[Congressional Record Volume 145, Number 30 (Thursday, February 25, 1999)]
[Senate]
[Pages S2011-S2015]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BREAUX (for himself, Mr. Conrad, Mr. Burns, and Mr. 
        Baucus):
  S. 469. A bill to encourage the timely development of a more cost 
effective United States commercial space transportation industry, and 
for other purposes; to the Committee on Commerce, Science, and 
Transportation.


           commercial space transportation cost reduction act

         Council of State Governments, International City/County 
           Management Association, National Association of 
           Counties, National Conference of State Legislatures, 
           National Governors' Association, National League of 
           Cities, U.S. Conference of Mayors,
                                                February 24, 1999.
     Hon. Fred Thompson,
     Hon. George V. Voinovich,
     Hon. Joseph I. Lieberman,
     Hon. Richard J. Durbin,
     U.S. Senate,
     Washington, DC
       Dear Senators Thompson, Lieberman, Voinovich, and Durbin: 
     On behalf of the elected leaders of the respective 
     organizations of Governors, legislators, mayors, county 
     officials, and city managers, we are pleased that you will be 
     introducing the Federal Financial Assistance Management 
     Improvement Act. This bill was passed by the Senate last year 
     and has the strong support of all our organizations.
       The bill would require the Office of Management and Budget 
     (OMB) to reevaluate its array of over 75 crosscutting 
     regulations that govern all funds going to state and local 
     governments. We support a requirement that OMB establish lead 
     agencies to develop uniform common rules for crosscutting 
     regulations, base data information for multiple grants to the 
     same state or local government, and electronic filing of most 
     intergovernmental paperwork.
       We greatly appreciate your leadership for these reforms and 
     urge all Senators to support passage of your bill.
           Sincerely,
         Governor Thomas R. Carper, State of Delaware, Chairman, 
           National Governors' Association; Representative Dan 
           Blue, North Carolina State House of Representatives and 
           President, National Conference of State Legislatures; 
           Commissioner Betty Lou Ward, Wake County, North 
           Carolina, President, National Association of Counties; 
           Mayor Deedee Corradini, Salt Lake City, Utah, 
           President, The U.S. Conference of Mayors; Bryce (Bill) 
           Stuart, City Manager, Winston-Salem, North Carolina, 
           President, International City/County Management 
           Association; Mayor Clarence Anthony, South Bay, 
           Florida, President, National League of Cities; Senator 
           Kenneth McClintock, Puerto Rico Senate, Chairman, 
           Council of State Governments.
  Mr. BREAUX. I take the time today, Mr. President and my colleagues, 
to introduce a bill which I happen to think addresses a very important 
issue that this Nation is facing; and that is the question of trying to 
devise a system where the United States can continue to be the world's 
leader in the space launch business.
  Every day, every month, more and more satellites around the world are 
being put into service. I daresay that most people really do not follow 
the details of how this is accomplished, but I do know that over the 
last several months people in this country have heard a great deal 
about Chinese rockets, Ukrainian rockets, Russian rockets and all the 
problems that they have been involved with related to the U.S. 
aerospace industry.
  One may wonder, why would a U.S. company have to use a Ukraine launch 
vehicle or a Chinese launch vehicle or a Russian launch vehicle or a 
European launch vehicle in order to launch a U.S. satellite to serve 
the technological and communications needs of the world. The reason is 
not that hard to figure out when you look at the fact that these 
countries that I just mentioned are not countries that are under the 
same economic obligations that we are. Many of those are not free 
market economies. Many are still government-run economies. Many of 
those countries have governments that have put a great deal of money in 
their launch industries and are now able to provide those launch 
vehicles for use at a cutrate or subsidized price.
  I do not think that is particularly good for our country to have to 
buy space transportation on a Ukraine rocket to launch a U.S. 
satellite. When those rockets malfunction, then we are in a problem 
area trying to tell them based on our technological expertise why the 
failure happened. Our companies could get into trouble because of the 
risk that they are sharing with them technology that could be used for 
military purposes.
  So I, for one, do not think I would want to drive a Ukrainian car let 
alone ride in a Ukrainian rocket. But that is what is happening because 
of a situation where we do not have enough access in the private 
industry to U.S.-built space transportation vehicles that can launch 
U.S.-built satellites for communications purposes.
  We have learned that one of the reasons is the fact that there is 
inadequate private sector funding for U.S. companies to engage in 
building space transportation vehicles for this purpose. It is, of 
course, a high-risk business. This is much more risky than building a 
ship or building a car or building just about anything else. A lot can 
go wrong. So it is a high risk. And there is inadequate funding in the 
private sector.
  To solve this problem, what do you do? Do you make the Government 
take it over? Do you make the Government own the launch vehicles and 
make the Government pay for the building of the launch vehicles? In our 
society the answer is no. But I think that the legislation that I am 
introducing today, along with Senator Conrad Burns of Montana, sets up 
a program which would be a loan guarantee program where the U.S. 
Government can pattern in the space transportation industry what we 
have done very successfully in the shipbuilding industry under what is 
known as a Title XI shipbuilding loan guarantee program, where the 
Federal Government comes to a qualified builder who is having a 
difficult time getting adequate financing because of the nature of the 
industry, and that the Federal Government will be in a position to 
guarantee the loan to a company which company would go out into the 
private market and borrow the money but have the loan guaranteed by the 
Federal Government. Under that scenario, we have built literally 
hundreds and hundreds of vessels, probably thousands, through the Title 
XI loan guarantee program.
  What I am proposing in the ``Commercial Space Transportation Cost 
Reduction Act of 1999'' is to set up a loan guarantee program which 
would be patterned after the Title XI Shipyard Loan Guarantee Program. 
We would vest the Secretary of Transportation in our Government with 
the administrative responsibilities for the program operations. The 
legislation would initially provide up to $500 million of funding for 
the loan guarantee program. That would represent the possibility of 
generating up to $5 billion in loans for U.S. space transportation 
companies to engage other U.S. companies and U.S. workers in building 
space transportation vehicles for use in our society.
  I ask unanimous consent for 2 additional minutes.

