[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 2121 Introduced in Senate (IS)]







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.

    Be it enacted by the Senate and House of Representatives 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 ``Space Launch Cost 
Reduction Act of 1998''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.
 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.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) The commercial space launch industry is an essential 
        part of the United States economy and opportunities for United 
        States companies are growing as international markets expand.
            (2) United States trading partners have been able to 
        aggressively lower their commercial space launch prices either 
        through direct cash payments for commercially targeted product 
        development or with indirect benefits derived from nonmarket 
        economy status.
            (3) Because United States incentives for launch vehicle 
        development have historically focused on civil and military 
        rather than commercial use, United States launch costs have 
        remained comparatively high, and United States launch 
        technology has not been commercially focused.
            (4) As a result, the United States share of the world 
        commercial market has decreased from nearly 100 percent twenty 
        years ago to approximately 40 percent in 1998.
            (5) In order to avoid reliance on foreign launch services, 
        the United States must strive to have sufficient domestic 
        launch capacity as well as the highest quality and the lowest 
        cost per launch.
            (6) The key to regaining United States leadership in the 
        world market is not another massive government program, but 
        rather provision of just enough government support to enable 
        the more cost effective private sector to build lower-cost 
        space launch vehicles.
            (7) Private sector companies across the United States are 
        already attempting to develop a variety of lower-cost space 
        launch vehicles, but lack of sufficient private financing has 
        proven to be a major obstacle, an obstacle our trading partners 
        have removed by providing direct access to government funding.
            (8) Given the unique strength of private industry in the 
        United States, a more effective alternative to the approach of 
        our trading partners is for the United States Government to 
        provide limited financial incentives in the form of loan 
        guarantees, which would help qualifying private-sector 
        companies secure otherwise unattainable private financing, 
        while at the same time keeping government involvement at an 
        absolute minimum.

SEC. 3. PURPOSES.

    Therefore the purposes of this Act are--
            (1) to ensure availability of otherwise unattainable 
        private sector financing for private sector development of 
        commercial space launch vehicles with launch costs 
        significantly below current levels;
            (2) and, as a result--
                    (A) to avoid reliance on foreign launch services;
                    (B) to increase the international competitiveness 
                of the United States space industry;
                    (C) to encourage the growth of space-related 
                commerce in the United States and internationlly;
                    (D) to increase the number of high-value jobs in 
                United States space-related industries; and
                    (E) to reduce United States Government space launch 
                expenditures.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Actual cost.--The term ``actual cost'' of a space 
        launch vehicle as of any specified date means the aggregate, as 
        determined by the Administrator, of--
                    (A) all amounts paid by or the account of the 
                obligor on or before that date; and
                    (B) all amounts which the obligor is then obligated 
                to pay from time to time thereafter, for the 
                construction, reconstruction, or reconditioning of such 
                space launch vehicle.
            (2) Administrator.--The term ``Administrator'' means the 
        Administrator of the National Aeronautics and Space 
        Administration with respect to all space launch vehicles as 
        provided by this Act.
            (3) Commercial space launch industry.--The term 
        ``commercial space launch industry'' means all companies 
        developing, producing, or operating commercial space launch 
        vehicles.
            (4) Construction, reconstruction, or reconditioning.--The 
        terms ``construction'', ``reconstruction'', or 
        ``reconditioning'' shall include, but shall not be limited to, 
        designing, inspecting, outfitting, and equipping;
            (5) Depreciated actual cost.--The ``depreciated actual 
        cost'' of a space launch vehicle means the actual cost of the 
        space launch vehicle depreciated on a straightline basis over 
        the useful life of the space launch vehicle as determined by 
        the Administrator, not to exceed twenty-five years from the 
        date the space launch vehicle was delivered by the space launch 
        vehicle builder, or, if the space launch vehicle has been 
        reconstructed or reconditioned, the actual cost of the space 
        launch vehicle depreciated on a straightline basis from the 
        date the space launch vehicle was delivered by the space launch 
        vehicle builder to the date of such reconstruction or 
        reconditioning on the basis of the original useful life of the 
        space launch vehicle and from the date of such reconstruction 
        or reconditioning on a straightline basis and on the basis of a 
        useful life of the space launch vehicle determined by the 
        Administrator, plus all amounts paid or obligated to be paid 
        for the reconstruction or reconditioning depreciated on a 
        straightline basis and on the basis of a useful life of the 
        space launch vehicle determined by the Administrator.
            (6) Obligee.--The term ``obligee'' means the holder of an 
        obligation.
            (7) Obligor.--The term ``obligor''means any party primarily 
        liable for payment of the principal of or interest on any 
        obligation.
            (8) Obligation.--The term ``obligation'' means any note, 
        bond, debenture, or other evidence of indebtedness issued for 
        one of the purposes specified in section 105(a) of this Act.
            (9) Space launch site.--The term ``space launch site'' 
        means a location from which a launch or landing takes place and 
        includes all facilities located on, or components of, a launch 
        or landing site which are necessary to conduct a launch, 
        whether on land, sea, in the Earth's atmosphere, or beyond the 
        Earth's atmosphere.
            (10) Space launch vehicle.--The term ``space launch 
        vehicle'' includes all types, whether in existence or under 
        construction, of vehicles construed for the purpose of 
        operating in, or placing a payload or passengers in, outer 
        space, and which are or will be documented under the laws of 
        the United States.

