[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                       OFFICE OF COMMERCIAL SPACE
                      TRANSPORTATION'S FISCAL YEAR
                          2012 BUDGET REQUEST

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON SPACE AND AERONAUTICS

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                         THURSDAY, MAY 5, 2011

                               __________

                           Serial No. 112-16

                               __________

 Printed for the use of the Committee on Science, Space, and Technology


       Available via the World Wide Web: http://science.house.gov



                  U.S. GOVERNMENT PRINTING OFFICE
66-220                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                    HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR.,         EDDIE BERNICE JOHNSON, Texas
    Wisconsin                        JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas                LYNN C. WOOLSEY, California
DANA ROHRABACHER, California         ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland         DAVID WU, Oregon
FRANK D. LUCAS, Oklahoma             BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois               DANIEL LIPINSKI, Illinois
W. TODD AKIN, Missouri               GABRIELLE GIFFORDS, Arizona
RANDY NEUGEBAUER, Texas              DONNA F. EDWARDS, Maryland
MICHAEL T. McCAUL, Texas             MARCIA L. FUDGE, Ohio
PAUL C. BROUN, Georgia               BEN R. LUJAN, New Mexico
SANDY ADAMS, Florida                 PAUL D. TONKO, New York
BENJAMIN QUAYLE, Arizona             JERRY McNERNEY, California
CHARLES J. ``CHUCK'' FLEISCHMANN,    JOHN P. SARBANES, Maryland
    Tennessee                        TERRI A. SEWELL, Alabama
E. SCOTT RIGELL, Virginia            FREDERICA S. WILSON, Florida
STEVEN M. PALAZZO, Mississippi       HANSEN CLARKE, Michigan
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY
                                 ------                                

                 Subcommittee on Space and Aeronautics

               HON. STEVEN M. PALAZZO, Mississippi, Chair
F. JAMES SENSENBRENNER JR.,          GABRIELLE GIFFORDS, Arizona
    Wisconsin                        MARCIA L. FUDGE, Ohio
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
DANA ROHRABACHER, California         TERRI A. SEWELL, Alabama
FRANK D. LUCAS, Oklahoma             DAVID WU, Oregon
W. TODD AKIN, Missouri               DONNA F. EDWARDS, Maryland
MICHAEL T. McCAUL, Texas             FREDERICA S. WILSON, Florida
SANDY ADAMS, Florida                     
E. SCOTT RIGELL, Virginia                
MO BROOKS, Alabama                       
RALPH M. HALL, Texas                 EDDIE BERNICE JOHNSON, Texas


                            C O N T E N T S

                         Thursday, May 5, 2011

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Steven M. Palazzo, Chair, 
  Subcommittee on Space and Aeronautics, Committee on Science, 
  Space, and Technology, U.S. House of Representatives...........     7
    Written Statement............................................     8

Statement by Representative Jerry F. Costello, Acting Ranking 
  Minority Member, Subcommittee on Space and Aeronautics, 
  Committee on Science, Space, and Technology, U.S. House of 
  Representatives................................................     9
    Written Statement............................................    10

                               Witnesses:

Dr. George C. Nield. Associate Administrator for Commercial Space 
  Transportation, Federal Aviation Administration
    Oral Statement...............................................    11
    Written Statement............................................    13

Dr. Gerald Dillingham, Director, Physical Infrastructure, US 
  Government Accountability Office
    Oral Statement...............................................    16
    Written Statement............................................    19

Dr. Henry R. Hertzfeld, Research Professor of Space Policy and 
  International Affairs, Elliott School of International Affairs, 
  George Washington University
    Oral Statement...............................................    30
    Written Statement............................................    31

Discussion
  ...............................................................      

              Appendix: Answers to Post-Hearing Questions

Dr. George C. Nield, Associate Administrator for Commercial Space 
  Transportation, Federal Aviation Administration................    58

Dr. Gerald Dillingham, Director, Physical Infrastructure, U.S. 
  Government Accountability Office...............................    65

Dr. Henry R. Hertzfeld, Research Professor of Space Policy and 
  International Affairs, Elliott School of International Affairs, 
  George Washington University...................................    67


              OFFICE OF COMMERCIAL SPACE TRANSPORTATION'S
                    FISCAL YEAR 2012 BUDGET REQUEST

                              ----------                              


                         THURSDAY, MAY 5, 2011

                  House of Representatives,
             Subcommittee on Space and Aeronautics,
               Committee on Science, Space, and Technology,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2318 of the Rayburn House Office Building, Hon. Steven 
Palazzo [Chairman of the Subcommittee] presiding.


                            hearing charter

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                 SUBCOMMITTEE ON SPACE AND AERONAUTICS

                     U.S. HOUSE OF REPRESENTATIVES

              Office of Commercial Space Transportation's

                    Fiscal Year 2012 Budget Request

                         thursday, may 5, 2011
                         10:00 a.m.--12:00 p.m.
                   2318 rayburn house office building

Purpose

    The purpose of the May 5 hearing held by the Subcommittee on Space 
and Aeronautics is to review the Fiscal Year 2012 budget request 
submitted by the FAA Office of Commercial Space Transportation (in FAA 
shorthand the office is referred to as `AST') and to examine new 
initiatives in the request to expand the office's roles and 
responsibilities. AST's FY2012 budget request seeks $26.625 million, a 
74% increase over the FY2010 enacted level ($15.237 million) and a 
near-doubling of its workforce, asserting that NASA-sponsored 
commercial cargo flights to the International Space Station, plus the 
expected start-up of commercial human sub-orbital flights, places new 
regulatory demands on their operations.

Witnesses

      Dr. George C. Nield, Associate Administrator for 
Commercial Space Transportation, Federal Aviation Administration

      Dr. Gerald Dillingham, Director, Physical Infrastructure, 
U.S. Government Accountability Office

      Dr. Henry R. Hertzfeld, Research Professor of Space 
Policy and International Affairs, Elliott School of International 
Affairs, George Washington University

Background

    The Office of Commercial Space Transportation (AST) licenses and 
regulates U.S. commercial space launches and reentries, as well as the 
operation of non-federal launch and reentry sites. It's mission 
statement is: ``To ensure the protection of the public, property, and 
the national security and foreign policy interests of the United States 
during commercial launch and reentry activities, and to encourage, 
facilitate, and promote U.S. commercial space transportation.'' AST 
issued its first launch license in 1989 and since then has licensed 204 
launches with no fatalities, serious injuries, or significant damage to 
the uninvolved public.
    In 1984 President Reagan signed an executive order designating the 
Department of Transportation as the lead federal agency for encouraging 
and facilitating commercial launch activities within the private 
sector. Eight months later Congress passed the Commercial Space Launch 
Act (P.L. 98- 575) which gave legislative authority to DOT's role as 
the principal oversight agency for the regulation and licensing of 
commercial space transportation systems. Subsequently, DOT shifted the 
office to the FAA.
    Congress last acted on legislation dealing with commercial space 
transportation in the 108th Congress. Two bills were enacted: (1) ``The 
Commercial Space Launch Amendments Act'', H.R. 5382 (PL 108-492) was 
introduced by Rep. Dana Rohrabacher and expanded AST's authority to 
regulate commercial human space flight; (2) H.R. 2608 (PL 108-360) 
reauthorized the Office of Commercial Space Transportation through FY 
2009. No subsequent bill addressing AST has since been enacted.

Licensing Activities

    There are three types of launches--national security, civil, and 
commercial. The Office of Commercial Space Transportation regulates 
commercial launches; launches of NASA and DOD payloads do not require 
licenses. In 2010, AST licensed four commercial orbital launches 
compared to five licensed launches in 2009. For 2011 AST forecasts four 
commercial launches will be licensed. No suborbital flights were 
conducted under FAA experimental permits in 2010.
    In 2010 one reentry was conducted under an FAA reentry license. The 
SpaceX Dragon Capsule successfully reentered the atmosphere and landed 
in the Pacific Ocean following its first NASA Commercial Orbital 
Transportation System (COTS) demonstration flight. It was the first 
reentry license ever granted by FAA. SpaceX anticipates flying its 
second COTS demonstration flight later this year and Orbital also plans 
to fly its first COTS demonstration before the end of 2011.
    In addition to licensing launches, AST also licenses the operation 
of commercial launch sites (or ``spaceports ''). Currently, there are 
eight--

          Spaceport Florida, Cape Canaveral Air Force Station, 
        FL

          Mid-Atlantic Regional Spaceport, Wallops Island, VA

          California Spaceport, Vandenberg Air Force Base, CA

          Kodiak Launch Complex, Kodiak Island, AK

          Mojave Air & Space Port, CA

          Cecil Field Spaceport, Jacksonville, FL

          Oklahoma Spaceport, Burns Flat, OK

          Spaceport America, Las Cruces, NM

        
        

    AST's FY12 budget request seeks $26.625 million, a 75% increase 
over FY10 enacted, and compared to the FY11 request it represents a 69% 
increase ($10.878 million). Three new proposals are responsible for the 
spending growth--

    (1)  proposed establishment of the ``FAA Commercial Spaceflight 
Technical Center'' to be located at the Kennedy Space Center in Florida 
($5 million in FY12 to hire 50 additional employees);

    (2)  creation of a ``Space Incentives Program'' ($5 million in 
FY12) ; and

    (3)  hiring an additional seven employees ($1.25 million) for 
development and implementation of safety requirements and human factors 
to support development of commercial crew transportation systems and 
missions.

    The budget request includes the following justification: ``A key 
challenge that we are facing today involves the beginning of a new era 
in commercial human spaceflight: suborbital human spaceflight (space 
tourism) and orbital crew transportation to the International Space 
Station. The publication of the new National Space Policy signals an 
even greater role for the commercial space industry in America's 
overall space strategy and space traffic management and AST's 
activities support the growth in the commercial space industry. In 
addition, the 2012 Budget request supports the Presidential Task Force 
on Space Industry Workforce and Economic Development's recommendation 
that FAA establish a Commercial Spaceflight Technical Center. The 
Technical Center will provide safety and technical support for future 
commercial space launch activities and support the continued 
development of standards and regulations for commercial spaceflight. 
Due to a projected increase in commercial space transportation 
launches, AST funding will be used to conduct appropriate research and 
develop necessary regulations related to commercial human spaceflight 
to ensure public safety.''
    The FAA Commercial Spaceflight Technical Center. Many details about 
the Center are still being developed. AST's budget request notes that 
the Presidential Task Force recommended that FAA establish the Center 
at the Kennedy Space Center, and that its main purpose will be ``to 
develop safety processes and requirements related to commercial human 
spaceflight (HSF), along with related research. Primary focus areas at 
the Technical Center will include spaceflight safety, spaceflight 
engineering and standards, and Space Traffic Management.'' In 
supplementary budget material provided to committee staff, AST also 
pointed out that establishing the Technical Center at Kennedy will 
``enable the nation to continue to benefit from the contributions of a 
significant number of highly-skilled aerospace workers who will be 
seeking employment during the next 12 months. It will allow the FAA and 
NASA to partner in developing an organization with a knowledgeable and 
experienced staff to regulate future commercial space operations.''
    Space Incentives Program. The request seeks $5 million to establish 
a program for incentivizing advancements in space transportation by 
non-governmental organizations. Modeled on previous successful prize 
programs (e.g., the Ansari X Prize), AST proposes to put up a $5 
million award for industry to develop and demonstrate a low-cost launch 
system for CubeSats. These are very small low-cost satellites (10 x 10 
x 10 cm) that are favored by universities and other research 
institutions, and are typically carried as secondary payloads on 
conventional satellite launches. Should the prize program produce a 
winning design, it would enable frequent dedicated low-cost missions 
carrying one or several CubeSats.

Commercial Space Launch Amendments Act of 2004

    In 2004, SpaceShipOne successfully launched two suborbital flights 
from the Mojave, CA, airport within a two week time-span, winning the 
$10 million Ansari X-Prize. Space industry optimists believed then that 
suborbital flights carrying space tourists would quickly develop with 
several commercial companies entering the marketplace to offer routine 
suborbital flights. Later that year Congress passed H.R. 5382 (P.L. 
108-492), the Commercial Space Launch Amendments Act of 2004, 
authorizing the Secretary of Transportation to license and regulate 
commercial human space flight.
    However, even though the Act extended regulatory authority to DOT 
(specifically to the Office of Commercial Space Transportation), it 
prohibited federal regulation of commercial human space flight 
companies for eight years following enactment. This prohibition covers 
both suborbital and orbital commercial launch systems.
    The premise of the eight-year prohibition was rooted in the concern 
that the industry did not yet exist, and thus DOT (and AST) had no 
relevant experience upon which to regulate industry practices. During 
this period, space launch companies would be able to experiment with 
various designs and processes as they endeavored to improve their 
vehicles' safety and performance prior to offering licensed suborbital 
(or orbital) flights. The Act provided two exceptions to the regulatory 
prohibition; AST could restrict or prohibit design features or 
operating practices that (1) resulted in a serious or fatal injury to 
crew or space flight participants, or (2) contributed to an unplanned 
event during a commercial human space flight that posed a high risk of 
causing a serious or fatal injury to crew or space flight participants. 
The eight year ban expires December 23, 2012.
    Thus the increase in AST's FY2012 budget request is predicated on 
the expiration of the ban and with it the need to develop the technical 
expertise, and to hire industry veterans. Their budget request states: 
``The FY2012 request reflects the addition of crew and passenger safety 
to our regulatory activities.''
    The regulatory prohibition may be modified by Congress. On March 
31, 2011, during House consideration of H.R. 658, the FAA Air 
Transportation and Modernization and Safety Improvement Act of 2011, an 
amendment was adopted by the House that, among other provisions, 
extended the regulatory prohibition for another eight years following 
the date of the first licensed commercial human space flight launch. 
The Senate companion bill had no comparable provision.
    To date only one company, Virgin Galactic, is known to be actively 
testing a prototype sub-orbital commercial human spaceflight vehicle. 
SpaceShipTwo, a larger version of the Ansari X-Prize winner, is 
undergoing unpowered atmospheric testing in California. According to 
the company, hundreds of interested purchasers have already placed 
down-payments with Virgin Galatic for the privilege of flying on their 
spacecraft once commercial flights get underway.

NASA's Commercial Cargo and Crew Programs

    With the retirement of the Space Shuttle this summer, NASA plans to 
rely on two companies--Orbital Sciences Corporation (Orbital) and Space 
Exploration Technologies ( SpaceX)--to provide cargo resupply services 
to the International Space Station until 2020. Under the current 
contracts each company is obligated to launch two supply flights a 
year, and with regard to SpaceX, it would also bring materials back 
from ISS using their Dragon capsule to reenter the atmosphere and land 
at a permitted site. For these resupply flights NASA is buying a 
service as though it were a traditional commercial customer, thus 
triggering coverage under AST's licensing regime. Once both companies 
are operating resupply flights on a routine basis, AST's regulatory 
workload will increase by four flights a year, plus two reentries.
    NASA is also pursuing a longer term strategy to use a similar 
approach of buying launch services to ferry astronauts to and from the 
International Space Station, although agency plans are still uncertain 
about when these ``commercial crew'' flights will begin. Most of the 
agency's notional plans suggest 2016 as a likely date, though many 
technical hurdles still remain, not the least of which is NASA 
publishing a set of human rating requirements to be met by any of the 
commercial launch bidders.
    Non-NASA flights would also require a new set of regulations be 
established and enforced by AST to ensure that the risk to non-
governmental crew and passengers are minimized. NASA has vast 
experience in this arena while AST has none. FAA (AST) and NASA are in 
discussions now about how the two agencies will exercise oversight and 
insight into the design and operation of any commercial orbital crew 
launch systems, as well as their reentry performance, landing sites, 
and recovery operations. The goal is to minimize any overlap between 
the agencies.
    On Thursday, April 28, 2011, AST published a notice on its website 
that it will hold a public meeting late this month in Florida to seek 
input from the affected community. ``FAA is planning to propose 
regulations to protect the health and safety of crew and space flight 
participants for orbital human spaceflight as soon as circumstances 
require after December 23, 2012'' (the end of the eight year regulatory 
prohibition now in current law).
    Chairman Palazzo. The Subcommittee on Space and Aeronautics 
will come to order.
    Good morning. Welcome to today's hearing entitled ``The 
Office of Commercial Space Transportation's Fiscal Year 2012 
Budget Request.'' In front of you are packets containing the 
written testimony, biographies and Truth in Testimony 
disclosures for today's witness panel. I recognize myself for 
five minutes for an opening statement.
    Today, May 5th, marks the 50th anniversary of the first 
flight of an American astronaut, and the second human being 
into outer space. Alan Shepard, riding in a Mercury capsule, 
launched atop a Redstone rocket on a 15-minute suborbital 
flight that carried him to an altitude of 116 miles. His flight 
was a major first step for America's space program, helping 
bolster American pride and setting our country and NASA on a 
spectacular course of space accomplishments.
    Turning to the present, I want to thank our witnesses for 
taking time from their busy schedules to appear before our 
Subcommittee. I realize a lot of work by many people goes into 
the preparation of your statements, and I want to assure you 
that your expertise and wisdom will be valuable to this 
Committee and Congress as we wrestle with issues related to our 
Nation's commercial space program.
    The Office of Commercial Space Transportation provides an 
essential public service, ensuring that commercial launches are 
undertaken with the highest level of safety. Their record of 
achievement is significant, licensing over 200 launches without 
any loss of life, serious injury, or notable property damage to 
the general public.
    However, over the next several years AST, as they are 
commonly known within FAA and industry, faces an increased 
workload and possible added regulatory duties, and their fiscal 
year 2012 budget request reflects these new burdens. The 
request seeks a 75 percent increase over the fiscal year 2010 
enacted level and an expansion of its workforce by nearly 50 
percent. A significant portion of the increase would be spent 
hiring additional staff to develop and implement new safety 
requirements for suborbital and orbital commercial human 
spaceflight launch systems. AST also proposes to establish a 
new program modeled after NASA's Centennial Challenges prize to 
incentivize development of space transportation technologies. 
Finally, the budget request proposes creation of a Commercial 
Spaceflight Technical Center at NASA's Kennedy Space Center 
that would initially employ a small number of aerospace 
engineers, but could over time hire as many as a couple 
hundred. The request is silent on associated infrastructure 
costs.
    With respect to commercial human spaceflight, the 
Commercial Space Launch Amendments Act of 2004 included two 
provisions that will be central to our discussions today. The 
first authorized AST to regulate commercial human space flight 
launch systems; the second prohibited AST from regulating 
commercial human spaceflight for eight years in order to give 
space tourism companies an opportunity to design, develop, and 
operate new and experimental launch systems. The freeze was 
expected to allow the nascent industry to gain experience 
through experimental flights upon which AST could rely as it 
began to draft a regulatory regime.
    At the time Congress was considering the 2004 Act, industry 
expressed concern that without any real-world experience, 
regulation writers could choke off creation of the space 
tourism marketplace by writing and enforcing unworkable and 
overly prescriptive rules.
    Roughly 6-1/2 years have elapsed since the bill's 
enactment, and as many in this room are aware, there is an 
effort underway in Congress to extend the regulatory 
prohibition another eight years. Given that no prototype 
commercial suborbital vehicle has yet flown into space, does 
the argument still hold that AST needs an experience base upon 
which it can draft regulations guiding the industry's design 
and operation of their vehicles? To what degree should AST 
regulate commercial human space launch systems? Should they 
have insight down to the component level for each type of 
launch vehicle, much the same way that FAA certifies commercial 
civil aircraft? How would they acquire the knowledge and 
expertise to take on this role? It is my hope this morning's 
hearing will help shed light on these and other pressing 
questions.
    Before closing, I also want to express concerns about AST's 
proposal to create a prize program. While I appreciate 
government's interest in promoting technological development in 
the space transportation industry, it is my view that NASA is 
doing more than a sufficient job funding new technologies and 
capabilities through aggressive use of Space Act agreements. In 
these times when Congress and the White House are focusing on 
reducing the federal budget deficit, I question the wisdom of 
implementing another form of federal largesse.
    Dr. Nield, don't take this personally, but I want the 
record to note that the FAA's testimony was provided to our 
Committee about 20 hours ago contrary to Committee rules and 
past practice. By holding back testimony, Members and staff are 
afforded only a handful of hours to review and analyze 
Administration statements, undermining the ability of this body 
to engage in a well-informed dialog with Executive Branch 
witnesses. The White House's process for vetting testimony of 
agency witnesses continues to frustrate this Committee and 
Congress. This is not the first time in this still-young 
Congress that testimony has arrived only hours before the 
scheduled start of hearings, and I urge the White House to 
exercise greater diligence.
    [The prepared statement of Mr. Palazzo follows:]

