[Senate Report 106-135]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 253
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-135
_______________________________________________________________________

                                     


       COMMERCIAL SPACE LAUNCH INDUSTRY INDEMNIFICATION EXTENSION

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 832




                                     


                 August 4, 1999.--Ordered to be printed

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
69-010                     WASHINGTON : 1999


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       one hundred sixth congress

                             first session

                     JOHN McCAIN, Arizona, Chairman

TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi              Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine                 JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia

                       Mark Buse, Staff Director

                  Martha P. Allbright, General Counsel

     Ivan A. Schlager, Democratic Chief Counsel and Staff Director

               Kevin D. Kayes, Democratic General Counsel

                                  (ii)
                                                       Calendar No. 253
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-135

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



 
       COMMERCIAL SPACE LAUNCH INDUSTRY INDEMNIFICATION EXTENSION

                                _______
                                

                 August 4, 1999.--Ordered to be printed

                                _______


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 832]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 832) ``A bill to extend the 
commercial space launch damage indemnification provisions of 
section 70113 of title 49, United States Code'', having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                          Purpose of the Bill

  The purpose of the bill is to extend the commercial space 
launch damage indemnification provisions of section 70113 of 
title 49, United States Code.

                          Background and Needs

  The Commercial Space Launch Amendments Act (Public Law 100-
657) established a framework for the shared allocation of 
insurance risk for commercial space launches that would allow 
the government to indemnify licensed launch providers 
(licensee). Public Law 100-657 requires a licensee to obtain a 
specific level of insurance to satisfy third-party claims 
arising from death, bodily injury, or loss of or damage to 
property resulting from licensed activities. All licensees that 
comply with the private liability insurance are indemnified by 
the Federal government for any civil liability damages that 
exceed the private insurance coverages. The level of insurance 
required is determined by the Secretary of Transportation 
(Secretary) after consultation with the Administrator of the 
National Aeronautical and Space Administration; the Secretary 
of the Air Force; and the heads of other appropriate agencies. 
The amount of private insurance required is limited to $500 
million for third party claims and $100 million for claims by 
the U.S. Government for damage or loss to Government property. 
A licensee may not be required to obtain more than the maximum 
liability insurance available at a reasonable cost on the world 
market. The Secretary may also take into account the maximum 
probable loss from a particular launch in determining the 
required insurance coverage.
  If the total amount of successful third party and government 
claims related to a single licensed launch exceed the amount of 
required liability insurance, Public Law 100-657 stipulates 
that the Secretary provide for the payment of successful claims 
above the amount compensated by insurance, including self-
insurance. These payments are subject to advance appropriations 
or specific legislative authority. Payments for a single launch 
are limited to $1.5 billion in excess of the required insurance 
amount. This amount is indexed to reflect inflation in 1989 and 
thereafter.
  Public Law 100-657 established a framework to govern third-
party liability compensation plans in cases where aggregate 
claims are likely to exceed the required financial 
responsibility amounts. The Secretary is directed to survey the 
causes and extent of damages in such cases and to submit the 
results to the Congress. The President is required to submit to 
the Congress a plan that outlines the dollar value of the 
claims and recommends funding sources. Public Law 100-657 also 
describes the procedures and timetables applicable to 
congressional consideration of the plan, which must be approved 
by a joint resolution. Expedited procedures are prescribed for 
any plan that requires additional appropriations or additional 
legislative authority.
  The compensation plan provisions would apply only with 
respect to licenses for which the Secretary receives a complete 
application within five years following the Act's enactment. 
This authority was renewed for an additional five years and is 
set to expire again on December 31, 1999.

                          Legislative History

  The bill S. 832 was introduced by Senator McCain on April 20, 
1999, co-sponsored by Senators Frist, Burns, Breaux, and Lott, 
and referred to the Committee on Commerce, Science, and 
Transportation. The Subcommittee on Science, Technology, and 
Space conducted a hearing on the commercial space launch 
industry on May 20, 1999, at which time testimony was received 
from Major General Robert C. Hinson, Commander, 14th Air Force, 
Air Force Space Command, and Component Commander, U.S. Air 
Force Space Operations, U.S. Space Command; Mr. Keith Calhoun-
Senghor, Director, Office of Space Commercialization, 
Technology Administration, Department of Commerce; Ms. Lori 
Garver, Associate Administrator for Policy and Plans, National 
Aeronautics and Space Administration; Ms. Patricia Grace Smith, 
Associate Administrator for Commercial Space Transportation, 
Federal Aviation Administration, Department of Transportation; 
Mr. Jim Albaugh, President, Space and Communications, Boeing 
Company; Mr. D. Andrew Beal, President and CEO, Beal Aerospace 
Technologies Inc.; Mr. Hoyt Davidson, Managing Director of 
Space Finance Group, Donaldson, Lufkin & Jenrette Securities 
Corporation; Mr. John Douglas, President, Aerospace Industries 
Association; Mr. Peter B. Teets, President and Chief Operating 
Officer, Lockheed Martin Corporation; and Mr. Stephen G. Wurst, 
President, Space Access, LLC. On June 23, 1999, the Committee 
met in executive session and ordered that the bill be reported 
favorably without amendment by voice vote.