[[Page S2012]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BREAUX. And by having that type of a system, I think that we 
would give our private companies the ability to compete with all of 
these other companies in countries which have their governments 
supporting them in these areas.
  We have had a number of Senators who have expressed an interest in 
participating with us in this legislation. Let me just mention Senator 
Lott, Senator Bacchus, Senator Bingaman, Senator Graham of Florida and 
Senator Landrieu of Louisiana. I hope--and now that the bill has been 
introduced, that the Commerce Committee can have some hearings on it--
that we can continue to improve it and move forward with establishing 
something that will allow the private sector of the United States to 
continue to be, and even increase the ability to be, the world leader 
in space transportion. In particular, the ability to launch our 
satellites with our vehicles and not have to rent space from the 
Russians or from the Chinese or from the Ukrainians or from any other 
part of the world. This is a vitally important industry, and the United 
States should be the technological leader now and for the future.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 469

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Commercial 
     Space Transportation Cost Reduction Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.

 TITLE 1--INCREASING THE AVAILABILITY OF PRIVATE SECTOR FINANCING FOR 
 THE UNITED STATES COMMERCIAL SPACE TRANSPORTATION INDUSTRY THROUGH A 
                         LOAN GUARANTEE PROGRAM

Sec. 101. United States Commercial Space Transportation Vehicle 
              Industry Program.
Sec. 102. Functions of the Secretary of the Department of 
              Transportation.
Sec. 103. Space Transportation Loan Guarantee Fund.
Sec. 104. Authorization of Secretary to Guarantee Obligations.
Sec. 105. Eligibility for Guarantee.
Sec. 106. Defaults.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) The United States commercial space transportation 
     vehicle industry is an essential part of the national economy 
     and opportunities for U.S. commercial providers are growing 
     as international markets expand.
       (2) The development of the U.S. commercial space 
     transportation vehicle industry is consistent with the 
     national security interests and foreign policy interests of 
     the United States.
       (3) United States trading partners have been able to lower 
     their commercial space transportation prices aggressively 
     either through direct cash payments for commercially targeted 
     product development or with indirect benefits derived from 
     nonmarket economy status.
       (4) Because United States incentives for space 
     transportation vehicle development have historically focused 
     on civil and military rather than commercial use, U.S. launch 
     costs have remained comparatively high, and U.S. launch 
     technology has not been commercially focused.
       (5) As a result, the U.S. share of the world commercial 
     market has decreased from nearly 100% twenty years ago to 
     approximately 47% in 1998.
       (6) In order to avoid undue reliance on foreign space 
     transportation services, the U.S. must strive to have 
     sufficient domestic capacity as well as the highest quality 
     and the lowest cost per service provided.
       (7) A successful high quality, lower cost U.S. commercial 
     space transportation industry should also lead to substantial 
     U.S. taxpayer savings through collateral lower U.S. 
     government costs for its space access requirements.
       (8) The key to maintaining United States leadership in the 
     world market is not another massive government program, but 
     rather provision of just enough government support on an 
     incremental and timely basis to enable the more cost 
     effective U.S. private sector to build lower-cost space 
     transportation vehicles.
       (9) Private sector companies across the United States are 
     already attempting to develop a variety of lower-cost space 
     transportation vehicles, but lack of sufficient private 
     financing, particularly in the early stages of 
     development, has proven to be a major obstacle, an 
     obstacle our trading partners have removed by providing 
     direct access to government funding.
       (10) Given the strengths and creativity of private industry 
     in the United States, a more effective alternative to the 
     approach of our trading partners is for the U.S. government 
     to provide limited incentives, including loan guarantees 
     which would help qualifying U.S. private-sector companies 
     secure otherwise unavailable private ``bridge'' financing for 
     the critical developmental stages of the project, while at 
     the same time keeping government involvement at a minimum.