            Prepared Statement of Chairman Steven M. Palazzo

    Good morning and welcome to today's hearing to discuss the Fiscal 
Year 2012 budget request submitted by the FAA Office of Commercial 
Space Transportation.
    Today, May 5th, marks the 50th anniversary of the first flight of 
an American astronaut - and the second human being - into outer space. 
Alan Shepard, riding in a Mercury capsule, launched atop a Redstone 
rocket on a fifteen minute suborbital flight that carried him to an 
altitude of 116 miles. His flight was a major first step for America's 
space program, helping bolster American pride and setting our country 
and NASA on a spectacular course of space accomplishments.
    Turning to the present, I want to thank our witnesses for taking 
time from their busy schedules to appear before our Subcommittee. I 
realize a lot of work by many people goes into the preparation of your 
statements and I want to assure you that your expertise and wisdom will 
be valuable to this Committee and Congress as we wrestle with issues 
related to our nation's commercial space program.
    The Office of Commercial Space Transportation provides an essential 
public service, ensuring that commercial launches are undertaken with 
the highest level of safety. Their record of achievement is 
significant, licensing over 200 launches without any loss of life, 
serious injury, or notable property damage to the general public.
    However, over the next several years AST - as they are commonly 
known within FAA and industry - faces an increased workload and 
possible added regulatory duties, and their FY2012 budget request 
reflects these new burdens. The request seeks a 75% increase over the 
FY10 enacted level and an expansion of its workforce by nearly 50%. A 
significant portion of the increase would be spent hiring additional 
staff to develop and implement new safety requirements for sub-orbital 
and orbital commercial human spaceflight launch systems. AST also 
proposes to establish a new program - modeled after NASA's Centennial 
Challenges prize - to incentivize development of space transportation 
technologies. Finally, the budget request proposes creation of a 
Commercial Spaceflight Technical Center at NASA's Kennedy Space Center 
that would initially employ a small number of aerospace engineers, but 
could over time hire as many as a couple hundred. The request is silent 
on associated infrastructure costs.
    With respect to commercial human space flight, the Commercial Space 
Launch Amendments Act of 2004 included two provisions that will be 
central to our discussions today. The first authorized AST to regulate 
commercial human space flight launch systems; the second prohibited AST 
from regulating commercial human space flight for eight years in order 
to give space tourism companies an opportunity to design, develop and 
operate new and experimental launch systems. The freeze was expected to 
allow the nascent industry to gain experience through experimental 
flights upon which AST could rely as it began to draft a regulatory 
regime. At the time Congress was considering the 2004 Act, industry 
expressed concern that without any real-world experience, regulation 
writers could choke off creation of the space tourism marketplace by 
writing and enforcing unworkable and overly-prescriptive rules.
    Roughly six-and-a-half years have elapsed since the bill's 
enactment, and as many in this room are aware, there is an effort 
underway in Congress to extend the regulatory prohibition another eight 
years. Given that no prototype commercial sub-orbital vehicle has yet 
flown into space, does the argument still hold that AST needs an 
experience base upon which it can draft regulations guiding the 
industry's design and operation of their vehicles? To what degree 
should AST regulate commercial human space launch systems? Should they 
have insight down to the component level for each type of launch 
vehicle, much the same way that FAA certifies commercial civil 
aircraft? How would they acquire the knowledge and expertise to take on 
this role? It is my hope this morning's hearing will help shed light on 
these and other pressing questions.
    Before closing, I also want to express concerns about AST's 
proposal to create a prize program. While I appreciate government's 
interest in promoting technological development in the space 
transportation industry, it is my view that NASA is doing more than a 
sufficient job funding new technologies and capabilities through 
aggressive use of Space Act Agreements. In these times when Congress 
and the White House are focusing on reducing the federal budget 
deficit, I question the wisdom of implementing another form of federal 
largesse.
    Dr. Nield, don't take this personally, but I want the record to 
note that the FAA's testimony was provided to our committee about 20 
hours ago, contrary to committee rules and past practice. By holding 
back testimony, Members and staff are afforded only a handful of hours 
to review and analyze administration statements, undermining the 
ability of this body to engage in a well-informed dialogue with 
executive branch witnesses. The White House's process for vetting 
testimony of agency witnesses continues to frustrate this committee and 
Congress. This is not the first time in this still-young Congress that 
testimony has arrived only hours before the scheduled start of 
hearings, and I urge the White House to exercise greater diligence.

    Chairman Palazzo. The Chair now recognizes Mr. Costello for 
an opening statement.
    Mr. Costello. Mr. Chairman, thank you, and I thank you for 
calling the hearing today, and let me just associate myself 
with your remarks about testimony coming from the White House 
in a timely manner consistent with the rules of this Committee. 
It has been a longstanding problem. I have been on this 
Committee for a number of years, and we experience the same 
problem regardless of which Administration is in office, and I 
would just say to you to go back, Dr. Nield, and express our 
frustration. As the Chairman said, don't take it personal but 
we know the vetting process needs to--you all need to do a 
better job in the White House. We expressed that under the Bush 
Administration. We will continue to express that under the 
Obama Administration.
    Mr. Chairman, I am very familiar with commercial space 
transportation and the commercial space transportation 
industry, not only from the hearings that I Chaired in the 
Aviation Subcommittee but also from the X-Prize Foundation, 
which is well known for designing and managing public 
competitions for aviation and space. They are located across 
the river, in St. Louis, Missouri, from my Congressional 
district in southwestern Illinois.
    AST's fiscal year 2012 budget request reflects the office's 
changing role as the commercial spaceflight industry expands to 
provide cargo and crew transportation for NASA, build 
spaceports around the country, transport space tourists, and 
fulfill other missions. Congress and the FAA will need to 
decide how best to proceed with respect to safety regulations 
of this emerging industry.
    Congress passed several laws to allow commercial space 
transportation to develop, and we must ensure the industry has 
proper federal safety oversight. As the number of launches is 
expected to increase with commercial space tourism and the 
potential use of commercial space launch vehicles by NASA, it 
is imperative that the FAA has the proper resources to ensure 
new technologies and programs evolve safely.
    I look forward to hearing from the FAA Associate 
Administrator for Commercial Space Transportation about FAA's 
role in overseeing the commercial space industry to ensure the 
safety of the public, as well as crew and spaceflight 
participants. I hope this hearing will be the first of many 
substantive hearings by this Subcommittee to examine the 
current status and future challenges of commercial space 
operations. We need to determine our goals for the Office of 
Commercial Space Transportation and evaluate the issues we must 
consider for the future of the AST.
    I welcome our witnesses and look forward to hearing their 
testimony. Again, I thank you, Mr. Chairman, and I yield back 
and look forward to hearing from our witnesses.
    [The prepared statement of Mr. Costello follows:]

       Prepared Statement of Acting Ranking Member Jerry Costello

    Mr. Chairman, thank you for holding today's hearing to review the 
Fiscal Year 2012 (FY12) budget request for the Federal Aviation 
Administration's (FAA's) Office of Commercial Space Transportation 
(AST).
    I am very familiar with the emerging commercial space 
transportation industry, not only from hearings I Chaired in the 
Aviation Subcommittee, but also because the X-Prize Foundation, which 
is most well known for designing and managing public competitions for 
aviation and space, is located in St. Louis, Missouri --across the 
river from my Congressional district.
    AST's FY12 budget request reflects the office's changing role as 
the commercial spaceflight industry expands to provide cargo and crew 
transportation for NASA, build space ports around the country, 
transport space tourists, and fulfill other missions. Congress and the 
FAA will need to decide how best to proceed with respect to safety 
regulation of this emerging industry.
    Congress passed several laws to allow commercial space 
transportation to develop and we must ensure the industry has proper 
federal safety oversight. As the number of launches is expected to 
increase with commercial space tourism and the potential use of 
commercial space launch vehicles by National Aeronautics and Space 
Administration (NASA), it is imperative that the FAA has the proper 
resources to ensure new technologies and programs evolve safely.
    I look forward to hearing from the FAA Associate Administrator for 
Commercial Space Transportation, Dr. George Nield, about FAA's role in 
overseeing the commercial space industry to ensure the safety of the 
public, as well as crew and space flight participants.
    I hope this hearing will be the first of many substantive hearings 
by this subcommittee to examine the current status and future 
challenges of commercial space operations. We need to determine our 
goals for the Office of Commercial Space Transportation and evaluate 
the issues we must consider for the future of the AST.
    I welcome our witnesses and look forward to their testimony.
    Thank you, Mr. Chairman, and I yield back the balance of mytime.

    Chairman Palazzo. Thank you, Mr. Costello.
    If there are Members who wish to submit additional opening 
statements, your statements will be added to the record at this 
point.
    At this time I would like to introduce our witness panel. 
Our first witness is Dr. George Nield, Associate Administrator 
for Commercial Space Transportation at the FAA. He has over 30 
years of aerospace experience with the Air Force, NASA, and 
private industry. Dr. Nield came to FAA from the Orbital 
Sciences Corporation, where he served as Senior Scientist for 
the Advanced Programs Group. Our next witness is Dr. Gerald 
Dillingham, Director of Civil Aviation Issues at the U.S. 
Government Accountability Office. He is responsible for 
directing program evaluations and policy analysis related to 
all aspects of civilian aviation including safety, finance, 
environment, air traffic control, airport development, and 
international aviation issues. Our final witness is Dr. Henry 
Hertzfeld, Research Professor of Space Policy and International 
Affairs in the Space Policy Institute at the Elliott School of 
International Affairs and an Adjunct Professor of Law at George 
Washington University in Washington, DC. Welcome to all of you.
    As our witnesses should know, spoken testimony is limited 
to five minutes each after which the Members of the Committee 
will have five minutes each to ask questions.
    I now recognize our first witness, Dr. George Nield, 
Associate Administrator for Commercial Space Transportation at 
the FAA.

               STATEMENT OF DR. GEORGE C. NIELD,

          ASSOCIATE ADMINISTRATOR FOR COMMERCIAL SPACE

        TRANSPORTATION, FEDERAL AVIATION ADMINISTRATION

    Dr. Nield. Chairman Palazzo, Congressman Costello and 
Members of the Subcommittee, thank you for inviting me to 
participate in this hearing on the activities of the Federal 
Aviation Administration Office of Commercial Space 
Transportation. This is my first opportunity to speak to many 
of you, so I am particularly pleased to be here. I know the 
Subcommittee is specifically interested in the Administration's 
fiscal year 2012 budget request for AST. I would also like to 
update the Subcommittee on some of our recent activities and 
offer you our view of the future.
    The mission of the Office of Commercial Space 
Transportation is to ensure protection of the public, property, 
and the national security and foreign policy interests of the 
United States during commercial launch and reentry activities, 
and to encourage, facilitate and promote commercial space 
transportation.
    While we take all of our statutory charges seriously, our 
top priority is safety. To carry out our safety 
responsibilities, we develop and issue regulations, grant 
licenses, permits and safety approvals, and conduct safety 
inspections during every licensed or permitted launch. To date, 
we have an unblemished safety record: 204 licensed launches 
without any loss of life, serious injuries, or significant 
property damage to the general public.
    We are also responsible for licensing the operation of 
launch and reentry sites, or spaceports. Since 1996, we have 
licensed the operation of eight different spaceports around the 
country. Last year, the FAA awarded four grants for spaceport 
development. We believe these investments will enhance safety 
and facilitate future development efforts.
    The capability to accomplish important commercial space 
transportation research was significantly enhanced last fall 
through the establishment of the Center of Excellence for 
Commercial Space Transportation led by New Mexico State 
University. The Center of Excellence is a partnership between 
government, industry and academia, and will carry out research 
necessary to maintain U.S. leadership in commercial space 
transportation safety and technologies.
    Fifty years ago on May 5, 1961, Alan Shepard became the 
first American to travel into space, but today, we find 
ourselves at a crossroads. Next month, NASA will carry out the 
final launch of the space shuttle. While this is a bittersweet 
event for all space enthusiasts, it is also an exciting time 
and an opportunity to begin the next chapter in space 
transportation.
    After the completion of Atlantis's final mission, NASA is 
planning to rely on private industry to launch cargo and 
eventually crew members to and from the International Space 
Station, thereby enabling NASA to focus its attention on 
exploring the solar system. It will be the FAA's responsibility 
to license and regulate those commercial launches to the ISS.
    One of the most important contributors to our near-term 
workload will be suborbital space flights. In fiscal year 2012, 
we expect to see several dozen licensed or permitted launches, 
many of which will involve suborbital flights. That will mark a 
significant increase in activity for us, and it represents the 
start of what is likely to be a period of sustained and rapid 
growth.
    The Administration's fiscal year 2012 budget request for 
AST totals approximately $26.6 million and provides for 103 
full-time employees. The request includes funding for a 
Commercial Spaceflight Technical Center at the Kennedy Space 
Center in Florida and a low-cost access to space incentive 
program. I would be happy to discuss each of these initiatives 
in more detail if there is interest.
    Commercial space transportation is currently undergoing a 
number of changes, and as the regulator, we need to be prepared 
to change along with the industry. For example, in the coming 
months, it may be necessary to revisit some of the statutes and 
regulations that govern commercial space launch activities. 
Specifically, the FAA's legislative authority may require 
revision so that we can continue to ensure public safety both 
in space and on the ground. We see the potential for greater 
regulatory authority in the area of on-orbit transportation as 
well as during launch and reentry. We welcome the opportunity 
to work with Congress on these priorities.
    Chairman Palazzo, Congressman Costello and Members of the 
Subcommittee, this concludes my prepared remarks. I would be 
pleased to answer any questions that you may have.
    [The prepared statement of Dr. Nield follows:]

               PREPARED STATEMENT OF DR. GEORGE C. NIELD,
      ASSOCIATE ADMINISTRATOR FOR COMMERCIAL SPACE TRANSPORTATION,
                    FEDERAL AVIATION ADMINISTRATION

    Chairman Palazzo, Congressman Costello, and Members of the 
Subcommittee:
    Thank you for inviting me to participate in this hearing on the 
activities of the Federal Aviation Administration (FAA) Office of 
Commercial Space Transportation (AST). This is my first opportunity to 
speak to many of you, so I am particularly pleased to be here. I know 
the Subcommittee is specifically interested in the Administration's FY 
2012 budget request for AST. I look forward to answering any questions 
you may have about our request. I would also like to take this 
opportunity to update the Subcommittee on some of our recent 
activities, to highlight some of the changes to our industry during the 
past year, and to offer a view of the future - what's on the horizon as 
we transition to a new role for the nation's commercial space 
transportation industry.

    The Office of Commercial Space Transportation

    The Office of Commercial Space Transportation (AST) was established 
by Executive Order in 1984 and was located in the Office of the 
Secretary of Transportation. In November of 1995, the office was 
transferred to the FAA, where today it is one of the agency's four 
lines of business, along with the Office of Aviation Safety, the Office 
of Airports, and the Air Traffic Organization.
    Space transportation activities in the United States fall into 
three main sectors: the civil sector, where the National Aeronautics 
and Space Administration (NASA) has the primary lead; the national 
security sector, involving the Department of Defense and the 
intelligence community; and the commercial sector, which is regulated 
by the FAA. In accordance with federal statute, it is the mission of 
AST to ensure protection of the public, property, and the national 
security and foreign policy interests of the United States during 
commercial launch and reentry activities, and to encourage, facilitate, 
and promote commercial space transportation. While we take all of our 
statutory charges seriously, our top priority is safety. To carry out 
our safety responsibilities, we develop and issue regulations; grant 
licenses, permits, and safety approvals; and conduct safety inspections 
during every licensed or permitted launch. To date, we have an 
unblemished safety record: 204 licensed launches, without any loss of 
life, serious injuries, or significant property damage to the general 
public.
    We are also responsible for licensing the operation of launch and 
reentry sites or ``spaceports,'' as they are popularly known. Since 
1996 we have licensed the operation of the California Spaceport at 
Vandenberg Air Force Base; Spaceport Florida at Cape Canaveral Air 
Force Station; the Mid-Atlantic Regional Spaceport at Wallops Flight 
Facility in Virginia; Mojave Air and Space Port in California; Kodiak 
Launch Complex on Kodiak Island, Alaska; the Oklahoma Spaceport in 
Burns Flat, Oklahoma; Spaceport America near Las Cruces, New Mexico; 
and Cecil Field in Jacksonville, Florida.
    Development of these sites is necessary for the growth and success 
of the industry. In FY 2010, the FAA awarded four grants for spaceport 
development. These investments will facilitate safety and growth of 
future spaceport development and should ultimately inspire additional 
private investment in commercial space transportation.
    Commercial space transportation research efforts were enhanced last 
year by the establishment of the Center of Excellence for Commercial 
Space Transportation, led by New Mexico State University, Las Cruces. 
The other institutions that comprise the center include Stanford 
University; the Florida Institute of Technology in Melbourne; the New 
Mexico Institute of Mining and Technology in Socorro; the University of 
Colorado at Boulder; the University of Texas Medical Branch, Galveston; 
and the Florida Center for Advanced Aero-Propulsion--a research 
consortium made up of the University of Florida, Florida State 
University, and the University of Central Florida. The Center of 
Excellence is a partnership between academia, industry, and government, 
and will carry out research necessary to maintain U.S. leadership in 
commercial space transportation safety and technology.
    Additionally, the FAA maintains important relationships with our 
interagency partners. We continue our partnership with the Air Force 
through our Common Standards Working Group where we coordinate on 
safety issues for expendable launch vehicles. We also work with the 
White House Office of Science and Technology Policy, NASA, and the 
Departments of Commerce, State, and Defense in the development of 
interagency policy for the industry, including the new National Space 
Policy released in 2010. We consult with the Department of State 
regularly to promote our commercial space transportation guidance 
abroad.
    The Administration's 2010 National Space Policy establishes 
specific goals to strengthen stability in space by, among other things, 
promoting safe and responsible operations in space. This will require 
steps such as collecting and monitoring detailed knowledge of the 
orbital environment, and the sharing of that information with a variety 
of space actors. It will also be important to continue taking steps to 
minimize the creation of orbital debris and otherwise help preserve the 
space environment for responsible, peaceful, and safe activities by all 
users. Over time, the FAA will play a central role in developing and 
enhancing our nation's capacity to conduct such efforts, along with the 
Departments of Defense, State, and Commerce; the Office of the Director 
of National Intelligence; NASA; and the Federal Communications 
Commission. This collaboration will provide global benefits.

    Today and Moving Forward

    As the FAA continues the work of overseeing and enabling the safe 
development of the commercial space transportation industry, the space 
community as a whole finds itself at a crossroads. Last month, we 
celebrated the 50th anniversary of human space flight. Next month, NASA 
will conduct its final Space Shuttle launch. While this is a 
bittersweet event for all space enthusiasts, it is also an exciting 
time and an opportunity to begin the next chapter in space access, 
transportation, and development. After the completion of Atlantis' 
final mission, NASA is planning to rely on private industry to launch 
cargo, and eventually crew members, to and from the International Space 
Station (ISS), thereby enabling NASA to focus its attention on 
exploring the solar system. FAA is engaging with NASA to further refine 
the licensing and regulatory process for these upcoming commercial crew 
launches to the ISS.
    Throughout the past 50 years, NASA has become the world leader in 
human spaceflight, amassing vast experience and a wonderful track 
record in space travel. There is no equal.
    Similarly, during the past 50 years, the FAA has achieved a 
stunning record of safety in commercial aviation. We are now leveraging 
that half-century of experience and safety acumen in our regulation and 
oversight of the commercial space transportation industry.
    Working in tandem, the FAA and NASA can bring best practices and 
our best experiences to bear on the future development of a safe and 
robust commercial human spaceflight industry for our nation - a 
priority of the Administration. Working with NASA and other experts, we 
can ensure the United States maintains its leadership role as human 
space flight becomes a reality for the commercial industry and private 
sector development increases to meet demand.
    One of the concerns we have heard expressed, and which Members of 
this Subcommittee may share, pertains to the demand for commercial 
launches to low Earth orbit: Is there a market? What does that market 
look like now and in the future? Is it sustainable?
    To answer these questions, Congress directed NASA, in coordination 
with the FAA, to conduct an assessment of the potential non-
Governmental market for commercially developed crew and cargo 
transportation systems and capabilities (apart from the more 
established market for launched commercial spacecraft). Assessments by 
NASA and the FAA reveal a diversity of opinion among the space 
community regarding the size of the non-Governmental market for 
commercial crew and cargo launches, as well as the price of a ticket to 
space. The NASA report concluded that ``catalyzed by a successful 
Commercial Crew Program, a stable commercial non-Government market is 
likely to emerge.'' NASA investments to date have paid huge dividends 
for industry, providing new capabilities and enabling the development 
of new, lower-cost launch systems.
    Multiple American companies--including small, entrepreneurial 
enterprises and large, established aerospace corporations--have 
announced that they are ready, willing, and able to meet NASA's future 
needs, as well as those of non-Governmental customers.
    The future of commercial cargo and crew transportation to low Earth 
orbit is a coming reality, but the largest near-term expansion in 
activity will be in suborbital spaceflight. In calendar year 2010, 
there were four licensed orbital launches: two Falcon 9 test fights and 
two satellite deployment missions--a Delta II and a Delta IV. That same 
year, we saw the first FAA-licensed reentry, of SpaceX's Dragon 
capsule. In FY 2012, we expect several dozen licensed or permitted 
launches. Although most of those missions will involve suborbital 
launches, it still will be quite a change. The dramatic increase in 
launch numbers will provide the FAA and the space community .with 
important data and facilitate significant improvements throughout the 
industry.

    The President's FY 2012 Budget

    The Administration's FY 2012 budget request for AST totals 
approximately $26.6 million and provides for 103 full-time employees 
(FTEs), at a cost of approximately $15.8 million. The office's request 
for non-pay activities totals approximately $10.8 million. Key outputs 
of the request include a projected 6 license and permit applications, 
40 launch or reentry operations inspections, 8 launch site inspections, 
5 environmental assessments, plus new rulemaking products, the 
Commercial Space Flight Technical Center, the Center of Excellence for 
Commercial Space Transportation, and incentives for low cost access to 
space. The budget requests $1.2 million and 14 positions to develop and 
implement additional safety processes and requirements specifically for 
commercial human spaceflight and the FAA's efforts to improve 
spaceflight safety.

