[Federal Register Volume 66, Number 147 (Tuesday, July 31, 2001)]
[Notices]
[Pages 39545-39548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19043]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Docket No. FAA-2001-9119]


Notice of Public Meeting; Commercial Launch Industry

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of public meeting

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SUMMARY: The FAA announces an on-line public forum on the Internet 
seeking comments and information from the public regarding the 
government's role in supporting the U.S. commercial launch industry. In 
particular, the FAA is asking whether and why the government should 
continue to share the risk of liability for commercial launches in the 
unlikely event of an accident, or consider changes to existing laws. 
Public views obtained from the on-line forum will be included in a 
report to Congress on the appropriateness and need to continue current 
risk-sharing arrangements or modify laws governing liability risk-
sharing for commercial launches and reentries beyond December 31, 2004.

DATES: A two-week on-line public forum will begin on September 4, 2001, 
at 9 a.m. EST and end on September 14, 2001, at 4:30 p.m. EST. Written 
comments may also be submitted to the docket through September 14, 
2001. Comments submitted to the docket after September 14th will be 
considered and included in the report to the extent practicable; 
however, the FAA encourages timely submission of comments to facilitate 
preparation of the report.

ADDRESSES: The on-line public forum can be reached by clicking the 
``On-Line Public Forum'' hyperlink on the Associate Administrator for 
Commercial Space Transportation's (AST) Internet home page, http://ast.faa.gov. Persons unable to participate in the on-line public forum 
may mail or deliver views to the U.S. Department of Transportation 
Dockets, Docket No. FAA-2001-9119, 400 Seventh Street, SW., Washington, 
DC 20590. The FAA requests two copies of any written comments. Comments 
may also be submitted to the docket electronically by sending them to 
the Documents Management Systems (DMS) at the following Internet 
address: http://dms.dot.gov/. Comments to the docket should be 
submitted by September 14, 2001. Comments submitted to the docket may 
be examined in Room PL 401 at the U.S. Department of Transportation, 
400 Seventh Street, SW., Washington, DC 20590, between 10 a.m. and 5 
p.m. weekdays except Federal holidays, and may be viewed by accessing 
the DMS using the Internet cite noted above.

FOR FURTHER INFORMATION CONTACT: Ms. Esta M. Rosenberg, Senior 
Attorney-Advisory, Regulations Division, Office of the Chief Counsel, 
Federal Aviation Administration, U.S. Department of Transportation 
(202) 366-9320, or Mr. Ronald K. Gress, Manager, Licensing and Safety 
Division, Associate Administrator for Commercial Space Transportation, 
Federal Aviation Administration, U.S. Department of Transportation 
(202) 267-7985.

SUPPLEMENTARY INFORMATION:

Background

    For decades, U.S. national launch capability was attributable 
exclusively to government managed programs. By the 1980's, commercial 
opportunities in space prompted development of a private sector launch 
industry that would operate as a commercial business by selling launch 
services to customers. Customers included manufacturers or owners and 
operators of telecommunications and Earth observations satellites, as 
well as research scientists, among others. Government policies were 
developed to facilitate growth of a robust commercial launch industry.
    In the mid-1980's, Congress enacted the Commercial Space Launch Act 
(CSLA) to create the legal framework for a commercial launch industry 
and to sustain the momentum towards an increasingly privatized launch 
capability in the United States. In enacting the CSLA, Congress cited 
the critical importance of demonstrating legislative commitment to the 
emerging launch industry in order to encourage private sector 
investment in developing commercial launch ventures. Under the 
statutory framework established by the CSLA, launch authorization would 
be