     SEC. 3. PURPOSES.

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

     SEC. 4. DEFINITIONS.

       In this Act:
       (1) Total capital requirement.--The term ``total capital 
     requirement'' of a United States commercial space 
     transportation provider means the aggregate, as determined by 
     the Secretary, of all Cash Requirements paid or to be paid by 
     or on the account of the Obligor prior to the achievement by 
     the Obligor of positive cash flow generation. For the 
     purposes of this definition, the term ``Cash Requirements'' 
     shall include all cash expended or invested by the Obligor 
     (including but not limited to design, development, testing 
     and evaluation (DDT&E)), construction, reconstruction, 
     reconditioning, placing into operation, working capital, 
     interest expense and initial operating and marketing expenses 
     in connection with space transportation prior to the 
     achievement of positive cash flow generation from ongoing 
     operations.
       (2) Loan.--The term ``loan'' means an obligation.
       (3) Obligee.--The term ``obligee'' means the holder of an 
     obligation.
       (4) Obligor.--The term ``obligor'' means any party 
     primarily liable for payment of the principal of or interest 
     on any obligation.
       (5) Obligation.--The term ``obligation'' means any note, 
     bond, debenture, or other evidence of indebtedness issued for 
     one of the purposes specified in section 105(a) of this Act.
       (6) Secretary.--The term ``Secretary'' means the Secretary 
     of the United States Department of Transportation.
       (7) Space launch site.--The term ``space launch site'' 
     means a location from which a launch or landing takes place 
     and includes all facilities located on, or components of, a 
     launch or landing site which are necessary to conduct a 
     launch, whether on land, sea, in the earth's atmosphere, or 
     beyond the earth's atmosphere.
       (8) Space transportation vehicle.--The term ``space 
     transportation vehicle'' includes all types of vehicles, 
     whether in existence or under design, development, 
     construction, reconstruction or reconditioning; constructed 
     in the United States by United States commercial space 
     transportation vehicle providers as defined below and owned 
     by those commercial providers, for the purpose of operating 
     in, or transporting a payload to, from, or within, outer 
     space, or in suborbital trajectory, and includes any 
     component of such vehicle not specifically designed or 
     adapted for a payload.
       (9) State.--The term ``State'' means each of the several 
     States of the Union, the District of Columbia, the 
     Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, the Commonwealth of the Northern Mariana 
     Islands, and any other commonwealth, territory, or 
     possession of the United States.
       (10) United states commercial provider.--The term ``United 
     States commercial provider'' means a commercial provider, 
     organized under the laws of the United States or of a State, 
     which is--
       (A) more than 50 percent owned by United States nationals; 
     or
       (B) a subsidiary of a foreign company and the Secretary of 
     Transportation finds that--
       (i) such subsidiary has in the past evidenced a substantial 
     commitment to the United States market through--
       (I) investments in the United States in long-term research, 
     development, and manufacturing (including the manufacture of 
     major components and subassemblies); and
       (II) significant contributions to employment in the United 
     States; and
       (ii) the country or countries in which such foreign company 
     is incorporated or organized, and, if appropriate, in which 
     it principally conducts its business, affords reciprocal 
     treatment to companies described in subparagraph (A) 
     comparable to that afforded to such foreign company's 
     subsidiary in the United States, as evidenced by--

[[Page S2013]]

