I
107TH CONGRESS
1ST SESSION
H. R. 2177
To amend the Internal Revenue Code of 1986 to encourage the timely develop-
ment of a more cost effective United States commercial space transpor-
tation industry, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 14, 2001
Mr. CALVERT (for himself, Mr. ORTIZ, Mr. LUCAS of Oklahoma, Mr. FOLEY,
Mr. BARTLETT of Maryland, Mr. BACA, Mr. MCKEON, Mr. LEWIS of
California, Mr. SENSENBRENNER, Mr. SKEEN, Mr. WELDON of Florida,
Mr. REHBERG, Mr. SANDLIN, Mr. REYES, and Mrs. CAPPS) introduced
the following bill; which was referred to the Committee on Ways and
Means
A BILL
To amend the Internal Revenue Code of 1986 to encourage
the timely development of a more cost effective United
States commercial space transportation industry, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Invest in Space Now Act of 2001’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.
Sec. 5. Credit for purchase of space transportation vehicle provider stock.
Sec. 6. United States commercial space transportation vehicle authorization.
SEC. 2. FINDINGS.
The Congress hereby finds that:
(1) The United States commercial space trans-
portation industry is an essential part of the na-
tional economy.
(2) Opportunities for United States commercial
providers are growing as international markets ex-
pand.
(3) The development of the United States com-
mercial space transportation industry is consistent
with the national security needs and foreign policy
interests of the United States.
(4) United States trading partners have been
able to lower their commercial space transportation
prices aggressively either through direct cash pay-
ments for commercially targeted product develop-
ment or with indirect benefits derived from non-
market economy status.
(5) Because United States incentives for space
transportation development have historically focused
on civil and military rather than commercial use,
United States space transportation costs have re-
mained comparatively high, and United States space
transportation technology has not been commercially
focused.
(6) As a result, the United States share of the
world commercial market for space transportation
has decreased from nearly 100 percent 20 years ago
to approximately 47 percent in 1998.
(7) In order to avoid undue reliance on foreign
space transportation services, the United States
must strive to have sufficient domestic capacity as
well as the highest quality and the lowest cost per
service provided.
(8) A successful high quality, lower cost United
States commercial space transportation industry
should also lead to substantial United States tax-
payer savings through collateral lower United States
Government costs for its space access requirements.
(9) Opening the commercial opportunities of
space to the American aerospace industry must be a
high priority of the United States Government as we
begin the 21st century.
(10) Opening space and maintaining United
States leadership in the world market does not re-
quire massive Government intrusion, but enough
Government support on an incremental and timely
basis to enable the more cost effective United States
private sector to build lower cost space transpor-
tation vehicles.
(11) Private sector companies across the United
States are already attempting to develop a variety of
lower cost space transportation vehicles, but lack of
sufficient private financing, particularly in the early
stages of development, has proven to be a major ob-
stacle, an obstacle our trading partners have re-
moved by providing direct access to government
funding.
(12) Given the strengths and creativity of pri-
vate industry in the United States, a more effective
alternative to the approach of our trading partners
is for the United States Government to provide lim-
ited incentives industry wide to assist qualifying
United States private sector companies obtain other-
wise unavailable private equity financing for the crit-
ical development stages of a project, while at the
same time keeping Government involvement at a
minimum.
SEC. 3. PURPOSES.
The purposes of this Act are—
(1) to ensure availability of otherwise unavail-
able private sector equity financing for United
States private sector development of commercial
space transportation vehicles which will have trans-
portation costs significantly below current levels; and
(2) as a result—
(A) to avoid undue reliance on foreign
space transportation services;
(B) to reduce substantially United States
Government space transportation expenditures;
(C) to increase the international competi-
tiveness of the United States space industry;
(D) to encourage the growth of space-re-
lated commerce in the United States and inter-
nationally; and
(E) to open the space frontier to the
American people.
SEC. 4. DEFINITIONS.
