[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2177 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2177
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.
_______________________________________________________________________
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 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 ``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 transportation
industry is an essential part of the national economy.
(2) Opportunities for United States commercial providers
are growing as international markets expand.
(3) The development of the United States commercial 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 payments for commercially targeted
product development or with indirect benefits derived from
nonmarket 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 remained 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 taxpayer 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 require 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 transportation
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 obstacle, an obstacle our trading partners
have removed by providing direct access to government funding.
(12) Given the strengths and creativity 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 incentives industry wide to
assist qualifying United States private sector companies obtain
otherwise unavailable private equity financing for the critical
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 unavailable private
sector equity financing for United States private sector
development of commercial space transportation vehicles which
will have transportation 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 competitiveness
of the United States space industry;
(D) to encourage the growth of space-related
commerce in the United States and internationally; 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 located on, or components of, a launch
or landing site, whether real or personal property, which are
necessary 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, developed in the future, or currently
under design, development, construction, reconstruction, or
reconditioning, which are constructed in the United States by a
United States commercial provider and owned by the commercial
provider, for the purpose of operating in, or transporting a
payload to, from, or within, 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 Islands, 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 corporation or a Limited Liability Company (LLC).
(6) United states commercial space transportation vehicle
provider.--The term ``United States commercial space
transportation vehicle provider'' means a United States
commercial provider engaged in designing, developing, and
producing commercial space transportation vehicles.
(7) United states commercial space transportation vehicle
industry.--The term ``United States commercial space
transportation vehicle industry'' means the collection of
United States commercial space transportation vehicle
providers.
(8) Space transportation costs significantly below current
levels.--The term ``space transportation costs significantly
below current 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 producing, 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 requirement 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 TRANSPORTATION VEHICLE PROVIDER
STOCK.
(a) In General.--Part IV of subchapter A of chapter 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 TRANSPORTATION 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 taxpayer 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 following table:
``For taxable years beginning
The applicable
in calendar year--
percentage is--
2002, 2003, and 2004................... 50
2005................................... 40
2006................................... 35
2007................................... 30
2008 and 2009.......................... 20
2010 and thereafter.................... 0.
``(b) Maximum Credit.--
``(1) Limitation for each provider.--
``(A) Large capitalization providers.--The credit
allowed under this section with respect to the stock of
each large capitalization 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 providers.--The credit
allowed under this section with respect to the stock of
each small capitalization 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 purchased 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 corporation
is a qualified space transportation vehicle provider,
``(B) such stock is acquired by the taxpayer 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 beginning 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 vehicle provider.--The
term `qualified space transportation 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 subparagraph (B), designate
each qualified space transportation vehicle provider as
a large capitalization 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 vehicle providers are classified into
large capitalization providers and small capitalization
providers. The guidelines shall be based on factors
particular to the space transportation industry,
including--
``(i) the capital requirements necessary to
support the type of provider the taxpayer is or
is trying to become,
``(ii) the payload size of space
transportation vehicles developed or used by
the taxpayer,
``(iii) the markets in which the taxpayer
is participating, and
``(iv) whether human spaceflight is
included.
``(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 purchased by the taxpayer,
or
``(2) during such 3-year period, the issuer of such stock
ceases to meet the requirements of section 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 section 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 purposes of this section. A
person treated as unrelated to the taxpayer under the
previous sentence shall not be the same capitalization
status (determined under subsection (c)(3) as the
taxpayer.
``(C) Related persons.--For purposes of this
paragraph, a person is a related person to another
person if--
``(i) the relationship between such persons
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 appears 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 defined in
section 26(b)) plus the tax imposed by section 55, over
``(2) the sum of the credits allowable under this part
(other than subpart C thereof, relating to refundable
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 TRANSPORTATION VEHICLE
AUTHORIZATION.
(a) United States Commercial Space Transportation Vehicle Industry
Authorization Program.--
(1) Establishment of program.--There shall be a United
States Commercial Space Transportation 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 program shall be
carried out by the Secretary of Transportation under a
streamlined application process pursuant to the terms of this
section and any regulations that may be promulgated hereunder,
in consultation with other United States Government officials,
and private sector representatives, as necessary, to ensure
fair, effective, and timely program administration and
streamlined authorization.
(3) Scope of program.--
(A) Temporary government support.--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 transportation
vehicle development ventures during their startup
phases.
(B) Exclusion of space launch sites.--The program
does not provide authorization pertaining to the
construction, reconstruction, or reconditioning of
space launch sites.
(C) Exclusion of nonrelated activities.--The
program does not provide authorization 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 product which is integral to the
design, development, construction, reconstruction, or
reconditioning of a space transportation vehicle as
described in subsection (b).
(4) Nondisclosure of confidential materials.--Materials
that are submitted by a United States commercial space
transportation vehicle provider to the Secretary in connection
with an application submitted under the United States
Commercial Space Transportation Vehicle Authorization Program
and deemed by the commercial provider to be confidential, and
that contain trade secrets or proprietary commercial,
financial, or technical information of a kind not customarily
disclosed to the public, shall not be disclosed by the
Secretary to persons other than Government officers or
employees notwithstanding any other provision of law.
(5) Consultation.--The Secretary shall consult to the
extent deemed necessary for effective implementation 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 authorize
vehicle providers who demonstrate by the submission of
technical and financial information 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.-- Authorization by the
Secretary is deemed granted unless within 120 days of
application submission the Secretary determines that
the provider has no reasonable possibility of
significantly lowering space transportation costs.
(2) Possible commercial viability and capital requirement
to qualify stock for credit.--To demonstrate possible
commercial viability the United States commercial space
transportation vehicle provider must raise $10,000,000 of
equity 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 additional 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 vehicle
provider must submit to the Secretary each year a
certified audit opinion letter verifying its use of
funds in substantial compliance with its application.
(B) Consequence of failures.--
(i) Failure to submit a certified audit
opinion letter verifying substantial compliance
with its application will result in
deauthorization 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 transportation costs
significantly below current levels will result
in deauthorization. Failure to achieve success
will not result in deauthorization.
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