

19 to be financed with an obligation.

20 (G) If applicable, the projected market

21 that will be served by each space launch vehicle

22 or equipment to be financed with an obligation.

23 (H) The adequacy of collateral provided

24 for a guarantee for an obligation.
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1 (I) The management and operating experi2 ence of an obligor or applicant for a guarantee.

3 (J) Whether another guarantee under this

4 Act is or will be in effect during the construc5 tion period of the project.

6 (4) In lieu of or in combination with appropria7 tions of budget authority to cover the costs of loan

8 guarantees as required under section 504(b)(1) of

9 the Federal Credit Reform Act of 1990, the Admin10 istrator may accept on behalf of an applicant for as11 sistance under this section a commitment from a

12 non-Federal source to fund in whole or in part credit

13 risk premiums with respect to the loan that is the

14 subject of the application. In no event shall the ag15 gregate of appropriations of budget authority and

16 credit risk premiums described in this paragraph

17 with respect to a loan guarantee be less than the

18 cost of that loan guarantee.

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

20 meaning given that term in section 661a of title 2.

21 SEC. 105. ELIGIBILITY FOR GUARANTEE.

22 (a) PURPOSE OF OBLIGATIONS.—Pursuant to the au23 thority granted under section 104(a) of this Act, the Ad24 ministrator, upon such terms as he shall prescribe, con25 sistent with the provisions and purpose of the Act, may
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1 guarantee or make a commitment to guarantee, payment

2 of the principal of and interest on an obligation for the

3 purpose of—

4 (1) financing, for construction, reconstruction,

5 or reconditioning of a space launch vehicle which is

6 designed for commercial use; or

7 (2) financing the purchase, reconstruction, or

8 reconditioning of space launch vehicles for which ob9 ligations were guaranteed under this Act that, under

10 the provisions of section 106 of this Act—

11 (A) are space launch vehicles for which ob12 ligations were accelerated and paid;

13 (B) were acquired by the Fund; or

14 (C) were sold at foreclosure instituted by

15 the Administrator.

16 (b) CONTENTS OF OBLIGATIONS.—Obligations guar17 anteed under this Act—

18 (1) shall have an obligor approved by the Ad19 ministrator, after consideration of ratings of credit20 worthiness reflecting prevailing financial industry

21 standards, as responsible and possessing the tech22 nical capability, experience, financial resources, and

23 other qualifications necessary to the adequate oper24 ation and maintenance of the space launch vehicle or
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1 space launch vehicles which serve as security for the

2 guarantee of the Administrator;

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

4 of this section and subsection (i) of this section,

5 shall be in an aggregate principal amount which

6 does not exceed 87.5 per centum of the actual cost

7 or depreciated actual cost, as determined by the Ad8 ministrator, of the space vehicle which is used as se9 curity for the guarantee of the Administrator;

10 (3) shall have maturity dates satisfactory to the

11 Administrator but, subject to the provisions of para12 graph (2) of subsection (c) of this section, not to ex13 ceed twenty-five years from the date of the delivery

14 of the space launch vehicle which serves as security

15 for the guarantee of the Administrator or, if the

16 space launch vehicle has been reconstructed or re17 conditioned, not to exceed the later of (i) twenty-five

18 years from the date of delivery of the space launch

19 vehicle and (ii) the remaining years of the useful life

20 of the space launch vehicle as determined by the Ad21 ministrator;

22 (4) shall provide for payments by the obligor

23 satisfactory to the Administrator;

24 (5) shall bear interest (exclusive of charges for

25 the guarantee and service charges, if any) at rates
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1 not to exceed such per centum per annum on the un2 paid principal as the Administrator determines to be

3 reasonable, taking into account the range of interest

4 rates prevailing in the private market for similar

5 loans and the risks assumed by the Administrator;

6 and

7 (6) shall provide, or a related agreement shall

8 provide that the space launch vehicle shall meet such

9 safety, reliability, and performance standards as are

10 acceptable to the Administrator, after consultation

11 with relevant federal government licensing and regu12 latory authorities.