    Commercial Space Flight Technical Center

    The budget request for AST includes $5 million and 50 positions for 
a Commercial Spaceflight Technical Center. In anticipation of the 
commercial cargo launches to the ISS that are scheduled to begin this 
year and with plans for eventual commercial crew missions, it will be 
vitally important to enhance and ensure the highest levels of safety 
for commercial spaceflight operations. The staffing and activities 
planned for the Commercial Spaceflight Technical Center will provide 
the detailed engineering and operational expertise that will be 
required to oversee the emerging commercial spaceflight industry.
    Specifically, the Commercial Spaceflight Technical Center will 
perform several functions: spaceflight safety, including safety 
inspections, and accident prevention and investigation activities; 
spaceflight engineering and standards, to be developed in cooperation 
with both NASA and the industry, for spacecraft, spaceports, flight 
crew and participants, and aerospace technicians; range operations, 
including planning for future upgrades; and facilitating interagency 
coordination and information sharing with regard to space situational 
awareness, orbital debris, and collision avoidance advisories.
    On August 15, 2010, the Presidential Task Force on Space Industry 
Workforce and Economic Development recommended that FAA establish the 
new Center at the Kennedy Space Center in Florida. By co-locating the 
new Center at the Kennedy Space Center, we hope to benefit from the 
contributions of a significant number of highly skilled aerospace 
workers who will be seeking employment during the next 12 months. 
Additionally, this co-location will allow the FAA and NASA to further 
strengthen our partnership by developing a knowledgeable and 
experienced staff to regulate future commercial space operations, and 
to develop the technical standards that will be needed for this 
emerging and critically important industry.
    Although the relationship between the Commercial Spaceflight 
Technical Center and NASA will be vital, the Center will not duplicate 
NASA functions. NASA has a separate mission and is focused on 
activities such as the safety of its personnel during transport to and 
from the ISS, operation of the ISS, development of a new Heavy-Lift 
launch vehicle, robotic and human exploration of the solar system, 
Earth and space science, and aeronautics. The FAA is a regulatory 
agency and has the statutory responsibility to oversee commercial space 
launches and reentries, and to ensure public safety during these 
operations. Establishment of the Commercial Spaceflight Technical 
Center will enable the FAA to strengthen its partnership with NASA, 
drawing on NASA's expertise and experience in space operations and 
human space flight to augment the FAA's experience in licensing and 
regulating commercial launches to develop a highly skilled cadre of 
commercial space hardware and operations experts.

    Low-Cost Access to Space Incentive

    The FY 2012 budget request also includes $5 million to incentivize 
advancements in the commercial space transportation industry. The Low 
Cost Access to Space Incentive program will provide a $5 million award 
to the first non-governmental team to develop and demonstrate the 
capability to launch a 1-kilogram cubesat to orbit using a partially 
reusable launch system. The Administration believes that prizes and 
challenges have many potential benefits, including increasing the 
number of organizations that are addressing a particular problem of 
national significance, stimulating private sector investment that is 
many times greater than the cash value of the prize, and allowing the 
Federal Government to pay only for results.
    The high cost of access to space has long been a major obstacle for 
civil, military, and commercial space programs. The dream of low cost, 
fully-reusable space launch systems has recently been demonstrated by 
the X-Prize competitions, but only to suborbital space. This 
competition will achieve significant reductions in the cost of getting 
satellites to orbit.
    The Space Incentive Program follows a long tradition of prize 
competitions, including the AnsariX Prize won by Scaled Composites 
SpaceShipOne in 2004 and the Orteig Prize won by Charles Lindbergh in 
1927. These awards can lead to significant accomplishments in 
transportation, and the use of prizes has been very successful in 
enabling government and industry to come up with innovative solutions 
to challenging problems. This incentive is expected to increase the 
number of developers and operators focusing on the specific problem of 
reusable, low-cost, orbital space launch systems, and we believe it is 
of sufficient size to attract the investment and commitment of 
companies who are capable of winning the prize.

    Preparing for the Future 

    The FAA stands ready to meet the changes and challenges we know are 
coming. The industry has made significant strides toward a future that 
will make increasing demands on the FAA's role as a regulator. As 
activities expand in the marketplace, our role will amplify as well. To 
this end, we are constantly looking ahead.
    In the coming months and years, it may be necessary to revisit some 
of the statutes and regulations that govern the commercial space launch 
activities of the FAA. Specifically, the FAA's legislative authority 
may require expansion to ensure public safety in space and on Earth, as 
the commercial space flight sector evolves. Potentially, there may be a 
need for greater regulatory authority in the areas of transportation on 
orbit as well as launch and reentry. In addition, the FAA's licensing 
authority may also require revision regarding operations associated 
with commercial hybrid launch systems and commercial cargo vehicles 
intentionally returning to Earth, regardless of whether they return 
substantially intact. We welcome the opportunity to work with Congress 
on these priorities.
    In this time of challenge and opportunity, the FAA is mindful of 
our many responsibilities, and we look forward to working with this 
Subcommittee as we tackle the challenges of shifting cargo and crew 
launches to the commercial sector and opening space to tourism and 
point-to-point transportation. The commercial space industry is ready 
to expand--and with your support, we are ready for lift-off.
    Chairman Palazzo, Congressman Costello, and Members of the 
Subcommittee, this concludes my prepared remarks. I would be pleased to 
answer any questions you may have.
    Chairman Palazzo. Thank you, Dr. Nield.
    I now recognize our second witness, Dr. Gerald Dillingham, 
Director of Civil Aviation Issues for the U.S. Government 
Accountability Office.

              STATEMENT OF DR. GERALD DILLINGHAM,

               DIRECTOR, PHYSICAL INFRASTRUCTURE,

             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Dr. Dillingham. Thank you, Mr. Chairman, Mr. Costello, 
Members of the Subcommittee.
    My testimony this morning focuses on three areas. First, 
the recent trends in the commercial space launch industry, and 
second, fiscal year 2012 budget request for FAA's Office of 
Commercial Space Transportation, or AST, and third, some of the 
key challenges that FAA and the industry will need to address 
as the industry matures.
    Regarding the trends in the industry, after reaching a peak 
of 22 launches in 1998, the frequency of commercial space 
launches began to fluctuate and generally decline until an 
uptick occurred in 2004. In 2004, five manned commercial test 
flights took place, and since that time additional manned 
flights have been anticipated but have not materialized. 
However, other trends seem to indicate that the number of 
commercial launches is expected to increase. For example, there 
has been an increase in R&D activities including low-altitude 
flight tests, reusable rocket-powered vehicles that are capable 
of takeoffs and landings. We also see where private companies 
and states are developing additional spaceports to accommodate 
anticipated space tourism flights and expand the Nation's 
launch capacity. In 2006, there were six FAA licensed 
spaceports. In 2011, the number has increased to eight. 
Additional commercial spaceports have been proposed in Hawaii, 
Indiana and Wisconsin.
    Now, let us turn to AST's fiscal year 2012 budget request. 
FAA expects the number of commercial launches will increase 
over the next several years for several reasons. First, the 
first space tourism flights are expected to begin within two 
years with several launches occurring each year. Second, NASA 
plans to use private companies to transport cargo and 
eventually personnel to the International Space Station. FAA 
also expects its workload to increase over the next several 
years as it begins to develop safety regulations for these 
flights, so it has significantly increased its budget request. 
FAA's fiscal year budget request would increase the budget for 
AST by nearly 75 percent over fiscal year 2010 budget to about 
$27 million in fiscal year 2012. According to FAA, this would 
fund nearly a 45 percent increase in staffing from 71 Full-time 
Equivalents in fiscal year 2010 to 103 in fiscal year 2012. 
This request also asks for a $5 million increase in spending on 
the office's space incentive awards program.
    From our perspective, FAA's focus on the need to expand its 
expertise in the areas of human factors and human spaceflight 
appear reasonable. However, the timing of the requested 
increase, given the current federal budget situation and 
uncertainties as to when and how much FAA's workload will 
expand, warrants careful consideration by the Congress.
    Mr. Chairman and Members of the Subcommittee, let us turn 
to the challenges we see on the horizon for FAA's oversight for 
the industry as it continues to mature. First, FAA must ensure 
that its regulations on licensing and safety requirements for 
launches and launch sites, which are based on safety 
requirements for expendable launch vehicle operations at 
federal sites, will also be suitable for operations at private 
sector spaceports.
    A second challenge for FAA is its dual mandate to regulate 
safety and promote human spaceflight. FAA and Congress must 
remain vigilant to ensure that any relationship between FAA and 
the commercial space launch industry remains appropriate.
    A third challenge for FAA will be to ensure that planning 
and implementation of NextGen accommodates spacecraft that are 
traveling to and from space through the national airspace 
system.
    For the industry, a key challenge going forward will be 
maintaining a strong international competitive position for the 
U.S. commercial space launch industry. Foreign competitors have 
historically offered lower launch prices than U.S. providers. 
As the commercial space launch industry expands, high launch 
costs and export controls will affect its ability to sell its 
services abroad.
    Finally, an overarching challenge for the industry and the 
United States is a lack of a comprehensive national space 
launch strategy. Numerous federal agencies have 
responsibilities for space activities including FAA, NASA, DOD, 
State and Commerce. According to a 2009 National Academy of 
Sciences study, the process of alignment offers the opportunity 
to leverage resources from various agencies to address such 
shared challenges as a diminishing space industry base, the 
dwindling technical workforce, and reduced funding levels.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Dillingham follows:]

              Prepared Statement of Dr. Gerald Dillingham,

                   Director, Physical Infrastructure,

                 U.S. Government Accountability Office























    Chairman Palazzo. Thank you, Dr. Dillingham.
    I now recognize our final witness, Dr. Henry Hertzfeld, 
Research Professor of Space Policy and International Affairs at 
the Elliott School of International Affairs at George 
Washington University.

              STATEMENT OF DR. HENRY R. HERTZFELD,

             RESEARCH PROFESSOR OF SPACE POLICY AND

INTERNATIONAL AFFAIRS, ELLIOTT SCHOOL OF INTERNATIONAL AFFAIRS, 
                  GEORGE WASHINGTON UNIVERSITY

    Dr. Hertzfeld. Mr. Chairman, thank you for the opportunity 
to testify today. I am pleased that the Committee has begun the 
important process of reviewing these matters as the space 
industry in the United States is poised for very significant 
changes.
    Reviewing the findings of the congressionally mandated 2008 
study of human safety regulations and noting important changes 
in the development of commercial space as well as the 
environment of space itself, I will discuss both near-term and 
long-term issues that will need Congressional review.
    First, because there have been no commercial suborbital 
flights yet, the experimental period for the licensing of human 
suborbital flights will need to be extended. The time period 
should not have a limit determined by an arbitrary number of 
years but should be measured by developing indicators of the 
maturity of the industry and the risks involved. I would 
recommend that the FAA, perhaps the Commercial Space 
Transportation Advisory Committee (COMSTAC) or an independent 
study, determine these types of market indicators. At a future 
point, when and if suborbital commercial flights develop into a 
marketable service, the regulatory oversight should be 
transitioned to other parts of the FAA since these flights will 
be within airspace and closer in form to aviation than space.
    The second issue is an inherent conflict when one agency 
has the dual mandate to both regulate and promote. The 2008 
study found no complaints from industry about the OCST's dual 
roles. This, though, should be carefully monitored and the 
promotional aspects might eventually have to be shifted to 
other agencies to preserve the integrity of the regulatory 
process.
    A related conflict-of-interest problem in the form of one 
office regulating different competing modes of transportation, 
in this case Expendable Launch Vehicles (ELVs), Reusable Launch 
Vehicles (RLVs), suborbital flights and possibly even Unmanned 
Aerial Vehicles (UAVs), also raise issues of fairness, undue 
influence, and in the end of making difficult objective 
decisions regarding safety. In the 2008 study, we noted that 
there was overlapping jurisdiction in determining who will have 
the lead if there is a serious commercial space accident. The 
FAA OCST, through an agreement, delegates that lead to the 
National Transportation Safety Board (NTSB), which at present 
does not have a Congressional mandate to investigate space 
transportation accidents. Also, a law enacted after the 
Columbia accident, primarily focused on the Shuttle and Space 
Station, requires a Presidential commission to be formed to 
lead an accident investigation. However, that same law also 
applies to a commercial space vehicle that is carrying a 
government payload. Although all agencies have in the past 
cooperated fully in these investigations, only one should have 
the lead responsibility.
    A uniform United States approach to regulating in-orbit 
space activities will become necessary and should be integrated 
with the licensing procedures for commercial space operations. 
Difficult issues of in-orbit liability will need to be studied 
very carefully before these rules are promulgated. At present 
within the United States, the existing very limited and 
uncoordinated in-orbit rules are split among the Federal 
Communications Commission (FCC), the National Oceanic and 
Atmospheric Administration (NOAA) and the FAA. These should be 
coordinated.
    In addition, there are many international dimensions to in-
orbit regulations. If the United States does not take a 
leadership role and initiate action in this area soon, other 
nations will. This could lead to international rules that might 
have negative effects on the growth of U.S. commercial space 
operations. As we regulate in-orbit activities, the regulatory 
regime should be clearly delineated between those vehicles that 
intend to go to outer space and those that will remain within 
airspace. The regulatory difference involves international 
obligations the United States has agreed to under the space 
treaties. A new distinction needs to be clearly made between 
suborbital vehicles and vehicles that enter outer space but are 
not intended to achieve orbit.
    Finally, Congress might want to revisit the informed 
consent rules in the CSLA for space participants. I have two 
suggestions there. One is that the FAA be responsible for 
drafting clauses dealing with information to be given to the 
spaceflight participant on accident risk history and other data 
that the FAA is in a better position to provide than private 
companies. These clauses should be required to be included in 
the consent form. However, the companies are still responsible 
for drafting the form and making it specific to their vehicles.
    And secondly, states are starting to compete with their own 
passenger waivers of liability to the private operator. 
Currently, Florida, Virginia and recently New Mexico and Texas 
have these laws, each with different wording. Federal 
preemption on this issue might be warranted to prevent 
competition among states on an issue that involves interstate 
commerce and may adversely affect safety decisions the 
companies make concerning the vehicle and operations.
    Thank you. I will be more than happy to answer questions.
    [The prepared statement of Dr. Hertzfeld follows:]

             Prepared Statement of Dr. Henry R. Hertzfeld,
     Research Professor of Space Policy and International Affairs,
 Elliott School of International Affairs, George Washington University

    I appreciate the opportunity to testify today on the Federal 
Aviation Administration's Office of Commercial Space Transportation's 
role in the supervision and regulation of commercial space flight and 
am pleased that the Committee has begun the important process of 
reviewing these matters. The space industry in the United States is 
poised for very significant changes and it is very timely to begin the 
process of reviewing national and international issues that will need 
to be resolved in the years ahead as commercial activity in space grows 
and evolves.
    Since its inception the Office of Commercial Space Transportation 
(OCST) within the DOT and subsequently within the FAA has actively and 
successfully developed a regulatory environment for commercial space 
launches and related activities.
    During the past decade the OCST has fulfilled its legislative 
mandates to regulate commercial spaceflight. It has also licensed 
private spaceports and other space and space-related activities 
reflecting the growth of interest and investment in these areas by both 
entrepreneurs and established companies.
    Of particular interest are the Amendments to the CSLA in 2004, 
which gave the FAA the authority to develop regulations for private 
human space flight. The regulatory framework was oriented to 
encouraging the development of commercial human suborbital flights and 
was stimulated by the success of the X-Prize competition.
    However, those promises have not yet, nearly eight years later, 
resulted in any private paying passengers, although the companies 
developing those vehicles are still planning to initiate space 
adventure/tourist businesses.
    Beyond the continued promises of suborbital commercial activity 
there are other new developments. Among them are; 1) NASA plans to send 
cargo and astronauts to the International Space Station on commercial 
vehicles, 2) foreign nations are developing new capabilities which will 
compete with U.S. commercial companies in all space efforts, 3) one 
U.S. company has plans to transport paying customers to an in-orbit 
space facility, 4) the Google Lunar X Prize could put a private vehicle 
on the Moon that might be capable of performing relatively simple 
activities with commercial value, and 5) commercial UAVs will begin 
operations which will require new air traffic management in the same 
high altitudes where suborbital vehicles will fly. These UAVs may have 
functional capabilities that will compete with suborbital vehicles as 
well as LEO satellites.
    Until recently, the OCST focus for human space flight regulations 
has been on suborbital vehicles and passengers. The experimental permit 
period will end soon without any database on flights, safety, or 
passengers. This experimental period should be continued, but instead 
of an arbitrary period of years being designated for the sunset of that 
provision, other tests should be developed to determine when the 
regulations should be re-evaluated by Congress.
    Those tests should focus on the availability of enough experience 
and data from the industry to develop meaningful safely rules. Tests 
should take into account factors such as;

      The maturity of the business,

      The ability to fly on a routine scheduled basis,

      The number of passengers and the amount of cargo 
transported or research experiments flown,

      The standardization of vehicles and systems that could 
provide the basis for a vehicle certification regime, and

      A quantification of the different risks involved.

    Ultimately, the safety of both people and property in flight as 
well as the safety of people and property terrestrially should be the 
paramount objective of regulations. Rather than go beyond my own 
technical capabilities and suggest a specific test in this testimony, I 
would recommend a panel of appropriate experts (e.g. COMSTAC) be 
commissioned to study this issue and develop a set of specific 
recommendations. While no statistical analysis will be perfect, a more 
objective set of requirements will better meet the Congressional intent 
than an arbitrary time horizon.

Five Different Space Regimes (when viewed from a legal/regulatory 
perspective)

    The OCST is primarily organized to license commercial space 
launches and related activities including spaceports. Congress has 
given additional responsibility to the FAA OCST to license re-entry 
space vehicles and, most recently in 2004, to license commercial human 
space flight.
    OCST regulated launch activities include suborbital vehicles that 
may or may not go into space but are separated from aircraft 
regulations by a definition based on vehicle propulsion characteristics 
that have a thrust greater than the lift during the greater part of 
their ascent
    The current division of regulations is fast approaching overlapping 
and unsettled areas of regulation and jurisdiction. We are at a point 
where the FAA has to do more than just license ELVs for launch. 
Specifically, the most difficult future issues will be to regulate 
commercial in-orbit activities, both for human space flight as well as 
for other purposes. Because of the growing danger to space operations 
from the crowding of certain orbits with human-created space debris as 
well as the projected increased use of commercial services in space by 
NASA and other government entities, we will need new regulatory 
authority over in-orbit activity. This involves uncharted issues of 
safety as well as financial responsibility to meet the needs of 
international treaty obligations, the viability of U.S. space 
operations, and fairness and equity for near-term activities that could 
have a very long horizon of future responsibilities.
    Simply extending the safety review and financial requirements of a 
launch license regime to include in-orbit activities will not be 
sufficient to solve the upcoming issues.
    In order to try to understand these developing concerns in space 
regulations, I suggest that we consider the following reorientation of 
the categories of spaceflight regulation:
    The categories are:

    Activities under both domestic law and the Outer Space Treaties

    1.  Launches to Orbit
    2.  In-orbit activities
    3.  Non-orbital launches and activities

    Activities under domestic law

    4.  Sub-orbital launches and activities
    5.  Spaceports

    The first three involve activities that fall under the 
international space treaty obligations and therefore must take into 
account several factors:

        1.  Outer space is, through Article II of the Outer Space 
        Treaty (OST), a place without sovereignty;

        2.  Article VI of the OST makes States Party to the Treaty 
        responsible for government activities and the activities of 
        non-government entities in space as well as requiring continued 
        national supervision;

        3.  Article VII of the OST makes States liable for their launch 
        activities.

    What is unique to space is the requirement of State responsibility 
and liability. No other industry faces this. In fact, other high 
technology industries with low probabilities of catastrophic accidents 
but with a very high probability of severe damage (e.g. civil nuclear 
power plants, oil platforms) are covered by different treaty 
obligations. If an accident occurs under those international legal 
regimes the operator will be primarily responsible and liable with the 
States party to those treaties and agreements in a position as a 
guarantor of payment.
    The last two categories, suborbital launches and spaceports are 
domestic, involving the use of national airspace and of terrestrial 
spaceports. When (and if) suborbital markets develop, either for cargo 
or people, these activities of the OCST should be transitioned to other 
parts of the FAA, as they are closer to aircraft than to space from a 
legal regulatory perspective. The question is when to begin that 
transition.
    I would recommend postponing a consideration of any transition of 
responsibilities for suborbital launches to the indefinite future. As 
described above, we need to develop a methodology to evaluate the 
emerging suborbital activity. When we have the proper amount of data on 
safety and reliability of the equipment and operating procedures and 
when the companies have demonstrated that they can operate as a 
business, then Congress can address this issue.
    In outline format below, I have listed a more detailed description 
of each category. Currently, only Category 2 (in-orbit activities) and 
possibly parts of Category 3 (non-orbital activities) are largely 
unregulated and will require a thorough study of three serious issues: 
1) liability, 2) coordination among U.S. Agencies, and (3) coordination 
and harmonization with other nations and international organizations.

    1)  Launches to orbit

        a.  This category represents the current FAA licensing regime 
        for launches vehicles and re-entry vehicles.
    2)  In-orbit activities

        a.  In general, in-orbit activities are unregulated. However, 
        there are some situations that have required the U.S. 
        Government to develop specific rules. These are spread among a 
        number of agencies and are not well coordinated. Specifically, 
        the Federal Communications Commission requires that 
        geosynchronous satellites at the end of their useful life 
        retain enough fuel to be transported into ``graveyard'' orbits; 
        enforcement and verification remains problematic. Additionally, 
        the FCC is the agency responsible for representing the U.S. at 
        the International Telecommunications Union meetings and for 
        authorizing the use of spectrum in the United States.

        b.  NOAA has a similar requirement for the commercial earth 
        observation satellites under its jurisdiction. Rather than a 
        specific requirement for end-of-life, their regulations require 
        companies to submit a plan for disposal of the satellite that 
        will meet the approval of the Secretary of Commerce.

        c.  The FAA OCST has the authority to oversee launches and 
        defines the end of the launch period as the time when the 
        launch vehicle last exercises it control over the payload. 
        Normally, this includes some in-orbit activities. They also 
        have authority for re-entry vehicles to oversee in-orbit 
        preparations for the re-entry.

        d.  Finally, IADC Guidelines on Space Debris Mitigation are 
        voluntary rules with no specific enforcement provisions. 
        However, some of the recommended guidelines have become 
        enforceable through enactment of specific legislation and 
        agency regulations in the United States.