In this Act:
(1) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Transportation.
(2) SPACE
LAUNCH
SITE.—The term ‘‘space
launch site’’ means a location from which a launch
or landing takes place and includes all facilities lo-
cated on, or components of, a launch or landing site,
whether real or personal property, which are nec-
essary to conduct a launch, whether on land, sea,
in the Earth’s atmosphere, or beyond the Earth’s
atmosphere.
(3) SPACE
TRANSPORTATION
VEHICLE.—The
term ‘‘space transportation vehicle’’ includes all
types of vehicles, whether now in existence, devel-
oped in the future, or currently under design, devel-
opment, construction, reconstruction, or recondi-
tioning, which are constructed in the United States
by a United States commercial provider and owned
by the commercial provider, for the purpose of oper-
ating in, or transporting a payload to, from, or with-
in, outer space, or in suborbital trajectory.
(4) STATE.—The term ‘‘State’’ means any
State in the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Is-
lands, Guam, American Samoa, the Commonwealth
of the Northern Mariana Islands, and any other
commonwealth, territory, or possession of the United
States.
(5) UNITED STATES COMMERCIAL PROVIDER.—
The term ‘‘United States commercial provider’’
means a commercial provider organized under the
laws of the United States or of a State as a corpora-
tion or a Limited Liability Company (LLC).
(6) 
UNITED
STATES
COMMERCIAL
SPACE
TRANSPORTATION
VEHICLE
PROVIDER.—The term
‘‘United States commercial space transportation ve-
hicle provider’’ means a United States commercial
provider engaged in designing, developing, and pro-
ducing commercial space transportation vehicles.
(7) 
UNITED
STATES
COMMERCIAL
SPACE
TRANSPORTATION
VEHICLE
INDUSTRY.—The term
‘‘United States commercial space transportation ve-
hicle industry’’ means the collection of United States
commercial space transportation vehicle providers.
(8) SPACE
TRANSPORTATION
COSTS
SIGNIFI-
CANTLY
BELOW
CURRENT
LEVELS.—The term
‘‘space transportation costs significantly below cur-
rent levels’’ means at the time of application, for
that market segment for which, or in which, the
space transportation vehicle is designed, developed,
produced, maintained, or operated, the cost of pro-
ducing, maintaining, and operating the vehicle is 50
percent of the then space transportation costs in
that market segment as estimated by the Secretary.
If no market exists for the transportation proposed
at the time of application, the 50 percent require-
ment of the preceding sentence shall be treated as
being met if the vehicle has a reasonable possibility
of creating the market proposed.
SEC. 5. CREDIT FOR PURCHASE OF SPACE TRANSPOR-
TATION VEHICLE PROVIDER STOCK.
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
credits against tax) is amended by adding at the end the
following new subpart:
‘‘Subpart H—Space Transportation Credit
‘‘SEC. 54. CREDIT FOR PURCHASE OF SPACE TRANSPOR-
TATION VEHICLE PROVIDER STOCK.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—There shall be allowed as a
credit against the tax imposed by this chapter for
the taxable year an amount equal to the applicable
percentage of the aggregate amount paid by the tax-
payer during the taxable year for the purchase of
qualified space transportation vehicle provider stock.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage is the
percentage determined in accordance with the fol-
lowing table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2002, 2003, and 2004 ..................................................
2005 .............................................................................
2006 .............................................................................
2007 .............................................................................
2008 and 2009 .............................................................
2010 and thereafter .....................................................
0.
‘‘(b) MAXIMUM CREDIT.—
‘‘(1) LIMITATION FOR EACH PROVIDER.—
‘‘(A) 
LARGE
CAPITALIZATION
PRO-
VIDERS.—The credit allowed under this section
with respect to the stock of each large capital-
ization space transportation vehicle provider
purchased during a calendar year shall not
exceed—
‘‘(i) $50,000,000 for 2002,
‘‘(ii) $100,000,000 for 2003,
‘‘(iii) $125,000,000 for 2004,
‘‘(iv) $175,000,000 for 2005,
‘‘(v) $200,000,000 for 2006,
‘‘(vi) $50,000,000 for 2007, and
‘‘(vii) $0 for 2008 and 2009.