[[Page 39546]]

granted through a licensing program administered by the U.S. Department 
of Transportation (DOT). Through licensing, the Federal government 
would exercise safety oversight and regulatory control over private 
sector launches.
    Progress in commercializing space access was slow, however, largely 
because the Shuttle was available to launch satellites as secondary 
payloads on advantageous terms. The Challenger disaster of 1986, and 
the stand-down of Shuttle service for the two years that followed, 
spurred development of private sector launch capability, but still at a 
slow rate. By 1988, no commercial launches had yet taken place. Among 
the reasons cited for delayed development of a commercial launch 
industry was the difficulty of managing the potentially catastrophic 
liability risk associated with a commercial launch. Insurance to 
financially protect an operator against the risk of potentially vast 
liability was not readily available. To the extent it was available, 
insurance was costly and market capacity extremely limited. Launch 
companies stated that they were unwilling to ``bet the company'' on 
each launch and without insurance could not responsibly manage the 
potentially catastrophic and open-ended liability that might result in 
the event of a launch accident affecting a populated area. Previously, 
liability had been the responsibility of the Federal government. It 
became clear that a viable commercial launch industry would not develop 
in the United States without an adequate means of managing liability 
risk.
    To address industry concerns, and facilitate development of 
commercial launch capability and associated insurance capacity, 
Congress instituted a comprehensive liability risk-sharing program 
through the CSLA limiting the amount of insurance a launch operator 
would be required to buy and placing responsibility on the government 
for covering excess liability, up to a set limit. The payment of excess 
claims provisions of the CSLA became popularly known as indemnification 
although the term is a misnomer. Unlike an absolute guarantee of 
indemnification, the CSLA provides procedures for Congress to vote to 
appropriate funds covering excess liability, up to a statutory ceiling 
of $1.5 billion above required insurance, with an adjustment for 
inflation occurring after 1988 (the year the program was enacted).
    Initially, the liability risk-sharing provisions of the CSLA were 
limited to a five year term and were due to sunset at the end of 1993. 
The first launch license was issued and the first licensed launch took 
place in 1989. By the end of 1993, 37 licensed launches had taken place 
and two entities held operator licenses. The concept of an operator 
license was developed by DOT to facilitate and streamline approvals for 
the conduct of launches by an operator that had demonstrated a sound 
safety record and launch capability. An operator license grants broader 
authorization than that conveyed in a single launch license by 
authorizing an unlimited number of launches of a class of launch 
vehicle by the operator from a federal launch range.
    By 1993, commercial launches were occurring at the rate of one 
every two months, on average, and were still relatively infrequent 
events. That year, Congress extended the statutory liability risk-
sharing program, including the indemnification provisions, for an 
additional six year term, through December 1999. Launch rates increased 
during the period of 1995 to 1999. Consideration of another extension 
in 1999 proved controversial and a one-year continuation was granted, 
allowing time for further deliberation in Congress of an additional 
extension. That deliberation resulted in passage of the Commercial 
Space Transportation Competitiveness Act of 2000, which extended the 