    Congress has not given authority for any Agency to coordinate or 
regulate most in-orbit commercial activities. Consideration should now 
be given to studying in-orbit activities and for the United States to 
take a leadership role in addressing a number of possible legal 
problems associated with commercial in-orbit operations. These include 
addressing:

    i.  Liability issues under Treaties that are inadequate and need 
attention through national legislative initiatives

    ii.  Sustainability and debris issues remain unresolved including 
legal uncertainties with future servicing satellites

    iii. Human safety on private in-orbit vehicles may have conflicting 
authority

        1.  NASA ISS transportation for astronauts on commercial 
        vehicles could fall under FAA jurisdiction or be exempt and 
        under NASA regulations

        2.  Interface with the ISS and international partners will 
        involve not only NASA directives but also those of other 
        nations.

        3.  Proposals for a ``hotel'' or private research facility 
        remain open question on regulatory and liability exposure.

    Additionally, other nations as well as the United Nations Committee 
on Peaceful Uses of Outer Space are beginning to address issues of in-
orbit regulations mainly through activities on space debris and space 
sustainability. The United States will need to coordinate its 
activities with these on-going efforts.

3) Non-orbital activities:
    (I am suggesting the use of a new term non-orbital, to separate 
true suborbital flights within airspace from launches of rockets that 
enter into outer space but have a planned trajectory that returns to 
Earth without achieving orbit.)
        Currently sounding rockets that can reach altitudes as high as 
        1000km, which is roughly 10 times the distance defined as the 
        ``edge of space'' are included in the definition of a 
        suborbital trajectory. This is confusing, as the term, 
        suborbital, should mean just what it says: below the point 
        where a rocket or payload cannot reach orbital altitude. Since 
        once something reaches outer space there are different rules 
        that may apply due to international treaty agreements. 
        Therefore a separation between non-orbital activities and 
        suborbital activities may clarify a definitional problem, 
        particularly when and if separate in-orbit regulations of 
        commercial spacecraft are issued. An example of a non-orbital 
        commercial activity might be a launch vehicle used for point-
        to-point delivery of cargo.

4) Sub-orbital activities
    These should be limited to those non-aircraft activities that stay 
within airspace (but could cross borders and also fly over the open 
seas); they should be under FAA jurisdiction and be treated similarly 
to aircraft. If the market becomes truly commercial, these activities 
can graduate from the current experimental phase. At that point these 
activities should be transitioned from OCST licensing to another part 
of the FAA whether private human passengers are aboard or just cargo is 
being flown.

5) Domestic spaceport regulations
    These are currently being licensed by FAA under domestic law.

Accident Investigations

    In the Congressionally-mandated 2008 Analysis of Human Space Flight 
Study we discussed a potential conflict in the delegation of authority 
for investigating an accident involving humans in space flight. After 
the Shuttle Columbia accident, Congress passed legislation requiring a 
Presidential Commission to be formed following certain types of space 
accidents. (That legislation is now found at Title 51 of the U.S. Code, 
Chapter 707.)
    Those conditions are outlined in Sec. 70702, Establishment of 
Commission. The relevant parts of that section for the issues presently 
before this Committee are: . . . (3) any other United States space 
vehicle carrying humans that is owned by the Federal Government or that 
is being used pursuant to a contract with the Federal Government or (4) 
a crew member or passenger of any space vehicle described in this 
subsection.
    Clearly, Congress intended that a high profile investigation occur 
in the event of a space accident. Private launch vehicles and 
spacecraft, whether licensed by the FAA or not, are within the purview 
of this law. Furthermore, if humans are on board and are injured, a 
Commission is also mandated. This section can also be read to include 
suborbital vehicles (as now defined under OCST legislation) if they are 
being used to carry research or other instruments that are under an 
agreement with a Federal Agency. And these types of commercial services 
onboard suborbital vehicles are the subject of current agreements and 
discussions between government agencies and private companies, although 
they have yet to actually fly.
    We also were informed during the 2008 study that the FAA OCST has a 
Memorandum of Agreement with the NTSB that in case of an accident with 
more than $25,000 property damage and/or injury or death to a human 
being onboard a vehicle licensed by the FAA, the NTSB will lead an 
accident investigation. At present, the NTSB has legislative authority 
to investigate virtually all modes of transport accidents except space. 
However, in discussions the General Counsel of the NTSB in 2008, he was 
clear that the NTSB was consulted and did actively participate in the 
Columbia accident investigation and that there was good cooperation 
among Federal Agencies.
    Therefore, although there may not be any negative or competitive 
issues regarding the cooperation among Agencies in the case of an 
accident investigation, it would be advantageous for Congress to clear 
up any ambiguities and to clearly designate who will be in charge of a 
space accident under the specific situations that currently have 
overlapping jurisdiction.

Inherent Conflicts Between FAA Role as Promoter and Regulator

    A survey of firms involved in developing commercial space flight 
capabilities done in connection with the 2008 Study found that none of 
the companies had any issues with the FAA's dual roles of promoter and 
regulator.
    In my testimony in 2003 before this Subcommittee on this issue, I 
pointed out that there is an inherent possible conflict if the same 
Agency that is charged with promoting an activity is also in charge of 
regulating it. The conflicts arise two ways: 1) since regulations cost 
industry money and possibly market share or profits, there will always 
be pressure from industry to minimize regulations, and 2) as competing 
firms with different types of vehicles capable of serving similar 
markets develop, they will pressure an Agency to favor specific 
products or types of services with the larger and more powerful firms 
prevailing.
    Elements of these conflicts are present in commercial space, even 
if today the industry is still too small and too risky for serious 
issues to arise in regard the Agency's dual role. More specifically, 
when the role of promotion was given to the FAA's commercial space 
operations there was only one type of vehicle, the ELV. Today under FAA 
regulatory authority there are ELVs plus companies developing reusable 
launch vehicles (RLVs), suborbital commercial vehicles, and unmanned 
high altitude vehicles (UAV), all of which can compete against each 
other for air traffic control as well for services in certain markets. 
For example, future UAVs will need coordination with all launch 
vehicles in traffic management. But, even more importantly, UAVs will 
perform services such as regional remote sensing and telecommunications 
for private end users. These are the very same types of services that 
companies now provide with LEO satellites and possibly may also provide 
using suborbital rockets.
    Congress should monitor the maturity of the industry. When and if 
one regulatory Agency or one office within an Agency is burdened with 
either regulating closely competing transportation services and/or 
burdened with choices of which transport mode to promote and which to 
ignore, these functions should be assigned to another Agency or to 
different offices within an Agency.

ISS Crew Transfer Issues

    As mentioned above under in-orbit regulatory activities, recent 
plans of NASA rely on commercially provided services for transportation 
to the ISS. Commercial vehicles will do what has been done previously 
by government owned and operated vehicles or by payments to the Russian 
Government for Souyz launches. FAA licenses were not required or 
involved. But, they clearly could be if NASA's plans materialize.
    There are a number of issues to consider before granting licensing 
authority to the FAA for transporting U.S. Government astronauts or 
payloads to the ISS. First, NASA already has a complex and well-
developed set of safety regulations in place for both human and non-
human space flights as well as for approaching and docking with the 
ISS. What would a new set of regulations add? Would they be less 
expensive? Would they compromise safety? Since there are no commercial 
flights to the ISS at present, there is no database to judge the wisdom 
of changing regulations and/or the regulatory agency.
    This then could become a chicken-and-egg problem. NASA will 
possibly be the prime customer of the first commercial U.S. in-orbit 
flights with humans on board. It is unlikely that a human-rated private 
vehicle will be available from any company before the planned ISS 
flights. Therefore, there will be no database without NASA. The larger 
question is, given cost and price, whether NASA will pay for what it 
will demand (that is, safety regulations that are most likely more 
costly and more comprehensive)? And, if so, will that become the 
standard for FAA regulations for completely private passenger in-orbit 
flights as well as NASA in the future, or will the FAA develop a 
different set of regulations for private flights? Over time, if 
successful, NASA could use those, but in the near-term it may be a 
wiser path for Congress to allow NASA to determine the safety standards 
for its missions.
    There is yet another issue with the safety of the ISS itself that 
involves not only NASA but also its international partners. Each has 
veto powers in the ISS agreement. Just recently an announcement was in 
the press that the Russians would not allow a private U.S. vehicle to 
dock at the ISS. Whether they are concerned about their near monopoly 
power with the Soyuz flights to the ISS or whether they are truly 
concerned about safety is immaterial. If they have the right to deny a 
U.S. vehicle access to (at least) their docking mechanism, then either 
costs will be greater and/or there will be no market large enough for 
the commercial U.S. vehicle. In this case the FAA will have no input 
into the decision, as it is not a direct party to the ISS agreement.
    Considering other non-government U.S. in-orbit commercial activity, 
the FAA clearly should have a role in both safety and financial 
responsibility. As with launch activities, where the FAA itself does 
not have the technical competence, they can and should establish 
agreements with NASA and the DOD to aid in the safety review process. 
And, as they now do in aircraft certification, they can work with the 
manufacturers of components to insure the best standards for quality 
control and safety. At some future point when space vehicles are more 
standard, the FAA should work toward a certification program that is 
different technically but similar in process to the one now used for 
aircraft.
    The financial responsibility issue is more difficult for on-orbit 
activities. The difficulties with the current space treaty liability 
regime are too numerous and complex to describe in this brief summary. 
As explained below, the core of the issue is determining how to 
implement a fault liability regime as described in the Liability 
Convention.
    With the advent of commercial in-orbit vehicles as well as the more 
traditional satellites and the ever-increasing probability of accidents 
in space, diplomatic negotiations as required by the Treaty for the 
first-order settlement of claims may not be successful. If these issues 
are put before a tribunal, it is likely that nobody will be compensated 
since there currently are no rules of evidence, no clear definition of 
what a space object is, no standard of care that is commonly accepted, 
and no history of prior court decisions. Adding to that is the 
possibility that debris may create an accident many years ahead. Even 
with insurance policies for liability on-orbit, the guarantee of a 
payment to an innocent party is nonexistent. Extending the financial 
responsibility regulations that now exist for launch vehicles and their 
component parts to in-orbit activity will require much study, analysis, 
and creativity. This difficult task will involve many Agencies of the 
U.S. Government, foreign governments, international entities (e.g. ESA) 
and the United Nations. The FAA will have an important role in these 
discussions and in the future regulation of commercial in-orbit 
activities.

Consent and Waiver for Private Passengers/Participants in Space

    In the 2004 Amendments to the CSLA, Congress mandated that private 
passengers on space flights were required to be informed by the 
operator of the vehicle of the risks involved and were also required to 
execute a reciprocal waiver of claims with the FAA. The legislation was 
quite specific and, among many requirements to be disclosed also 
included a full disclosure of the accidents that space vehicles of all 
types have had.
    The FAA decided to let the companies develop the consent form 
rather than to develop a standard one. It may, at this time, be 
advantageous for the FAA to draft model clauses for the form with the 
generic information about all space accidents and other non-company and 
non-vehicle related clauses that are required. The FAA is in a better 
position to collect and distribute uniform, accurate, and full data on 
those topics. Companies would be responsible for including those 
clauses as well as drafting the informed consent agreement appropriate 
to their vehicle and services.
    Several States that have or are developing private spaceports have 
enacted legislation that protects operators (private companies) from 
being sued by passengers for liability in case of an accident. Florida, 
Virginia, and most recently, Texas, have different versions of these 
provisions. I would question whether this trend in competition among 
the States in the form of protecting companies is beneficial.
    First, this type of waiver can provide an incentive for 
carelessness in safety. The States do exclude gross negligence or 
willful actions from the waiver of liability. However, safety can be 
jeopardized in other ways that simply may be financial decisions based 
on reasonable risk analyses, but ones that are not standard practice in 
most of today's space vehicles. Companies will argue that safety is 
paramount since any accident in an infant industry situation will mean 
serious economic losses to the company. But, that may not be sufficient 
when dealing with the many unknowns and risks of spaceflight, as we 
know it today.
    Second, launches from non-coastal states will likely fly over 
adjacent states. Accidents are adjudicated according to the laws of the 
state where the accident occurs. Contract and tort laws are different 
in each state. Therefore, there is a question as to whether a consent 
and waiver form signed under the law of a state where the vehicle 
originated would be honored in another state where the accident 
occurred.
    In short, it is time to study this issue more closely and for 
Congress to make a clear determination of what authority states may 
have in issuing waivers of passenger liability to the operator of 
commercial space vehicles. Federal preemption would be appropriate 
action to avoid an uncoordinated hodgepodge of different state rules 
for an activity that is primarily national in character.

Summary of Recommendations:

    1.  Experimental permits: The experimental permit for human 
suborbital commercial flight should not be permitted to expire. Instead 
of another arbitrary period of years being designated for the sunset of 
experimental permits, other tests should be developed to determine when 
the regulations should be re-evaluated by Congress. I would recommend a 
panel of appropriate experts be commissioned to study this issue and 
develop a set of quantifiable tests to evaluate the maturity of this 
industry segment and to make recommendations based on the development 
of a mature market and a reliable and safe operating record. At that 
point these suborbital activities should be transitioned from OCST 
licensing to another part of the FAA and have a regulatory framework 
that is technically different but otherwise similar to aircraft, 
whether private human passengers are aboard or cargo is being flown.
    2.  On-orbit Regulations: Simply extending the safety review and 
financial requirements of a launch license regime to include in-orbit 
activities will not be sufficient to solve the complex future issues of 
liability and sustainable space activities. In addition to in-orbit 
regulations of satellites, non-orbital activities that enter outer 
space should also be similarly regulated. Under international treaty 
obligations they create the same U.S. Government liability exposure as 
any other in-orbit activities. Congress should recommend that the FAA 
commission a study to evaluate the complex legal environment of in-
orbit liability in order to develop effective and workable U.S. 
regulations that will clearly provide protections that will not 
unfairly burden industry or governments.
    3.  Accident Investigation: Congress should clearly designate who 
will be in charge of investigating a space accident under the specific 
situations that currently have overlapping jurisdiction.
    4.  Informed Consent Waivers: It may, at this time, be advantageous 
for the FAA to draft model clauses for the form with generic 
information about all space accidents and other non-company and non-
vehicle related clauses that are required. Companies would still be 
responsible for the form and for providing information about any 
specific vehicle they operate.
    5.  State Laws Limiting Operator Liability to Passengers: Congress 
should study this issue and make a clear determination of what 
authority states have in permitting waivers of passenger liability to 
the operator of commercial space vehicles. Issues of vehicle safety, 
interstate commerce, and conflicts of laws among the various states 
raise possible future problems.
    6.  Promotion and Regulation in One Agency: When the OCST was 
formed it had only one type of vehicle (ELVs) to regulate. It is 
foreseeable that the OCST could be burdened with regulating closely 
competing economic activities (e.g. ELVs, RLVs, suborbital vehicles and 
UAVs all may be using or transporting payloads capable of providing 
similar telecommunications or remote sensing services to end-users). 
And, it is also possible that the OCST will be in charge of licensing 
competing vehicles. Choices of which type of vehicle to promote and 
which to ignore are as difficult as issues of developing different 
rules and oversight for different vehicles. If any of these conditions 
develop into true conflicts, Congress should consider a clear 
separation of functions among different agencies.

Closing Statement

    The future role of the FAA OCST in commercial space will be very 
important. But it will also require changes from today's regulatory 
structure. Those changes will reflect the changing commercial space 
environment. If the projections of some advocates materialize and a 
vibrant suborbital business is created, then these activities that 
occur mainly in national airspace might logically be moved to other 
parts of the FAA that manage domestic airspace and coordinate with ICAO 
on international matters.
    The licensing of in-orbit commercial activities will grow as 
governments contract with commercial firms for different services. 
There are many new issues that have domestic and international 
implications with regulating in-orbit activities. The FAA will be 
instrumental in shaping these rules for U.S. operations. However, it is 
unlikely that these services will grow without a large initial market 
funded by the traditional government space agencies (NASA, DOD, DOC/
NOAA) as the prime customers. Commercial firms initially will need to 
abide by many existing government safety rules. Eventually, after 
gaining practical experience, these rules may be subject to 
modification, codification, and implementation by the FAA for licensing 
of private operations in-orbit. Before the point where these firms have 
obtained a level of expertise in safety that satisfies the Congress, 
the operations of government missions in space should remain with the 
Agencies that have historically demonstrated an excellent overall 
safety record in a very hazardous and risky environment.