‘‘(B) 
SMALL
CAPITALIZATION
PRO-
VIDERS.—The credit allowed under this section
with respect to the stock of each small capital-
ization space transportation vehicle provider
purchased during a calendar year shall not
exceed—
‘‘(i) $35,000,000 for 2002,
‘‘(ii) $40,000,000 for 2003,
‘‘(iii) $45,000,000 for 2004,
‘‘(iv) $50,000,000 for each of 2005
and 2006,
‘‘(v) $40,000,000 for 2007, and
‘‘(vi) $35,000,000 for each of 2008
and 2009.
‘‘(2) AGGREGATE LIMIT.—The aggregate credit
allowed under this section with respect to the stock
of all space transportation vehicle providers pur-
chased during a calendar year shall not exceed—
‘‘(A) $395,000,000 for 2002,
‘‘(B) $580,000,000 for 2003,
‘‘(C) $690,000,000 for 2004,
‘‘(D) $875,000,000 for 2005,
‘‘(E) $950,000,000 for 2006,
‘‘(F) $430,000,000 for 2007,
‘‘(G) $245,000,000 for 2008, and
‘‘(H) $245,000,000 for 2009.
‘‘(c) QUALIFIED SPACE TRANSPORTATION VEHICLE
PROVIDER STOCK.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified space
transportation vehicle provider stock’ means any
common stock in a C corporation or any membership
unit in a State-registered limited liability company
(LLC) if—
‘‘(A) as of the date of issuance, such cor-
poration is a qualified space transportation ve-
hicle provider,
‘‘(B) such stock is acquired by the tax-
payer at its original issue (directly or through
an underwriter) in exchange for money or other
property (not including stock), and
‘‘(C) the proceeds of such issue are used
by such issuer during the 36-month period be-
ginning on the date of issuance in substantial
compliance with the issuer’s projected usage
submitted to the Secretary of Transportation
under section 6 of the Invest in Space Now Act
of 2001 with its application for authorization.
‘‘(2) QUALIFIED SPACE TRANSPORTATION VEHI-
CLE PROVIDER.—The term ‘qualified space transpor-
tation vehicle provider’ means any United States
commercial space transportation vehicle provider (as
defined in section 4 of the Invest in Space Now Act
of 2001) for which an authorization is in effect
under section 6 of such Act.
‘‘(3) CAPITALIZATION
STATUS
OF
QUALIFIED
PROVIDERS.—For purposes of applying the limits
under subsection (b)—
‘‘(A) DESIGNATION.—The Secretary shall,
using the guidelines developed under subpara-
graph (B), designate each qualified space trans-
portation vehicle provider as a large capitaliza-
tion space transportation vehicle provider or a
small capitalization space transportation vehicle
provider.
‘‘(B) 
GUIDELINES.—The 
Secretary 
of
Transportation shall, not later than 6 months
after the date of the enactment of the Invest in
Space Now Act of 2001, publish guidelines
under which qualified space transportation vehi-
cle providers are classified into large capitaliza-
tion providers and small capitalization pro-
viders. The guidelines shall be based on factors
particular to the space transportation industry,
including—
‘‘(i) the capital requirements nec-
essary to support the type of provider the
taxpayer is or is trying to become,
‘‘(ii) the payload size of space trans-
portation vehicles developed or used by the
taxpayer,
‘‘(iii) the markets in which the tax-
payer is participating, and
‘‘(iv) whether human spaceflight is in-
cluded.