       (I) providing comparable opportunities for companies 
     described in subparagraph (A) to participate in Government 
     sponsored research and development similar to that authorized 
     under this Act;
       (II) providing no barriers, to companies described in 
     subparagraph (A) with respect to local investment 
     opportunities, that are not provided to foreign companies in 
     the United States; and
       (III) providing adequate and effective protection for the 
     intellectual property rights of companies described in 
     subparagraph (A).
       (II) Small business.--For the purposes of this Act, a 
     ``small business'' is a commercial provider as defined by the 
     Secretary according to criteria established in consultation 
     with the commercial space transportation vehicle industry and 
     professional associations.
       (12) United states commercial space transportation vehicle 
     provider.--The term ``United States commercial space 
     transportation vehicle provider'' means a United States 
     commercial provider engaged in designing, developing, 
     producing, or operating commercial space transportation 
     vehicles.
       (13) United states commercial space transportation vehicle 
     industry.--The term ``United States commercial space 
     transportation vehicle industry'' means the collection of 
     United States commercial providers of space transportation 
     vehicles.
       (14) Cost to the government.--``Cost to the Government'' 
     means the Risk Rate multiplied by the amount of the guarantee 
     issued by the Secretary. The Cost to the Government reduces 
     the amount of the Fund until such time as part or all of the 
     guarantee has been retired as described in Section 103 of the 
     Act.
       (15) Risk rate.--``Risk Rate'' means the percentage applies 
     to a guarantee of an entity assigned to a specific Risk 
     Category by the Secretary and used in calculating the Cost to 
     the Government of the guarantee.
       (16) Risk category.--``Risk Category'' means the category 
     into which the Secretary assigns an entity applying for a 
     guarantee based on the risk factors identified in Section 
     104(f). The Risk Category is assigned for the purpose of 
     arriving at a Risk Rate in the calculation of the Cost to the 
     Government.
       (17) Fund.--The ``Fund'' means the amount appropriated 
     under the Act as described under Section 103 of the Act.

 TITLE 1--INCREASING THE AVAILABILITY OF PRIVATE SECTOR FINANCING FOR 
  THE UNITED STATES COMMERCIAL SPACE TRANSPORTATION VEHICLE INDUSTRY 
                    THROUGH A LOAN GUARANTEE PROGRAM

     SEC. 101. UNITED STATES COMMERCIAL SPACE TRANSPORTATION 
                   VEHICLE INDUSTRY LOAN GUARANTEE PROGRAM.

       (a) Establishment of Program.--There shall be a United 
     States Commercial Space Transportation Vehicle Industry Loan 
     Guarantee program to provide loan guarantees to support the 
     private development of multiple qualified United States 
     commercial space transportation vehicle providers with launch 
     costs significantly below current levels.
       (b) Administration of Program.--The program shall be 
     carried out by the Secretary of Transportation under a 
     streamlined application process pursuant to the terms of this 
     Section and any regulations that may be promulgated 
     hereunder, in consultation with other U.S. Government 
     officials, and private sector representatives, as necessary, 
     to ensure fair, effective and timely program administration.
       (c) Scope of Program.--
       (1) Temporary Government Support.--The United States 
     Commercial Space Transportation Vehicle Industry Loan 
     Guarantee program is intended to provide loan guarantees to 
     support financing of qualified commercial space 
     transportation vehicle development ventures during their 
     startup phases and is not intended as a permanent source of 
     financing for such ventures. Applications for guarantees 
     under this program must include specific plans for the timely 
     transition from guaranteed financing to standalone private 
     sector financing as soon as the venture becomes commercially 
     viable.
       (2) Exclusion of space launch sites.--The program does not 
     provide for loan guarantees pertaining to the construction, 
     reconstruction, or reconditioning of space launch sites.
       (3) Exclusion of evolved expendable launch vehicle 
     program.--The United States Commercial Space Transportation 
     Vehicle Industry Loan Guarantee program shall not remove, 
     restrict, or replace funding provided by the Department of 
     Defense to commercial providers participating in the Evolved 
     Expendable Launch Vehicle (EELV) program. Commercial 
     providers already receiving Department of Defense funding for 
     the development of specific expendable launch vehicles under 
     the Evolved Expendable Launch Vehicle program shall not be 
     eligible to apply for loan guarantees pertaining to this same 
     program, under the United States Commercial Space 
     Transportation Vehicle Industry Loan Guarantee program.
       (4) Small business set aside.--Depending upon the number of 
     applications, not less than ten percent and up to 20 percent 
     of the loan guarantee fund shall be set aside for small 
     businesses as defined by the Secretary. In no event shall a 
     single commercial provider be the sole beneficiary of loan 
     guarantees available under this Act.
       (5) Competition encouraged on initiatives attempting to 
     meet unique u.s. government specifications.--When possible 
     and economically feasible, in order to allow U.S. taxpayers 
     to receive the benefits and disciplines of private sector 
     competition, the Secretary shall administer the loan 
     guarantee program to permit the participation of multiple 
     United States space transportation vehicle commercial 
     providers that are targeting unique U.S. government 
     specifications.
       (6) Nondisclosure of confidential materials.--Materials 
     that are submitted by a United States commercial space 
     transportation vehicle provider to the Secretary in 
     connection with an application submitted under the United 
     States Commercial Space Transportation Vehicle Industry Loan 
     Guarantee program and deemed by the commercial provider to be 
     confidential, and that contain trade secrets or proprietary 
     commercial, financial, or technical information of a kind not 
     customarily disclosed to the public, shall not be disclosed 
     by the Secretary to persons other than Government officers, 
     employees or contractors notwithstanding any other provision 
     of law.
       (d) Sunset.--This Act shall sunset 10 years from date of 
     enactment.