    Chairman Palazzo. Thank you, Dr. Hertzfeld. I thank the 
panel for their testimony, reminding Members that Committee 
rules limit questioning to five minutes.
    The Chair will at this point open the round of questions. 
The Chair recognizes himself for five minutes.
    Dr. Nield, your budget request appears to be premised in 
part on the expiration of the eight-year regulatory prohibition 
at the end of calendar year 2012. In the event that the 
prohibition lapses, how will AST approach the task of drafting 
a framework for regulating commercial human spaceflight in the 
absence of any real experience? And question two, assuming AST 
desires to put in place a structure that is workable and won't 
choke the fledgling space tourism marketplace with overly 
prescriptive regulations, how would AST go about the task of 
regulating an industry that for all practical purposes doesn't 
exist yet?
    Dr. Nield. Thank you for that question. Certainly, the 
development of regulations to ensure the safety of flight crew 
and spaceflight participants is on our to-do list. That is 
something we are focused on, thinking about, and talking about, 
but until the Congressional moratorium is lifted, we would not 
be in a position to issue any new regulations. However, we do 
have responsibility to regulate the operations and safety of 
the emerging commercial human spaceflight industry as Congress 
specified in the Commercial Space Launch Amendments Act of 2004 
and so we would propose using the tools that we have at our 
disposal including the issuing of licenses, permits, safety 
approvals, and conducting safety inspections to ensure that 
safety.
    We also continue to have the responsibility to ensure the 
safety of the general public on the ground, and so we are in a 
position today to be responsible for, as I said, 204 licensed 
launches that have already occurred, so industry is present. 
What is new now is the emergence of the commercial human 
spaceflight, and that is really taking two different directions 
as it goes forward. One, the commercial crew development in 
support of the NASA space station which is coming in the next 
years, and the second is the suborbital space tourism 
activities. So both of those are very important and I think 
they warrant different approaches, and we are trying to prepare 
for both pieces of industry's activities.
    Chairman Palazzo. Can you elaborate on the different 
approaches between the two?
    Dr. Nield. I think inherently the suborbital flights and 
the orbital flights are different. On the suborbital side, you 
have an opportunity for incremental step-by-step flight 
testing, and of course, that is what we saw with the 
SpaceShipOne winning the X Prize back in 2004 and now we have a 
number of companies that are designing, building and testing 
vehicles for that type of an operation, and we expect to see a 
number of flight tests in the very near future, but those 
flights will tend to be just 10 to 20 minutes long in the 
spaceflight portion of it, and they are relatively benign in 
terms of environmental conditions.
    On the orbital side, you can do lots of analysis, you can 
do lots of ground testing, but once you are ready to go to 
space, you light the rocket engine and you pretty much need to 
go all the way to orbit. So that is really a different 
scenario, and of course, we do have 50 years of experience with 
NASA conducting those human space flights to orbit that we can 
draw on in terms of preparing some top-level guidance and 
safety standards for industry, so we are not really starting 
with a clean sheet. We would propose working closely with NASA 
and the industry in preparing the overall guidance.
    Chairman Palazzo. Another question, Dr. Nield. To what 
level of detail does AST plan to regulate commercial human 
launch systems seeking a permit or license? For instance, does 
AST plan to get down to the component level of each system 
approving their design, operation and maintenance, and will you 
require several levels of redundancy for each critical system?
    Dr. Nield. I think someday we will end up with a 
certification process that is very similar to what the FAA does 
for aviation and so that might well entail going down to the 
system and subsystem level and components and so forth. That 
has led to an incredible safety record for aviation. But I 
think it is too early to try to do that kind of thing for space 
transportation today, and so our approach has been to have top-
level system safety performance-based regulations that do not 
dictate the particular kinds of designs or particular kinds of 
operations that are being proposed, but rather make sure that 
we have the right kind of end result, which is to ensure the 
safety of the public on the ground, and to the extent possible 
to also ensure the safety of those on board.
    Chairman Palazzo. Thank you.
    I now recognize the Ranking Member, Mr. Costello.
    Dr. Costello. Mr. Chairman, thank you.
    Dr. Nield, we all agree that safety is the number one 
responsibility of all of us when it comes to this issue. You 
indicated that the FAA is trying to prepare for putting 
regulations into place for human space transportation. Can you 
tell us where you are right now? Where are we as far as 
planning is concerned?
    Dr. Nield. Just to briefly review, we have had and continue 
to have regulations in place to protect the safety of those on 
the ground and so many of the rockets that are being proposed 
for launching commercial crew have already been flying under 
FAA licenses. What is new is having the people on board. So we 
have known this was coming. We have been studying. We have been 
talking. We have been debating. We have been researching to 
find the best practices within NASA and the industry on how 
best to do that. We worked very closely with NASA on their 
proposed human rating draft requirements that have already been 
issued, and in fact, we have just announced a public meeting 
down in Cape Canaveral later on this month that would allow 
industry and NASA and others to talk to us about the 
recommendations that they would have on a regulatory approach.
    Mr. Costello. In your opinion at this point, what criteria 
or information do you think the FAA needs to begin to establish 
regulations?
    Dr. Nield. I think we have the basic information that is 
needed. We have the 50 years of human spaceflight experience 
gathered by NASA. We have 50 years of experience that the FAA 
has in regulating the aviation community and 204 licensed 
commercial launches. What we really need at this point is good 
communication and coordination between the parties involved. In 
order for this industry to be successful, we can't afford to 
have one set of requirements for NASA missions and one set of 
requirements for FAA regulations. That would not allow industry 
to close their business cases and it would be needlessly 
inefficient, so we need to work together to ensure that we have 
consistent and compatible requirements.
    Mr. Costello. And you mentioned that you are working with 
NASA now. That relationship, would you tell the Committee that 
it is working well, you feel that you are working 
cooperatively?
    Dr. Nield. I think we have made good strides there. 
Frankly, our 2012 budget request has a key enabler for that 
cooperation, and that is the Commercial Space Flight Technical 
Center at Kennedy Space Center (KSC). We view that as an 
excellent opportunity, not only to potentially hire some of the 
experienced workforce that are going to be searching for work 
in the months ahead, but also to be basically collocated with 
NASA to build that cadre of subject-matter experts on 
engineering standards and launch operations.
    Mr. Costello. As you know, the FAA reauthorization that 
passed the House has an extension of the prohibition on 
regulations and would extend for eight years after the first 
licensed launch of a spaceflight participant. I understand that 
may move the prohibition to maybe the year 2020 and that the 
FAA may have some concerns with that. Can you express the 
concerns that the FAA may have?
    Dr. Nield. Yes. I very much understand the intent of the 
original moratorium, which was the fear that the government 
could stifle industry and prevent it from doing creative and 
original experimentation to really get its feet on the ground, 
and although there have not been commercial human space flights 
since 2004, I think our office's dual mandate of ensuring 
public safety and to encourage, facilitate and promote the 
industry gives us a unique perspective to be able to recognize 
that the only way to be truly safe is not to fly at all. So we 
understand the delicate balance there and we would propose to 
have the option to be able to take advantage of trends, of best 
practices, of lessons learned, of anomalies during flight 
tests. If something should start to appear as an indicator of 
problems, which was talked about by Dr. Dillingham, then we 
want to be able to move quickly to be able to allow all to take 
advantage of those lessons learned rather than potentially 
having future accidents. So we are not ready to burden the 
industry today. We just want to focus on safety and try to 
allow experimentation and creativity as we go forward in a safe 
manner.
    Mr. Costello. Dr. Dillingham, would you comment on the 
prohibition, the extension?
    Dr. Dillingham. Yes, Mr. Costello. I think we are pretty 
much in line across the panel with regard to the extension of 
the prohibition. It is not clear to us at the GAO what is the 
basis of the eight years. We would be in the line of sort of 
incrementally looking at what is going on at that point and 
moving as you get more information, but the caution that we 
make with regard to sort of the eight years, be careful about 
making regulations in times of crisis. That is, if the 
industry, if there is an accident and all of a sudden we are 
trying to make regulations, sometimes it doesn't quite work out 
the way that the Congress wants it to work out when they don't 
have the time to deliberate, and FAA in the same way. So we are 
for incrementalism. We don't see any basis for eight years.
    Mr. Rohrabacher. [Presiding] You have a new Chairman here 
now. We have a vote on right now, and we will continue this 
discussion after the vote, and I would expect that would be in 
about 15 or 20 minutes, so if we could recess here. The 
Subcommittee is recessed for 20 minutes.
    [Recess.]
    Mr. Rohrabacher. The Subcommittee on Space and Aeronautics 
will come to order. I want to thank the witnesses for sticking 
around while we had to do our business on the Floor, and Mr. 
Costello, the Ranking Member, has had his options, and are we 
going to give the Chair back? Well, we will now proceed for 
questions for our panel, and Mr. Brooks from Alabama, we will 
proceed with your time.
    Mr. Brooks. Thank you, Mr. Chairman, and Mr. Chairman. We 
have got two of them right now.
    You know, we are facing a $1.6 trillion deficit which I 
would submit to you is a very serious threat to our country, it 
could result in a Federal Government insolvency or bankruptcy 
if we don't get it addressed, and I see where you are asking 
for a 75 percent, or AST is asking for a 75 percent funding 
increase. Then also look at the word ``commercial,'' and when I 
see the word ``commercial,'' I see little or no government 
involvement, not substantial or significant government 
involvement. To me, commercial means free enterprise and 
private sector as opposed to something that the government has 
a heavy hand of managing or subsidizing. I also see commercial 
as meaning that there is a profit motive and that is the reason 
for the commercial activity is that there is a way that someone 
in the private sector can do something faster or cheaper or 
better than perhaps the government or its competitors and hence 
they can make a profit because they are able to do that better 
or faster or cheaper.
    Now, of this $15 million that was budgeted in 2010 and $27 
million that is requested in fiscal year 2012, Dr. Nield, can 
you tell how much of this is paid for by the commercial space 
entities via either license fees or taxes or some other source 
of revenue?
    Dr. Nield. None of it, because under current law, we are 
not allowed to charge for licenses that we issue.
    Mr. Brooks. Well, you have often used the FAA as an analogy 
with commercial flight, and correct me if I am wrong, but isn't 
the FAA's budget significantly paid for through ticket taxes, 
landing fees, fuel taxes and things of that nature?
    Dr. Nield. That is a significant component of overall FAA 
expenditures and so as the industry develops, I think it 
certainly is appropriate to think about whether similar ideas 
can be incorporated for space transportation. The problem is 
with a relatively low number of launches taking place, then if 
you try to cover the cost per ticket, per passenger, for 
rocket, that ends up putting additional burdens on the 
industry, which is going to have a negative impact on the U.S. 
efforts.
    Mr. Brooks. Well, that kind of brings us to another 
question that I had. With respect to the low number of 
launches, why is it that we have that low number?
    Dr. Nield. There is a variety of different reasons for 
that. I think in recent years, the United States has not been 
competitive with the rockets that are offered by other 
countries. In other countries, the space programs tend to be 
very much part of the government efforts. I think the United 
States is rather unique in that we do have a commercial 
industry. In recent years, DOD and NASA contracts with industry 
have perhaps caused the U.S. efforts to not be as competitive 
as we would like to see them, but I think recently there has 
been some new entrants to the industry, some new ideas, some 
new entrepreneurial spirit, and we are seeing some of the 
prices come down, and I think that is going to lead to the U.S. 
market share eventually growing back to where we would like to 
see that in the future.
    Mr. Brooks. If I recall correctly, AST was created sometime 
around 1984. Is that----
    Dr. Nield. That is correct.
    Mr. Brooks. So it has been in existence for more than a 
quarter of a century, and commercial launches appear to be on 
the decline rather than the increase. Might that be because at 
least as of now, there is little to no commercial viability?
    Dr. Nield. I would disagree with that assessment. I think 
the progress of the industry has been slower than people would 
have liked to see, but as we look at what we are seeing now in 
terms of research, development, plans, contracts, customers, 
there is a lot bubbling out in the world right now and I think 
we are about to see a rapid increase in a variety of different 
parts of the industry, whether it is space tourism or 
commercial involvement to allow NASA to get lower cost 
transportation to low Earth orbit so that it can concentrate on 
exploration and a variety of different other programs.
    Mr. Brooks. Is there an impact on the commercial viability 
of these private ventures caused by the regulatory atmosphere 
of AST? Stated differently, are the AST regulations increasing 
the cost of being commercially viable which in turn means they 
are less commercially viable or not commercially viable, which 
means that they don't do it?
    Dr. Nield. I would state that we are not a cause of that. I 
think it would be important for the Committee to talk to 
industry to get their impressions, but I believe that the 
regulations that we have in place are very much focused on 
safety while allowing industry to take the steps that are 
appropriate to have viable businesses.
    Mr. Brooks. Thank you. As you may know, I am just a lowly 
freshman on this panel trying to learn the ropes. This is my 
first exposure to this particular issue, and I very much 
appreciate your candor, and I yield the remainder of my time.
    Mr. Palazzo. I now recognize Mrs. Edwards from Maryland.
    Ms. Edwards. Thank you, Mr. Chairman, and thank you to our 
witnesses today. This is an issue that I have had a 
longstanding interest in. I am trying to understand what the 
role and responsibility of the commercial sector is with 
respect to the commercial space industry and how that relates 
also to the responsibilities that we have as a government and 
that our agencies, particularly NASA, FAA and others have, so I 
appreciate your testimony. And I, like others, want to express 
that I share the hope that this is just the first of a series 
of hearings that we hold on commercial space transportation 
because there are a number of issues that I think it is 
important to address and understand well prior to a robust 
industry being developed. We have to understand the 
implications of having the FAA as both the regulator of 
commercial space transportation safety and the promoter of the 
industry it is regulating. As we know, FAA used to have that 
dual responsibility for the commercial airline industry until 
Congress withdrew the FAA role for both promoting the industry 
and regulating the industry because of a perceived conflict of 
interest and so that the agency could focus on safety. I think 
we have some very similar concerns right now, and rather than 
waiting until the point where we know there is a problem and 
have to withdraw the authority, we should deal with that at the 
outset.
    I think as well as NASA moves forward to work more closely 
with the private sector, these issues of safety, regulatory 
authority, and liability in commercial space will need to be 
addressed rigorously to ensure the safety of the public and 
individuals in space or near space as well as those of us who 
are on the ground. So Mr. Chairman, I appreciate your holding 
the hearing today because I think it is an important and timely 
topic.
    I have just a couple of questions, and probably will have 
some additional ones for the record. I am particularly 
concerned about this question of indemnification and liability, 
because unlike when NASA launches even with commercial payloads 
or purely government payloads and personnel, there is a deep, 
close relationship there, and I can envision an environment 
where you would have, say, a tourist on board. It is not like 
an astronaut where an astronaut might have specific technical 
expertise and responsibilities, has been engaged in the program 
all along and understands the vehicle and those sorts of 
things. If I go into space, and I might want to be one of those 
if I win the lottery and can afford a ticket, I hope that 
nobody gives me any technical responsibility on the vehicle. I 
just want to be there, but I want to get up, get back and be 
safe. So it is difficult also to imagine who the private 
insurer is out there who will indemnify me as a tourist, and I 
don't want that to be the responsibility of the American 
taxpayer because some of us can afford to go into space and 
think that would be a great vacation. So I wonder if you could 
speak about the indemnification responsibilities, liability, 
where that falls on the private sector versus on the 
government, not on the taxpayer.
    Dr. Nield. Yes. Thank you. That is an excellent question. 
Congress in the Commercial Space Launch Amendments Act of 2004 
went on the record and said spaceflight is inherently risky and 
they told the FAA how we should handle the carrying of people 
onboard rockets, and that is using an approach known as 
informed consent, so these operators are going to have to 
thoroughly brief those ticket buyers on all the things that 
could go wrong, all the possible risks and hazards, and if they 
understand that and they are still willing to go, they would 
have to sign the paperwork and then be allowed to participate. 
So it is very different from stepping on an airliner with the 
expectation that you are going to arrive safely at your 
destinations.
     In terms of the overall risk sharing and liability system 
that we have in place today, there is a three-tier system. The 
FAA assesses the possible risks and things that could wrong 
during a flight, and we come up with a number known as the MPL, 
the maximum probable loss, and we use that to establish how 
much insurance a launch operator has to go buy, and that will 
be up to the level of the MPL, or $500 million, whichever is 
less. The second tier then is what has come to be known as 
indemnification and so the Secretary could ask the Congress to 
appropriate funds up to $1.5 billion above that amount. If it 
is a really, really bad day and the damages are greater than 
that amount, then the liability reverts to the operator. So all 
of that is talking about third-party damages. Right now, we 
have no intention of having the taxpayer subsidize any claims 
or complaints or injuries for those who fly on these vehicles.
    Ms. Edwards. Thank you, and with that I yield. I just would 
say that there is where I will become a real fiscal hawk coming 
out of this pretty liberal Democrat, because there is no way 
the taxpayer should run that kind of risk with a purely private 
program. Thank you.
    Chairman Palazzo. I now recognize Ms. Adams from Florida.
    Mrs. Adams. Thank you, Mr. Chair, and I want to thank the 
panel for being here today.
    Mr. Chairman, I am very concerned about the budget which 
has been proposed by AST in fiscal year 2012. I would like to 
specifically address Dr. Nield first and then other witnesses 
if I have time. But Dr. Nield, in your testimony, you state AST 
is responsible for the safe operation of commercial companies 
and promotion of a robust commercial human spaceflight 
industry. However, in your testimony you reference regulating 
space industry or the development of new regulations 11 times. 
You mention six times the eventual or planned possibilities for 
robust commercial market without any basis for this development 
in the next few years and never once mention jobs or free 
market solutions or economic development. This is kind of 
troubling to me. The AST is asking for a 74 percent increase in 
its budget over the 2010 enacted level because it wants to 
prepare and implement regulations for an industry that in the 
last 20 years has only required 204 instances of regulatory 
intervention through some kind of license in the last 20 years. 
Last year, AST oversaw four commercial orbital launches and no 
suborbital flights, and yet in your testimony, Dr. Nield, you 
said AST expects six license and permit applications, 40 launch 
or reentry operation inspections, eight launch site 
inspections, five environmental assessments plus new rulemaking 
procedures.
    My concern is the Administration is asking this Committee 
to believe that after an eight-year moratorium on regulation 
and an extension of the moratorium in the wings, your office is 
going to require an expansion of government regulations, 
spending and staff which to me just defies logic and good 
sense.
    I have a couple of quick questions. In your testimony, you 
say, ``The high cost of access to space has long been a major 
obstacle for civil, military, and commercial space programs. 
The dream of low-cost fully reusable space launch systems has 
recently been demonstrated by the X-Prize competitions but only 
to suborbital space.'' Do you believe the dream of low-cost 
access to space will be closer within your grasp, or our grasp, 
with a 74 percent increase in your regulatory agency's budget?
    Dr. Nield. If we spend it correctly, I believe it will, and 
certainly some of the programs that we have proposed including 
the incentive program, the Center of Excellence, and a number 
of other activities are designed to enable commercial industry 
to be successful, which is our hope and objective.
    Mrs. Adams. So you believe the expansion of regulatory 
authority is the best way to encourage the development of 
commercial space?
    Dr. Nield. By itself, regulations have the potential to 
shut down the industry and that is not our objective. At the 
same time, in order for industry to be successful, it is 
helpful to have a common set of well-understood standards that 
all can follow so that we would----
    Mrs. Adams. And which would take a 74 percent increase of 
your budget.
    Dr. Nield. I think if we look at the particular proposals 
which include incentive programs and the Commercial Space 
Flight Technical Center, those are the kinds of things that 
would be helpful to the industry to allow them to be successful 
in the future.
    Mrs. Adams. Do you have any concern that the development of 
evolution and growth of a regulatory regime based on very 
little data or information on what to expect from vehicle 
design or human rating standards encourages a market 
environment of stability that an investor would want to take 
on?
    Dr. Nield. I have had a number of discussions with industry 
leaders, and that is exactly what they are asking for. They are 
very fearful that we will end up with separate and conflicting 
requirements from NASA, with its programs for the space station 
and other activities, and the FAA as the designated regulator 
for this industry, and they want to ensure that we have a 
consistent and compatible set of requirements and so that is 
why it is so important for us to work closely with NASA to take 
advantage of that 50 years of human spaceflight experience, 
which is a long time.
    Mrs. Adams. I will get one last question hopefully. On 
April 28, 2011, AST published a notice on its website that it 
will hold a public meeting late this month in Florida to seek 
input from the affected community. Are you expecting to issue 
your first round of regulations on December 24, 2012, if the 
eight-year moratorium expires?
    Dr. Nield. No, we are not.
    Mrs. Adams. I yield back the rest of my time.
    Chairman Palazzo. Thank you. We will now recognize Mr. Wu 
from Oregon.
    Mr. Wu. Thank you very much, Mr. Chairman.
    Dr. Nield, I had a set of questions about commercialization 
and other issues which I think need to be answered, and I am 
now going to give those questions to Committee staff and have 
them submit them to you and ask for responses in writing 
because your answer to a prior question, I thought would have 
elicited a gasp from this audience, which is basically that 
when we commercialize, people should not have an expectation of 
safety, that it is very different from getting aboard an 
airliner, and that we should have informed consent, sign a 
disclosure form and then you board the booster and vehicle and 
then you take your chances. Now, I am just stunned. I am 
absolutely stunned about that characterization of the future of 
commercial human spaceflight.
    Now, Dr. Nield, there are a couple of consequences from 
this picture that you painted, and one is that any launch 
failure which hurts people or kills people, there are immense 
consequences in addition to killing people, which is something 
that we should strive with every energy to avoid. It would also 
potentially flatten the space program for a period of years 
just as it did after fatal events in the space shuttle and 
prior. Isn't that a likely consequence and that is the risk 
that we are taking in the scenario that you paint?
    Dr. Nield. That is a very important risk and that is why it 
is so important that we have good safety processes in place. 
That is why we have the regulations that we do, and on the 
commercial side, that is why they have the need to pay 
attention to safety as well because not only are they 
potentially losing their mission, their rocket, the people on 
board but that has the potential to wipe out that business if 
there is a serious accident. So I think they are focused 
correctly on doing things safely.
    In terms of the informed consent process, that is the 
direction that the Congress has given us and so we are 
following that to the best of our ability. In the future----
    Mr. Wu. Okay. I just want to set aside the commercial 
satellite side of this and focus on the potential for 
commercial human flight, and we basically treat human 
spaceflight very differently, and I am just very concerned that 
any fatalities would cause a dramatic pause in U.S. human 
spaceflight activity to the detriment of our national 
interests, and apparently you are saying that we can't prevent 
that currently.
    Dr. Nield. Our office will do anything we can to ensure 
safe operations going forward. However, with all due respect, I 
would point out that all forms of transportation have 
accidents, have fatalities, whether it is in cars, airplanes, 
boats and trains, and so the Nation needs to understand that 
that is part of the risk of exploring the unknown, of doing new 
things, and we should anticipate that, try to prevent it where 
we can but not let deter us from moving forward and advancing 
technology so that the United States can remain as a leader in 
spaceflight.
    Mr. Wu. And that is my goal, to have the United States 
remain a leader, and I am concerned that fatalities will 
undermine our ability to do that because, you know, a pause 
happened after Challenger and Columbia, which were federal 
projects, and that was bad enough. I suspect that with a 
private venture, the effects would be even more dire.
    Let me pull you to a slightly different issue, because I 
think the loss of life and the loss of leadership in space are 
the most important ones, but if there is an accident like that 
in a private venture, we are talking about public indemnity, 
taxpayer indemnity for damages whereas when it is a federal 
venture, in essence the government is self-insured. So we are 
taking on an extra cost, are we not, when we put the risk in a 
commercial space venture for human spaceflight?
    Dr. Nield. On the contrary, I would say that under the 
current liability risk-sharing scheme which I mentioned a few 
minutes ago, there is a requirement in order to get the FAA 
license to purchase insurance from these commercial entities 
and so to that extent, it is a better deal for the taxpayer 
than an all-government program which uses all taxpayer money.
    Mr. Wu. Wasn't the thrust of Congresswoman Edwards' 
question that there would have to be some kind of liability cap 
and that the Federal Government assumed risk beyond that?
    Dr. Nield. The current law involves this three-tier system 
but the basic first tier is composed of insurance that the 
companies are required to buy by FAA regulations.
    Mr. Wu. Yes, but that is the point, that there are 
additional tiers beyond that.
    Dr. Nield. That is true.
    Mr. Wu. And private entities are not going to assume all of 
the risk but the potential high cost.
    Dr. Nield. That is an important factor, and we need to look 
at how competitive the U.S. endeavors are compared to other 
countries that do not have different tiers. I would point out 
that in the 25 years of operation, not a dime of taxpayer 
dollars has ever been used. We have never had to exercise that 
liability risk-sharing scheme, but it is very important to have 
that in place in order to give some certainty to the businesses 
that their liability is capped.
    Mr. Wu. Yes, but you are proposing changes both on the 
commercial satellite side and human spaceflight, so the risk 
profile is changing.
    Dr. Nield. Pardon me if I gave that impression. I am not 
proposing any changes to the liability.
    Mr. Wu. I mean the flight profiles and the numbers and the 
missions.
    Dr. Nield. We hope to see lots of launches, and that is 
going to help insurers to get confidence in the business if we 
do it well, and that could be a win-win for all, but I am not 
proposing any changes to the liability regimes.
    Mr. Wu. Thank you, Mr. Chairman, for permitting me to go a 
little bit beyond my time, but I may come back to this line of 
questioning. Thank you.
    Chairman Palazzo. Thank you. Now we recognize Mr. 
Rohrabacher from California.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman, and let 
me associate myself with the questions of Mrs. Adams, who I 
think was trying to get to a very important heart of the issue 
of today's discussion. However, for my friend Mr. Wu, the 
Congress specifically voted on informed consent and limited 
liability. I know, I am the author of the amendment. I was told 
not to bring it to the Floor, it wouldn't pass. We brought it 
to the Floor. It passed by a vote of the Congress and then went 
on to be voted by the Senate. So I think that might have been 
before you were here, however, but it was when I was Chairman 
of this Committee--Subcommittee, that is.
    So informed consent is part of it, and it may or may not be 
a policy that you want to continue past a certain time period 
after our technology and after this new type of transportation 
system has been developed. Let us just note that we have had 
certain other industries that have benefited by this type of 
approach, by limiting liability. We do know that it has been 
long recognized that overcoming gravity is not the most serious 
obstacle that has to be overcome. Quite often, overcoming the 
power of trial lawyers is at least as equal a challenge, and 
not necessarily overcoming gravity may be much more beneficial 
to mankind in establishing that capability rather than just 
overcoming trial lawyers.
    With that said, about expanding your budget, let me just 
note, they say idle hands are the devil's tool, and idle 
government regulators looking for something to do could 
actually be of greater concern than being idle hands in the 
private sector. If we are not going to be increasing the 
regulatory scope of your operation and actually the situation, 
this prohibition is extended, why do you need a bigger budget? 
I mean, aren't we just calling for what Mrs. Adams was pointing 
to? We now are bringing on a bigger staff but your 
responsibilities if we do which I think we should, which is 
continue this prohibition, that really your responsibilities 
haven't been expanded.
    Dr. Nield. I would beg to differ. I think the 
responsibilities potentially are increasing as the industry is 
increasing, and we would like to be prepared to do what we can 
to enable the successful growth. And so if you look at where we 
were in past years in terms of the small number of launches and 
where we expect to be in 2012, I expect again a tenfold 
increase in the number of launches. We need to follow through 
on those license applications, do the evaluations, make sure 
they are safe, process those. We need to have our safety 
inspectors to make sure we are doing all we can to ensure safe 
and successful operations. We have also tried to come up with 
some other ideas including the Commercial Space Flight 
Technical Center and the prize and other ideas that would hold 
out some incentives.
    Mr. Rohrabacher. Well, let me put it this way. At a time 
when we have a trillion and a half dollar deficit and we are 
trying to find ways of cutting across the board, it might be 
beneficial to try to see if we can use the staffs that we 
already have and the budgets that we already have by giving 
people more responsibilities and thus maybe getting more 
productivity out of our offices.
    Let me just note that if we have a variety of spacecraft to 
choose from rather than just one governmental system, which 
some people seem to be pushing to have--NASA has got to be in 
charge, we have to have the NASA alternative. Well, if we just 
have the NASA alternative as compared to three or four 
commercial activities, once there is an accident, we are shut 
down, as we saw with the space shuttle. Instead, if we have 
various alternatives in the private sector, there is a big 
benefit to being able to ease over to another alternative 
rather than just putting it all on the government's shoulders 
no matter what the liability question is there. There is a 
major societal benefit to having these alternatives.
    Let me go to Mr. Hertzfeld. You state in your report that 
without sufficient data, defining a minimum set of criteria for 
human spaceflight services, because we are already--let me make 
this very clear. We can already regulate for safety of the 
people on the ground, and that is already a regulatory power of 
this office. What we are really talking about is expanding the 
ability of people to go without the regulation and the massive 
expansion of regulation on the passengers who we believe can 
decide for themselves whether they want to step onto a 
spacecraft, which is of course the informed consent which Mr. 
Wu was talking about. But if you continue this where people 
have that choice and thus we don't have to have further 
regulation, do we see this expansion of power that we are 
talking about as a necessity for expanding the role of this 
office?
    Dr. Hertzfeld. I think the answer really eludes us today 
because this industry is changing rapidly, and I see it as a 
process looking to the future. I was suggesting that we study 
different types of industry indicators such as the structure of 
the industry, the maturity, how many passengers, and how many 
flights are really going to happen. We have had a lot of 
promises in the past. They are slow to materialize. I do 
believe someday they will but I don't know when that day is. 
And there are a lot of regulatory issues that we can't get 
around. We have air traffic control issues, if we really go to 
outer space, we have treaty issues where the government has 
committed to pay if there is a----
    Mr. Rohrabacher. Well, if this eight-year regulatory 
prohibition does not expire, what burden would that add to the 
public and the industry that you see?
    Dr. Hertzfeld. It really depends on what the FAA is 
prepared to do when it does expire. I don't think they have 
been specific yet. If I remember the legislation correctly, and 
please correct me if I am wrong, that it only gives them the 
option of looking at regulations when it expires. It doesn't 
necessarily mean they are going to have to, and that is why I 
am suggesting we develop a process, we develop a way of 
approaching it so that if it is necessary, they can.
    Mr. Rohrabacher. And if we don't have any experience at 
that moment with taking passengers up in a commercial way, how 
are we going to then put in place regulations when we don't 
even have the operation happening yet because we don't have a 
significant number of passengers. And by the way, Mr. Wu, it 
seems that you did vote for that amendment when I brought it to 
the Floor back in 2004.
    Mr. Wu. I see the wisdom of my colleague.
    Mr. Rohrabacher. I yield back my time. Thank you.
    Chairman Palazzo. All right. Thank you. Mr. Wu would like 
the opportunity to have one more question. If the other Members 
are so inclined, they will have an opportunity to ask one more 
question as well.
    Mr. Wu. Thank you very much, Mr. Chairman.
    This is a topic which has been brought up repeatedly in the 
commercial airline context where the FAA has responsibility for 
both regulating the airlines as well as promoting commercial 
airline flight, airline travel. The same apparently applies in 
commercial spaceflight, and Dr. Hertzfeld and Dr. Dillingham, I 
would like each of you to comment on this regime and the 
potential for conflict and whether this is a good arrangement 
or whether as has been proposed on a the commercial airline 
side that these functions ought to be separated.
    Dr. Dillingham. Thank you, Mr. Wu. Where we are now, when 
we looked at this issue, this potential conflict of interest, 
we did not see any at that point in time. We looked at it a few 
years ago. It does not mean that this situation will not change 
as the industry matures. One of our concerns is that we not 
wait until there is a situation where we have this crisis, and 
it would be like the Air Tran accident. All of a sudden we 
realized that maybe this is not the way it should be. So our 
position is, it is fine now. As the industry matures, we think 
that that separation of promotion and safety should be looked 
at real close and maybe Commerce would be the place for the 
promotion aspect of it.
    Dr. Hertzfeld. Back in the late 1980s, early 1990s when the 
FAA really began to gear up, they were only regulating 
expendable launch vehicles, and so there didn't seem to be much 
of any potential conflict between promotion and regulation at 
that time. Today, from everything I have seen, we hear no 
criticism from industry about this dual role, and I think that 
would be a measure when we begin to hear complaints, and as I 
mentioned in the testimony----
    Mr. Wu. You mean complaints about the regulatory side?
    Dr. Hertzfeld. No--well, the regulatory--when you regulate, 
you are going to cost industry some money, and many regulations 
are necessary in this very risky business. It is a question of 
how much and the balance and whether the same agency can 
successfully promote, which means trying to expand industry, 
while at the same time other parts of the same office are going 
to regulate and put possible burdens on the industry. So it is 
a balance between a social good and competition. Commerce 
traditionally has had the promotion of industry as one of its 
major mandates, but also, Commerce has the National Technical 
Information Service (NTIS) and it has regulations for NOAA. It 
is not regulatory authority as well. I understand that the FAA 
has agreements with the space part of NOAA in Commerce but--and 
so there are already some building blocks of spreading the 
promotion of the industry among other agencies, and I think at 
a point where you may be faced with this delicate balance, then 
the Congress might have to look into the problem. Today, none 
of us, I think, have seen any indications that there is a 
conflict there.
    Mr. Wu. Thank you very much, Dr. Hertzfeld. Dr. Dillingham, 
thank you.
    Chairman Palazzo. Thank you, Mr. Wu. Ms. Adams from Florida 
has indicated she would like to have a question. You are now 
recognized.
    Mrs. Adams. Thank you, Mr. Chair.
    Dr. Nield, do you believe that the design and operation of 
private spaceflight capabilities have occurred? Do you believe 
they exist today?
    Dr. Nield. Yes, I do.
    Mrs. Adams. So you believe that you know for a fact what 
the design is going to be and therefore you are able to 
regulate that design?
    Dr. Nield. In our regulatory approach, we try not to be 
prescriptive and so we don't specify what kinds of design of 
hardware or operations that an operator may choose. We try to 
be performance based so again we are protecting the public.
    Mrs. Adams. So you believe that the design for performance 
is created and therefore you can regulate it?
    Dr. Nield. On a top-level system safety basis, I would say 
the answer is yes.
    Mrs. Adams. Okay. And that is how you are estimating how 
much money it will cost to regulate this by your budget. How 
long did the process of issuing the first reentry license take 
from application to issuance?
    Dr. Nield. Under the law, we are given 180 days to conduct 
an evaluation of a complete application package, either for 
launch or reentry, and----
    Mrs. Adams. Well, the question was very simple. How long 
did it take?
    Dr. Nield. It was about two weeks from receiving the 
complete package until we were able to make a decision. Now, 
that is an iterative process. We received the----
    Mrs. Adams. So my information that it took somewhere around 
a year is incorrect, from the time it was applied until the 
time it was issued? You are telling me it is two weeks?
    Dr. Nield. It was about two weeks from a complete 
application until a decision, yes.
    Mrs. Adams. That is not what I asked you. Issuance.
    Dr. Nield. Someone can submit a cover letter and say we are 
going to apply for a reentry license but that doesn't meet the 
intent of the regulations, so it can drag on until all of the 
information----
    Mrs. Adams. Dr. Nield, if you don't want to answer, that is 
fine. When I ask you a specific question, I think I should at 
least get a specific answer. We will move on.
    Dr. Dillingham, GAO reports there will be a 45 percent 
increase in staffing. Do you believe there is enough certainty 
in the demand on FAA to require such a dramatic increase in 
their staff?
    Dr. Dillingham. No, ma'am.
    Mrs. Adams. Does GAO agree with the assertion by AST they 
will need the type of dramatic increases in funding they are 
requesting for fiscal year 2012?
    Dr. Dillingham. No, ma'am.
    Mrs. Adams. There are currently eight licensed spaceports, 
according to your testimony. There is not activity at all of 
them. How many spaceports currently have routine flights from 
them?
    Dr. Dillingham. I don't think there are any spaceports that 
have routine flights from them.
    Mrs. Adams. That is what I was hearing. Do you believe the 
billions in tax incentives, direct investments and grants at 
the state and federal level for commercialization has yielded 
the type of fast-paced growth originally envisioned?
    Dr. Dillingham. No, ma'am.
    Mrs. Adams. Does the increased activity GAO would expect in 
the next two years for suborbital flights justify a 45 percent 
increase in staff and a 74 percent increase in the AST budget?
    Dr. Dillingham. No, ma'am. We have argued that may be 
incrementally based on the development of the industry, one 
could start making that move in that direction rather than the 
big bang theory.
    Mrs. Adams. Thank you. And under your understanding of the 
current regulatory regime, does FAA have the authority to 
regulate a commercial rocket launch with NASA astronauts going 
to station if NASA has contracted with a commercial company for 
the seats?
    Dr. Dillingham. I do not know the answer to that but I can 
get the answer back to you. Maybe Dr. Nield may help.
    Mrs. Adams. Dr. Nield, would you like to take a shot at 
that?
    Dr. Nield. Ma'am, it would depend on how the services were 
procured. If NASA is conducting the launch, no license is 
required. If NASA is having industry conduct the launch, then a 
license would be required under the law.
    Mrs. Adams. What about if the commercial rocket is carrying 
a payload to the station?
    Dr. Nield. That would not be a determining factor. And 
again, we are working with NASA to ensure that their needs and 
FAA public safety needs can be met and have a successful 
outcome of these types of activities.
    Mrs. Adams. Dr. Nield, you have heard the discussion here 
and you can see where I am going. 74 percent increase in a time 
where economic restraint should be held. You are asking for us 
to increase your budget for what if. I have grave concerns 
about that. I just want you to know that.
    Chairman Palazzo. Thank you. I now recognize Mr. Brooks 
from Alabama.
    Mr. Brooks. It seems to me that the real key to whether we 
are going to have a private sector or a commercial venture in 
America that is successful is dependent on whether the 
businesses that are exploring this can make a profit. Short of 
subsidies by the Federal Government--and this is a question I 
would like for each of you to consider. Short of subsidies by 
the Federal Government, what can Congress do to reduce 
regulatory or other costs of commercial space ventures in order 
to enhance the prospect of profitability which in turn would 
enhance the ability of the private sector to compete in space?
    Dr. Nield. First of all, I think having an enlightened but 
responsible regulator would ensure that the industry can be 
successful, and that is what we aim to be. Other things would 
include ensuring that the liability structure that is set up is 
appropriate to allow the businesses to compete internationally. 
Certainly, research is an important area to the extent that we 
can provide the tools that the companies need to have the 
latest rockets and engineering operations. That would be very 
important. And I think through the use of contests and prizes, 
the government can have a leverage effect on its investment 
without paying out taxpayer dollars until or unless the 
requirements of the prize have been met. Historically, that has 
been a very successful incentive for industry investment. So 
those are some of the things that come to mind, sir.
    Dr. Dillingham. I would think that the current regime that 
is in place now where regulation is in fact sort of balanced 
with the development of the industry has been one of the major 
contributing factors to the industry moving as it has up to 
this point. It is not as fast as one might want it to be, but 
anything that does not tamp down the idea of profit for the 
industry will be helpful, I believe.
    Mr. Brooks. Do you have any specifics?
    Dr. Dillingham. No, sir, not now, but I can in fact get 
back to you with some specifics.
    Dr. Hertzfeld. I think all the things that Dr. Nield 
mentioned will help, more research and more balanced approach 
and all the rest, but I think we have to keep in mind that for 
the near-term future, maybe for longer and in the history, this 
is a dual use. Space is dual use. We have had private companies 
involved for many, many years, mainly as contractors as opposed 
to selling services to the government, but the government 
depends on all of the private companies and always has. This is 
a slight change in what we see in terms of some of the private 
developments and the entrepreneurial efforts, but the 
government's research is really what has stimulated space and 
probably the government services will for quite a while, and 
what is happening in the commercial sector is interesting. It 
may take time, but I think that our core dependence on the 
space capabilities will remain as the primary stimulus for 
technology changes and through technology changes primarily for 
cost reductions. I don't believe the regulatory burden is so 
expensive compared to the technologies in getting to space that 
making regulation a little less expensive is going to make a 
big difference in the price or supply and demand for space as 
we move along.
    Mr. Brooks. Thank you. If there is anything specific that 
comes to mind in the future of what we can do to help our 
commercial space industry be more competitive, cheaper to 
operate, more profitable, particularly in the face of 
international competition, I would welcome that communication 
to my office.
    Dr. Nield. Mr. Brooks, if you would permit me?
    Mr. Brooks. Please.
    Dr. Nield. One idea built on what Dr. Hertzfeld said is 
very important, and I think that the effort that NASA has 
recently employed to purchase services rather than build its 
own rockets to operate could be a huge incentive to our 
industry by having companies design their own systems to 
provide cargo to the space station and some day to transport 
astronauts. I think that could be a real enabler to the success 
of the industry in the long term that NASA can take advantage 
of and that will allow the United States to be competitive in 
this area internationally.
    Mr. Brooks. Is the private sector now less expensive in 
delivering payloads to space than NASA?
    Dr. Nield. Absolutely.
    Mr. Brooks. We have got the satellites. How about man?
    Dr. Nield. We have had only limited commercial human 
spaceflight, a few flights by SpaceShipOne, but I think in the 
future as industry starts to offer that option too, then I 
believe it will end up costing less than a government program 
as well, and that remains to be seen but I think that is the 
promise of enabling our industry.
    Mr. Brooks. Thank you.
    Chairman Palazzo. I recognize Mr. Rohrabacher from 
California for our final series of questions.
    Mr. Rohrabacher. Thank you very much, and let me just note 
that whatever money is invested by these private companies and 
whatever systems we have available to us then without having to 
worry about budget interrogations as you have gone through 
today because we always take it for granted that a private 
company is trying its very best to be as productive and keeping 
those budgets down as much as they can because there is that 
dynamic that doesn't exist in the Federal Government because 
government doesn't have the same dynamic as the private sector. 
And then also if one system goes down, we have other 
alternatives to choose from, as I say, compared to the shuttle 
where we put all our eggs in the shuttle basket and it really 
put us in jeopardy after those accidents.
    Commercial space companies--let me know, Mr. Chairman--I 
believe are on the edge, the cutting edge of human progress. We 
now have a gang of industrialists, inventors, explorers, 
entrepreneurs and yes, adventurers who are pushing the 
envelope, and this is very American and this is what we are 
supposed to be all about. They are going into the new frontier 
and they are utilizing it and taming it and finding ways of how 
we can utilize the great resources that are on the frontier. I 
would suggest that the area between the moon and the Earth will 
become a commercial enterprise zone basically being utilized by 
commercial enterprises and that NASA in the future will be 
looking to further exploration and the moon and beyond and 
developing new technologies. We have reached--your point about 
well, developing the technology, that is really where the cost 
is as compared to regulatory cost, well, that is true, but we 
have reached the plateau on the development of technologies now 
that will permit commercial enterprise and those technologies 
are there and the cost has already been paid, so I would say at 
this point the regulatory burden is what is probably the 
greatest threat in holding us back from utilizing that space 
between the Earth and the moon for the benefit of humankind.
    This is very similar to the time period during the last 
half of the last century when aviation was developed in 1903, 
the first plane that went off, and at a certain point it became 
possible through contracts, mail contracts, through war 
contracts, dual use with military and civilian use, civilian 
airlines became profitable, they became a potential. We are at 
that point right now with commercial space, and let me 
congratulate the Obama Administration, which you will rarely 
hear from me, and they have managed to see this where some of 
my own colleagues on the Republican side who always talk about 
enterprise and keeping costs down and making profit ventures 
don't seem to have grasped what this Administration has 
grasped, and that is, the more money that is invested in the 
private sector and the more potential profit we are making for 
these entrepreneurs, that means there will be more money for 
NASA and other people to do their job and expand the potential 
of human activity in space.
    So Mr. Chairman, thank you very much for a very important 
hearing and I am looking forward in the days ahead to working 
with you to make sure America reaches its potential both with 
NASA and in the commercial area. Thank you very much.
    Chairman Palazzo. Thank you, Mr. Rohrabacher, and thank you 
for stepping in for me while I had to go to another Committee 
to cast a vote.
    I thank the witnesses for their valuable testimony and the 
Members for their questions. The Members of the Subcommittee 
may have additional questions for the witnesses, and we will 
ask you to respond to those in writing. The record will remain 
open for two weeks for additional comments from Members.
    The witnesses are excused and this hearing is adjourned. 
Thank you.
    [Whereupon, at 12:05 p.m., the Subcommittee was adjourned.]