‘‘(d) RECAPTURE OF CREDIT.—If—
‘‘(1) the taxpayer fails to hold qualified space
transportation vehicle provider stock for the 3-year
period beginning on the date such stock was pur-
chased by the taxpayer, or
‘‘(2) during such 3-year period, the issuer of
such stock ceases to meet the requirements of sec-
tion 6 of the Invest in Space Now Act of 2001,
then notwithstanding any other provision of this subtitle,
the tax imposed by this chapter on the taxpayer for the
taxable year beginning in the calendar year in which such
cessation occurred shall be increased by the amount of
credit allowed under subsection (a) to the taxpayer with
respect to such stock.
‘‘(e) 
SPECIAL
RULES.—For 
purposes 
of 
this
section—
‘‘(1) CERTAIN PURCHASES BY CORPORATION OF
ITS OWN STOCK.—Rules similar to the rules of sec-
tion 1202(c)(3) shall apply.
‘‘(2) RELATED PERSONS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), for purposes of subsection
(b) the taxpayer and any person related to the
taxpayer shall be treated as one person.
‘‘(B) EXCEPTION.—A taxpayer may elect
to treat not more than one other person who is
related to such taxpayer as unrelated for pur-
poses of this section. A person treated as unre-
lated to the taxpayer under the previous sen-
tence shall not be the same capitalization status
(determined under subsection (c)(3) as the tax-
payer.
‘‘(C) RELATED
PERSONS.—For purposes
of this paragraph, a person is a related person
to another person if—
‘‘(i) the relationship between such per-
sons would result in a disallowance of
losses under section 267 or 707(b), or
‘‘(ii) such persons are members of the
same controlled group of corporations (as
defined in section 1563(a), except that
‘more than 50 percent’ shall be substituted
for ‘at least 80 percent’ each place it ap-
pears therein).
‘‘(f) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for the
purchase of any stock—
‘‘(1) the increase in the basis of such stock
which would (but for this subsection) result from
such purchase shall be reduced by the amount of the
credit so allowed, and
‘‘(2) the basis of such stock shall be increased
by the amount of the increase under subsection (d).
‘‘(g) APPLICATION WITH OTHER CREDITS.—The
credit allowed under subsection (a) for any taxable year
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over
‘‘(2) the sum of the credits allowable under this
part (other than subpart C thereof, relating to re-
fundable credits).’’
(b) CONFORMING AMENDMENT.—Subsection (a) of
section 1016 of such Code is amended by striking ‘‘and’’
at the end of paragraph (26), by striking the period at
the end of paragraph (27) and inserting ‘‘; and’’, and by
adding at the end the following new paragraph:
‘‘(28) to the extent provided in section 54(f), in
the case of amounts with respect to which a credit
has been allowed under section 54 or a recapture
imposed under section 54(d).’’.
(c) CLERICAL AMENDMENT.—The table of subparts
for part IV is amended by adding at the end the following
new item:
‘‘Subpart H. Space transportation credit.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid after December
31, 2000.
SEC. 6. UNITED STATES COMMERCIAL SPACE TRANSPOR-
TATION VEHICLE AUTHORIZATION.
(a) UNITED STATES COMMERCIAL SPACE TRANS-
PORTATION VEHICLE INDUSTRY AUTHORIZATION PRO-
GRAM.—
(1) ESTABLISHMENT
OF
PROGRAM.—There
shall be a United States Commercial Space Trans-
portation Vehicle Industry Authorization Program to
provide authorization for tax credit qualification
under section 54 of the Internal Revenue Code of
1986 to multiple United States commercial space
transportation vehicle providers developing vehicles
with space transportation costs significantly below
current levels.
(2) ADMINISTRATION OF PROGRAM.—The pro-
gram shall be carried out by the Secretary of Trans-
portation under a streamlined application process
pursuant to the terms of this section and any regu-
lations that may be promulgated hereunder, in con-
sultation with other United States Government offi-
cials, and private sector representatives, as nec-
essary, to ensure fair, effective, and timely program
administration and streamlined authorization.
