[Federal Register Volume 71, Number 62 (Friday, March 31, 2006)]
[Proposed Rules]
[Pages 16251-16273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3137]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 401, 404, 405, 406, 413, 420, 431, 437

[Docket No. FAA-2006-24197]
RIN 2120-AI56


Experimental Permits for Reusable Suborbital Rockets

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Federal Aviation Administration (FAA) proposes to amend 
its commercial space transportation regulations under the Commercial 
Space Launch Amendments Act of 2004. The FAA proposes application 
requirements for an operator of a reusable suborbital rocket to obtain 
an experimental permit. The FAA also proposes operating requirements 
and restrictions on launch and reentry of reusable suborbital rockets 
operated under a permit.

DATES: Send your comments on or before May 30, 2006.

ADDRESSES: You may send comments identified by Docket Number FAA-2006-
24197 using any of the following methods:
     DOT Docket Web site: Go to http://dms.dot.gov and follow 
the instructions for sending your comments electronically.
     Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your 
comments electronically.
     Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-001.
     Fax: 1-202-493-2251.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For more information on the rulemaking process, see the 
SUPPLEMENTARY INFORMATION section of this document.
    Privacy: We will post all comments we receive, without change, to 
http://dms.dot.gov, including any personal information you provide. For 
more information, see the Privacy Act discussion in the SUPPLEMENTARY 
INFORMATION section of this document.
    Docket: To read background documents or comments received, go to 
http://dms.dot.gov at any time or to Room PL-401 on the plaza level of 
the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Randy Repcheck, Office of Commercial 
Space Transportation, Systems Engineering and Training Division, AST-
300, Federal Aviation Administration, 800 Independence Avenue, SW., 
Washington, DC 20591; telephone (202) 267-8760; facsimile (202) 267-
5463, e-mail [email protected]. For legal information, contact 
Laura Montgomery, Senior Attorney, Office of the Chief Counsel, Federal 
Aviation Administration, 800 Independence Avenue, SW., Washington, DC 
20591; telephone (202) 267-3150; facsimile (202) 267-7971, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites interested persons to participate in this 
rulemaking by submitting written comments, data, or views. We also 
invite comments relating to the economic, environmental, energy, or 
federalism impacts that might result from adopting the proposals in 
this document. The most helpful comments reference a specific portion 
of the proposal, explain the reason for any recommended change, and 
include supporting data. We ask that you send us two copies of written 
comments.
    We will file in the docket all comments we receive, as well as a 
report summarizing each substantive public contact with FAA personnel 
concerning this proposed rulemaking. The docket is available for public 
inspection before and after the comment closing date. If you wish to 
review the docket in person, go to the address in the ADDRESSES section 
of this preamble between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays. You may also review the docket using the 
Internet at the Web address in the ADDRESSES section.
    Privacy Act: Using the search function of our docket Web site, 
anyone can find and read the comments received into any of our dockets, 
including the name of the individual sending the comment (or signing 
the comment on behalf of an association, business, labor union, etc.). 
You may review DOT's complete Privacy Act Statement in the Federal 
Register published on April 11, 2000 (65 FR 19477-78) or you may visit 
http://dms.dot.gov.
    Before acting on this proposal, we will consider all comments we 
receive on or before the closing date for comments. We will consider 
comments filed late if it is possible to do so without incurring 
expense or delay. We may change this proposal in light of the comments 
we receive.
    If you want the FAA to acknowledge receipt of your comments on this 
proposal, include with your comments a pre-addressed, stamped postcard 
on which the docket number appears. We will stamp the date on the 
postcard and mail it to you.

Availability of Rulemaking Documents

    You can get an electronic copy using the Internet by:

[[Page 16252]]

    (1) Searching the Department of Transportation's electronic Docket 
Management System (DMS) Web page (http://dms.dot.gov/search);
    (2) Visiting the Office of Rulemaking's Web page at http://www.faa.gov/regulations_policies; or
    (3) Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html.
    You can also get a copy by sending a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the docket number, notice number, or amendment number 
of this rulemaking.

Authority for This Rulemaking

    The FAA's authority to issue rules regarding space transportation 
safety is found under the general rulemaking authority, 49 U.S.C. 
322(a), of the Secretary of Transportation to carry out 49 U.S.C. 
Subtitle IX, chapter 701, 49 U.S.C. 70101-70121 (Chapter 701). 
Additionally, the recently enacted Commercial Space Launch Amendments 
Act of 2004 (the CSLAA) mandates this rulemaking through section 70105, 
which creates the FAA's new permit authority, and section 70120, which 
requires that this rulemaking be complete by June 23, 2006. If the FAA 
does not issue a final rule by December 23, 2007, Congress prohibits 
the FAA from issuing any permits for launch or reentry until the final 
regulations are issued.

Background

    Chapter 701 authorizes the Secretary of Transportation and, through 
delegations, the FAA's Associate Administrator for Commercial Space 
Transportation, to oversee, license, and regulate both launches and 
reentries of launch and reentry vehicles, and the operation of launch 
and reentry sites when carried out by U.S. citizens or within the 
United States. 49 U.S.C. 70104, 70105; U.S. Federal Aviation 
Administration, Commercial Space Transportation Delegations of 
Authority, N1100.240 (Nov. 21, 1995). Chapter 701 directs the FAA to 
exercise this responsibility consistent with public health and safety, 
safety of property, and the national security and foreign policy 
interests of the United States, and to encourage, facilitate, and 
promote commercial space launch and reentry by the private sector. 49 
U.S.C. 70103, 70105.
    On December 23, 2004, President Bush signed into law the Commercial 
Space Launch Amendments Act of 2004 (CSLAA). The CSLAA changes current 
law in several significant ways. One such change, which establishes an 
experimental permit regime for developmental reusable suborbital 
rockets, is the subject of this rulemaking. The FAA is implementing 
other provisions of the CSLAA in a companion rulemaking entitled, 
``Human Space Flight Requirements for Crew and Space Flight 
Participants.''
    A permit is available as an alternative to licensing for operators 
of reusable suborbital rockets. The CSLAA defines a suborbital rocket 
as a vehicle, rocket-propelled in whole or in part, intended for flight 
on a suborbital trajectory, and the thrust of which is greater than its 
lift for the majority of the rocket-powered portion of ascent. 49 
U.S.C. 70102. To be eligible for an experimental permit, a reusable 
suborbital rocket must be flown for the following purposes:
     Research and development to test new design concepts, new 
equipment, or new operating techniques,
     Showing compliance with requirements as part of the 
process for obtaining a license under Chapter 701, or
     Crew training before obtaining a license for a launch or 
reentry using the design of the rocket for which the permit would be 
issued.\1\
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    \1\ The CSLAA defines crew as any employee of a licensee or 
transferee, or of a contractor or subcontractor of a licensee or 
transferee, who performs activities in the course of that employment 
directly relating to the launch, reentry, or other operation of or 
in a launch vehicle or reentry vehicle that carries human beings. 49 
U.S.C. 70102.