                      Summary of Major Provisions

  The bill extends the indemnification available to the 
commercial space launch industry until December 31, 2009, an 
additional ten years beyond the current expiration date of 
December 31, 1999.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 8, 1999.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 832, a bill to 
extend the commercial space launch damage indemnification 
provisions of section 70113 of title 49, United States Code.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

S. 832--A bill to extend the commercial space launch damage 
        indemnification provisions of section 70113 of title 49, United 
        States Code

    S. 832 would provide a 10-year extension of the Department 
of Transportation's (DOT's) authority to indemnify nonfederal 
entities involved in commercial space transportation services 
licensed by DOT. The existing authorization, which is set to 
expire December 31, 1999, allows DOT to pay claims in excess of 
the amounts covered by private insurance under certain terms 
and conditions. This authority is contingent upon funding being 
provided in advance in an appropriation act or other 
legislation.
    Extending DOT's indemnification authority could result in 
additional discretionary spending over the next five years, but 
CBO expects that any such costs would be negligible. According 
to agency officials, DOT has never had to pay claims to third 
parties for incidents involving such vehicles or services. Thus 
far, the costs associated with incidents have been small and 
have been covered by private insurance. S. 832 would not affect 
direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply.
    S. 832 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not impose costs on state, local, or tribal governments.
    The CBO staff contact is Kathleen Gramp. This estimate was 
approved by Robert A. Sunshine, Deputy Assistant Director for 
Budget Analysis.

                      Regulatory Impact Statement

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

  S. 832 extends the deadline for licensees who qualify for 
indemnification, thus making the provision available to more 
companies in the commercial space launch industry.

                            economic impact

  In extending the deadline for indemnification for ten years, 
S. 832 provides a favorable and stable insurance risk 
allocation framework for the commercial space launch industry. 
The continued involvement of the federal government indicates 
its willingness to support the development of the industry. 
This may encourage additional private sector investment and 
facilitate commercialization efforts. Ultimately, the demand 
for commercial space launches will be driven by space-based 
applications, such as worldwide telecommunications services, 
which have enormous market potential. Indemnification thus acts 
as an incentive for the commercial space launch industry to 
support these larger telecommunication markets and accompanying 
economic growth.

                                privacy

  This legislation will not have an adverse impact on the 
personal privacy of individuals.

                               paperwork

  This legislation will not increase the paperwork requirement 
for individuals or businesses.

                      Section-by-Section Analysis


Section 1. Commercial Space Launch Industry Indemnification Extension

  This section extends the deadline for licensees qualified for 
indemnification from December 31, 1999, to December 31, 2009.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                        TITLE 49. TRANSPORTATION

              Subtitle IX. Commercial Space Transportation

            CHAPTER 701. COMMERCIAL SPACE LAUNCH ACTIVITIES


Sec. 70113. Paying claims exceeding liability insurance and financial 
                    responsibility requirements

