[Congressional Record Volume 140, Number 66 (Tuesday, May 24, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 24, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                    THE LAUNCH SERVICES ACT OF 1994

                                 ______


                            HON. JOEL HEFLEY

                              of colorado

                    in the house of representatives

                         Tuesday, May 24, 1994

  Mr. HEFLEY. Mr. Speaker, today I have introduced a bill that I hope 
will give rise to a revitalization of the U.S. space launch industry, 
the Launch Services Corporation Act of 1994.
  This bill addresses a problem that has concerned me since I came to 
Congress in 1986--the continual erosion of America's share of the world 
commercial space launch market and the rising costs of doing business 
in space. Over the past 25 years, this Nation has spent more than $3 
billion studying this problem, yet we have nothing to show for it today 
but a pile of reports. This bill is my attempt to get this issue off 
the dime.
  The Launch Services Act of 1994 is modeled on the highly successful 
Communications Satellite Act of 1962, which enabled today's market in 
geosynchronous telecommunications satellites.
  My bill would direct the president to issue a statement of the 
Nation's requirements for space launch, then cause to bring into being 
a corporation, a public-private partnership, which would be charged 
with raising private capital, either through the sale of stocks or 
other devices, and providing launch services to the Government and 
world commercial market.
  To provide an underpinning for this corporation, the Government would 
provide some funds for nonrecurring costs, negotiate a guaranteed 
number of launches per year, probably between 10 and 15 and provide 
help in research and development and access to launch facilities. After 
6 years, the act would sunset and the corporation would have to make 
its way in the world as a private, for-profit business, dependent upon 
its skill in meeting the requirements of the market.
  Why would we want to do something like this? For a number of reasons. 
First, the high cost of launch satellites into orbit is stifling, even 
endangering what we can do as a Nation. This is particularly true in 
the area of defense, so much so that last year, the Senate 
Appropriations Committee ordered the Defense Department to look into 
the possibility of launching strategic assets aboard foreign launchers 
like Long March or Ariane. I don't think any of us believe that would 
be a good thing.
  Launch costs to orbit have been the long pole in the space tent for 
some time. In 1969, a commission headed by then-Vice President Spiro T. 
Agnew concluded that the costs of putting things into space were too 
high and that the Nation should develop launch systems driven by 
elements of commonality, reusability, and economy. The space shuttle 
was the first attempt to do that and we have been studying the problem 
ever since.
  Second, the current U.S. launch industry has no incentive to lower 
its costs. Its main--and sometimes only--customer is the Federal 
Government, particularly the Defense Department which, in turn, has no 
choice but to pay high prices for launch. As a result, U.S. launchers 
remain high-tech and built for performance and launch costs remain 
high. In other words, we build race cars while the rest of the world 
builds trucks and our wallets and market share suffer as the result.
  This has had the expected result in the world commercial launch 
market. Atlas and, especially Delta, rockets are currently competitive 
against the French Ariane although some of Atlas share could be list 
with the maiden flight of Ariane V next year. But entrants from 
nonmarket Russia and china could undercut virtually all of our 
launchers.
  There is a limit to how much can be accomplished by 
further refinements to our existing fleet or even through trade talks. 
In the short term, it is simply impossible to demand that a command-
and-control economy, like China, start pricing its products as though 
it operated in a free market. A tiger cannot change its stripes 
overnight. To compete with the Protons and Long Marches of the world, 
we have to bring about a drastic reduction in launch costs and real 
changes in the way we do business. I believe the best way to do that is 
to expose the U.S. launch industry to market forces and the only way 
for such a corporation to survive would be for it to aggressively 
recapture a major share of the world market. The two work hand in hand.