 TITLE I--INCREASING THE AVAILABILITY OF PRIVATE SECTOR FINANCING FOR 
                  THE COMMERCIAL SPACE LAUNCH INDUSTRY

SEC. 101. COMMERCIAL SPACE LAUNCH INDUSTRY LOAN GUARANTEE PROGRAM.

    (a) Establishment of Program.--There shall be a Commercial Space 
Launch Industry Loan Guarantee program to provide loan guarantees to 
support the private development of qualified commercial space launch 
vehicle initiatives.
    (b) Administration of Program.--The program shall be carried out by 
the Administrator of the National Aeronautics and Space Administration.
    (c) Scope of Program.--
            (1) Exclusion of space launch sites.--The program does not 
        provide for loan guarantees pertaining to the construction, 
        reconstruction, or reconditioning of space launch sites.
            (2) Exclusion of evolved expendable launch vehicle 
        program.--The Commercial Space Launch Industry Loan Guarantee 
        Program shall not remove, restrict, or replace funding provided 
        by the Department of Defense to companies participating in the 
        Evolved Expendable Launch Vehicle (EEV) Program. Companies 
        already receiving Department of Defense funding for the 
        development of expendable launch vehicles under the Evolved 
        Expandable Launch Vehicle Program shall not be eligible to 
        apply for loan guarantees pertaining to these same vehicles, 
        under the Commercial Space Launch Industry Loan Guarantee 
        Program. Such companies shall, however, be eligible to apply 
        for loan guarantees under the Commercial Space Launch Industry 
        Loan Guarantee Program pertaining to commercial space launch 
        vehicles not receiving funding from the Department of Defense 
        under the Evolved Expendable Launch Vehicle Program.

SEC. 102. FUNCTIONS OF THE NATIONAL AERONAUTICS AND SPACE 
              ADMINISTRATION.

    The Administrator shall carry out the following functions:
    (a) Consultation.--Consultation with appropriate Federal agency and 
space launch industry representatives concerning--
            (1) assessments of international competition, potential 
        markets for space launch vehicles, and availability of private 
        investment capital; and
            (2) recommendations of commercial entities, partnerships, 
        joint ventures, or consortia regarding effective implementation 
        of the loan guarantee program.
    (b) Program Management.--Management of the loan guarantee program 
consistent with the purposes of this Act.

SEC. 103. SPACE LAUNCH VEHICLE LOAN GUARANTEE FUND.

    There is hereby created a Space Launch Vehicle Loan Guarantee Fund 
(hereinafter referred to as the Fund) which shall be used by the 
Administrator as a revolving fund for the purpose of carrying out the 
provisions of this Act, and there shall be allocated to such Fund the 
sum of $400,000,000. Moneys in the Fund shall be deposited in the 
Treasury of the United States to the credit of the Fund or invested in 
bonds or other obligations of, or guaranteed as to principal and 
interest by, the United States.

SEC. 104. AUTHORIZATION OF ADMINISTRATOR TO GUARANTEE OBLIGATIONS.

