[Congressional Record Volume 147, Number 105 (Wednesday, July 25, 2001)]
[Senate]
[Pages S8223-S8224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAHAM (for himself, Mr. Murkowski, Mr. Reid, Mr. Nelson 
        of Florida, Mr. Inhofe, Mr. Warner, and Mr. Burns):
  S. 1243. A bill to amend the Internal Revenue Code of 1986 to treat 
spaceports like airports under the exempt facility bond rules; to the 
Committee on Finance.
  Mr. GRAHAM. Mr. President, today I am introducing with my colleagues, 
Senators Murkowski, Reid of Nevada, Nelson of Florida, Inhofe, Warner 
and Burns legislation entitled the Spaceport Equality Act.
  Currently airports, high speed rail, seaports, mass transit, and 
other transportation projects can raise money through the issuance of 
tax-exempt bonds. The Spaceport Equality Act amends the Internal 
Revenue Code to clarify that spaceports enjoy the same favorable tax 
treatment.
  The U.S. aerospace industry manufactures nearly 70 percent of the 
world's satellites, but only 40 percent of the satellites that enter 
the atmosphere are launched by this country. Our Nation's spaceports 
are a vital component of the infrastructure needed to expand and 
enhance the U.S. role in the international space arena. The Spaceport 
Equality Act is an important step in increasing our competitive 
position in this emerging industry.
  This bill will stimulate investment in expanding and modernizing our 
Nation's space launch facilities by lowering the cost of financing 
spaceport construction and renovation. Upon enactment, the bill will 
increase U.S. launch capacity, and enhance both our economic and 
national security.
  The commercial space market is expected to become increasingly more 
competitive in the next decade. The ability to have a robust space 
launch capability is in our best interests economically as well as 
strategically.
  My proposal does not provide direct Federal spending to our 
commercial space transportation industry. Instead, it creates the 
conditions necessary to stimulate private sector capital investment in 
infrastructure. This bill offers Congress the chance to help open a new 
age to space, where the States and local communities can themselves 
take part in space transportation.
  To be state of the art in space requires state of the art financing 
on the ground. I urge my colleagues in the Senate to join us in this 
important effort by co-sponsoring this bill.
  I ask unanimous consent that the text of the bill and a short summary 
of the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1243

       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 ``Spaceport Equality Act''.

     SEC. 2. SPACEPORTS TREATED LIKE AIRPORTS UNDER EXEMPT 
                   FACILITY BOND RULES.

       (a) In General.--Paragraph (1) of section 142(a) of the 
     Internal Revenue Code of 1986 (relating to exempt facility 
     bonds) is amended to read as follows:
       ``(1) airports and spaceports,''.
       (b) Treatment of Ground Leases.--Paragraph (1) of section 
     142(b) of the Internal Revenue Code of 1986 (relating to 
     certain facilities must be governmentally owned) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Special rule for spaceport ground leases.--For 
     purposes of subparagraph (A), spaceport property which is 
     located on land owned by the United States and which is used 
     by a governmental unit pursuant to a lease (as defined in 
     section 168(h)(7)) from the United States shall be treated as 
     owned by such unit if--
       ``(i) the lease term (within the meaning of section 
     168(i)(3)) is at least 15 years, and
       ``(ii) such unit would be treated as owning such property 
     if such lease term were equal to the useful life of such 
     property.''.
       (c) Definition of Spaceport.--Section 142 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new subsection:
       ``(l) Spaceport.--
       ``(1) In general.--For purposes of subsection (a)(1), the 
     term `spaceport' means--
       ``(A) any facility directly related and essential to 
     servicing spacecraft, enabling spacecraft to launch or 
     reenter, or transferring passengers or space cargo to or from 
     spacecraft, but only if such facility is located at, or in 
     close proximity to, the launch site or reentry site, and
       ``(B) any other functionally related and subordinate 
     facility at or adjacent to the launch site or reentry site at 
     which launch services or reentry services are provided, 
     including a launch control center, repair shop, maintenance 
     or overhaul facility, and rocket assembly facility.
       ``(2) Additional terms.--For purposes of paragraph (1)--
       ``(A) Space cargo.--The term `space cargo' includes 
     satellites, scientific experiments, other property 
     transported into space, and any other type of payload, 
     whether or not such property returns from space.
       ``(B) Spacecraft.--The term `spacecraft' means a launch 
     vehicle or a reentry vehicle.
       ``(C) Other terms.--The terms `launch', `launch site', 
     `launch services', `launch vehicle', `payload', `reenter', 
     `reentry services', `reentry site', and `reentry vehicle' 
     shall have the respective meanings given to such terms by 
     section 70102 of title 49, United States Code (as in effect 
     on the date of enactment of this subsection).''.
       (d) Exception From Federally Guaranteed Bond Prohibition.--
     Paragraph (3) of section 149(b) of the Internal Revenue Code 
     of 1986 (relating to exceptions) is amended by adding at the 
     end the following new subparagraph:
       ``(E) Exception for spaceports.--Paragraph (1) shall not 
     apply to any exempt facility bond issued as part of an issue 
     described in paragraph (1) of section 142(a) to provide a 
     spaceport in situations where--
       ``(i) the guarantee of the United States (or an agency or 
     instrumentality thereof) is the result of payment of rent, 
     user fees, or other charges by the United States (or any 
     agency or instrumentality thereof), and
       ``(ii) the payment of the rent, user fees, or other charges 
     is for, and conditioned upon, the use of the spaceport by the 
     United States (or any agency or instrumentality thereof).''.
       (e) Conforming Amendment.--The heading for section 142(c) 
     of the Internal Revenue Code of 1986 is amended by inserting 
     ``, Spaceports,'' after ``Airports''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.
                                  ____