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49 U.S.C. 70105a(d).

    The reusable suborbital rocket must also be flown on suborbital 
trajectory, which the CSLAA defines as the intentional flight path of a 
launch vehicle, reentry vehicle, or any portion thereof, whose vacuum 
instantaneous impact point (the location on Earth where a vehicle would 
impact if it were to fail, calculated in the absence of atmospheric 
drag effects) does not leave the surface of the Earth. 49 U.S.C. 70102.
    For operators of airplane-like vehicles, the CSLAA's definitions of 
suborbital rocket and suborbital trajectory establish the circumstances 
under which the operator will be required to conduct vehicle flights 
under an experimental permit or launch license, rather than through a 
special airworthiness certificate in the experimental category. For 
some vehicles, the proposed rule would make it possible to conduct 
early test flights, including glide tests or flights under jet power 
only, under a special airworthiness certificate, prior to transitioning 
to an experimental permit. The FAA will make the authorization process 
for operators of these vehicles as seamless as possible.

References

    The FAA has cited the following references in this NPRM. Copies of 
each have been placed in the docket.

Amateur-Built Aircraft and Ultralight Flight Testing Handbook, AC 
90-89A
Department of Defense Standard Practice: System Safety, MIL-STD-882D
Equipment, Systems, and Installations in Part 23 Airplanes, AC 
23.1309
Guide to the Identification of Safety-Critical Hardware Items for 
Reusable Launch Vehicle (RLV) Developers, American Institute of 
Aeronautics and Astronautics (AIAA)
Guidelines for Experimental Permits for Reusable Suborbital Rockets, 
May, 2005
Reusable Launch and Reentry Vehicle System Safety Process, AC 
431.35-2

Current Guidelines

    Currently, the FAA issues an experimental permit on a case-by-case 
basis. To that end, the FAA issued Guidelines for Experimental Permits 
for Reusable Suborbital Rockets (May 2005) to assist applicants and the 
FAA pending implementation of regulations.

General Discussion of the Proposals

A. FAA Approach to Experimental Permits

    Congress enacted an experimental permit regime to streamline the 
authorization process for developmental reusable suborbital rockets. As 
the legislative history states, Congress intended that, ``[a]t a 
minimum, permits should be granted more quickly and with fewer 
requirements than licenses.'' H.Rep. 108.429 Sec. VII. Congressman 
Rohrabacher, chairman of the House Subcommittee on Space and 
Aeronautics, also clarified the intent of the experimental permit by 
noting that the experimental flight permits should make it easier for 
an operator to launch. Even more significantly, the House Science 
Committee questioned whether the FAA should use its traditional risk 
measure of expected casualty when issuing permits.\2\
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    \2\ The CSLAA shares legislative history with H.R. 3752, for 
which the House prepared a conference report, H. Rep. 108-429. 
Although the Senate made significant changes to this bill, and no 
conference report was prepared, the original House report remains 
helpful.
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    Congress intends an experimental permit regime to reduce the 
regulatory burden on developers of reusable suborbital rockets. 
Accordingly, while still maintaining public safety, the FAA proposes to 
reduce the number of

[[Page 16253]]