    (a) Principal and Interest.--The Administrator is authorized to 
guarantee, and to enter into commitments to guarantee, the payment of 
the interest on, and the unpaid balance of the principal of, any 
obligation which is eligible to be guaranteed under this Act. A 
guarantee, or commitment to guarantee, made by the Administrator under 
this Act shall cover 100 percent of the amount of the principal and 
interest of the obligation.
    (b) Security Interest.--No obligation shall be guaranteed under 
this Act unless the obligor conveys or agrees to convey to the 
Administrator such security interest, which may include a mortgage or 
mortgages on a space launch vehicle or space launch vehicles, as the 
Administrator may reasonably require to protect the interests of the 
United States. If the Administrator determines that the mortgage on the 
vehicle(s) is not sufficient to provide adequate security, the 
Administrator, as a condition of processing or approving the loan 
application, may require additional collateral, such as a mortgage(s) 
on other vehicle(s) or on other assets, special escrow funds, pledges 
of stock, charters, contracts, notes, letters of credit, accounts 
receivable assignments, and guarantees. If the Administrator determines 
that the assets of the obligor are insufficient to constitute adequate 
security, and a parent company of the obligor can be identified, the 
Administrator may require an unconditional and irrevocable promise by 
the parent company to pay the full cost of the obligation in the event 
of default by the obligor on the obligation. The parent company thus 
acting as guarantor of the obligation must agree to waive any defenses, 
against the payment of the obligation, which it might otherwise claim 
under equity or law.
    (c) Private Default Insurance.--If the Administrator determines 
that other potential measures, as described in this Act, are not 
sufficient to provide adequate security, the Administrator, as a 
condition of processing or approving the loan guarantee application, 
may require that the obligor obtain private bond insurance with respect 
to all or part of the government's risk of default by the obligor on 
the obligation. Such private bond insurance may be funded from the 
proceeds of any obligation guaranteed under this Act. If the obligor 
fails to renew such private bond insurance on a timely basis, the 
Administrator may take such action as deemed necessary, with regard to 
seizure of security interest conveyed by the obligor or the assessment 
of additional fees to the obligor, to ensure that the appropriate 
insurance renewal is obtained without delay.
    (d) Pledge of United States.--The full faith and credit of the 
United States is pledged to the payment of all guarantees made under 
this Act with respect to both principal and interest, including 
interest, as may be provided for in the guarantee, accruing between the 
date of default under a guaranteed obligation and the payment in full 
of the guarantee.
    (e) Proof of Obligations.--Any guarantee, or commitment to 
guarantee, made by the Administrator under this Act shall be conclusive 
evidence of the eligibility of the obligations for such guarantee, and 
the validity of any guarantee, or commitment to guarantee, so made 
shall be incontestable. Notwithstanding an assumption of an obligation 
by the Administrator under section 106 (a) or (b) of this Act, the 
validity of the guarantee of an obligation made by the Administrator 
under this Act is unaffected and the guarantee remains in full force 
and effect.
    (f) Determination of Estimated Cost to Government for Loan 
Guarantee Program.--
            (1) The Administrator shall--
                    (A) establish in accordance with this subsection a 
                system of risk categories for obligations guaranteed 
                under this Act, that categorizes the relative risk of 
                guarantees made under this Act with respect to the risk 
                factors set forth in paragraph (3); and
                    (B) determine for each of the risk categories a 
                subsidy rate equivalent to the cost of obligations in 
                the category, expressed as a percentage of the amount 
                guaranteed under this Act for obligations in the 
                category.
            (2)(A) Before making a guarantee under this section for an 
        obligation, the Administrator shall apply the risk factors set 
        forth in paragraph (3) to place the obligation in a risk 
        category established under paragraph (1)(A).
            (B) The Administrator shall consider the aggregate amount 
        available to the Administrator for making guarantees under this 
        Act to be reduced by the amount determined by multiplying--
                    (i) the amount guaranteed under this Act for an 
                obligation, by
                    (ii) the subsidy rate for the category in which the 
                obligation is placed under subparagraph (A) of this 
                paragraph.
            (C) The estimated cost to the Government of a guarantee 
        made by the Administrator under this Act for an obligation is 
        deemed to be the amount determined under subparagraph (B) for 
        the obligation.
            (D) The Administrator may not guarantee obligations under 
        this Act after the aggregate amount available to the 
        Administrator under appropriations Acts for the cost of loan 
        guarantees is required by subparagraph (B) to be considered 
        reduced to zero.
            (3) The risk factors referred to in paragraphs (1) and (2) 
        are the following:
                    (A) The technological feasibility of the project 
                being proposed, including the probable overall 
                magnitude of space launch cost reduction to be 
                achieved.
                    (B) The period for which an obligation is 
                guaranteed or to be guaranteed, such period not 
                exceeding 25 years.
                    (C) The amount of an obligation, which is 
                guaranteed or to be guaranteed, in relation to the 
                total cost of the project financed or to be financed by 
                the obligation.
                    (D) The financial condition of an obligor or 
                applicant for a guarantee.
                    (E) If applicable, any guarantee related to the 
                project, other than the guarantee under this Act for 
                which the risk factor is applied.
                    (F) If applicable, the projected employment of each 
                space launch vehicle or equipment to be financed with 
                an obligation.
                    (G) If applicable, the projected market that will 
                be served by each space launch vehicle or equipment to 
                be financed with an obligation.
                    (H) The adequacy of collateral provided for a 
                guarantee for an obligation.
                    (I) The management and operating experience of an 
                obligor or applicant for a guarantee.
                    (J) Whether another guarantee under this Act is or 
                will be in effect during the construction period of the 
                project.
            (4) In lieu of or in combination with appropriations of 
        budget authority to cover the costs of loan guarantees as 
        required under section 504(b)(1) of the Federal Credit Reform 
        Act of 1990, the Administrator may accept on behalf of an 
        applicant for assistance under this section a commitment from a 
        non-Federal source to fund in whole or in part credit risk 
        premiums with respect to the loan that is the subject of the 
        application. In no event shall the aggregate of appropriations 
        of budget authority and credit risk premiums described in this 
        paragraph with respect to a loan guarantee be less than the 
        cost of that loan guarantee.
            (5) In this subsection, the term ``cost'' has the meaning 
        given that term in section 661a of title 2.