                                Appendix

                              ----------                              


                   Answers to Post-Hearing Questions


Responses by Dr. George C. Nield, Associate Administrator 
for Commercial Space Transportation, Federal Aviation Administration

Questions submitted by Chairman Steven Palazzo

Q1.  You testified during the hearing that, `` . . . in the coming 
months, it may be necessary to revisit some of the statutes and 
regulations that govern commercial space launch activities. 
Specifically, the FAA's legislative authority may require revision so 
that we can continue to ensure public safety both in space and on the 
ground. We see the potential for greater regulatory authority in the 
area of on-orbit transportation as well as during launch and reentry.''

        a.  What circumstances would trigger AST's decision to 
        promulgate additional regulations to ensure public safety?

A1(a). The testimony referred to legislative authority and associated 
regulation changes. The circumstances which drive a need for revision 
to legislative authority are a result of the evolving industry and the 
complexities of the types of technical solutions that are being 
developed. Specifically, there are four areas where the FAA believes 
legislative changes may be warranted:
      On-Orbit authority - see full discussion in part B of 
this question
      Hybrid activities -The current FAA regulatory structure 
does not fully accommodate non-launch operations of a combined carrier 
aircraft/launch vehicle system (hybrid activity). Allowing FAA/AST to 
oversee the entire operation will be more efficient for the operator as 
well as the FAA.
      Safety Approvals - Clarify the scope of Safety Approvals 
to facilitate the introduction of safety services and components into 
the commercial space transportation industry.
      Reentry - Remove the ``substantially intact'' language 
from reentry authority; this definition treats vehicles designed to 
survive reentry in one piece differently from vehicles that break up 
upon reentry. This is not rational from a public safety perspective 
because vehicles that break up upon reentry, but do not burn up, can 
pose an equal or greater public safety risk than those that survive by 
scattering vehicle components and other debris over a wide area.
    In addition, NASA has recently identified the potential need for 
changes to statutory definitions (such as the one that identifies crew 
solely as an employee of the licensee) to assist the FAA in working 
with them on the Commercial Crew Program. We are in the process of 
evaluating those definitions to determine if a change may be necessary. 
As to the specific area of future regulatory action, the evolution of 
the industry is driving revisions intended to improve, clarify, and 
streamline regulations. Proposed revisions result from lessons learned 
in issuing licenses and permits, or from changing standards, 
technology, or hazards in the commercial space transportation industry. 
In many cases, regulatory revisions can reduce the burden on the 
industry and the government. For example, the FAA recently issued final 
regulations that will ease launch window constraints due to concerns 
about lightning. In the near future, the FAA plans to improve and 
streamline requirements for the launch of reusable and expendable 
launch vehicles, for the launch of amateur rockets, and for the 
operation of launch and reentry sites. Regulatory updates also come 
from changing standards or technology in the commercial space 
transportation industry. Additionally, the FAA has several rule updates 
under consideration to maintain consistency with Air Force and NASA 
range guidelines, thus reducing the burden on industry.

        b.  What would be the rationale for seeking greater regulatory 
        authority for on-orbit transportation as well as launch and 
        reentry? What is the scope of on-orbit activities that AST 
        would seek to regulate?