13 (c) SECURITY.—

14 (1) The security for the guarantee of an obliga15 tion by the Administrator under this Act may relate

16 to more than one space launch vehicle and may con17 sist of any combination of types of security. The ag18 gregate principal amount of obligations which have

19 move than one space launch vehicle as security for

20 the guarantee of the Administrator under this Act

21 may equal, but not exceed, the sum of the principal

22 amount of obligations permissible with respect to

23 each space launch vehicle.

24 (2) If the security for the guarantee of an obli25 gation by the Administrator under this Act relates
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1 to more than one space launch vehicle, such obliga2 tion may have the latest maturity date permissible

3 under subsection (b) of this section with respect to

4 any of such space launch vehicles: Provided, that the

5 Administrator may require such payments of prin6 cipal, prior to maturity, with respect to all related

7 obligations as he deems necessary in order to main8 tain adequate security for the guarantee.

9 (d) RESTRICTIONS.—

10 (1) No commitment to guarantee, or guarantee

11 of, an obligation shall be made by the Administrator

12 unless the Administrator finds that the property or

13 project with respect to which the obligation will be

14 executed will be economically sound. In making that

15 determination, the Administrator shall consider—

16 (A) the need in the particular segment of

17 the space launch industry for new or additional

18 capacity, including any impact on existing

19 equipment for which a guarantee under this Act

20 is in effect;

21 (B) the market potential for the employ22 ment of the space launch vehicle over the life of

23 the guarantee;
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1 (C) projected revenues and expenses asso2 ciated with employment of the space launch ve3 hicle;

4 (D) any charters, contracts of affreight5 ment, transportation agreements, or similar

6 agreements or undertakings relevant to the em7 ployment of the space launch vehicle; and

8 (E) other relevant criteria.

9 (2) No commitment to guarantee, or guarantee

10 of an obligation may be made by the Administrator

11 under this Act for the purchase of a used space

12 launch vehicle unless the space launch vehicle will be

13 reconstructed or reconditioned in the United States

14 and will contribute to the development of the United

15 States commercial space industry.

16 (e) GUARANTEE FEES.—

17 (1) The Administrator shall prescribe regula18 tions to assess a fee for the guarantee of an obliga19 tion under this Act, such as to cover costs of admin20 istration of the program.

21 (2) A fee under this subsection shall be as22 sessed and collected not later than the date on which

23 amounts are first paid under an obligation with re24 spect to which the fee is assessed.
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1 (3) A fee paid under this subsection is not re2 fundable. However, an obligor shall receive credit for

3 the amount paid for the remaining term of the guar4 anteed obligation if the obligation is refinanced and

5 guaranteed under this Act after such refinancing.

6 (4) A fee paid under this subsection shall be in7 cluded in the amount of the actual cost of the obli8 gation guaranteed under this Act and is eligible to

9 be financed under this Act.

10 (f) INVESTIGATION OF APPLICATIONS.—The Admin11 istrator shall charge and collect from the obligor such

12 amounts as are necessary to cover administrative costs for

13 the investigation of applications for a guarantee, for the

14 appraisal of properties offered as security for a guarantee,

15 for the issuance of commitments, for services in connec16 tion with the escrow fund authorized by section 107 of

17 this Act and for the inspection of such properties during

18 construction, reconstruction, or reconditioning.

19 (g) ADDITIONAL REQUIREMENTS.—Obligations guar20 anteed under this Act and agreements relating thereto

21 shall contain such other provisions with respect to the pro22 tection of the financial security interests of the United

23 States (including acceleration, assumption, and subroga24 tion provisions and the issuance of notes by the obligor

25 to the Administrator), liens and releases of liens, pay-
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1 ments of taxes, and such other matters as the Adminis2 trator may, in his discretion, prescribe.

3 SEC. 106. DEFAULTS.

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

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

6 the obligor of principal or interest due under an obligation

7 guaranteed under this Act, the obligee or his agent shall

8 have the right to demand (unless the Administrator shall,

9 upon such terms as may be provided in the obligation or

10 related agreements, prior to that demand, have assumed

11 the obligor’s rights and duties under the obligation and

12 agreements and shall have made any payments in default),

13 at or before the expiration of such period as may be speci14 fied in the guarantee or related agreements, but not later

15 than ninety days from the date of such default, payment

16 by the Administrator of the unpaid principal amount of

17 said obligation and of the unpaid interest thereon to the

18 date of payment. Within such period as may be specified

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

20 thirty days from the date of such demand, the Adminis21 trator shall promptly pay to the obligee or his agent the

22 unpaid principal amount of said obligation and unpaid in23 terest thereon to the date of payment: Provided, That the

24 Administrator shall not be required to make such payment

25 if prior to the expiration of said period he shall find that
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1 there was no default by the obligor in the payment of prin2 cipal or interest or that such default has been remedied

3 prior to any such demand.