SEC. 105. ELIGIBILITY FOR GUARANTEE.

    (a) Purpose of Obligations.--Pursuant to the authority granted 
under section 104(a) of this Act, the Administrator, upon such terms as 
he shall prescribe, consistent with the provisions and purpose of the 
Act, may guarantee or make a commitment to guarantee, payment of the 
principal of and interest on an obligation for the purpose of--
            (1) financing, for construction, reconstruction, or 
        reconditioning of a space launch vehicle which is designed for 
        commercial use; or
            (2) financing the purchase, reconstruction, or 
        reconditioning of space launch vehicles for which obligations 
        were guaranteed under this Act that, under the provisions of 
        section 106 of this Act--
                    (A) are space launch vehicles for which obligations 
                were accelerated and paid;
                    (B) were acquired by the Fund; or
                    (C) were sold at foreclosure instituted by the 
                Administrator.
    (b) Contents of Obligations.--Obligations guaranteed under this 
Act--
            (1) shall have an obligor approved by the Administrator, 
        after consideration of ratings of creditworthiness reflecting 
        prevailing financial industry standards, as responsible and 
        possessing the technical capability, experience, financial 
        resources, and other qualifications necessary to the adequate 
        operation and maintenance of the space launch vehicle or space 
        launch vehicles which serve as security for the guarantee of 
        the Administrator;
            (2) subject to the provisions of subsection (c)(1) of this 
        section and subsection (i) of this section, shall be in an 
        aggregate principal amount which does not exceed 87.5 per 
        centum of the actual cost or depreciated actual cost, as 
        determined by the Administrator, of the space vehicle which is 
        used as security for the guarantee of the Administrator;
            (3) shall have maturity dates satisfactory to the 
        Administrator but, subject to the provisions of paragraph (2) 
        of subsection (c) of this section, not to exceed twenty-five 
        years from the date of the delivery of the space launch vehicle 
        which serves as security for the guarantee of the Administrator 
        or, if the space launch vehicle has been reconstructed or 
        reconditioned, not to exceed the later of (i) twenty-five years 
        from the date of delivery of the space launch vehicle and (ii) 
        the remaining years of the useful life of the space launch 
        vehicle as determined by the Administrator;
            (4) shall provide for payments by the obligor satisfactory 
        to the Administrator;
            (5) shall bear interest (exclusive of charges for the 
        guarantee and service charges, if any) at rates not to exceed 
        such per centum per annum on the unpaid principal as the 
        Administrator determines to be reasonable, taking into account 
        the range of interest rates prevailing in the private market 
        for similar loans and the risks assumed by the Administrator; 
        and
            (6) shall provide, or a related agreement shall provide 
        that the space launch vehicle shall meet such safety, 
        reliability, and performance standards as are acceptable to the 
        Administrator, after consultation with relevant federal 
        government licensing and regulatory authorities.
    (c) Security.--
            (1) The security for the guarantee of an obligation by the 
        Administrator under this Act may relate to more than one space 
        launch vehicle and may consist of any combination of types of 
        security. The aggregate principal amount of obligations which 
        have move than one space launch vehicle as security for the 
        guarantee of the Administrator under this Act may equal, but 
        not exceed, the sum of the principal amount of obligations 
        permissible with respect to each space launch vehicle.