requirements for a permit when compared to a license, and to model its 
experimental permit regime for space transportation on the special 
airworthiness certificates granted to experimental aircraft. The FAA 
does not propose to require satisfaction of its risk criteria for a 
permit as it does for a license. Likewise, of all the system safety 
management and engineering requirements the FAA requires for a license, 
the FAA only proposes to require a hazard analysis to obtain a permit. 
Containing a vehicle within an operating area, as proposed here, is 
similar to the approach used in granting special airworthiness 
certificates to experimental aircraft.
    The FAA examined, for purposes of streamlining, the three-pronged 
approach currently used to license the launch of reusable launch 
vehicles (RLVs). The safety strategy for licensing launch and reentry 
consists of the following three interdependent safety requirements:
    1. Quantified limits on individual and collective risk to the 
general public,
    2. A system safety process that requires an operator to use a 
logical, disciplined approach to identifying hazards and mitigating and 
removing risks,\3\ and
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    \3\ A hazard is an activity or condition that poses a threat. 
Risk is the potential for an undesirable consequence.
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    3. Implementation of operating requirements.
    Just as system redundancy may compensate for failure or flawed 
design or performance, the three-pronged approach protects the health 
and safety of the general public through these different yet 
interrelated means. The FAA proposes to apply a simplified version of 
this approach as discussed below.
1. Quantitative Risk Analysis
    Under a launch license, a licensee must demonstrate that the risk 
from a launch falls below specified collective and individual risk 
criteria. The FAA proposes to relieve a launch operator from the 
requirement to calculate collective or individual risk under an 
experimental permit. An applicant would instead propose one or more 
operating areas that meet qualitative criteria.
    Under the license regime, an applicant must demonstrate to the FAA 
that its launch will meet certain individual and collective risk 
criteria. Individual risk is the risk to an individual member of the 
public. Under a license, the risk level to an individual must not 
exceed 1 x 10-\6\ per mission. Collective risk is the risk 
to a population. Under a license, the risk level to the collective 
members of the public exposed to vehicle debris impact hazards must not 
exceed an expected average number of 30 x 10-\6\ casualties 
per mission (commonly referred to as expected casualty).
    Risk analysis accounts for vehicle reliability, effective casualty 
areas, the probability of impact, populations at risk, and potential 
consequences. The strength of any quantitative risk analysis lies not 
only in the resulting values, but also in the decisions reached during 
the analysis, where the decisions limit risk to the public. In that 
regard, a quantitative risk criterion may serve as an indicator of when 
sufficient mitigation measures and operating requirements have been 
applied. However, uncertainties in launch vehicle reliability, 
operating environments, and the extent of the consequences of a failure 
prevent such a straightforward application when addressing research, 
development, and flight-testing of new technologies, such as 
developmental reusable suborbital rockets. Because of the 
uncertainties, any risk analysis would need to include conservative 
assumptions in order to demonstrate that the criteria are met. Greater 
knowledge and certainty about expendable launch vehicle (ELV) 
reliability and operations, coupled with the benefits of operating from 
coastal sites, allows ELVs to be held to a criterion of 30 casualties 
per one million launches.
    Most RLVs are intended to launch from inland launch sites near 
significant populations, such as airports. Even though the reusable 
suborbital rockets currently proposed are typically much smaller than 
their expendable counterparts,\4\ reusable launch vehicles operating 
from these sites under the same risk criterion would be required to 
have a lower probability of failure than those expendable counterparts. 
Preliminary calculations using the characteristics of several proposed 
and operational suborbital vehicles have shown that a probability of 
failure of 5% or less would have to be achieved to meet the criterion 
of 30 in one million. Unlike with ELVs, which have a historical 
probability of failure of approximately 10%, there is little 
operational experience and data available to support or refute that low 
a value for probability of failure.
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    \4\ Vehicle size is relevant to risk because a smaller vehicle, 
in general, will have less of a potential for harm to people and 
property on the ground than a larger vehicle.
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    The FAA considered requiring the operators of reusable suborbital 
rockets to produce the data needed to demonstrate the necessary 
probability of failure. This is the current approach for vehicles 
applying for a launch license. However, the data necessary to determine 
reliability does not yet exist for developmental suborbital rockets. 
This reliability data typically can be obtained by the very research 
and development testing that Congress intends permits to enable.
    Alternatively, the FAA could have increased the risk threshold for 
research and development vehicles to reflect the lack of data. In an 
effort to determine a new risk criterion, the FAA researched the risks 
from similar activities, such as the risks to persons living near 
airports. Our research concluded that the involuntary risks to people 
living near a major U.S. airport are most similar to the risks to 
people living near a spaceport. However, in order to do a true one-to-
one comparison, the empirical involuntary risks data, expressed as an 
annual risk to individuals living near a major U.S. airport, would have 
to be converted to a per-mission collective risk.
    Converting annual individual risk data into a per-mission 
collective risk criterion for permitted activities is sensitive to the 
assumptions applied in the conversion. In particular, the flight rate 
(the number of flights in a given time period) of permitted vehicles 
and the extent of the population exposed are difficult to predict. 
Because of this sensitivity, the FAA could reasonably propose risk 
values spanning an order of magnitude from the same underlying data. 
Such uncertainty in the proper value has the potential for producing a 
value that would be too easy to meet, thus failing to require the 
safety decisions that make quantitative risk analyses so valuable, and 
perhaps leading to a false sense of safety. On the other hand, if the 
value was too difficult to meet, it could create a regulatory 
environment that would be too burdensome to be conducive to research 
and development activities. Accordingly, the FAA chose not to pursue a 
new criterion for allowable quantitative risk in the absence of 
conclusive data to support a particular value.
    Nonetheless, quantitative risk analyses facilitate safety decision-
making, and for that reason, the FAA will continue to conduct these 
quantitative risk analyses for the industry as a whole as well as 
recommend that launch operators perform these analyses for their own 
use. The FAA will continue to conduct

[[Page 16254]]