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

5 under a mortgage, loan agreement, or other security

6 agreement between the obligor and the Administrator, the

7 Administrator may upon such terms as may be provided

8 in the obligation or related agreement, either—

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

10 under the agreement, make any payment in default,

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

12 default and the assumption by the Administrator; or

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

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

15 shall have the right to demand at or before the expi16 ration of such period as may be specified in the

17 guarantee or related agreements, but not later than

18 60 days from the date of such notice, payment by

19 the Administrator of the unpaid principal amount of

20 said obligation and of the unpaid interest thereon.

21 Within such period as may be specified in the guar22 antee or related agreements, but not later than 30

23 days from the date of such demand, the Adminis24 trator shall promptly pay to the obligee or the

25 obligee’s agent the unpaid principal amount of said
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1 obligation and unpaid interest thereon to the date of

2 payment.

3 (c) ADMINISTRATOR TO COMPLETE, SELL OR OPER4 ATE PROPERTY.—In the event of any payment or assump5 tion by the Administrator under subsection (a) or (b) of

6 this section, the Administrator shall have all rights in any

7 security held by him relating to his guarantee of such obli8 gations as are conferred upon him under any security

9 agreement with the obligor. Notwithstanding any other

10 provision of law relating to the acquisition, handling, or

11 disposal of property by the United States, the Adminis12 trator shall have the right, in his discretion, to complete,

13 recondition, reconstruct, renovate, repair, maintain, oper14 ate, charter, or sell any property acquired by him pursuant

15 to a security agreement with the obligor. The terms of the

16 sale shall be as approved by the Administrator.

17 (d) CASH PAYMENTS; ISSUANCE OF NOTES OR OBLI18 GATIONS.—Any amount required to be paid by the Admin19 istrator pursuant to subsection (a) or (b) of this section,

20 shall be paid in cash. If at any time the moneys in the

21 Fund authorized by section 103 of this Act are not suffi22 cient to pay any amount the Administrator is required to

23 pay by subsection (a) or (b) of this section, the Adminis24 trator is authorized to issue to the Secretary of the Treas25 ury notes or other obligations in such forms and denomi-
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1 nations, bearing such maturities, and subject to such

2 terms and conditions as may be prescribed by the Admin3 istrator, with the approval of the Secretary of the Treas4 ury. Such notes or other obligations shall bear interest at

5 a rate determined by the Secretary of the Treasury, taking

6 into consideration the current average market yield on

7 outstanding marketable obligations of the United States

8 of comparable maturities during the month preceding the

9 issuance of such notes or other obligations. The Secretary

10 of the Treasury is authorized and directed to purchase any

11 notes and other obligations to be issued hereunder and for

12 such purpose he is authorized to use as a public debt

13 transaction the proceeds from the sale of any securities

14 issued under chapter 31 of title 31, and the purposes for

15 which securities may be issued under such chapter are ex16 tended to include any purchases of such notes and obliga17 tions. The Secretary of the Treasury may at any time sell

18 any of the notes or other obligations acquired by him

19 under this section. All redemptions, purchases, and sales

20 by the Secretary of the Treasury of such notes or other

21 obligations shall be treated as public debt transactions of

22 the United States. Funds borrowed under this section

23 shall be deposited in the Fund and redemptions of such

24 notes and obligations shall be made by the Administrator

25 from such Fund.
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1 (e) ACTIONS AGAINST OBLIGOR.—In the event of a

2 default under any guaranteed obligation or any related

3 agreement, the Administrator shall take such action

4 against the obligor or any other parties liable thereunder

5 that, in his discretion, may be required to protect the in6 terests of the United States. Any suit may be brought in

7 the name of the United States or in the name of the obli8 gee and the obligee shall make available to the United

9 States all records and evidence necessary to prosecute any

10 such suit. The Administrator shall have the right, in his

11 discretion, to accept a conveyance of Act to and possession

12 of property from the obligor or other parties liable to the

13 Administrator, and may purchase the property for an

14 amount not greater than the unpaid principal amount of

15 such obligation and interest thereon. In the event that the

16 Administrator shall receive through the sale of property

17 an amount of cash in excess of the unpaid principal

18 amount of the obligation and unpaid interest on the obli19 gation and the expenses of collection of those amounts,

20 the Administrator shall pay the excess to the obligor.