            (2) If the security for the guarantee of an obligation by 
        the Administrator under this Act relates to more than one space 
        launch vehicle, such obligation may have the latest maturity 
        date permissible under subsection (b) of this section with 
        respect to any of such space launch vehicles: Provided, that 
        the Administrator may require such payments of principal, prior 
        to maturity, with respect to all related obligations as he 
        deems necessary in order to maintain adequate security for the 
        guarantee.
    (d) Restrictions.--
            (1) No commitment to guarantee, or guarantee of, an 
        obligation shall be made by the Administrator unless the 
        Administrator finds that the property or project with respect 
        to which the obligation will be executed will be economically 
        sound. In making that determination, the Administrator shall 
        consider--
                    (A) the need in the particular segment of the space 
                launch industry for new or additional capacity, 
                including any impact on existing equipment for which a 
                guarantee under this Act is in effect;
                    (B) the market potential for the employment of the 
                space launch vehicle over the life of the guarantee;
                    (C) projected revenues and expenses associated with 
                employment of the space launch vehicle;
                    (D) any charters, contracts of affreightment, 
                transportation agreements, or similar agreements or 
                undertakings relevant to the employment of the space 
                launch vehicle; and
                    (E) other relevant criteria.
            (2) No commitment to guarantee, or guarantee of an 
        obligation may be made by the Administrator under this Act for 
        the purchase of a used space launch vehicle unless the space 
        launch vehicle will be reconstructed or reconditioned in the 
        United States and will contribute to the development of the 
        United States commercial space industry.
    (e) Guarantee Fees.--
            (1) The Administrator shall prescribe regulations to assess 
        a fee for the guarantee of an obligation under this Act, such 
        as to cover costs of administration of the program.
            (2) A fee under this subsection shall be assessed and 
        collected not later than the date on which amounts are first 
        paid under an obligation with respect to which the fee is 
        assessed.
            (3) A fee paid under this subsection is not refundable. 
        However, an obligor shall receive credit for the amount paid 
        for the remaining term of the guaranteed obligation if the 
        obligation is refinanced and guaranteed under this Act after 
        such refinancing.
            (4) A fee paid under this subsection shall be included in 
        the amount of the actual cost of the obligation guaranteed 
        under this Act and is eligible to be financed under this Act.
    (f) Investigation of Applications.--The Administrator shall charge 
and collect from the obligor such amounts as are necessary to cover 
administrative costs for the investigation of applications for a 
guarantee, for the appraisal of properties offered as security for a 
guarantee, for the issuance of commitments, for services in connection 
with the escrow fund authorized by section 107 of this Act and for the 
inspection of such properties during construction, reconstruction, or 
reconditioning.
    (g) Additional Requirements.--Obligations guaranteed under this Act 
and agreements relating thereto shall contain such other provisions 
with respect to the protection of the financial security interests of 
the United States (including acceleration, assumption, and subrogation 
provisions and the issuance of notes by the obligor to the 
Administrator), liens and releases of liens, payments of taxes, and 
such other matters as the Administrator may, in his discretion, 
prescribe.

SEC. 106. DEFAULTS.