these analyses to provide further insight into safety issues, identify 
trends, and collect data that may assist in defining future criteria. 
In addition, the FAA will provide guidance and tools to assist the 
industry in performing its own quantitative analyses.
2. System Safety
    To obtain an experimental permit, the FAA proposes that an 
applicant be required only to conduct a hazard analysis instead of, as 
for a launch license, establishing a comprehensive system safety 
program consisting of both system safety management and system safety 
engineering.\5\ A hazard analysis, which is typically part of a 
detailed system safety engineering process, identifies and 
characterizes hazards and qualitatively assesses risks. A license 
applicant uses this analysis to identify risk elimination and 
mitigation measures to reduce risk to an acceptable level.
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    \5\ The mitigation measures and safety requirements resulting 
from systematic approaches to identifying and reducing risk serve to 
protect individuals and society through prudent safety measures that 
assist in preventing mishaps.
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    The FAA realizes that by not requiring system safety engineering 
methods, other than a hazard analysis, some hazards may not be 
uncovered. A more rigorous approach would entail both ``bottoms-up'' 
subsystem analyses, such as a failure modes, effects, and criticality 
analysis, and ``top-down'' system analyses such as fault tree analysis 
and event tree analysis. However, containment within an FAA-approved 
operating area will ameliorate many of these unknown risks.
    Unlike the system safety management requirements of a license, the 
FAA does not propose explicit requirements for documenting the system 
safety organization or for identifying specific safety personnel in the 
permit regime. Pioneers within the commercial RLV industry need freedom 
to organize their companies in various innovative ways to conduct 
launches. In these organizations the emphasis should not be on the 
management structure but on the commitment to safety throughout the 
organization. Effective safety organizations are created not only by 
identifying individuals responsible for safety, but also through 
developing a strong and effective safety culture. In a strong safety 
culture, responsibility for safety is spread throughout the 
organization, upper-level management is committed to public safety, 
employees have a voice in safety decisions, and safe behavior is 
rewarded. Therefore, a permittee should establish an organization that 
has a strong safety culture to achieve safe operations.
    An operator with a strong safety culture would incorporate prudent 
approaches to ensuring safe flight based on lessons learned from launch 
industry mishaps and experimental aircraft testing and inspection, such 
as those described in AC 90-89A, ``Amateur-Built Aircraft and 
Ultralight Flight Testing Handbook.'' Permittees should familiarize 
themselves with and implement the guidance that the FAA has available 
for system safety management, particularly AC 431.35-2, ``Reusable 
Launch and Reentry Vehicle System Safety Process.'' Copies of these 
documents have been placed in the docket for this rulemaking.
    The FAA may reevaluate the need for prescriptive system safety 
management requirements if there are weaknesses in the industry's 
safety culture.
3. Operating Requirements
    The FAA proposes only those operating requirements that directly 
involve activities authorized under an experimental permit. To operate 
under a license, a licensee must comply with the operating requirements 
of part 431.\6\ The FAA examined each operating requirement under part 
431, as well as operating requirements derived from lessons learned 
from recent RLV launches conducted under a license. Many part 431 
operating requirements involve preparatory activities. Preparatory 
activities would not be addressed in a permit application. For example, 
the FAA would still require flight rules; however, the FAA proposes not 
to require a mission readiness review where, among other things, flight 
rules are discussed. Operating requirements are discussed in detail 
later in this preamble.
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    \6\ Operating requirements are often derived from the system 
safety process. Others, required by regulation, are based on 
historical best practices that mitigate the inherent uncertainty in 
the system safety process.
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4. Effect of a Less Burdensome Permitting Regime
    The FAA's proposed permitting regime is designed so that a 
permittee will implement adequate safety measures. Ultimately, however, 
public health and safety will depend on each operator adopting a strong 
safety culture and using proven system safety principles that go beyond 
the FAA's regulatory requirements.
    Imposing fewer requirements on permittees than licensees creates 
the potential for an increase in risk to the public compared to a 
similar launch or reentry licensed under part 431 or part 435. The FAA 
will carefully monitor the safety of space flight that takes place 
under a permit to ensure that the proposed approach does not result in 
inappropriate levels of risk. The FAA requests public comment on this 
approach, particularly the exclusion of quantitative risk criteria, the 
streamlining of system safety management and engineering, and the 
streamlined operating requirements.

B. Organization and Requirements of Proposed Rule

    The FAA proposes a new part 437 with requirements for obtaining and 
maintaining an experimental permit. The proposed rule has been 
organized into four subparts. Subpart A would contain general 
information about an experimental permit, including eligibility, scope, 
and duration. Subpart B would contain demonstration and information 
requirements that an applicant must meet to obtain an experimental 
permit. The FAA would use selected information submitted for subpart B 
for an interagency review that allows government agencies such as the 
Department of Defense and the Department of State to examine the 
proposed mission from their unique perspectives. Subpart C would 
contain the safety standards with which a permittee would have to 
comply while conducting permitted activities.
    Subparts B and C are necessarily interrelated. Subpart B would 
require a permit applicant to demonstrate how it would comply with 
certain subpart C requirements. An applicant would have to show how it 
would comply with the general performance-based safety standards 
proposed in subpart C, but would not have to demonstrate compliance 
with prescriptive subpart C requirements. For example, proposed rest 
rules for vehicle safety operations personnel are prescriptive and very 
specific. The FAA would not require an applicant to demonstrate in its 
application how it will implement those rules. Instead, the FAA would 
monitor the permit holder to verify that the permit holder is meeting 
the subpart C requirements. This should further ease the application 
burden in accordance with the streamlining goals of the CSLAA.
    Last, subpart D would contain other responsibilities that would 
apply to a permittee. This subpart would include requirements for the 
continuing accuracy of the permit application, allowable design 
changes, maintaining records related to the permit application and 
operations, pre-flight reporting, for-hire prohibition, and compliance 
monitoring.

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1. Subpart A--General Information
    Subpart A would contain rules concerning the scope and organization 
of part 437, definitions, eligibility for an experimental permit, the 
scope of an experimental permit, issuance of an experimental permit, 
and the duration of an experimental permit. The duration of a permit 
would be one year from the date of issuance. A permittee could conduct 
an unlimited number of launches and reentries for a particular 
suborbital rocket design during that time. A permittee would be able to 
apply to renew its permit on a yearly basis. Subpart A would also note 
that the FAA may modify an experimental permit at any time during its 
term, that an experimental permit is not transferable, and that the 
issuance of an experimental permit does not relieve a permittee of its 
obligation to comply with any requirement of law that applies to its 
activities.
2. Subpart B--Application Requirements

a. Requirements for an Experimental Permit

    This subpart would require an applicant to submit a program 
description, flight test plan, and operational safety documentation. 
The program description would include a description of the purpose for 
which the reusable suborbital rocket would be operated, dimensions, 
weights, thrust profiles, payloads, propellants, hazardous materials, 
and systems. An applicant would also have to describe any foreign 
ownership.
    The flight test plan would include a description of the applicant's 
proposed flight test program, including estimated number of flights, 
key flight-safety events, and the maximum altitude of the reusable 
suborbital rocket. An applicant would have to propose and obtain FAA 
approval of an operating area for its flight tests.
    Through operational safety documentation, an applicant would show 
how it would comply with the general performance standards proposed in 
subpart C.