     SEC. 102. FUNCTIONS OF THE SECRETARY OF TRANSPORTATION.

       The Secretary shall carry out the following functions--
       (a) Consultation.--Consultation, to the extent deemed 
     necessary for effective implementation of the Act with 
     appropriate federal agencies, Congressional, and space 
     transportation industry representatives, and members of the 
     risk management industry concerning--
       (1) assessments of international competition, potential 
     markets for space transportation vehicles, and availability 
     of private investment captial;
       (2) recommendations of commercial entities, partnerships, 
     joint ventures, or consortia regarding effective 
     implementation of the loan guarantee program; and,
       (3) recommendations on how to make U.S. government space 
     access requirements more compatible with U.S. commercial 
     space transportation assets.
       (b) Program Management.--Management of the loan guarantee 
     program consistent with the purposes of this Act.

     SEC. 103. AUTHORIZATION OF APPROPRIATION OF FUNDS.

       (a) The Act authorizes an annual appropriation of the sum 
     of $400,000,000 to be deposited in a Fund to be used by the 
     Secretary for the purpose of carrying out the provisions of 
     the Act. The Fund will be reduced by the Cost to the 
     Government (as defined) of each loan guarantee extended by 
     the Secretary as further described in Section 104(f). As an 
     Obligor releases its government guarantees on the schedule 
     agreed to up front with the Secretary, this Cost to the 
     Government shall be reduced or eliminated, thus replenishing 
     the Fund for new guarantees.

     SEC. 104. AUTHORIZATION OF SECRETARY TO GUARANTEE OBLIGATIONS

       (a) Principal and Interest.--The Secretary is authorized to 
     guarantee, and to enter into commitments to guarantee, the 
     payment of the interest on, and the unpaid balance of the 
     principal of, any obligation which is eligible to be 
     guaranteed under this Act. A guarantee, or commitment to 
     guarantee, made by the Secretary under this Act shall cover 
     100 percent of the amount of the principal and interest of 
     the obligation.
       (b) Security Interest.--No obligation shall be guaranteed 
     under this Act unless the obligor conveys or agrees to convey 
     to the Secretary a security interest such as the Secretary 
     may reasonably require to protect the interests of the United 
     States.
       (c) Private Insurance.--If the Secretary determines that 
     other potential measures, as described in this Act, are not 
     sufficient to provide adequate security, the Secretary, as a 
     condition of processing or approving an application for 
     guarantee of an obligation, may require that the obligor 
     obtain private insurance with respect to a portion of the 
     government's risk of default by the obligor on the 
     obligation, including both the amount of the obligation still 
     outstanding and the accrued interest. Such private insurance 
     may be funded from the proceeds of any obligation guaranteed 
     under this Act. If the obligor fails to renew such private 
     insurance on a timely basis, the Secretary may take such 
     action as deemed necessary, with regard to seizure of 
     security interest conveyed by the obligor or the assessment 
     of additional fees to the obligor, to ensure that the 
     appropriate insurance renewal is obtained without delay.
       (d) Pledge of United States.--The full faith and credit of 
     the United States is pledged to the payment of all guarantees 
     made under this Act with respect to both principal and 
     interest, including interest, as may be provided for in the 
     guarantee, accruing between the date of default under a 
     guaranteed obligation and the payment in full of the 
     guarantee.
       (e) Proof of Obligations.--Any guarantee, or commitment to 
     guarantee, made by the Secretary under this Act shall be 
     conclusive evidence of the eligibility of the obligations for 
     such guarantee, and the validity of any guarntee, or 
     commitment to guarantee, so made shall be incontestable. 
     Notwithstanding an assumption of an obligation by the 
     Secretary under section 106 (a) or (b) of this Act, the 
     validity of the guarantee of an obligation made by the 
     Secretary under this Act is unaffected and the guarntee 
     remains in full force and effect.
       (f) Determination of Estimated Benefit and Cost to 
     Government for Loan Guarantee Program.--