  The benefits of such a strategy are obvious. If the services offered 
by the new corporation manage to bring about a reduction in launch 
costs by 50 percent, or even 25 percent, the Government can recoup its 
initial investment over a period of a relatively few years. The 
spending foregone can then be applied, either to other programs, or to 
meeting budget constraints.
  The benefits to the private sector are more speculative but, I 
believe, just as real. To make money in the commercial launch market, 
players have to seize an overwhelming--not just a major--share of that 
market. If that can be accomplished, investors may start examining 
ideas for space business that may seem far-fetched today. This could 
give rise to the commercialization of space so many of us have waited 
for, the success of which would redound to the benefit of the Launch 
Services Corporation in new business.
  The last benefit is more basic. If we continue the way we have been 
going, we are going to lose the American launch industry. Martin 
Marietta, in my State, recently acquired the Space Division of General 
Dynamics. While this acquisition works to the good in consolidating 
overcapacity in the launch industry, the vehicles Martin will build are 
by no means assured of capturing a greater share of the launch market 
than we have now. The loss of jobs and this manufacturing base will 
continue unless we take fairly drastic action.
  I'm not wedded to this idea nor am I going to pretend this is a 
perfect bill. Frankly, this idea scares some people. Some of the 
current players, Martin included, worry it would put them out of 
business. Some others, such as Orbital Sciences and, to some extent, 
McDonnell Douglas, feel market forces are at work that will eventually 
sort all of this out.
  There are reasonable questions that can and should be asked about the 
commercial potential of space, the effect of such legislation on 
existing contracts and the actual financing of such a corporation. We 
dropped the authorization section of this bill after we were unable to 
get any solid figures on how much this would cost and how much private 
investment we could attract. These are questions that can and should be 
explored more fully in open debate. But we must talk about this issue, 
not put it off for another 25 years.
  Mr. Speaker, we hear a lot these days about re-inventing Government, 
about preparing for the 21st century. Businesses have become leaner and 
meaner and State and local governments have begun to contract out and 
to privatize. I believe the American space launch industry must do the 
same lest those industries, which put men on the moon and helped us win 
the cold war, become that war's final casualties.

                                H.R. --

       Be it enacted by the Senate and House of 
     Representatives of the United States of America in 
     Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Launch Services Corporation 
     Act of 1994''.

     SEC. 2. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``Corporation'' means the Launch Services 
     Corporation created under section 4 of this Act; and
       (2) the terms ``launch'', ``launch property'', ``launch 
     services'', ``launch site'', and ``launch vehicle'' have the 
     meaning given such terms under section 4 of the Commercial 
     Space Launch Act (49 U.S.C. App. 2603), except that the 
     provisions of this Act shall not apply to activities relating 
     to suborbital trajectories.

     SEC. 3. FEDERAL RESPONSIBILITIES.

       (a) President.--The President shall--
       (1) coordinate the activities of Federal agencies with 
     space launch responsibilities, so as to ensure that there is 
     full and effective compliance at all times with this Act;
       (2) ensure that timely treaties, trade agreements, and 
     other appropriate arrangements are made, and appropriate 
     regulations are issued, to enable foreign customers to obtain 
     launch services from the Corporation and to otherwise 
     participate in the launch services system established 
     pursuant to this Act; and
       (3) after consultation with appropriate Federal agencies, 
     issue a statement of the technical requirements of the 
     Federal Government for the system referred to in paragraph 
     (2).
       (b) Research and Development.--The National Aeronautics and 
     Space Administration and the Department of Defense shall 
     cooperate with the Corporation on research and development 
     related to the purposes of the Corporation.
       (c) Federal Agencies in General.--The Federal Government 
     shall--
       (1) procure, to the maximum extent feasible, needed launch 
     services from the Corporation;
       (2) pay fair market value for services provided to the 
     Federal Government by the Corporation;
       (3) extend to the Corporation first priority for access to 
     launch property and launch sites in a mutually agreeable 
     manner;
       (4) furnish range safety for launches from Government-owned 
     facilities; and
       (5) to the extent feasible, furnish other services to the 
     Corporation as may be required in connection with the 
     establishment and operation of the Corporation.

     SEC. 4. LAUNCH SERVICES CORPORATION.