b. Environmental Considerations

    The FAA proposes to require an applicant to provide sufficient 
information for the FAA to analyze the environmental impacts associated 
with issuing reusable suborbital rocket launch and reentry permits. The 
information provided by an applicant would be used by the FAA to 
complete an appropriate environmental analysis and associated 
documentation to comply with the statutory requirements that address 
public health and safety (e.g., the Clean Air Act), as well as the 
requirements of the National Environmental Policy Act, 42 U.S.C. 4321 
et seq. (NEPA), and the Council on Environmental Quality Regulations 
for Implementing the Procedural Provisions of the National 
Environmental Policy Act, 40 CFR parts 1500-1508. These requirements 
would be similar to those associated with a license, but the FAA is 
preparing a means of lessening the burden on a permit applicant.
    The FAA is developing a programmatic environmental impact statement 
(PEIS) concurrent with this rulemaking. The PEIS will analyze potential 
environmental impacts (impacts on the human environment include social, 
economic, cultural and natural environmental impacts) associated with 
experimental permitting of launches of reusable suborbital rockets. The 
PEIS will address environmental issues, including potential impacts on 
human health and safety, and provide information common to all permits. 
The PEIS is designed to allow an individual applicant's environmental 
analysis to focus on the environmental effects specific to the permit 
application for launch and reentry of the applicant's reusable 
suborbital rocket. The FAA will use the PEIS and subsequent permit 
specific analyses to determine the appropriate level of NEPA analysis 
and documentation that can be used to substantiate FAA action on 
permits. The PEIS will assist the FAA by compiling trend data and 
focusing environmental monitoring efforts in the coming years.
    An applicant will use the PEIS to develop analyses specific to its 
subsequent permit application. The FAA will obtain, use, and refine the 
data and information to meet the FAA's obligations under the National 
Environmental Policy Act and Chapter 701 when issuing permits 
authorizing reusable suborbital rocket launches and reentries.

c. Financial Responsibility

    With the exception of eligibility for indemnification, the 
financial responsibility regime of Chapter 701 applies to permittees. 
Therefore, a permittee under this part would have to comply with the 
financial responsibility requirements of part 440 and as specified in 
its permit. Under Chapter 701, Congress establishes risk sharing for 
licensees by providing for the conditional payment of claims by the 
United States Government of those claims in excess of the required 
financial responsibility up to $1,500,000,000, as adjusted for 
inflation, for third party liability. After those limits, the licensee 
is responsible for all claims. The U.S. Government waives its claims 
for Government range property damage in excess of required maximum 
probable loss (MPL)-based property insurance.
    Under a permit, the CSLAA provides that the Government is 
responsible for claims in excess of the required insurance amount for 
Government range property claims and the holder of the permit is 
responsible for all other claims. In short, the Government property 
provisions remain the same for both licensees and permittees. A 
licensee remains eligible for indemnification from third party claims; 
however, under the CLSAA a permittee is not. An applicant would provide 
the information required by part 3 of appendix A of part 440 for the 
FAA to conduct a maximum probable loss analysis.

d. Operation of a Private Launch Site

    Under Sec.  401.5 the operation of a launch site means the conduct 
of approved safety operations at a permanent site to support the 
launching of vehicles and payloads. A reusable suborbital rocket 
operator operating a private launch site that contains permanent 
facilities or supports continuous operations would have to obtain a 
launch site operator license in accordance with part 420, which 
contains licensing and operational requirements. Compliance with part 
420 would require an explosive site plan and lightning protection and 
compliance with part 437.
    Requiring a launch site operator license marks a slight shift from 
FAA policy to date. In the past, the FAA announced that a launch 
operator who operated a private site for its own launches did not need 
a license to operate a launch site. This is because its launch license 
would cover the safety issues associated with operating the launch 
site. Licensing and Safety Requirements for Operation of a Launch Site, 
65 FR 62812, 62815 (October 19, 2000). The FAA has never issued such a 
license,\7\ but the FAA finds that it

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must revisit this issue for both licenses and permits. The existing 
approach may leave safety issues unaddressed. A launch license would 
not, after all, cover the safety issues associated with operating a 
launch site, and perhaps the FAA should not have said so when 
promulgating part 420. Part 420, which governs operating a launch site, 
contains requirements for the storage of explosives and for mitigating 
lightning effects. Those requirements are necessary regardless of 
whether a launch vehicle is present at the launch site. Additionally, 
because the scope of a permit may be even more narrow than the scope of 
a license, the FAA could fail to address other safety issues as well.
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    \7\ Sea Launch offers its own unique circumstances. Because its 
launches take place outside the United States, Chapter 701 does not 
require that Sea Launch's launch license encompass activities in 
preparation for flight. Accordingly, Sea Launch's license did not 
cover activities in preparation for flight at the platform in the 
Pacific Ocean. Nor did the FAA require Sea Launch to obtain a 
license to operate a launch site. This determination was correct, in 
light of the discussion above, because Sea Launch was not conducting 
continuous operations or establishing permanent facilities at its 
launch point. Both the ship and the launch platform depart after 
each launch. Although the FAA has said that Sea Launch did not 
require a site license because it was not offering its site to 
others, the lack of permanence provides a better reason.
---------------------------------------------------------------------------