    (a) Rights of Obligee.--In the event of a default, which has 
continued for thirty days, in any payment by the obligor of principal 
or interest due under an obligation guaranteed under this Act, the 
obligee or his agent shall have the right to demand (unless the 
Administrator shall, upon such terms as may be provided in the 
obligation or related agreements, prior to that demand, have assumed 
the obligor's rights and duties under the obligation and agreements and 
shall have made any payments in default), at or before the expiration 
of such period as may be specified in the guarantee or related 
agreements, but not later than ninety days from the date of such 
default, payment by the Administrator of the unpaid principal amount of 
said obligation and of the unpaid interest thereon to the date of 
payment. Within such period as may be specified in the guarantee or 
related agreements, but not later than thirty days from the date of 
such demand, the Administrator shall promptly pay to the obligee or his 
agent the unpaid principal amount of said obligation and unpaid 
interest thereon to the date of payment: Provided, That the 
Administrator shall not be required to make such payment if prior to 
the expiration of said period he shall find that there was no default 
by the obligor in the payment of principal or interest or that such 
default has been remedied prior to any such demand.
    (b) Notice of Default.--In the event of a default under a mortgage, 
loan agreement, or other security agreement between the obligor and the 
Administrator, the Administrator may upon such terms as may be provided 
in the obligation or related agreement, either--
            (1) assume the obligor's rights and duties under the 
        agreement, make any payment in default, and notify the obligee 
        or the obligee's agent of the default and the assumption by the 
        Administrator; or
            (2) notify the obligee or the obligee's agent of the 
        default, and the obligee or the obligee's agent shall have the 
        right to demand at or before the expiration of such period as 
        may be specified in the guarantee or related agreements, but 
        not later than 60 days from the date of such notice, payment by 
        the Administrator of the unpaid principal amount of said 
        obligation and of the unpaid interest thereon. Within such 
        period as may be specified in the guarantee or related 
        agreements, but not later than 30 days from the date of such 
        demand, the Administrator shall promptly pay to the obligee or 
        the obligee's agent the unpaid principal amount of said 
        obligation and unpaid interest thereon to the date of payment.
    (c) Administrator To Complete, Sell or Operate Property.--In the 
event of any payment or assumption by the Administrator under 
subsection (a) or (b) of this section, the Administrator shall have all 
rights in any security held by him relating to his guarantee of such 
obligations as are conferred upon him under any security agreement with 
the obligor. Notwithstanding any other provision of law relating to the 
acquisition, handling, or disposal of property by the United States, 
the Administrator shall have the right, in his discretion, to complete, 
recondition, reconstruct, renovate, repair, maintain, operate, charter, 
or sell any property acquired by him pursuant to a security agreement 
with the obligor. The terms of the sale shall be as approved by the 
Administrator.
    (d) Cash Payments; Issuance of Notes or Obligations.--Any amount 
required to be paid by the Administrator pursuant to subsection (a) or 
(b) of this section, shall be paid in cash. If at any time the moneys 
in the Fund authorized by section 103 of this Act are not sufficient to 
pay any amount the Administrator is required to pay by subsection (a) 
or (b) of this section, the Administrator is authorized to issue to the 
Secretary of the Treasury notes or other obligations in such forms and 
denominations, bearing such maturities, and subject to such terms and 
conditions as may be prescribed by the Administrator, with the approval 
of the Secretary of the Treasury. Such notes or other obligations shall 
bear interest at a rate determined by the Secretary of the Treasury, 
taking into consideration the current average market yield on 
outstanding marketable obligations of the United States of comparable 
maturities during the month preceding the issuance of such notes or 
other obligations. The Secretary of the Treasury is authorized and 
directed to purchase any notes and other obligations to be issued 
hereunder and for such purpose he is authorized to use as a public debt 
transaction the proceeds from the sale of any securities issued under 
chapter 31 of title 31, and the purposes for which securities may be 
issued under such chapter are extended to include any purchases of such 
notes and obligations. The Secretary of the Treasury may at any time 
sell any of the notes or other obligations acquired by him under this 
section. All redemptions, purchases, and sales by the Secretary of the 
Treasury of such notes or other obligations shall be treated as public 
debt transactions of the United States. Funds borrowed under this 
section shall be deposited in the Fund and redemptions of such notes 
and obligations shall be made by the Administrator from such Fund.
    (e) Actions Against Obligor.--In the event of a default under any 
guaranteed obligation or any related agreement, the Administrator shall 
take such action against the obligor or any other parties liable 
thereunder that, in his discretion, may be required to protect the 
interests of the United States. Any suit may be brought in the name of 
the United States or in the name of the obligee and the obligee shall 
make available to the United States all records and evidence necessary 
to prosecute any such suit. The Administrator shall have the right, in 
his discretion, to accept a conveyance of Act to and possession of 
property from the obligor or other parties liable to the Administrator, 
and may purchase the property for an amount not greater than the unpaid 
principal amount of such obligation and interest thereon. In the event 
that the Administrator shall receive through the sale of property an 
amount of cash in excess of the unpaid principal amount of the 
obligation and unpaid interest on the obligation and the expenses of 
collection of those amounts, the Administrator shall pay the excess to 
the obligor.