       (a) Creation.--There is authorized to be created a Launch 
     Services Corporation, a for-profit corporation which shall 
     not be an agency or establishment of the United States 
     Government and which shall be incorporated under the laws of 
     a State of the United States.
       (b) Purposes.--(1) The purposes of the Corporation shall 
     be--
       (A) to broaden and speed the economic use of space;
       (B) to enhance the economic competitiveness of the United 
     States launch services industry and all industrial, 
     commercial, and financial businesses related thereto;
       (C) to enhance national security;
       (D) to serve the launch needs of--
       (i) the Federal Government;
       (ii) private sector customers in the United States; and
       (iii) appropriate foreign customers; and
       (E) to remain a viable and competitive corporation.
       (2) It shall not be a purpose of the Corporation to 
     construct launch vehicles.
       (c) Process of Organization.--The President shall, as 
     expeditiously as possible, appoint incorporators, by and with 
     the advice and consent of the Senate, who shall serve as the 
     initial board of directors of the Corporation until the first 
     annual meeting of stockholders or until their successors are 
     elected and appointed under subsection (d) and qualified. 
     Such incorporators shall arrange for an initial stock 
     offering and shall take whatever other actions are necessary 
     to establish the Corporation, including the filing of 
     articles of incorporation, subject to the approval of the 
     President.
       (d) Directors and Officers.--
       (1) Directors.--The Corporation shall have a board of 
     directors consisting of 15 individuals who are citizens of 
     the United States, of whom one shall be elected annually by 
     the board to serve as chairman. Three members of the board 
     shall be appointed by the President, by and with the advice 
     and consent of the Senate, for terms of three years or until 
     their successors have been appointed and qualified, except 
     that one of the members first appointed under this sentence 
     shall be appointed to a term of one year, and one of such 
     members shall be appointed to a term of two years. Any member 
     appointed to fill a vacancy shall be appointed only for the 
     unexpired term of the director being replaced. The remaining 
     12 members of the board shall be elected annually by the 
     stockholders.
       (2) Officers.--The Corporation shall have such officers as 
     may be named and appointed by the board, at rates of 
     compensation fixed by the board, and serving at the pleasure 
     of the board. No individual other than a citizen of the 
     United States may be an officer of the Corporation. No 
     officer of the Corporation shall receive any salary from any 
     source other than the Corporation while employed by the 
     Corporation.
       (e) Financing.--
       (1) Stock.--The Corporation may issue and have outstanding, 
     in such amounts as it shall determine, shares of capital 
     stock, without par value, which shall carry voting rights and 
     be eligible for dividends. The stock shall be sold in a 
     manner to encourage the widest distribution to the public. No 
     company, including any company controlling, controlled by, or 
     under common control with such company, may hold more than 15 
     percent of the capital stock of the Corporation.
       (2) Additional instruments.--The Corporation may issue, in 
     addition to the stock authorized by paragraph (1), nonvoting 
     securities, bonds, debentures, and other certificates of 
     indebtedness.
       (f) Powers.--In order to achieve its purposes, the 
     Corporation may--
       (1) plan, initiate, own, manage, and operate itself, or in 
     conjunction with other business entities, a commercial launch 
     services system;
       (2) furnish, for hire, launch services to public and 
     private entities of the United States and, except as 
     otherwise prohibited by law, to foreign customers;
       (3) own and operate launch property, launch sites, and one 
     or more types of launch vehicle, provide or contract for 
     range safety operations at those launch sites, and provide or 
     contract for any other such service as may be required to 
     carry out its purposes; and
       (4) conduct appropriate research and development.
       (g) Recoupment.--Not later than 180 days after the date of 
     enactment of this Act, the President shall establish 
     procedures for the repayment by the Corporation to the 
     Federal Government of an amount equal to the amount of 
     Federal funding that has been provided to the Corporation.

     SEC. 5. FOREIGN BUSINESS NEGOTIATIONS.

       Whenever the Corporation shall enter into business 
     negotiations with respect to launch property, operations, or 
     services authorized by this Act with any international or 
     foreign entity, it shall notify the Department of State of 
     the negotiations, and the Department of State shall advise 
     the Corporation of relevant foreign policy considerations. 
     Throughout such negotiations the Corporation shall keep the 
     Department of State informed with respect to such 
     considerations. The Corporation may request the Department of 
     State to assist in the negotiations, and that Department 
     shall render such assistance as may be appropriate.

     SEC. 6. REPORTS TO THE CONGRESS.

       (a) President's Report.--The President shall transmit to 
     the Congress in January of each year a report which shall 
     include a comprehensive description of the activities and 
     accomplishments of the Federal Government and the Corporation 
     during the preceding calendar year under this Act, together 
     with an evaluation of such activities and accomplishments in 
     terms of the purposes of the Corporation and any 
     recommendations for additional legislative or other action 
     which the President may consider necessary for such purposes.
       (b) Corporation's Report.--The Corporation shall transmit 
     to the President and Congress, annually and at such other 
     times as it considers appropriate, a comprehensive and 
     detailed report of its operations, activities, and 
     accomplishments under this Act.

     SEC. 7. SUNSET.

       No Federal funding shall be provided to the Corporation 
     after December 31, 2000, except as payment for services 
     provided to the Federal Government by the Corporation.

                          ____________________