[[Page S2014]]

       (1) The Secretary shall in consultation with the private 
     risk management industry and consistent with the Federal 
     Credit Reform Act of 1990 (2 U.S.C. 661a et seq.)--
       (A) establish in accordance with this subsection a system 
     of risk categories for obligations guaranteed under this Act, 
     that categoriezes the relative risk of guarantees made under 
     this Act with respect to the risk factors set forth in 
     paragraph (3); and
       (B) determine for each of the risk categories a risk rate 
     equivalent to the cost of obligations in the category, 
     expressed as a percentage of the amount guaranteed under this 
     Act for obligations in the category.
       (2) Before making a guarantee under this section for an 
     obligation, the Secretary shall apply the risk factors set 
     forth in paragraph (3) to place the obligation in a risk 
     category established under paragraph (1)(A).
       (3) The risk factors referred to in paragraphs (1) and (2) 
     are the following:
       (A) The technological feasibility of the proposed venture 
     and the magnitude of its projected overall space launch cost 
     reduction;
       (B) The period for which an obligation is to be guaranteed, 
     such period not exceeding 12 years;
       (C) The amount of obligations which are guaranteed or to be 
     guaranteed, in relation to the Total Capital Requirement of 
     the proposed venture;
       (D) The financial condition of the applicant;
       (E) The availability of private financing, including 
     guarantees (other than the guarantees issued pursuant to this 
     Act) and private insurance, for the proposed venture;
       (F) The projected commercial and government utilization of 
     each space transportation vehicle or other article to be 
     financed by debt guaranteed pursuant to this Act (including 
     any contracts, letters of intent, or other expressions of 
     agreement under which the applicant will provide launch 
     services using a space transportation vehicle or other 
     article financed by debt guaranteed pursuant to this Act);
       (G) The adequacy of collateral provided in exchange for a 
     guarantee issued pursuant to this act;
       (H) The management and operating experience of the 
     applicant;
       (I) Commercial viability of the business plan for the 
     venture of the Obligor;
       (J) The extent of private equity capital in the project;
       (K) The applicant's plans for achieving a transition from 
     Government-guaranteed financing to private financing;
       (L) The likelihood that the venture would serve an 
     identifiable national interest;
       (M) The likelihood that the successful completion of the 
     project would result in savings that would offset anticipated 
     Government expenditures for space-related activities;
       (N) The likelihood that the project will open new markets 
     or result in the development of significant new technologies;
       (O) other relevant criteria; and
       (4) The amount of appropriated funds required by the 
     Federal Credit Reform Act of 1990 in advance of the 
     Secretary's issuance of a guarantee of an obligation, or a 
     commitment to guarantee an obligation, may be provided, in 
     whole or in part, by a non-Federal source and deposited by 
     the Secretary in the financing account established under the 
     Federal Credit Reform Act of 1990 for obligation guarantees 
     issued by the Secretary. These non-Federal source funds may 
     be in lieu of or combined with Federal funds appropriated for 
     the purpose of satisfying the requirements of the Federal 
     Credit Reform Act of 1990. The non-Federal source funds 
     deposited into that financing account shall be held and 
     applied by the Secretary in accordance with the provisions of 
     the Federal Credit Reform Act of 1990, in the same manner as 
     that legislation controls the use and disposition of 
     Federally appropriated funds. Non-Federal source funds must 
     be paid to the Secretary in cash prior to the issuance of any 
     guarantee or commitment to guarantee an obligation. The 
     payment of said non-Federal source funds shall not, in any 
     way, relive any entity from its responsibility to meet any 
     other provision of this Act or its implementing regulations 
     relating to the application for, issuance of, or 
     administration of a guarantee of an obligation.
       (5) In this subsection, the term ``cost'' has the meaning 
     given that term in the Federal Credit Reform Act of 1990 (2 
     U.S.C. 661a).