existing risk-sharing regime through 2004 and directed DOT to submit a 
comprehensive report on the need for maintaining the liability risk-
sharing status quo. Information received in response to this notice of 
an on-line pubic forum will be used in preparing the report.
    Launches conducted from U.S. facilities have an impressive safety 
track record, as measured by the absence of damage or loss to 
uninvolved persons. In fact, for licensed commercial launches, a claim 
for third-party damage or loss has never been made against a licensee's 
launch liability insurance coverage. Nevertheless, as in any business, 
and particularly one involving high risk explosives, the possibility of 
a launch accident makes insurance or other form of financial 
responsibility necessary to compensate potential victims and also to 
protect the corporate assets of launch participants. Moreover, by 
treaty, the United States accepts absolute liability for damage that 
occurs in other countries when a launch takes place from U.S. territory 
or facilities.
    To ensure that funds will be available to compensate injured but 
uninvolved persons, as well as government personnel supporting a 
commercial launch and to ensure that U.S. launch services providers are 
financially able to operate in the face of potentially open-ended 
liability, the CSLA divides potential liability into three layers and 
assigns responsibility for each layer as follows. The first layer is 
that which has the most probability of occurrence, although in fact no 
claims have ever arisen out of a commercial launch from the United 
States. A launch operator holding a license is required to obtain 
liability insurance (or otherwise prove that it can financially cover 
claims) in an amount calculated by the FAA based upon a risk assessment 
that measures, in a dollar amount, the greatest potential losses for 
bodily injury and property damage that can reasonably be expected to 
occur as a result of a licensed launch. Insurance requirements are set 
such that there is about a one in ten million chance that liability for 
third-party claims will exceed the amount of insurance the agency 
requires as a condition of a launch license. All participants in a 
licensed launch, including the payload customer and the contractors of 
the launch operator and the customer, as well as the U.S. Government 
and its contractors, are protected by the licensee's insurance 
coverage. Regardless of which entity involved in the launch is at fault 
for an accident, the legal liability of that party and the other launch 
participants is covered by the insurance. The injured victim will be 
compensated without protracted arguments over which party actually 
caused the injury. By law, the amount of insurance the FAA can require 
is limited to $500 million but actual insurance requirements have never 
exceeded $215 million for a launch.
    Above the amount of required insurance set by the FAA, the CSLA 
places responsibility for covering claims on the government, up to a 
ceiling of $1.5 billion as adjusted for inflation occurring after 1988, 
the year the program was enacted. As noted above, the CSLA contains 
procedures whereby Congress may vote to appropriate funds to cover the 
liability, but it is not absolute. Above the combined amount of 
required insurance plus the amount paid by the government, 
responsibility for covering third-party claims rests with the licensee 
or legally liable party. Under the statutory risk allocation program 
just described, the government's liability exposure for the most 
probable claims is covered by the launch licensee's insurance at no 
cost to the government or U.S. taxpayer. This coverage is particularly 
important because the government is liable under treaties for damage or 
injury that occurs on the ground outside the United States, regardless 
of the CSLA, when launches