                       The Spaceport Equality Act


                       Description of Present Law

       Present law allows exempt facility bonds to be issued to 
     finance certain transportation facilities, such as airports, 
     docks and wharves, mass commuting facilities, high speed 
     intercity rail facilities, and storage or training facilities 
     directly related to the foregoing. Except for high-speed 
     intercity rail facilities, these facilities must be owned by 
     a governmental unit to be eligible for such financing. Exempt 
     facility bonds for airports, docks and wharves, and 
     governmentally-owned, high-speed intercity rail facilities 
     are not subject to the private activity bond volume cap. Only 
     25% of the exempt facility bonds for a privately-owned, high-
     speed intercity rail facility require private activity bond 
     volume cap.
       Airports.--Treasury Department regulations provide that 
     airport property eligible for exempt facility bond financing 
     includes facilities that are directly related and essential 
     to the servicing of aircraft, enabling aircraft to take off 
     and land, and transferring

[[Page S8224]]

     passengers or cargo to or from aircraft, but only if the 
     facilities are located at, or in close proximity to, the 
     take-off and landing area. The regulations also provide that 
     airports include other functionally related and subordinate 
     facilities at or adjacent to the airport, such as terminals, 
     hangers, loading facilities, repair shops, maintenance or 
     overhaul facilities, and land-based navigational aids such as 
     radar installations. Facilities, the primary function of 
     which is manufacturing rather than transportation, are not 
     eligible for exempt facility bond financing.
       Public Use Requirement.--Treasury Department regulations 
     provide generally that, in order to qualify as an exempt 
     facility, the facility must serve or be available on a 
     regular basis for general public use, or be part of a 
     facility so used, as contrasted with similar types of 
     facilities that are constructed for the exclusive use of a 
     limited number of nongovernmental persons in their trades or 
     businesses. For example, a private dock or wharf leased to 
     and serving only a single manufacturing plant would not 
     qualify as a facility for general public use, but a hangar or 
     repair facility at a municipal airport, or a dock or a wharf, 
     would qualify even if it is leased or permanently assigned to 
     a single nongovernmental person provided that person directly 
     serves the general public, such as a common passenger carrier 
     or freight carrier. Certain facilities, such as sewage and 
     solid waste disposal facilities, are treated in all events as 
     serving a general public use although they may be part of a 
     nonpublic facility, such as a manufacturing facility used in 
     the trade of business of a single manufacturer.
       Federally Guaranteed Bonds.--Bonds directly or indirectly 
     guaranteed by the United States (or any agency or instrument 
     thereof) are not tax-exempt. The Treasury Department has not 
     issued detailed regulations interpreting the prohibition of 
     federal guarantees and the scope of the prohibition is 
     unclear.


                 Explanation of Spaceport Equality Act

       The Spaceport Equality Act clarifies that spaceports are 
     eligible for exempt facility bond financing to the same 
     extent as airports. As in the case of airports, the 
     facilities must be owned by a governmental unit to be 
     eligible for such financing.
       The term ``spaceport'' includes facilities directly related 
     and essential to servicing spacecraft, enabling spacecraft to 
     take off or land, and transferring passengers or space cargo 
     door from spacecraft, but only if the facilities are located 
     at, or in close proximity to, the launch site. Space cargo 
     includes satellites, scientific experiments, and other 
     property transported into space, whether or not the cargo 
     will return from space. The term ``spaceport'' also includes 
     other functionally related and subordinate facilities at or 
     adjacent to the spaceport, such as launch control centers, 
     repair shops, maintenance or overhaul facilities, and rocket 
     assembly facilities that must be located at or adjacent to 
     the launch site. The term ``spaceport'' further includes 
     storage facilities directly related to any governmentally-
     owned spaceport (including a spaceport owned by the U.S. 
     Government.
       It is intended that spaceports shall be treated in all 
     respects as serving the general public and will therefore 
     satisfy the public use requirements contained in present 
     Treasury Department regulations. It is also intended that the 
     use of spaceport facilities by the federal government will 
     not prevent the spaceport facilities from being treated as 
     serving the general public, will not prevent the spaceport 
     from being treated as owned by a government unit, and will 
     not otherwise render such facilities ineligible for exempt 
     facility bond financing. In addition, the amendment specifies 
     that payment by the federal government of rent, user fees, or 
     other charges for the use of spaceport property will not be 
     taken into account in determining whether bonds for 
     spacesports are federally guaranteed as long as such payments 
     are conditioned on the use of such property and not payable 
     unconditionally and in all events.
                                 ______