21 SEC. 107. ESCROW FUND.

22 (a) CREATION.—If the proceeds of an obligation

23 guaranteed under this Act are to be used to finance the

24 construction, reconstruction, or reconditioning of a space

25 launch vehicle or space launch vehicles which will serve
28

S 2121 IS1S

1 as security for the guarantee of the Administrator, the Ad2 ministrator is authorized to accept and hold, in escrow

3 under an escrow agreement with the obligor, a portion of

4 the proceeds of all obligations guaranteed under this Act

5 whose proceeds are to be so used which is equal to: (i)

6 the excess of the principal amount of all obligations whose

7 proceeds are to be so used over 87.5 per centum of the

8 amount paid by or for the account of the obligor for the

9 construction, reconstruction, or reconditioning of the

10 space launch vehicle or space launch vehicles; (ii) with

11 such interest thereon, if any, as the Administrator may

12 require: Provided, That in the event the security for the

13 guarantee of an obligation by the Administrator relates

14 both to a space launch vehicle or space launch vehicles

15 to be constructed, reconstructed, or reconditioned and to

16 a delivered space launch vehicle or space launch vehicles,

17 the principal amount of such obligations shall be prorated

18 for purposes of this subsection (a) under regulations pre19 scribed by the Administrator.

20 (b) DISBURSEMENT PRIOR TO TERMINATION OF ES21 CROW AGREEMENT.—The Administrator shall, as speci22 fied in the escrow agreement, disburse the escrow fund

23 to pay amounts the obligor is obligated to pay as interest

24 on such obligations or for the construction, reconstruction,

25 or reconditioning of the space launch vehicle or space
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S 2121 IS1S

1 launch vehicles used as security for the guarantee of the

2 Administrator under this Act, to redeem such obligations

3 in connection with refinancing or to pay to the obligor at

4 such times, as may be provided for in the escrow agree5 ment any excess interest deposits, except that if payments

6 become due under the guarantee prior to the termination

7 of the escrow agreement, all amounts in the escrow fund

8 at the time such payments become due (including realized

9 income which has not yet been paid to the obligor) shall

10 be paid into the fund and (i) be credited against any

11 amounts due or to become due to the Administrator from

12 the obligor with respect to the guaranteed obligations and

13 (ii) to the extent not so required, be paid to the obligor.

14 (c) DISBURSEMENT UPON TERMINATION OF ESCROW

15 AGREEMENT.—If payments under the guarantee have not

16 become due prior to the termination of the escrow agree17 ment, any balance of the escrow fund at the time of such

18 termination shall be disbursed to prepay the excess of the

19 principal of all obligations whose proceeds are to be used

20 to finance the construction, reconstruction, or recondition21 ing of the space launch vehicle or space launch vehicles

22 which serve or will serve as security for such guarantee

23 over an appropriate per centum of the actual cost of such

24 space launch vehicle or space launch vehicles to the extent

25 paid, and to pay interest on such prepaid amount of prin-
30

S 2121 IS1S

1 cipal, and the remainder of such balance of the escrow

2 fund shall be paid to the obligor.

3 (d) INVESTMENT OF FUND.—The Administrator may

4 invest and reinvest all or part of the escrow fund in obliga5 tions of the United States with such maturities that the

6 escrow fund will be available as required for purposes of

7 the escrow agreement.

8 (e) PAYMENT OF INCOME.—Any income realized on

9 the escrow fund shall, upon receipt, be paid to the obligor.

10 (f) TERMS OF ESCROW AGREEMENT.—The escrow

11 agreement shall contain such other terms as the Adminis12 trator may consider necessary to protect fully the interests

13 of the United States.

Æ