A1(b). The FAA's interest in incorporating on-orbit authority is 
intended to cover existing gaps in the protection of public and private 
property on orbit. Two specific examples have been discussed. The first 
involves NASA's Commercial Resupply Services (CRS) contract. Currently, 
the FAA's authority ends at the completion of the launch and deployment 
of the payload. NASA is primarily interested in operations of the 
payload during proximity operations (23 km from the International Space 
Station). After the vehicles undock they will maneuver for an orbit or 
two prior to reentry. Ensuring collision avoidance and prevention of 
possible damage to property on-orbit is increasingly critical, as the 
Iridium satellite collision shows. The second example is protection of 
public and private property on-orbit during commercial space station 
operations

Q2.  During the hearing there was discussion about extending the 
experimental period for manned space flight systems, but in lieu of a 
schedule-driven regulatory moratorium, it was suggested that an 
alternative approach based on performance or other indicators should be 
considered. In your view, is this a better approach? If yes, what 
metrics do you believe should be used?

A2. The FAA believes the ability to propose regulations is critical to 
the safety of commercial space transportation. Rather than wait for a 
catastrophic or near-catastrophic event to occur, a well-thought out 
approach to human space flight regulations developed in consultation 
with industry is needed. To ensure that the appropriate work of 
considering occupant safety may begin, the FAA opposes the extension of 
the moratorium on proposing regulations.
    We believe the original intent of the Commercial Space Launch 
Amendments Act moratorium was to preclude regulations from being 
written before industry had sufficient experience in building and 
operating commercial human space transportation systems. At the time, 
it was thought that suborbital space tourism would be the very first 
commercial human space business, and that commercial human orbital 
spaceflight was many years away. Suborbital human space flight is 
following developmental processes similar to aviation in the area of 
envelope expansion and incremental development, allowing safety insight 
every step of the way. The FAA has maintained adequate safety oversight 
through permitted activities and pre-license activities to have 
confidence in the safety of this part of the industry without the need 
to actively pursue additional suborbital human spaceflight regulations 
at this time. See answer to question 4 for more detail on the 
differences between orbital and suborbital human spaceflight.
    NASA's Commercial Crew Program (CCP) has made commercial human 
orbital flight a much nearer-term proposition than previously expected. 
Orbital human space flight is a much more substantial safety challenge 
from the first flight, requiring greater oversight. With orbital human 
space flight now in its 50th year, there is both sufficient experience 
and a need to allow the discussions to begin on development of human 
spaceflight occupant safety regulations.
    It takes many years to craft a good regulation; It is important 
that the FAA begin this work to meet the eventual needs of both NASA-
sponsored and non-NASA sponsored flights. Additionally, the 
availability of potential safety requirements will facilitate orbital 
commercial space activities by providing greater transparency about the 
potential regulations future vehicles may need to satisfy.
    If metrics are desired, we would be willing to work collaboratively 
with Congress, NASA, and industry to determine them.

Q3.  FAA and NASA are now engaged in discussions on regulating 
commercial cargo and crew launches to the International Space Station.

        a.  With respect to commercial cargo, does FAA anticipate 
        promulgating additional regulations to regulate this activity, 
        and if so, how soon do you anticipate publishing a NPRM?

A3(a). At this time, the FAA has the authority and regulations that are 
needed to license commercial cargo launches to the International Space 
Station. No additional needed regulations have been identified that are 
specific to commercial cargo. As mentioned in the answer to question 
1B, additional regulatory authority for on-orbit operations to protect 
public and private property may be warranted, but until Congress 
provides that authority, there can be no rulemaking in that area.

        b.  With respect to commercial crew, from FAA's perspective, 
        during the launch phase, how do the agencies distinguish their 
        regulatory roles over the design and performance of the crew 
        capsule and the design and performance of the launch system?

A3b. The FAA derives its authority and responsibilities from the 
Commercial Space Launch Act, recently re-codified at 51 U.S.C. Subtitle 
V, ch. 509. The FAA's current regulatory authority extends to launch 
and reentry operations only as they affect public safety. Therefore, 
the FAA's oversight of the crew capsule design and performance would be 
restricted to its impact on public safety and would be exercised 
through the licensing process. NASA maintains the responsibility for 
occupant safety and mission assurance. NASA's role is not regulatory. 
Instead, it imposes requirements for mission assurance and for occupant 
safety through direct contractual requirements (and related NASA 
oversight) with the launch or capsule designer/operator.
    The Commercial Space Launch Amendments Act of 2004 restricts the 
FAA's ability to protect persons on board a launch or reentry vehicle 
until the end of CY2012, unless there has been a death or serious 
injury to crew or a space flight participant during a licensed or 
permitted human space flight; or there has been an unplanned event or 
series of events during a licensed or permitted flight that posed a 
high risk of causing a serious injury or death. At some point after 
CY2012, the FAA may exercise its responsibility for occupant safety as 
its regulations and experience mature, but the timeline for that 
transition with regards to the Commercial Crew Program will be 
determined in the future. NASA will retain the responsibility for 
mission assurance.

Questions submitted by Representative Jerry Costello

Q1.  What is AST's FY 2011 funding level? We have been trying to obtain 
this information, and it has been some time since Congress passed a 
final FY 2011 appropriation. Please deliver to us a final FY 11 funding 
level for AST at the earliest possible date.

A1. AST's FY 2011 funding allotment was $15,021,161.

Q2.  Within the FY 2012 request for AST, how would you prioritize AST's 
programs and activities?

A2. AST's top-priority activities are those that are intended to ensure 
public safety, including issuing licenses and permits, conducting 
hazard analyses, developing regulations, and performing safety 
inspections. These activities account for approximately 40% of our FY 
2012 request. Our second priority activities are those related to 
enabling industry, including preparing market forecasts and other 
publications, and awarding spaceport infrastructure grants. For FY 2012 
only, a space transportation incentives program is included that is 
intended to encourage the development of low-cost access to space for a 
variety of government, industry, and academic users. These activities 
constitute approximately 27% of our request. Third priority is our 
safety-related research efforts, including work done by the Center of 
Excellence for Commercial Space Transportation, totaling 13% of our 
request. Fourth priority is our activities in support of international 
and interagency coordination, including significant interactions with 
both NASA and the US Air Force, totaling 12% of our request. Finally, 
fifth priority is the work we are doing related to Space Traffic 
Management. This area represents about 7% of our request, but is 
expected to grow in future years.

Q3.  Your FY 2012 request includes $5 million to ``establish a program 
for incentivizing advancements in space transportation by non-
governmental organizations''. Your justification further states that 
``The Low Cost Access to Space Incentive would provide a $5 million 
award designed to jump-start the creation of an entirely new market 
segment. ''

        a.  In this time of tight budgets, why is providing such prizes 
        a priority for FAA, which is an operational and regulatory 
        agency?

A3(a). The FAA supports the President's Innovation Initiative and 
Congress' America COMPETES Act by offering this prize, which is 
intended to stimulate private investment in low-cost access to space. 
The incentive model has a long history in aviation and other 
transportation industries of stimulating innovation to the benefit of 
the whole industry. According to the Congressional Research Service, 
the return on investment for the NASA Lunar Lander Challenge was 6 
times the prize amount, and Ansari X Prize Foundation leaders have 
estimated that 10 times the prize amount was invested by the industry. 
Prizes also offer a unique advantage in that money is not expended 
until the objectives have been successfully achieved.

        b.  Having recently experienced a reduction to both its 
        Facilities and Equipment and Research and Development 
        appropriations in the recently passed Continuing Resolution for 
        FY 2011, is FAA prepared to carve out $5 million of its budget 
        to fund the space incentives program if similar reductions are 
        made to FAA's FY 2012 budget?

A3(b). The FAA's top priority is ensuring public safety, to include 
licenses and permits with supporting analyses; safety inspections; and 
tools related to license analysis. Activities supporting the economic 
competitiveness of the commercial space transportation industry, such 
as the Space Incentive program, are of secondary priority. In the event 
of budgetary reductions, the FAA would focus its resources on its 
highest priority safety mission.

        c.  Does it make sense for an agency with primary regulatory 
        responsibility to undertake such a program rather than R&D 
        organizations who are not so encumbered, such as the National 
        Science Foundation or NASA or, alternatively, the Department of 
        Commerce's Office of Space Commercialization?

A3(c). The FAA's regulatory role does not preclude its ability to be a 
meaningful R&D organization as well. Although seemingly small ($170 
million in FY11) in comparison to the budget numbers for other R&D 
organizations, the R&D activities conducted by FAA lines of business 
are important components of and large contributors to the development 
and execution of FAA's regulatory authority. This prize is specifically 
designed not to overlap with any NASA prize initiative. The FAA 
believes this prize will encourage transportation technologies, rather 
than support an agency specific mission. The FAA is in a unique 
position to understand commercial space transportation, and the 
incentive is intended to specifically support the space transportation 
industry. There are no US government programs aimed at reducing the 
costs of access to space by developing reusable space launch systems to 
build upon the advancements of the Space Shuttle. Reusability is widely 
recognized and accepted as being a necessary technology before 
commercial space transportation can achieve its full potential.
    The National Science Foundation supports science research, not 
systems development, so there is no overlap. The Department of Commerce 
has not pursued any space-related prize initiatives.

Q4.  A 2008 report conducted by the Aerospace Corporation pursuant to 
direction in the 2004 Commercial Space Launch Amendments Act found that 
human suborbital and orbital flights should be regulated differently. 
What is the AST doing to understand the risks specific to suborbital 
and to orbital systems and how is it using that information to inform 
its approach to safety and regulations?


A4. This is a very important question, and the FAA is in a unique 
position to see the differences between orbital and sub-orbital 
operations through our work with licensing and permits. Suborbital 
flights are developing with more of a build-up approach, similar to 
aircraft development, and involve a shorter duration of exposure to the 
hazards of space. As a result, the FAA has elected not to pursue 
suborbital human space flight regulatory changes once the 2012 
moratorium expires. We believe that we have adequate insight to the 
safety levels of sub-orbital vehicles through the development and 
envelope expansion that take place during flight testing. However, 
orbital operations are by their nature ``all-or-nothing'' in that the 
vehicle must achieve orbit completely in order to be successful, and 
the duration of exposure to the hazards of space is much more 
substantial. The FAA believes that the development of orbital 
spaceflight regulations must begin soon in order to ensure consistency 
of approach among all government agencies for the benefit of industry.
    With regards to studying the risks specific to suborbital and 
orbital systems, the FAA is investigating the health effects of 
spaceflight on participants from the general public--as opposed to 
highly trained and healthy astronauts. In addition, the FAA is 
investigating the effects of frequent space launch activities on the 
National Air Space System and associated impacts to commercial airline 
operations. An ``anomaly database'' is being developed to track 
unexpected events in commercial space transportation that relate to 
safety. Finally, the FAA is sponsoring several areas of research under 
the Center of Excellence that directly relate to industry safety 
issues.

Q5.  To what extent has FAA been involved in NASA's commercial crew 
development (CCDev) program and in the selection of funding recipients 
for NASA's CCDev2 solicitation and what further involvement, if any is 
planned?

A5. The FAA has two full time employees located in the NASA Johnson 
Space Center Commercial Resupply Services (CRS) office and one in the 
NASA Kennedy Space Center Commercial Crew Program (CCP) office to 
coordinate and communicate regarding these interagency topics. NASA has 
one full time employee at FAA Headquarters in Washington DC for the 
same purposes. The FAA participated in NASA's review and evaluation of 
CCDev proposals but was not a ``voting member'' in the selection of 
winning proposals for contract. Our participation was to ensure that 
relevant FAA regulatory requirements were properly addressed in the 
acquisition process. The FAA and NASA are actively engaged in 
discussions to determine the best path forward to strengthen our 
government partnership both to increase safety and to benefit industry.

        a.  What, in your view, would give FAA the authority to impose 
        safety regulations for NASA crew members that may fly on 
        commercial spaceflight systems for ISS crew rotations rather 
        than having NASA do it?

A5(a). 51 U.S.C. Sec. 50905(c) provides the FAA authority to issue 
regulations governing the design or operation of a launch vehicle 
operating under an FAA license to protect the health and safety of crew 
and space flight participants. The intent of the Commercial Crew 
Program (CCP) is to develop a commercial capability for launches to the 
ISS. Since the FAA licenses commercial launches, it is the intent of 
both NASA and the FAA that the FAA will ultimately license these 
launches within the limits of its regulatory authority. This is to 
industry's benefit so that it may leverage the developments of the CCP 
to extend to non-NASA customers. For licensed operations, the FAA has 
responsibility for public safety. At some time in the future, and after 
the expiration for the 2012 moratorium, NASA and the FAA may agree that 
the FAA will exercise responsibility for occupant safety as well.

        b.  What are FAA's plans for working with NASA on human rating 
        requirements and safety for potential commercial human 
        spaceflight operations involving government crew?

A5(b). A Memorandum of Understanding (MOU) between the NASA Commercial 
Resupply Services Program and the FAA is already in place, and an MOU 
between the NASA Commercial Crew Program (CCP) and the FAA is currently 
being drafted. The FAA and NASA CCP have been conducting joint reviews 
of NASA 's requirements and FAA regulations to determine if there are 
any incompatibilities or conflicts between them. We are also examining 
how the FAA's regulations would apply under various acquisition 
strategies being considered by NASA. As part of our ongoing 
collaboration, the FAA attended NASA's requirements workshop in June 
2011. The FAA will continue to stay abreast of requirements development 
in order to ensure consistency, to reduce industry's data burden, and 
ensure that industry can leverage the developments of the CCP to extend 
to non-NASA customers.

Q6.  What specific issues and questions does Congress need to consider 
before determining how to handle accidents or collisions that may occur 
on-orbit?

A6. Space mishap investigation is extremely challenging, partly because 
of the remote environment that hampers investigation and partly because 
many entities could be involved or have a stake in the investigation 
and the outcome. In order to address this problem, the FAA, NASA, and 
the NTSB have a Mishap Tri-Chair Working Group which meets monthly; 
they have agreed to a matrix of responsibilities if a mishap occurs 
based on their discussions. This matrix would likely be of value to 
Congress in framing the discussion.
    Congress should consider these specific issues when determining how 
to handle accidents or collisions that may occur on-orbit:

    a.  On-orbit authority

    b.  Liability and indemnification issues under U.S. laws and 
international treaties

    c.  Which entity is best suited to conduct the efforts during the 
various stages or components of an investigation most efficiently; 
these stages include detection, data-gathering, investigation, 
compliance, enforcement, and international coordination

    d.  Existing treaties and legislation regarding mishaps involving 
NASA or NASA -contracted vehicles, to include:

          The Astronaut Rescue Agreement

          The National Aeronautics and Space Administration 
        Authorization Act of 2005, (specifically Section 822).

Q7.  In your testimony, you noted that having one set of requirements 
for NASA and one for FAA would not allow companies to close their 
business cases. Would not having regulations in place at the time of 
any future NASA commercial spaceflights for ISS crew rotations be a 
show-stopper for companies?

A7. Many in the industry have expressed a desire for the FAA to begin 
developing occupant safety regulations for human spaceflight to provide 
confidence to their investors that the appropriate regulatory structure 
is in place to use the commercial vehicles they develop in support of 
NASA 's requirements for non-NASA missions. Not having regulations 
compatible with the requirements that guided the development of the 
vehicles could lead to delays in licensing these vehicles commercially.

Q8.  In your prepared statement, you said that in FY 2012 you ``expect 
several dozen licensed or permitted launches''. How many of those will 
be licensed launches? What is the basis of your expectation?

A8. A conservative estimate, taking into consideration range and 
technical delays, is that there will be 20 - 25 licensed launches 
during FY 2012, of which 12 - 15 will be orbital launches and 8 - 10 
will be suborbital launches. Permitted launches are much more difficult 
to estimate. Based on self-reported intentions of industry combined 
with prudent judgment of the uncertainties, we believe a number of 
commercial reusable launch operators will conduct 20 - 30 research and 
development launches in FY2012 under experimental permits. In total, we 
expect 40 - 55 licensed or permitted launches during FY2012. The basis 
of our expectation is from analysis of current launch manifests, 
industry reported intentions, and existing contracts. The sum total of 
these projections is subject to a high level of uncertainty for various 
reasons, therefore the FAA has revised the total down to a more 
conservative number.

Q9.  You noted in testimony that ``ensuring that the liability 
structure that is set up is appropriate'' for allowing businesses to 
compete internationally will be important for the success of the 
commercial human spaceflight industry. Could you please elaborate on 
how the current liability structure in the U.S. compares to the 
liability structure internationally and how the U.S. structure may 
affect competition?

A9. The current U.S. regime, set forth under Title 51, Chapter 509, has 
three tiers.
    Tier I: Maximum Probable Loss (MPL)-Based Financial Responsibility 
Requirements. The launch licensee is required to obtain insurance to 
cover claims of third parties, including government personnel. The FAA 
sets the requirements based on the largest accident probable, not 
possible, that would result from licensed launch or reentry activities, 
not to exceed the lesser of $500 million for third party liability, or 
the maximum available on the world market at reasonable cost or $100 
million for U.S. Government range property, or the maximum available on 
the world market at reasonable cost.
    Tier II: Catastrophic Loss Protection (Government Payment of Excess 
Claims, Known as ``Indemnification''). Subject to appropriations, the 
U.S. Government may pay successful third-party liability claims in 
excess of required MPL-based insurance up to $1.5 billion [$2.7 billion 
adjusted for inflation]. The U.S. Government waives claims for 
government property damage above required property insurance.
    Tier III: Above MPL-Based Insurance plus Indemnification. If a 
claim exceeds Tier I and II the remaining financial responsibility 
reverts back to the licensee or legally liable party.
    The following are examples from the leading providers of commercial 
services for expendable launch vehicles:

          ``Arianespace shall be required to reimburse the French 
        government, up to a ceiling of 60 million euros per launch 
        [about $85 million in 2011], in the case of damages caused by 
        Ariane launches. Arianespace typically purchases insurance to 
        cover this amount. If the damages exceed this amount the French 
        government is obliged to indemnify the difference.'' \1\
---------------------------------------------------------------------------
    \1\  ``Study of Liability Risk-Sharing Regime in the United States 
for Commercial Space Transportation'' page 48, August 1,2006. This 
report, in response to Public Law 108-492, is available at: http://
www.faa.gov//about/office_org/headquarters_offices/ast/reports_studies/
---------------------------------------------------------------------------
          In Russia, ``[t]ypical levels of compulsory insurance vary 
        from $80 million for Start launch vehicles to $300 million for 
        Soyuz and Proton. The Russian government pays liability claims 
        in excess of insurance coverage if this specified in the launch 
        services contract. If it is not, the launch customer is liable 
        for these claims.'' \2\
---------------------------------------------------------------------------
    \2\ Ibid, page 52.
---------------------------------------------------------------------------
          In the expendable launch vehicle (ELV) satellite services 
        market, if there was no U.S. Government indemnification, the 
        FAA believes that U.S. providers would be unable to compete 
        against foreign providers. Industry has stated the same 
        position. \3\ In addition, as detailed in the 2006 report to 
        Congress: ``. . . private insurance markets still are not able 
        to provide full liability (maximum probable loss) coverage to 
        the commercial launch industry. Private liability insurance 
        capacity remains fragile and far below what would be needed to 
        compensate for government indemnification if it were 
        eliminated. Foreign competition has increased, and all credible 
        international competitors have risk-sharing schemes rivaling or 
        surpassing that of the U.S.'' \4\
---------------------------------------------------------------------------
    \3\ Ibid, page 36-37.
    \4\ Ibid., page 10, Executive Summary
---------------------------------------------------------------------------
          Regarding human space flight, the 2004 Commercial Space 
        Launch Amendments Act excludes space flight participants from 
        indemnification eligibility against third party claims. If a 
        foreign human space flight competitor had indemnification and 
        the U.S. did not, the FAA believes that in the mid-to-Iong 
        term, the U.S. human space flight industry--both orbital and 
        suborbital--would be negatively impacted.
          Given the approach to date in ELVs for satellites, foreign 
        competitors may try to institute an indemnification system that 
        is more favorable to industry than the U.S. liability regime 
        for human space flight.
          The FAA's commercial space industry advisory committee, 
        COMSTAC, told the FAA on June 1, 2011: ``We advocate increased 
        protection of operators and their associates when they serve 
        spaceflight participants. While the specific mechanism is yet 
        to be determined, the current indemnification regime (i.e., 
        private insurance up to $500M, Government indemnification to 
        $1.5B over that) would seem to be the correct way to achieve 
        this protection.''

Q10.  To what extent is data being collected to understand the range 
safety implications of different designs and approaches for commercial 
spaceflight systems and to inform any potential changes in regulations? 
Does FAA have access to company-proprietary data?

A10. Range safety implications of a design are always reviewed and 
analyzed in detail for each licensed or permitted launch, including 
proprietary data. We track and annually review with the US Air Force 
all waivers and exceptions to safety systems that were considered or 
granted by the USAF and the FAA. The FAA has four full time employees 
located at Patrick AFB (Eastern Range) for these purposes, with direct 
support provided from other FAA staff as required.
    We actively and continuously participate in joint USAF/FAA Common 
Standards Working Groups and in the USAF Range Commanders Council. 
There is a constant evolution of range operations and the FAA has 
several rule updates in consideration now to maintain consistency with 
USAF and NASA range guidelines.

Questions submitted by Representative David Wu

Q1.  What did FAA use as evidence of a commercial market to justify the 
significant increase in workforce and supporting activities detailed in 
its FY 2012 budget request, especially since the commercial market 
assessment for crew and cargo systems that NASA recently transmitted to 
Congress was not completed at the time of the FY 2012 budget process?