SEC. 107. ESCROW FUND.

    (a) Creation.--If the proceeds of an obligation guaranteed under 
this Act are to be used to finance the construction, reconstruction, or 
reconditioning of a space launch vehicle or space launch vehicles which 
will serve as security for the guarantee of the Administrator, the 
Administrator is authorized to accept and hold, in escrow under an 
escrow agreement with the obligor, a portion of the proceeds of all 
obligations guaranteed under this Act whose proceeds are to be so used 
which is equal to: (i) the excess of the principal amount of all 
obligations whose proceeds are to be so used over 87.5 per centum of 
the amount paid by or for the account of the obligor for the 
construction, reconstruction, or reconditioning of the space launch 
vehicle or space launch vehicles; (ii) with such interest thereon, if 
any, as the Administrator may require: Provided, That in the event the 
security for the guarantee of an obligation by the Administrator 
relates both to a space launch vehicle or space launch vehicles to be 
constructed, reconstructed, or reconditioned and to a delivered space 
launch vehicle or space launch vehicles, the principal amount of such 
obligations shall be prorated for purposes of this subsection (a) under 
regulations prescribed by the Administrator.
    (b) Disbursement Prior to Termination of Escrow Agreement.--The 
Administrator shall, as specified in the escrow agreement, disburse the 
escrow fund to pay amounts the obligor is obligated to pay as interest 
on such obligations or for the construction, reconstruction, or 
reconditioning of the space launch vehicle or space launch vehicles 
used as security for the guarantee of the Administrator under this Act, 
to redeem such obligations in connection with refinancing or to pay to 
the obligor at such times, as may be provided for in the escrow 
agreement any excess interest deposits, except that if payments become 
due under the guarantee prior to the termination of the escrow 
agreement, all amounts in the escrow fund at the time such payments 
become due (including realized income which has not yet been paid to 
the obligor) shall be paid into the fund and (i) be credited against 
any amounts due or to become due to the Administrator from the obligor 
with respect to the guaranteed obligations and (ii) to the extent not 
so required, be paid to the obligor.
    (c) Disbursement Upon Termination of Escrow Agreement.--If payments 
under the guarantee have not become due prior to the termination of the 
escrow agreement, any balance of the escrow fund at the time of such 
termination shall be disbursed to prepay the excess of the principal of 
all obligations whose proceeds are to be used to finance the 
construction, reconstruction, or reconditioning of the space launch 
vehicle or space launch vehicles which serve or will serve as security 
for such guarantee over an appropriate per centum of the actual cost of 
such space launch vehicle or space launch vehicles to the extent paid, 
and to pay interest on such prepaid amount of principal, and the 
remainder of such balance of the escrow fund shall be paid to the 
obligor.
    (d) Investment of Fund.--The Administrator may invest and reinvest 
all or part of the escrow fund in obligations of the United States with 
such maturities that the escrow fund will be available as required for 
purposes of the escrow agreement.
    (e) Payment of Income.--Any income realized on the escrow fund 
shall, upon receipt, be paid to the obligor.
    (f) Terms of Escrow Agreement.--The escrow agreement shall contain 
such other terms as the Administrator may consider necessary to protect 
fully the interests of the United States.
                                 <all>