  (a) General Requirements.--
          (1) To the extent provided in advance in an 
        appropriation law or to the extent additional 
        legislative authority is enacted providing for paying 
        claims in a compensation plan submitted under 
        subsection (d) of this section, the Secretary of 
        Transportation shall provide for the payment by the 
        United States Government of a successful claim 
        (including reasonable litigation or settlement 
        expenses) of a third party against a licensee or 
        transferee under this chapter, a contractor, 
        subcontractor, or customer of the licensee or 
        transferee, or a contractor or subcontractor of a 
        customer, resulting from an activity carried out under 
        the license issued or transferred under this chapter 
        for death, bodily injury, or property damage or loss 
        resulting from an activity carried out under the 
        license. However, claims may be paid under this section 
        only to the extent the total amount of successful 
        claims related to one launch or entry--
                  (A) is more than the amount of insurance or 
                demonstration of financial responsibility 
                required under section 70112(a)(1)(A) of this 
                title; and
                  (B) is not more than $ 1,500,000,000 (plus 
                additional amounts necessary to reflect 
                inflation occurring after January 1, 1989) 
                above that insurance or financial 
                responsibility amount.
          (2) The Secretary may not provide for paying a part 
        of a claim for which death, bodily injury, or property 
        damage or loss results from willful misconduct by the 
        licensee or transferee. To the extent insurance 
        required under section 70112(a)(1)(A) of this title is 
        not available to cover a successful third party 
        liability claim because of an insurance policy 
        exclusion the Secretary decides is usual for the type 
        of insurance involved, the Secretary may provide for 
        paying the excluded claims without regard to the 
        limitation contained in section 70112(a)(1).
  (b) Notice, Participation, and Approval.--Before a payment 
under subsection (a) of this section is made--
          (1) notice must be given to the Government of a 
        claim, or a civil action related to the claim, against 
        a party described in subsection (a)(1) of this section 
        for death, bodily injury, or property damage or loss;
          (2) the Government must be given an opportunity to 
        participate or assist in the defense of the claim or 
        action; and
          (3) the Secretary must approve any part of a 
        settlement to be paid out of appropriations of the 
        Government. (c) Withholding payments. The Secretary may 
        withhold a payment under subsection (a) of this section 
        if the Secretary certifies that the amount is not 
        reasonable. However, the Secretary shall deem to be 
        reasonable the amount of a claim finally decided by a 
        court of competent jurisdiction.
  (d) Surveys, Reports, and Compensation Plans.--
          (1) If as a result of an activity carried out under a 
        license issued or transferred under this chapter the 
        total of claims related to one launch or entry is 
        likely to be more than the amount of required insurance 
        or demonstration of financial responsibility, the 
        Secretary shall--
                  (A) survey the causes and extent of damage; 
                and
                  (B) submit expeditiously to Congress a report 
                on the results of the survey.
          (2) Not later than 90 days after a court 
        determination indicates that the liability for the 
        total of claims related to one launch or entry may be 
        more than the required amount of insurance or 
        demonstration of financial responsibility, the 
        President, on the recommendation of the Secretary, 
        shall submit to Congress a compensation plan that--
                  (A) outlines the total dollar value of the 
                claims;
                  (B) recommends sources of amounts to pay for 
                the claims;
                  (C) includes legislative language required to 
                carry out the plan if additional legislative 
                authority is required; and
                  (D) for a single event or incident, may not 
                be for more than $1,500,000,000.
          (3) A compensation plan submitted to Congress under 
        paragraph (2) of this subsection shall--
                  (A) have an identification number; and
                  (B) be submitted to the Senate and the House 
                of Representatives on the same day and when the 
                Senate and House are in session.
  (e) Congressional Resolutions.--
          (1) In this subsection, ``resolution''--
                  (A) means a joint resolution of Congress the 
                matter after the resolving clause of which is 
                as follows: ``That the Congress approves the 
                compensation plan numbered -------- submitted 
                to the Congress on --------, 19--.'', with the 
                blank spaces being filled appropriately; but
                  (B) does not include a resolution that 
                includes more than one compensation plan.
          (2) The Senate shall consider under this subsection a 
        compensation plan requiring additional appropriations 
        or legislative authority not later than 60 calendar 
        days of continuous session of Congress after the date 
        on which the plan is submitted to Congress.
          (3) A resolution introduced in the Senate shall be 
        referred immediately to a committee by the President of 
        the Senate. All resolutions related to the same plan 
        shall be referred to the same committee.
          (4)(A) If the committee of the Senate to which a 
        resolution has been referred does not report the 
        resolution within 20 calendar days after it is 
        referred, a motion is in order to discharge the 
        committee from further consideration of the resolution 
        or to discharge the committee from further 
        consideration of the plan.
          (B) A motion to discharge may be made only by an 
        individual favoring the resolution and is highly 
        privileged (except that the motion may not be made 
        after the committee has reported a resolution on the 
        plan). Debate on the motion is limited to one hour, to 
        be divided equally between those favoring and those 
        opposing the resolution. An amendment to the motion is 
        not in order. A motion to reconsider the vote by which 
        the motion is agreed to or disagreed to is not in 
        order.
          (C) If the motion to discharge is agreed to or 
        disagreed to, the motion may not be renewed and another 
        motion to discharge the committee from another 
        resolution on the same plan may not be made.
          (5)(A) After a committee of the Senate reports, or is 
        discharged from further consideration of, a resolution, 
        a motion to proceed to the consideration of the 
        resolution is in order at any time, even though a 
        similar previous motion has been disagreed to. The 
        motion is highly privileged and is not debatable. An 
        amendment to the motion is not in order. A motion to 
        reconsider the vote by which the motion is agreed to or 
        disagreed to is not in order.
          (B) Debate on the resolution referred to in 
        subparagraph (A) of this paragraph is limited to not 
        more than 10 hours, to be divided equally between those 
        favoring and those opposing the resolution. A motion 
        further to limit debate is not debatable. An amendment 
        to, or motion to recommit, the resolution is not in 
        order. A motion to reconsider the vote by which the 
        resolution is agreed to or disagreed to is not in 
        order.
          (6) The following shall be decided in the Senate 
        without debate:
                  (A) a motion to postpone related to the 
                discharge from committee.
                  (B) a motion to postpone consideration of a 
                resolution.
                  (C) a motion to proceed to the consideration 
                of other business.
                  (D) an appeal from a decision of the chair 
                related to the application of the rules of the 
                Senate to the procedures related to a 
                resolution.
  (f) Application.--This section applies to a license issued or 
transferred under this chapter for which the Secretary receives 
a complete and valid application not later than [December 31, 
1999.] December 31, 2009.

                                  
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