    When it issued part 420, the FAA noted in its discussion of the new 
requirements, if not in the regulations themselves, that ``[a] launch 
operator proposing to launch from its own launch site need only obtain 
a launch license because a launch license will address safety issues 
related to a specific launch and because a launch license encompasses 
ground operations.'' 65 FR at 62815. The FAA did not memorialize this 
exception in section 420.3, which describes those to whom part 420 
applies, because the FAA anticipated that there would be select 
provisions in part 420 which the FAA would apply to a launch licensee 
through its license. Upon further reflection, the FAA proposes to 
abandon that approach as an incomplete method of fulfilling its mandate 
to oversee the operation of a launch site.
    The existing approach neglects to take into account safety 
considerations that fall outside the scope of a launch license. Under 
49 U.S.C. 70102(4), Congress defines launch to include activities 
involved in the preparation of a launch vehicle for launch when those 
activities take place at a launch site in the United States. This means 
that when a launch vehicle is not present at a launch site, the other 
activities at a launch site are not licensed. Some of those activities, 
such as the storage of explosives and mitigating the effects of 
lightning, create potential hazards addressed by part 420.
    The question of whether a license to operate a launch site is 
necessary at a private site is especially relevant now because there 
are operators who hope to operate under an experimental permit on 
private land without having to obtain a license to operate a launch 
site. Under the existing definition of operation of a launch site, it 
may not be necessary in all cases for launch operators at a private 
site to obtain a license to operate the site. The FAA defines operation 
of a launch site as the conduct of approved safety operations at a 
permanent site to support the launching of vehicles and payloads. 14 
CFR 401.5. The FAA recently interpreted this to mean that a launch 
operator proposing to launch from a private site would not require a 
launch site operator license. See FAA Interpretation to Armadillo 
Aerospace (February 24, 2006). Because Armadillo planned to use a 
privately owned site intermittently, and build no infrastructure, it 
would be using a temporary site and thus not require a license to 
operate a launch site. The other avenue that must be explored is what 
it means to ``conduct approved safety operations.'' When promulgating 
section 401.5, the Department of Transportation observed that ``the 
operation of a launch site involves continuing operations at a 
permanent location.'' Licensing Regulations, 64 FR 11004, 1007 (April 
4, 1988). This suggests that approved safety operations must be 
continuous. Although the 1988 rulemaking that created this test did not 
define or discuss what the agency meant by approved safety operations, 
the FAA has given flesh to these terms in later years. In 2000, when 
the FAA issued its regulations governing licensing the operation of a 
launch site, the FAA noted that, in addition to explosive siting and 
lightning mitigation requirements, ``[t]he operational requirements * * 
* address, among other things, control of public access, [and] 
scheduling of operations at the site.'' 65 FR at 62834. The FAA expects 
to further refine the meaning of operation as future questions arise.

e. Human Space Flight

    An applicant proposing to conduct a reusable suborbital rocket 
launch or reentry with flight crew or a space flight participant on 
board would have to demonstrate compliance with part 460, Human Space 
Flight Requirements, which is being proposed under a separate notice.

f. Inspection Before Permit Issuance

    Before issuing a permit, an FAA representative would inspect a 
built vehicle to ensure compliance with application representations. 
For example, the FAA would examine systems required for maintaining the 
vehicle's instantaneous impact point (IIP) within an operating area. As 
with an experimental aircraft, any additional reusable suborbital 
rocket of the same design could be launched or reentered under the 
permit after inspection by the FAA.

g. Other Requirements

    The FAA may require additional analyses, information, or agreements 
if necessary to protect public health and safety, safety of property, 
and national security and foreign policy interests of the United 
States. This option is necessary because future reusable suborbital 
rocket concepts may entail unprecedented and unforeseen 
characteristics. The regulations proposed in this NPRM may not 
adequately cover all characteristics relevant to public safety and 
other U.S. interests.
3. Subpart C--Safety Requirements

a. Vehicle Safety Operations Personnel Rest Rules

    The FAA would require that vehicle safety operations personnel 
adhere to specified rest rules. Under current regulations, vehicle 
safety operations personnel are those persons whose job performance is 
critical to public health and safety or the safety of property during 
RLV or reentry operations. They include personnel on board the vehicle 
and on the ground.
    Risk elimination and mitigation measures, no matter how well 
thought out or implemented, can be undone if personnel performing 
safety-critical functions are not physically and mentally capable of 
performing their assigned function. The Federal government and private 
entities performing launches have historically imposed rest rules for 
safety-critical personnel.

b. Pre-Flight and Post-Flight Operations

    A permittee would have to protect the public from adverse effects 
of hazardous operations and systems associated with preparing a 
permitted vehicle for flight at a launch site in the United States, and 
with returning the vehicle to a safe condition after flight. A 
permittee would have to establish a safety clear zone large enough to 
contain the adverse effects of each hazardous operation. A safety clear 
zone would, for example, have to contain the hazards of propulsion 
system testing or propellant loading. A permittee would have to verify 
that the public was outside that safety clear zone before and during a 
hazardous operation. Systems such as high pressure gas facilities and 
facilities for storing liquid and solid propellant are hazardous even 
when operations are not being performed. An applicant would have to 
demonstrate in its

[[Page 16257]]

application to the FAA how it would meet these requirements.
    The ground activities covered by these requirements would depend on 
the scope of activities covered by an experimental permit. For launch 
of expendable launch vehicles, the FAA defines launch to begin with the 
arrival of a vehicle at a launch site in the United States. 14 CFR 
401.5. The FAA proposes to change that definition for reusable 
suborbital rockets operating under a permit. The FAA proposes to use a 
four-part test to determine the scope of a permit. The House Science 
Committee originated the four-part test in 1995, as guidance to the FAA 
to assist it in defining a ``launch'' for purposes of exercising 
licensing jurisdiction under Chapter 701. H.R. Rep. No. 233, 104th 
Cong., 1st Sess., at 60 (1995). The Committee report recommended that 
there are pre-flight activities that may properly be regulated as part 
of a ``launch,'' because they--
    (1) Are closely proximate in time to ignition or lift-off;
    (2) Entail critical steps preparatory to initiating flight;
    (3) Are unique to space launch; and
    (4) Are inherently so hazardous as to warrant the FAA's regulatory 
oversight under 49 U.S.C. chapter 701.
    The same committee later explained that this test was the basis for 
changing the definition of ``launch'' in the Commercial Space Act of 
1998. Public Law 105-303, 112 Stat. 2843 (1998), 49 U.S.C. 70102(3). In 
that Act, Congress revised the definition of launch to include 
activities ``involved in the preparation of a launch vehicle or payload 
for launch, when those activities take place at a launch site in the 
United States.'' 49 U.S.C. 70102(3).
    Although the four-part test is not a statutory requirement, the FAA 
believes that it provides a rational approach to determining whether a 
pre-flight activity should be authorized under a permit.