[[Page 39547]]

take place from the United States. In return for industry-provided 
insurance, the government accepts responsibility for covering liability 
of involved entities and compensating injured third parties in the 
unlikely event of catastrophic liability in excess of required 
insurance. Congress has never been requested to appropriate funds to 
fulfill its statutory commitment.
    Commercialization of U.S. launch capability has been a qualified 
success. Arianespace, a European launch consortium and the principal 
competitor of the US commercial launch industry, continues to attract a 
large share of the internationally competed launch market and launches 
of commercial satellites by Russia's Proton launch vehicle are 
increasing. More and more countries have developed space-faring 
capability and are developing national laws to address operator 
liability for commercially operated launch vehicles and to fulfill 
treaty obligations assumed by governments under the Outer Space 
Treaties. The U.S. risk-sharing regime has been used as model for other 
nations in developing risk-sharing programs under their domestic laws.
    Against this competitive climate, Congress extended the existing 
liability risk-sharing regime for an additional five year term, 
calculated from the 1999 sunset date. Congress will need to consider 
whether to extend the regime beyond the current sunset date of December 
2004, and if it declines to act the indemnification provisions will end 
under the terms of the existing law. In granting the extension, 
Congress directed the Department of Transportation to study the need 
for continuing the status quo with respect to liability risk 
allocation, and to consider whether modifications may be appropriate. 
In doing so, it would appear that, for Congress, questions remain 
unanswered as to the continuing need for the liability risk-sharing 
regime. In the Commercial Space Transportation Competitiveness Act of 
2000, Congress has detailed specific issues associated with launch 
liability and risk allocation that must be addressed by the 
comprehensive report, and they can be viewed at the AST Internet home 
page, http://ast.faa.gov.
    A portion of the report will be dedicated to presenting the views 
of the interested public. The interested public includes the launch 
services industry and its satellite customers and suppliers, as well as 
associations and interest groups dedicated to space-related issues. But 
the public is not limited to entities directly involved in launch 
services or the space industry. A robust U.S. commercial launch 
industry enables many industries and services for consumers. Today, 
commercialized utilization of and access to space is credited with 
enabling associated consumer services such as telecommunications, 
mobile data, direct-to-home television, remote sensing and related 
processing, as well as distribution industries. According to an AST 
report issued February 2001, ``The Economic Impact of Commercial Space 
Transportation on the U.S. Economy,'' U.S. economic activity in 1999 
linked to the commercial space industry totaled over $61.3 billion.
    Because the benefits of space are widespread, and because so many 
people are interested in space travel and exploration, both as 
taxpayers and as future adventure travelers, the FAA seeks views from 
any and all interested persons, including consumer groups, persons and 
commercial entities. The FAA also seeks the views of persons who may 
have more particularized interest in understanding how launch liability 
is managed, such as those persons living in the vicinity of launch 
sites. Population growth in the communities surrounding the most active 
U.S. launch sites, such as Cape Canaveral Air Force Station in Florida 
and Vandenberg Air Force Base in California, demonstrates confidence in 
Air Force range safety management in particular, and launch safety 
technology in general.
    This is the second opportunity provided by the FAA for the 
interested public to provide its perspective, using the Internet, on 
the appropriate role of government in risk management for commercial 
space transportation and associated issues concerning U.S. policies in 
support of a robust commercial launch industry. A docket also remains 
available for filing written comments, either by mail or 
electronically, following the instructions listed above under the 
heading, ADDRESSES.
    The on-line public forum will allow electronic discussion of the 
issues identified for analysis by the Commercial Space Transportation 
Competitiveness Act of 2000. Through the Internet, a large cross-
section of the interested public will be able to share views and 
information with each other and the FAA, and assist the FAA in 
compiling the range of perspectives concerning an appropriate risk-
sharing regime for commercial space transportation.
    There are two sets of questions. The first set of questions asks, 
in a general way, for public views concerning government support of the 
commercial space launch industry. The second set of questions repeats 
the questions posed in an on-line public forum held April 27-May 11, 
and addresses the specific elements Congress has required the FAA to 
study in preparing the report. At the end of the questions, the FAA 
provides a more ``free-style'' opportunity for submission of views on 
matters related to launch liability, risk management and government 
policies in support of the U.S. commercial space launch industry.
    If you would like to participate in the on-line forum, you are not 
required to answer all of the questions and you are not required to 
respond to all parts. You may answer as few or as many of the questions 
as you like, in either or both parts, as well as in the ``free-style'' 
section. You may choose to respond only in the ``free-style'' section 
and skip over the two sets of questions in Parts I and II entirely. If 
you choose to respond to a question, please be specific in your answer 
so that it is clear to the FAA and others who may view the on-line 
public meeting. To the extent you can, please provide supporting 
information and the rationale for your answer.

Part I

    There are eight questions listed in this part. You may answer none, 
some or all of them, and then proceed to Part II.
    1. Before reading this Notice, were you aware that a commercial 
launch industry exists in the United States, in addition to government 
launch capability (e.g., military space programs operated by the 
Department of Defense and civil space programs administered by NASA), 
and that private companies offer launch services as a commercial 
business?
    2. Is it important to you that the United States have a successful 
and internationally competitive commercial launch industry with a 
significant, if not majority, share of the international launch market, 
and if so, why? Do you believe there is a benefit to our nation from 
having a robust commercial launch industry and from being a well-
established world leader in space?
    3. Before reading this Notice, were you aware that the FAA licenses 
and regulates commercial launches in the United States?
    4. Before reading this Notice, were you aware that launch operators 
licensed by the FAA are required, by law, to maintain a prescribed 
amount of liability insurance?
    5. Before reading this Notice, were you aware of the government's 
involvement in providing coverage, that is, ``indemnification,'' for 
excess liability over and above that which is