(3) SCOPE OF PROGRAM.—
(A) 
TEMPORARY
GOVERNMENT
SUP-
PORT.—The United States Commercial Space
Transportation Vehicle Industry Authorization
Program is intended to provide eligibility for
tax credits under section 54 of the Internal
Revenue Code of 1986 to investors to support
financing of qualified commercial space trans-
portation vehicle development ventures during
their startup phases.
(B) 
EXCLUSION
OF
SPACE
LAUNCH
SITES.—The program does not provide author-
ization pertaining to the construction, recon-
struction, or reconditioning of space launch
sites.
(C) EXCLUSION OF NONRELATED ACTIVI-
TIES.—The program does not provide author-
ization for any corporation unless its business
plan provides that the main core mission of the
corporation is the construction, reconstruction,
reconditioning, sale, or distribution of any prod-
uct which is integral to the design, develop-
ment, construction, reconstruction, or recondi-
tioning of a space transportation vehicle as de-
scribed in subsection (b).
(4) NONDISCLOSURE OF CONFIDENTIAL MATE-
RIALS.—Materials that are submitted by a United
States commercial space transportation vehicle pro-
vider to the Secretary in connection with an applica-
tion submitted under the United States Commercial
Space Transportation Vehicle Authorization Pro-
gram and deemed by the commercial provider to be
confidential, and that contain trade secrets or pro-
prietary commercial, financial, or technical informa-
tion of a kind not customarily disclosed to the pub-
lic, shall not be disclosed by the Secretary to persons
other than Government officers or employees not-
withstanding any other provision of law.
(5) CONSULTATION.—The Secretary shall con-
sult to the extent deemed necessary for effective im-
plementation of this Act with appropriate Federal
agencies and congressional and space transportation
industry representatives.
(6) PROGRAM
MANAGEMENT.—The Secretary
shall manage the authorization program consistent
with the purposes of this Act.
(b) AUTHORIZATION OF VEHICLE PROVIDERS.—
(1) AUTHORIZATION
BASED
ON
REASONABLE
POSSIBILITY OF SUCCESS.—
(A) IN GENERAL.—The Secretary shall au-
thorize vehicle providers who demonstrate by
the submission of technical and financial infor-
mation that they have a reasonable possibility
of developing, operating, and maintaining a
space transportation vehicle or vehicles with
space transportation costs significantly below
current levels.
(B) RESPONSE BY SECRETARY.— Author-
ization by the Secretary is deemed granted un-
less within 120 days of application submission
the Secretary determines that the provider has
no reasonable possibility of significantly low-
ering space transportation costs.
(2) POSSIBLE
COMMERCIAL
VIABILITY
AND
CAPITAL
REQUIREMENT
TO
QUALIFY
STOCK
FOR
CREDIT.—To demonstrate possible commercial via-
bility the United States commercial space transpor-
tation vehicle provider must raise $10,000,000 of eq-
uity investment during the year of application in
order to qualify its stock investors for credit under
this Act. Equity raised in order to meet commercial
viability tests is eligible for credit once authorization
has been completed. The United States commercial
space transportation vehicle provider may qualify ad-
ditional stock for investor credit up to the maximum,
as provided, in section 54(b) of the Internal Revenue
Code of 1986, as added by section 5 of this Act.
(3) ANNUAL
VERIFICATION
OF
SUBSTANTIAL
COMPLIANCE.—
(A) IN GENERAL.—Once authorized, a ve-
hicle provider must submit to the Secretary
each year a certified audit opinion letter
verifying its use of funds in substantial compli-
ance with its application.
(B) CONSEQUENCE OF FAILURES.—
(i) Failure to submit a certified audit
opinion letter verifying substantial compli-
ance with its application will result in de-
authorization of the vehicle provider.
(ii) Failure to use funds received after
authorization for the development of a
space transportation vehicle or vehicles
with the goal to reduce space transpor-
tation costs significantly below current lev-
els will result in deauthorization. Failure
to achieve success will not result in de-
authorization.
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