A1. The FY2012 budget request for AST was based upon a variety of 
factors that affect our workforce and supporting activities. These 
factors include the number of commercial space launches anticipated in 
FY2012, but also include the increase in the breadth and complexity of 
planned commercial space operations. Measuring this increase is 
challenging to do; however, market assessments are one good option. 
This is why the FAA annually conducts our own commercial space 
transportation industry orbital market assessment. We provided this 
data to NASA for its report, including having our market analysis 
contractor perform specific new market assessments for NASA to use in 
its report.
    Additionally, the FAA regularly polls industry as to its intended 
schedules. This is particularly crucial in the area of suborbital 
markets, where data is more difficult to obtain.
    Another indicator of potential future activity is the amount of 
money being invested in the industry. The FAA notes that between the 
Commercial Resupply Services (CRS) contracts, CCDev and Commercial Crew 
Program (CCP), and the Commercial Reusable Suborbital Research (CRuSR) 
program, NASA has been ramping up investment in the commercial space 
industry. Previously insignificant figures from a few years ago have 
increased to over $800 million in FY2011. $1.6 billion has been 
proposed for FY 2012 and subsequent years. Although the investments 
will take time to mature into actual launch events, NASA's investments 
alone will create a large increase in activities requiring the FAA's 
engagement as industry progresses towards licensed launch events.
Responses by Dr. Gerald Dillingham, Director, Physical Infrastructure, 
US Government Accountability Office

Questions submitted by Chairman Steven Palazzo

Q1.  During the hearing there was discussion about extending the 
experimental period for manned space flight systems, but in lieu of a 
schedule-driven regulatory moratorium, it was suggested that an 
alternative approach based on performance or other indicators should be 
considered. In your view, is this a better approach? If yes, what 
metrics do you believe should be used?

A1. GAO Response: Yes, we believe that a performance-driven approach is 
better than a schedule-driven approach. In 2006, we recommended that 
the Federal Aviation Administration's (FAA) Office of Commercial Space 
Transportation (AST) identify and monitor safety indicators for manned 
spaceflight so that it could be proactive in determining when to 
regulate crew and flight participant safety. \1\ The agency has not 
implemented our recommendation because commercial manned space flight 
has not yet occurred. However, in the absence of such flights, metrics 
could be used along the lines suggested by Dr. Hertzfeld in his 
testimony. We agree with Dr. Hertzfeld that such metrics could take 
into account factors such as the maturity of the industry; the ability 
of companies to operate on a routine, scheduled basis; the number of 
passengers and the amount of cargo transported or the number of 
research experiments flown; the standardization of vehicles and systems 
that could provide the basis for a vehicle certification regime; and a 
quantification of the different risks involved.
---------------------------------------------------------------------------
    \1\ GAO, Commercial Space Launches: FAA Needs Continued Planning 
and Monitoring to Oversee the Safety of the Emerging Space Tourism 
Industry, GAO-07-16 (Washington, D.C.: Oct. 20, 2006).

Q2.  As part of its FY2012 budget request, AST is proposing greater 
regulatory authority in the area of on-orbit transportation. Does GAO 
---------------------------------------------------------------------------
agree with this concept? Does AST have the resources and expertise?

A2. GAO Response: Ultimately, increasing AST's regulatory authority is 
a policy decision for the Congress. We have not completed the work that 
would provide a basis for discussing the regulatory authority for on-
orbit transportation. Likewise, we have not assessed whether AST has 
the resources and expertise to undertake significant additional 
regulatory responsibility in this area.

Questions submitted by Representative Jerry Costello

Q1.  What liability and indemnification issues would commercial human 
spaceflight vehicles carrying U.S. government astronauts or crew raise?

        a.  What issues are raised when both government crew and paying 
        spaceflight participants are onboard together?

        b.  What are the most critical issues for Congress to consider?

A1. GAO Response: Currently, for commercial launches licensed by the 
Federal Aviation Administration (FAA), the U.S. government may pay 
third-party liability claims in excess of required launch insurance, up 
to $1.5 billion. This catastrophic loss protection in the event of a 
commercial launch incident is known as indemnification. The National 
Aeronautics and Space Administration's (NASA) current plan calls for 
launch contractors to obtain an FAA license for crew flights to the 
International Space Station and, therefore, these flights would be 
covered under this government indemnification. Additionally, space 
tourism flights require an FAA license and would also be covered under 
this government indemnification. Congress could consider several issues 
related to indemnification such as: (1) the point at which the industry 
will have outgrown the need for federal indemnification; (2) if federal 
indemnification is eliminated, how much time should be provided for 
industry to develop alternatives to government indemnification; and (3) 
if federal indemnification continues, whether an overall funding cap 
should be established.

Q2.  What does Congress need to understand before determining how 
accident investigations for commercial human spaceflight and suborbital 
flights should be handled, including on-orbit accidents?

        a.  Should the process and authority for accident investigation 
        be the same or different if humans are involved?

        b.  Should the same organization that investigates launches 
        also investigate on orbit accidents and if not, why not?

A2. GAO Response: As we reported in 2009, the role of the National 
Transportation Safety Board (NTSB) in investigating space flight 
accidents has not been resolved and, to our knowledge, that issue 
remains unresolved. NTSB does not have space transportation explicitly 
included in its statutory jurisdiction, although it does have 
agreements with FAA and the Air Force under which it will lead 
investigations of commercial space launch accidents. \2\ A 2008 FAA-
commissioned report on human space flight suggested that Congress may 
want to consider explicitly designating a lead agency for accident 
investigations involving space vehicles to avoid potential overlapping 
jurisdictions. \3\
---------------------------------------------------------------------------
    \2\ GAO, Commercial Space Transportation: Development of the 
Commercial Space Launch Industry Presents Safety Oversight Challenges 
for FAA and Raises Issues Affecting Federal Roles, GAO-10-286T 
(Washington, D.C.: Dec. 2, 2009).
    \3\ The Aerospace Corporation, et al., Analysis of Human Space 
Flight Safety, Report to Congress (El Segundo, Calif.: Nov. 11, 2008).

Q3.  How should any potential civil space traffic management regime 
correspond to national security needs for space traffic management and 
---------------------------------------------------------------------------
space situational awareness?

        a.  Should these functions be handled separately or by one 
        entity?

        b.  What criteria should inform the decision of what entity (or 
        entities) is given authority for space traffic management?

A3. GAO Response: Our work indicates that a civil space traffic 
management function, which could be carried out by one entity, would 
have to be coordinated or linked with the national security community 
and specifically with the Department of Defense's U.S. Strategic 
Command-the organization responsible for executing the space 
situational awareness mission. \4\ We have no basis to recommend any 
one entity to handle this function.
---------------------------------------------------------------------------
    \4\ GAO, Space Acquisitions: Development and Oversight Challenges 
in Delivering Improved SpaceSituational Awareness Capabilities, GAO-11-
545 (Washington, D.C.: May 27, 2011).

Q4. The 2004 Act limits the commercial human spaceflight safety regime 
---------------------------------------------------------------------------
to ``informed consent.'' Should Congress revisit that approach?

A4. GAO Response: Because commercial space flights have not yet begun, 
we do not have any basis to challenge the concept of ``informed 
consent.'' Congress could revisit the issue after the industry develops 
further and FAA develops safety regulations for human space flight, 
which would replace the informed consent regime.
Responses by Dr. Henry R. Hertzfeld, Research Professor of Space Policy 

and International Affairs, Elliott School of International Affairs,
George Washington University

Questions submitted by Chairman Steven Palazzo

Q1.  As part of its FY2012 budget request AST is proposing greater 
regulatory authority in the area of on-orbit transportation. Your 
statement also notes the need for new regulatory authority. For the 
near term (next ten years), what on-orbit activities do you believe 
merit the highest concern, and what tools does AST need to regulate 
them?

A1. There is an assumption built into the question that the AST will be 
the regulator of all on-orbit activities for the United States 
Government payloads on commercial space flights as well as the 
commercial sector. I do believe that the U.S. will need more on-orbit 
supervision of its activities, but the FAA is not the regulator for all 
commercial on-orbit activities, whether government-sponsored or not.
    NASA, NOAA, and the DOD have been performing in-orbit activities 
since the 1960s and have adequately developed technical means to 
perform in-orbit activities. They have the full support of overall 
government policy based on our treaty obligations and requirements 
should liability issues arise from their activities in space. The 
safety record of government operations in space, although not perfect 
in the hazardous environment of space, has generally been as good as 
reasonably could be expected. And, it has improved with the lessons 
learned from experience.
    But, Congress has not given any federal agency the mandate to fully 
regulate commercial on-orbit activities. The space regulatory agencies, 
the FAA, NOAA and the FCC, have issued rules and regulations for 
launches that extend the launching activity to the placement in the 
proper orbit of a payload and to the on-orbit preparations for re-
entry. Additionally, the FCC and NOAA have end-of-life requirements 
that requires payloads to safely be put into ``graveyard orbits'' or 
deorbited.
    Specifically, meeting the liability obligations of the space 
treaties (particularly Article VII of the Outer Space Treaty and 
Articles III and IV of the Liability Convention) may involve the 
finding of fault for accidents in space. If a U.S. payload is at fault, 
the U.S. Government is liable for damages to the assets of another 
State Party to the Convention. The Government can then turn to a 
commercial operator of that satellite or payload and attempt to recover 
those damage payments. However, currently there are no requirements for 
commercial firms to purchase insurance for on-orbit activities, 
although some companies do. (Iridium, a U.S. company which was involved 
in a serious accident a couple of years ago, did not insure its 
satellites. Fortunately, there was no significant near-term economic 
damage in space from that accident.)
    Whether it is through requiring the commercial operator of a space 
asset to purchase private insurance or through some other financial 
arrangement, Congress should consider a new on-orbit commercial 
protocol for space activities. Additionally, the government needs to do 
more to prevent accidents. The recent U.S. policy adopting the IADC 
Debris Mitigation Guidelines as well as increasing the coordination and 
accuracy of SSA is an example of what has already begun in the U.S. 
Although the FAA has been involved, it is only one part of the broad 
reaching regulatory system that will be needed.

Q2.  FAA and NASA are now engaged in discussions on regulating 
commercial cargo and crew launches to the International Space Station, 
especially with regard to crew safety, third-party safety, and 
International Space Station proximity operations. Current proposals 
suggests that NASA would certify crew capsules used to carry government 
astronauts to and from orbit, while FAA would license their launch. 
What are your thoughts about this division of responsibility? In your 
view, is it sensible? What steps should be taken to ensure there are no 
safety `gaps'?

A2. I would need to know more about what is now being discussed between 
the FAA and NASA, but I am concerned about this division of 
responsibilities. Currently, FAA certifies airplanes for flight; it 
does not certify space vehicles-it only licenses them subject to a 
safety review and a showing of financial liability. FAA aviation 
certification is a well-developed system and the rules and requirements 
are codified. NASA ``certifies'' the Shuttle. That is really different 
process than aviation certification and is more like a quality control 
process. Each Shuttle flight is separately certified while aircraft 
certification is valid for all flights of a particular type of 
airplane. There is no current certification procedure for commercial 
space vehicles, either by the government or by industry. Developing a 
certification process for a launch vehicle and its payload is an 
entirely new concept and will take years of work and experience before 
it could reach the level of assurance now in place for aviation.
    I don't see any essential reason for the FAA to get involved in 
technical issues of on-orbit activity for a government payload. NASA is 
well positioned to do that. Dividing the responsibility between the FAA 
and NASA will only create difficult communications problems between the 
Agencies and could possibly increase the risk of accidents rather than 
reduce them.
    Launching government satellites on U.S. commercial launch vehicles 
does not require an FAA license. If the launch is for a dedicated 
government payload, then NASA procedures (or DOD) are applied for 
safety reviews and financial responsibility remains a Government 
guarantee. However, companies may prefer to go through the FAA and get 
a license. This may be advantageous for the company for two reasons: 1) 
the vehicle may be similar to others of its class and already covered 
under an FAA review, and 2) it may provide an extra measure of 
assurance for the company should anything go wrong with the launch. 
But, to emphasize again, it is not absolutely necessary that a 
commercial launch get a license from the FAA for dedicated NASA 
payloads.
    In the case of ISS supply, even though the current trend in policy 
is to have NASA pay for commercial services, rather than build space 
hardware themselves or through an R&D contract, NASA is still the 
customer. If NASA wants to impose its own criteria for safety and it 
(or the Government) is able to indemnify those activities, and if NASA 
is willing to pay for the extra safeguards that it wants, there is 
precedent to bypass the FAA licensing procedures on those particular 
launches.
    Since a commercial company launching NASA cargo and eventually crew 
to the ISS will also want to market those services and capabilities to 
private customers, they may desire an FAA license for NASA launches as 
a marketing and quality assurance tool for other commercial sales.
    A benefit of involving the FAA as an observer, advisor, and partner 
in NASA missions (but not as a regulator) would be the development of a 
good database of operations for launch and on-orbit activities. 
Eventually the FAA can make good use of the accumulated data and 
experience in developing future regulations of purely commercial 
launches and on-orbit activities. This is particularly relevant for the 
future unknowns of private human activity in orbit and for the ISS.

Questions submitted by Representative Jerry Costello

Q1.  What liability and indemnification issues would commercial human 
spaceflight vehicles carrying U.S. government astronauts or crew raise?

        a.  What issues are raised when both government crew and paying 
        spaceflight participants are onboard together?

        b.  What are the most critical issues for Congress to consider?

A1. Liability in space is an untested legal regime, particularly for 
commercial enterprises in space. Through Article VI of the Outer Space 
treaty, States are responsible for the activities in space of their 
citizens and non-governmental entities. This provision exposes the 
State to potential payment for damages to the assets of other nations 
caused, not directly by the State, but by one of its companies 
operating in space. No other industry or sector is treated this way. In 
other high-technology, high-damage industries such as civil nuclear 
plants or large oil platforms, the operator has the primary 
responsibility for liability payments with governments sometimes a 
secondary guarantor.
    Domestic law, it should be noted, often can and will require a 
company to have insurance (FAA does this now with launches) so that the 
exposure of the government is actually minimized, except in exceptional 
situations.
    a)   The mixing of government personnel with private crew and/or 
private passengers is complicated. The problems are as diverse as the 
reasons for having private citizens on a spacecraft. Are they 
government contractors? Are they ``tourists?'' Are they doing private 
R&D or science related to a government project? Each scenario might 
trigger a different legal answer.
    It is possible that those passengers can get in the way of mission 
personnel (space vehicles are not roomy and it is impossible to 
physically separate private from government people). If an accident 
occurred as a result, as they have on ships and submarines, assigning 
liability is of concern. Informed consent is not enough in these cases; 
the passengers and companies involved must have comprehensive financial 
responsibility procedures for all types of fault-based liability.

Q2.  The 2004 Act limits the commercial human spaceflight safety regime 
to ``informed consent''. Should Congress revisit that approach?

A2. Yes, it should be reviewed. Informed consent from passengers is 
aimed at suborbital human flights and at stimulating the companies by 
not requiring them to insure their passengers who recognize, through 
informed consent statements, that they are taking certain risks. The 
informed consent requirement also makes it clear to the passenger that 
the FAA has not certified the vehicle or flight (and may therefore 
absolve the Government from being sued by the passenger).
    However, as mentioned in the testimony, four States that have 
spaceports are now moving to further protect the private launch 
companies from virtually any legal suits from passengers. Each State 
has slightly different wording in its laws which may now result in 
competition among the various States for launch operators to locate 
there based on the costs associated with safety issues. (Economic 
competition based on the price of the flight and on other incentives 
States may give companies such as building facilities or providing tax 
incentives should not be discouraged.)
    Furthermore, these types of informed consent waivers that protect 
the companies may not even be practical from a legal view. For 
instance, if a launch originates in New Mexico (a state with an 
informed consent law) and then has an accident in U.S. airspace above 
Colorado (a state without such a law), Colorado tort law would be 
applied to the accident and it is highly probable that a Colorado court 
would not allow the application of that waiver to the launch company. 
Predictability and uniformity in these safety regulations across the 
U.S. would be preferable.

Q3.  What does Congress need to understand before determining how 
accident investigations for commercial human spaceflight and suborbital 
flights should be handled, including on-orbit accidents?

        a.  Should the process and authority for accident investigation 
        be the same or different if humans are involved?

        b.  Should the same organization that investigates launches 
        also investigate on-orbit accidents and if not, why not?

A3. The expertise required to investigate an accident involving space 
technologies is quite limited. Only a very few agencies (e.g. NASA, 
DOD, and some parts of DOT and others) have the expertise to perform 
the analyses required. Historically, all agencies as well as private 
consultants, industry experts, etc. have fully cooperated in these 
investigations. I do not believe there has been any serious problem in 
obtaining that cooperation.
    Therefore, I believe that it is not a question of accidents with or 
without humans, or accidents involving space hardware on Earth, during 
launch, in-orbit, or returning from orbit, but only one of clearly 
designating one organization to coordinate an accident investigation. 
That organization could take any format ranging from an ad hoc office 
or Board within an agency such as NASA or DOT created especially for 
each commercial space accident to a more formal office created within 
an agency organized specifically to develop protocols and procedures 
for a space accident. That organization should be given all necessary 
legal powers to conduct an investigation, obtain evidence, review and 
keep secure any confidential information (classified or commercially 
proprietary) and procure all necessary technical expertise. The 
investigatory panel should be completely independent of the Agency 
hierarchy and should report directly to either (or both) the President 
and Congress.
    There are several possible locations (none need to be permanent 
organizations or office) for this independent activity. NASA itself has 
a safety office and advisory group that could create an investigation 
panel. The DOT/FAA might also be appropriate, but it currently does not 
have a full spectrum of technical space expertise. The NTSB is an 
independent body within the Executive Branch but does not specifically 
have space in its legislative charter. It does, however, have the 
organizational expertise to conduct accident investigations in other 
transportation modes and currently does have a MOU with the FAA for the 
investigation of certain space-related accidents.

Q4.  How should any potential civil space traffic management regime 
correspond to national security needs for space traffic management and 
space situational awareness?

        a.  Should these functions be handled separately or by one 
        entity?

        b.  What criteria should inform the decision of what entity (or 
        entities) is given authority for space traffic management?

A4. This is not my specific expertise. I do believe that the key to a 
successful regime for space traffic management must be coordination, 
just as it is for air traffic control. And, of course, to get to space 
or to get back from space involves going through air space. Therefore, 
on either a national or international level, not only does space 
traffic management have to be coordinated in space itself, but also it 
must be coordinated with air traffic control.
    Therefore, whether one entity does both or whether there are 
different organizations controlling traffic in and to space, they must 
work together (and also interface smoothly with military traffic 
command, as is also done currently with air traffic control).
    Criteria for this decision should rest mainly on the ability to 
coordinate the information required. The range of information is vast 
and complicated and with the global reach of space, will involve access 
to many different types of information such as air traffic data, 
weather data, space weather data, national and international launch 
information. The function will also require a sophisticated level of 
analysis and the ability to make real-time decisions.

Q5.  Should FAA require evidence of a real demand for launch services 
at a prospective spaceport prior to investing its resources for the 
work leading to granting a license?

A5. This is a difficult question. If and when there is a surge of 
private space launch activity, the FAA will need the resources. 
However, at present, the FAA data indicate that number of commercial 
launches is slightly over 10 per year. Forecasts indicate that the 
number of launches will remain relatively stable for the next several 
years and may rise to near 20 per year late in this decade. But, those 
forecasts are based on a number of assumptions, including the success 
of the NASA-led effort for commercial crew and cargo flights to the 
ISS.
    It appears from these numbers there will no surges in launch 
activity in the immediate future. But, given the many differences in 
the technical approach to launching from the private companies now 
building new and experimental launch vehicles that the FAA will need 
for a broad range of technical expertise and possibly new resources to 
evaluate these different approaches. The FAA is closely monitoring the 
development of these new vehicles and, as yet, none are commercially 
operating. Congress should be kept informed and ready to act when and 
if the FAA needs the resources to adequately license these new vehicles 
and possible new surges in launch demand.

Q6.  What, if any, risks are raised when range safety at a private 
spaceport is conducted by the organization that is operating the 
spaceport, and how should those risks be addressed?

A6. The obvious risks are the inherent decision conflicts between 
making money in a profit-motivated organization and developing a level 
of safety that is as high as possible and practicable as it could be. 
There will always be trade-offs between money and safety; nothing is 
100% safe. For the most part, government agencies dealing with space 
issues are well funded and, particularly when dealing with human 
safety, will err on the side of spending the funds necessary for a 
higher level of safety than a private firm would.
    On the other hand, a private firm will argue that the government is 
overly cautious and near equivalents in safety can be met with less 
expensive investments. And, they argue, that customers will not buy 
their services if there is a serious safety breach that was responsible 
for the loss of life.
    One way the risks can be addressed and possibly managed in an 
optimum level for safety is to require the private spaceport to use a 
new part-time board that would combine government expertise with 
private sector executives. This relatively small office/panel/board 
would consist of independent individuals who are experts in appropriate 
space and ground support technology, operations, law, and safety. This 
one office would employ a small permanent staff and would be 
established to oversee and advise all domestic spaceports. The funding 
for this would be through an obligatory payment or tax from each U.S. 
spaceport (charged on the basis of a formula to insure a proportionate 
and fair share payment by each spaceport). Each spaceport would be 
required to abide by the recommendations of this Board and an FAA 
license to launch from that facility would be granted only if there 
were full compliance with those recommendations. The FAA licensing 
process would be independent from this Board.
    One final note on the suggestion for a new Board to be formed (and 
this note equally applies to a possible new organization for accident 
investigations mentioned above) is that the demand for spaceports (and 
the number of accidents that might occur) would warrant the 
expenditures for these organizations. It might be more appropriate if 
demand is low to have ad hoc committees of experts both within the 
Government and outside formed for these purposes.
                                   