     SEC. 105. ELIGIBILITY FOR GUARANTEE

       (a) Purpose of Obligations.--Pursuant to the authority 
     granted under section 104(a) of this Act, the Secretary, upon 
     such terms as he shall prescribe, consistent with the 
     provisions and purpose of the Act, may guarantee or make a 
     commitment to guarantee, payment of the principal of and 
     interest on an obligation for the purpose of--
       (1) Financing the Total Capital Requirement, as defined, of 
     the DDT&E, construction, reconstruction, reconditioning, 
     placing into operation, working capital, interest expense, 
     and initial operating and marketing expenses in connection 
     with space transportation vehicles with launch costs 
     significantly below current levels.
       (2) Financing the purchase, reconstruction, or 
     reconditioning of space transportation vehicles to achieve 
     launch costs significantly below current levels for which 
     obligations were guaranteed under this Act that, under the 
     provisions of section 106 of this Act are space 
     transportation vehicles for which obligations were 
     accelerated and paid and that have been repossessed by the 
     Secretary or sold at foreclosure instituted by the Secretary.
       (b) Contents of Obligations.--
       Obligations guaranteed under this Act--
       (1) shall have an obligor approved by the Secretary as 
     responsible and possessing or having the ability to obtain 
     the technical capability, experience, financial resources, 
     and other qualifications necessary to the adequate 
     development, operation and maintenance of the space 
     transportation vehicle or space transportation vehicles which 
     serve as security for the guarantee of the Secretary;
       (2) subject to the provisions of subsection (c)(1) of this 
     section, shall be in an aggregate principal amount which does 
     not exceed 80 per centum of the total Capital Requirement, as 
     determined by the Secretary, of the space transportation 
     vehicle which is used as security for the guarantee of the 
     Secretary;
       (3) shall have maturity dates satisfactory to the Secretary 
     but, subject to the provisions of paragraph (2) of subsection 
     (c) of this section, not to exceed twelve years from the date 
     of the issuance of the guarantee.
       (4) shall provide for payments by the obligor satisfactory 
     to the Secretary;
       (5) shall provide, or a related agreement shall provide 
     that the space transportation vehicle shall meet such safety, 
     reliability, and performance standards as are necessary for 
     U.S. commercial licensing; and
       (6) shall provide that the space transportation vehicle 
     provider guarantee to the United States Government, launch 
     services at the targeted significantly reduced launch cost or 
     the prevailing commercial launch cost, which ever is lower.
       (c) Security.--
       (1) The security for the guarantee of an obligation by the 
     Secretary under this Act may relate to more than one space 
     transportation vehicle and may consist of any combination of 
     types of security. The aggregate principal amount of 
     obligations which have more than one space transportation 
     vehicle as security for the guarantee of the Secretary under 
     this Act may equal, but not exceed, the sum of the principal 
     amount of obligations permissible with respect to each space 
     transportation vehicle.
       (2) If the security for the guarantee of an obligation by 
     the Secretary under this Act relates to more than one space 
     transportation vehicle, such obligation may have the latest 
     maturity date permissible under subsection (b) of this 
     section with respect to any of such space transportation 
     vehicles: Provided, that the Secretary may require such 
     payments of principal, prior to maturity, with respect to all 
     related obligations as he deems necessary in order to 
     maintain adequate security for the guarantee.
       (d) Restrictions.--
       (1) Restriction on used space transportation vehicles.--No 
     commitment to guarantee, or guarantee of an obligation may be 
     made by the Secretary under this Act for the purchase of a 
     used space transportation vehicle unless--
       (A) the used space transportation vehicle will be 
     reconstructed or reconditioned in the United States and will 
     contribute to the development of the United States commercial 
     space transportation vehicle industry; and
       (B) the reconstruction or reconditioning of the used space 
     transportation vehicle will result in a magnitude of 
     projected space transportation cost reduction comparable to 
     that which development of new space transportation vehicles 
     would be required to project, in order to be eligible for 
     guarantee of obligations.
       (e) Application and Administrative Fees.--
       (1) The Secretary may assess a fee for applications for 
     loan guarantees submitted under this Act and/or a fee for 
     administration of an obligation under this Act.
       (2) Application fees under this subsection shall be 
     assessed and collected at the time a U.S. commercial space 
     transportation vehicle provider submits an application for 
     loan guarantees under this Act. Administrative fees under 
     this section shall be assessed and collected not later than 
     the date of issuance of the debt guaranteed pursuant to this 
     Act.
       (3) Administrative fees collected under this subsection 
     shall not exceed one-eighth of one percent of the guaranteed 
     amount of the face value of the debt covered by the 
     guarantee.
       (4) A fee paid under this subsection is generally not 
     refundable. However, an obligor shall receive credit for the 
     amount paid for the remaining term of the guaranteed 
     obligation if the obligation is refinanced and guaranteed 
     under this Act after such refinancing.
       (5) A fee paid under this subsection shall be included in 
     the amount of the actual cost of the obligation guaranteed 
     under this Act and is eligible to be financed under this Act.
       (6) There are authorized to be appropriated such sums as 
     may be necessary for salaries and expenses to carry out the 
     responsibilities under this title.
       (f) Additional Requirements.--Obligations guaranteed under 
     this Act and agreements relating thereto shall contain such 
     other provisions with respect to the protection of the 
     financial security interests of the United States as the 
     Secretary may, in his or her discretion, prescribe.