c. Hazard Analysis

    An applicant must perform a hazard analysis and provide the results 
to the FAA. A hazard analysis is an integral part of a system safety 
engineering process, which applies scientific and engineering 
principles necessary to identify and eliminate hazards and reduce the 
associated risk to the public. Typical elements of a hazard analysis 
include:
     Identifying and describing hazards,
     Assessing risk using qualitative severity and likelihood 
levels,
     Identifying and describing risk elimination and mitigation 
measures to reduce the risk to acceptable levels, as defined below, and
     Demonstrating that the risk elimination and mitigation 
measures are correct, complete, and achieve an acceptable reduction in 
risk through validation and verification.
    The FAA proposes the following criteria to determine the 
acceptability of the risks:
     The occurrence of any hazardous condition that may cause 
death or serious injury to the public must be extremely unlikely, and
     The likelihood of an occurrence of any hazardous condition 
that may cause major property damage to the public, major safety-
critical system damage or reduced capability, decreased safety margins, 
or increased workload must be remote.
    In developing qualitative criteria to assess risk, the FAA examined 
industry practice and existing government standards. The FAA based its 
criteria on MIL-STD-882D, ``Department of Defense Standard Practice: 
System Safety,'' and FAA AC 23.1309, ``Equipment, Systems, and 
Installations in Part 23 Airplanes.'' The U.S. Department of Defense, 
the National Aeronautics and Space Administration, and the aerospace 
industry have successfully used hazard analyses for decades to reduce 
risks to acceptable levels. The FAA proposes that an operator provide 
the results of the hazard analysis to FAA during the application 
process. An acceptable hazard analysis could be a Preliminary Hazard 
Analysis, as described in MIL-STD-882D, a Failure Modes, Effects, and 
Criticality Analysis, as described in FAA's ``Guide to Reusable Launch 
and Reentry Vehicle Reliability Analysis'' and AC 431.35-2, or a 
Functional Hazard Analysis, as described in AC 23.1309. Other analyses 
that provide an equivalent level of fidelity may be acceptable.
    A key step in the hazard analysis process is to identify and 
describe either risk elimination or risk mitigation measures. The 
recommended order of precedence for eliminating or mitigating risk is 
as follows:
     Design for minimum risk. The first priority should be to 
eliminate risks through appropriate design or operation choices.
     Incorporate safety devices. If risks cannot be eliminated 
through design or operation selection, an operator should reduce risks 
through the use of active and passive safety devices. The operator 
should make provisions for periodic functional checks of safety 
devices.
     Provide warning devices. When neither design nor safety 
devices can effectively eliminate identified risks or adequately reduce 
risks, an operator should use devices to detect the condition and 
produce an adequate warning signal. The operator should design warning 
signals and their application to minimize the likelihood of 
inappropriate human reaction and response.
     Develop and implement procedures and training. When it is 
impractical to eliminate risks through design selection or specific 
safety and warning devices, an applicant should develop and implement 
procedures and training.
    Selection of a risk elimination or mitigation approach is usually 
based on a number of factors, such as the type of operation, the 
feasibility of implementing the approach, the effectiveness of the 
approach, and the impact on system performance. The applicant's 
analysis should also consider whether the risk mitigation measures 
introduce new hazards.
    The mitigation measures of procedures and training deserve special 
mention. These may include the following:
     Conducting dress rehearsals to ensure crew readiness under 
nominal and non-nominal flight conditions;
     Creating and using current and consistent checklists that 
ensure safe conduct of flight operations during nominal and non-nominal 
flights;
     Consolidating flight rules, procedures, checklists, 
contingency abort plans, and emergency plans in a safety directive, 
notebook, or other compilation;
     Establishing communication protocols, including defined 
radio communications terminology and a common intercom channel for 
communications; and
     Conducting flight readiness reviews.
    To allow flexibility in reducing risk and to encourage innovation 
in improving safety, the FAA is not mandating any one particular 
approach, such as checklists or dress rehearsals. Nevertheless, the FAA 
notes that these could become permit requirements if the 
characteristics of a permittee's operations make them necessary for 
safety. For example, a permittee conducting a procedurally simple 
operation might not need to conduct dress rehearsals. A permittee with 
a highly complex operation might have to do so.

d. Operating Area Containment

    The FAA would require that a permittee operate its reusable 
suborbital rocket such that its IIP remained within an operating area 
and outside any

[[Page 16258]]

exclusion areas. An operating area would be a three-dimensional region 
where permitted flights could take place. The FAA would approve an 
operating area based on the following criteria:
     No densely populated area could be present within or 
adjacent to an operating area,
     An operating area would have to be large enough to contain 
each of an applicant's planned trajectories, accounting for expected 
dispersions,
     An operating area would have to contain enough unpopulated 
or sparsely populated area to perform key flight-safety events, and
     The operating area could not contain significant 
automobile traffic, railway traffic, waterborne vessel traffic, or 
large concentrations of members of the public.
    The FAA would use the above criteria to prohibit the operation of 
reusable suborbital rockets over areas where the consequences of an 
uncontrolled impact of the vehicle or its debris would be catastrophic. 
Given the number of people in a densely populated area and their 
proximity to each other, the likelihood of multiple casualties from an 
uncontrolled impact of a vehicle or its debris would be much higher in 
densely populated areas than in sparsely populated areas.
    The FAA has not proposed definitions for unpopulated, sparsely 
populated, or densely populated area. The FAA does not have sufficient 
experience with reusable suborbital rocket flight activity at this time 
to define these terms. The FAA did consider, but does not propose to 
adopt, the following definitions:
    Unpopulated means devoid of people.
    Sparsely populated means a population density of less than 10 
people per square statute mile in an area of at least one square 
statute mile.
    Densely populated area means a census designated place, as defined 
by the United States Census Bureau, with a population in excess of 
100,000 people, or any area with a population density in excess of 
1,000 people per square statute mile and an area of at least one square 
statute mile.