[[Page 39548]]

covered by the liability insurance a launch operator is required to 
purchase when conducting a licensed launch in the United States?
    6. A government-industry risk sharing arrangement, such as that 
reflected in the CSLA and described in this Notice, may be unusual for 
a commercial industry, but it is not unique. For example, 
indemnification of excess liability is credited with enabling 
commercial development of the nuclear power industry. Do you think it 
is important and appropriate for the government to continue to support 
the U.S. commercial launch industry by having some type of liability 
risk-sharing program, such as the one described in this Notice, and can 
you state why?
    7. Other governments financially support their launch industry 
through indemnification commitments. For example, the French Government 
is responsible for paying damages awarded to victims of Arianespace 
launches in excess of the insurance obtained by Arianespace. Do you 
believe that the U.S. Government should continue to have policies and 
laws, such as the CSLA risk-sharing program described in this Notice, 
so that U.S. companies can compete on similar terms against their 
international competitors?
    8. If you answered ``yes'' to Question 7, above, under what 
circumstances do you believe the U.S. Government should or could stop 
supporting the U.S. commercial launch industry through risk sharing? 
What criteria (e.g., market share, technological success, other 
considerations) would you use in deciding that a risk-sharing 
arrangement between government and industry is no longer necessary or 
appropriate?

Part II

    Reprinted below are the questions presented in the first Internet 
public meeting, conducted April 27-May 11. You may answer none, some or 
all of them, and then proceed to Part III.
    1. Could the U.S. commercial space transportation industry compete 
effectively against non-U.S. launch providers without the existing 
liability risk-sharing regime?
    2. Are the liability risk-sharing regimes of other space-faring 
countries relevant to the competitiveness of the U.S. space 
transportation industry? Are there specific elements of particular 
foreign regimes that you believe provide advantages or benefits to 
entities that fall under those regimes and the ability of non-U.S. 
launch providers to compete internationally?
    3. Does holding a launch operator strictly liable for the damage or 
injury that results from its launch hinder the commercialization of 
space launch capability?
    4. By treaty, the U.S. Government accepts absolute liability for 
damage on the ground or to aircraft in flight outside of the United 
States when a launch takes place from U.S. territory or facilities. 
Given the Government's obligations in this regard, does the existing 
liability risk-sharing regime provide adequate coverage and financial 
protection for the commercial space transportation industry as well as 
the Government?
    5. U.S. and foreign air carriers operating in the United States are 
required to maintain insurance coverage in certain minimum amounts 
covering liability to passengers and persons and property on the 
ground. For aircraft with more than 60 seats or more than 18,000 pounds 
of capacity, carriers must maintain third-party accident liability 
coverage in the minimum amount of $300,000 for any one person other 
than a passenger and a total of $20 million per involved aircraft for 
each occurrence. There is no government indemnification in the event 
claims exceed that amount, nor does the U.S. Government accept treaty-
based liability in the event of such damage. At what stage of 
development and under what circumstances should the airline liability 
regime become a model for commercial reusable launch vehicles (RLVs) 
that will routinely take-off and land?
    6. The Federal Government's current indemnification policy does not 
cover risks associated with commercial spaceport operations that do not 
involve launch vehicles. Do commercial spaceports require a liability 
risk-sharing regime comparable to that utilized for licensed launches 
and reentries, even when there is no vehicle-related activity taking 
place at the spaceport?
    7. What factors should the U.S. Congress consider in determining 
whether to continue as-is, or modify, existing laws in terms of 
liability risk-sharing for commercial space launch and reentry 
activities?
    8. What suggestions do you have for modifying the existing 
liability risk-sharing laws applicable to commercial launch and reentry 
activities?

Part III

    This part provides an opportunity for you to express your views and 
concerns on matters related to launch liability, risk management and 
government policies in support of the U.S. commercial space launch 
industry. You are welcome to use this opportunity to inform the FAA of 
your views regarding U.S. commercial space transportation in general, 
and the government's role in facilitating and supporting commercial 
access to space and regulating launch safety.

    Issued in Washington, DC, on July 25, 2001.
Joseph A. Hawkins,
Acting Associate Administrator for Commercial Space Transportation.
[FR Doc. 01-19043 Filed 7-30-01; 8:45 am]
BILLING CODE 4910-13-P