     SEC. 106. DEFAULTS.

       (a) Rights of Obligee.--In the event of a default, which 
     has continued for thirty days, in any payment by the obligor 
     of principal or interest due under an obligation guaranteed 
     under this Act, the obligee or his agent shall have the right 
     to demand (unless the Secretary shall, upon such terms as may 
     be provided in the obligation or related agreements, prior to 
     that demand, have assumed

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     the obligor's rights and duties under the obligation and 
     agreements and shall have made any payments in default), at 
     or before the expiration of such period as may be specified 
     in the guarantee or related agreements, but not later than 
     ninety days from the date of such default, payment by the 
     Secretary of the unpaid principal amount of such obligation 
     and of the unpaid interest thereon to the date of payment. 
     Within such period as may be specified in the guarantee or 
     related agreements, but not later than thirty days from the 
     date of such demand, the Secretary shall promptly pay to the 
     obligee or his agent the unpaid principal amount of said 
     obligation and unpaid interest thereon to the date of 
     payment: Provided, That the Secretary shall not be required 
     to make such payment if prior to the expiration of said 
     period he shall find that there was no default by the 
     obligor in the payment of principal or interest or that 
     such default has been remedied prior to any such demand.
       (b) Notice of Default.--In the event of a default under a 
     mortgage, loan agreement, or other security agreement between 
     the obligor and the Secretary, the Secretary may upon such 
     terms as may be provided in the obligation or related 
     agreement, either:
       (1) assume the obligor's rights and duties under the 
     agreement, make any payment in default, and notify the 
     obligee or the obligee's agent of the default and the 
     assumption by the Secretary; or
       (2) notify the obligee or the obligee's agent of the 
     default, and the obligee or the obligee's agent shall have 
     the right to demand at or before the expiration of such 
     period as may be specified in the guarantee or related 
     agreements, but not later than 60 days from the date of such 
     notice, payment by the Secretary of the unpaid principal 
     amount of said obligation and of the unpaid interest thereon. 
     Within such period as may be specified in the guarantee or 
     related agreements, but not later than 30 days from the date 
     of such demand, the Secretary shall promptly pay to the 
     obligee or the obligee's agent the unpaid principal amount of 
     said obligation and unpaid interest thereon to the date of 
     payment.
       (c) To Complete, Sell or Operate Property.--In the event of 
     any payment or assumption by the Secretary under subsection 
     (a) or (b) of this section, the Secretary shall have all 
     rights in any security held by him relating to his guarantee 
     of such obligations as are conferred upon him under any 
     security agreement with the obligor. Notwithstanding any 
     other provision of law relating to the acquisition, handling, 
     or disposal of property by the United States, the Secretary 
     shall have the right, in his discretion, to complete, 
     recondition, reconstruct, renovate, repair, maintain, 
     operate, charter, or sell any property acquired by him 
     pursuant to a security agreement with the obligor. The terms 
     of the sale shall be as approved by the Secretary.
       (d) Actions Against Obligor.--In the event of a default 
     under any guaranteed obligation or any related agreement, the 
     Secretary shall take such action against the obligor or any 
     other parties liable thereunder that, in his discretion, may 
     be required to protect the interests of the United States. 
     Any suit may be brought in the name of the United States or 
     in the name of the obligee and the obligee shall make 
     available to the United States all records and evidence 
     necessary to prosecute any such suit. The Secretary shall 
     have the right, in his discretion, to accept a conveyance of 
     Act to and possession of property from the obligor or other 
     parties liable to the Secretary, and may purchase the 
     property for an amount not greater than the unpaid principal 
     amount of such obligation and interest thereon. In the event 
     that the Secretary shall receive through the sale of property 
     an amount of cash in excess of the unpaid principal amount of 
     the obligation and unpaid interest on the obligation and the 
     expenses of collection of those amounts, the Secretary shall 
     pay the excess to the obligor.
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