Although proposing precise definitions may be premature, the FAA offers 
the following observations as preliminary guidance. The term 
``unpopulated'' would mean no people, period. The term ``sparsely 
populated'' suggests an area with a few scattered people where the risk 
to those few persons from the overflight of a suborbital rocket, even 
one being tested, would likely be negligible. The term ``densely 
populated area'' would have two characteristics. One would be strictly 
related to numbers of people, without regard to population density. Any 
area with 100,000 people is not a good area to test rockets. The second 
characteristic would be density--an area would have to be large enough 
to allow an applicant to find a workable operating area in certain 
parts of the country, but small enough to keep the risk to the people 
within the area negligible, given the flight constraints discussed 
below. The FAA requests comments on the definitions that it considered 
and on its preliminary observations.
    Proposed agreements between a permittee and Air Traffic Control 
would influence the size and location of the operating area. An 
operating area might also include ``exclusion areas,'' defined by the 
FAA, which would consist of areas where a reusable suborbital rocket's 
IIP could not traverse. The operating area proposed here is similar to 
that used in granting special airworthiness certificates to 
experimental aircraft, in that the FAA would allow an applicant to 
propose an area. An operator could also propose different operating 
areas for different flight tests in its application.
    During the application process, an applicant would identify and 
describe the methods and systems used to meet the requirement to 
contain its reusable suborbital rocket's IIP within the operating area 
and outside any exclusion area. Acceptable methods and systems would 
include:
     Proof of physical limitations on a vehicle's ability to 
leave the operating area, and
     Abort criteria and safety measures derived from a system 
safety process.
    Proof of physical limitations on a vehicle's ability to leave the 
operating area could be obtained through an analysis that showed that 
the maximum achievable range of the reusable suborbital rocket from the 
launch point was within the boundaries of the operating area, assuming 
the rocket flew a trajectory optimized for range and that all safety 
systems failed. Such a proof would simplify an operator's requirements 
considerably when compared to the use of active containment methods.
    An applicant could use its hazard analysis to determine safety 
measures that keep a reusable suborbital rocket's IIP within its 
operating area. Alternatively, an applicant could perform a separate 
and more comprehensive system safety analysis solely for containment. 
For example, an operator could use a hazard analysis to identify the 
safety measures necessary to avoid the hazards of a propulsion shutdown 
system not operating properly. Such a hazard analysis would use 
qualitative risk criteria approved by the FAA. An applicant could also 
use the American Institute of Aeronautics and Astronautics (AIAA) 
``Guide to the Identification of Safety-Critical Hardware Items for 
Reusable Launch Vehicle (RLV) Developers' to assist in the analysis of 
hardware. The FAA also plans to provide guidance in the future for the 
analysis of hazards created by errors in software and computing 
systems.
    Specific safety measures obtained from a system safety process 
could include a dedicated flight safety system or other safety measures 
derived from the hazard analysis that are not necessarily dedicated 
only to flight safety. A dedicated flight safety system could protect 
the public and property from harm, if a vehicle did not stay on its 
intended course, by stopping the vehicle's flight. A flight safety 
system consists of all components that provide the ability to end a 
launch vehicle's flight in a controlled manner. For example, a reusable 
suborbital rocket may use a thrust termination system in combination 
with other measures, such as propellant dumping, to keep a vehicle from 
reaching a populated area. Safety measures may also include systems and 
procedures that, while not dedicated exclusively to flight safety, help 
to protect the public. For example, an operator may choose to use a 
real-time IIP ground or cockpit display. The display may include the 
real-time IIP, and an operator would use abort criteria to assist in 
containment of the IIP.
    The FAA proposes to require an applicant to show that the system or 
method selected will contain the vehicle's IIP. That demonstration 
could include flight demonstration test data; component, system, or 
subsystem test data; inspection results; or analysis. The FAA would 
determine whether the proposed containment approach was acceptable, and 
might require more detailed analyses or verification for that 
containment approach. The FAA might also require additional safety 
measures to protect the public, such as propellant dumping to reduce 
explosive potential or fire hazards.
    Note that permits, as well as licenses, are available to the public 
on request. For permits, the FAA will publish approved operating areas 
on its web site.

e. Key Flight-Safety Event Limitations

    Operating within an acceptable operating area and implementing 
safety measures obtained from a hazard analysis are only part of what 
would be

[[Page 16259]]

necessary to maintain public safety. The FAA would also impose 
additional operating requirements for flight events with an increased 
likelihood of failure compared to other portions of flight. These 
operating requirements would include requiring an operator to perform 
key flight-safety events over unpopulated or sparsely populated areas. 
Events such as rocket engine ignition (for air-dropped and multi-mode 
propulsion vehicles), staging, and envelope expansion have historically 
had the highest probability of catastrophic failure for rocket-
propelled vehicles. In its application, an operator would have to 
identify and describe how it would keep these key flight-safety events 
over unpopulated or sparsely populated areas and demonstrate to the FAA 
that it had verified the operation of these systems.
    The FAA would also require an operator to conduct each reusable 
suborbital rocket flight so that the reentry impact point would not 
loiter over a populated area. The reentry impact point is the location 
of a reusable suborbital rocket's IIP during the period of unpowered 
suborbital flight outside the atmosphere.

f. Landing and Impact Locations

    The FAA would require an operator to use a location for nominal 
landing, any contingency abort landing, or any reusable suborbital 
rocket component impact or landing that--
     Is of sufficient size to contain an impact, including any 
debris dispersion on impact; and
     At the time of landing or impact, does not contain any 
members of the public.
    Subpart B would require an applicant to demonstrate that the 
identified sites were suitable.

g. Agreements

    To obtain a permit, the FAA would require an applicant to complete 
certain written agreements. The FAA would require that an applicant 
enter into an agreement with a Federal launch range, a licensed launch 
site operator or anyone else who provides access to and use of property 
and services required to support a permitted flight. Public safety 
related support would include the use of a local fire department for 
emergency response or a local police department for crowd control.
    If an applicant proposed to launch over water, the FAA would 
require an applicant to complete an agreement with the local United 
States Coast Guard (USCG) district to establish procedures for issuing 
a Notice to Mariners before a permitted flight. The FAA would also 
require an applicant to complete an agreement with the responsible Air 
Traffic Control authority having jurisdiction over the airspace through 
which a flight was to take place. That agreement would contain measures 
necessary to ensure the safety of aircraft, including procedures for 
notices to airmen and temporary flight restrictions. An applicant would 
not have to complete these two agreements if a Federal launch range or 
a licensed launch site operator already had agreements addressing these 
procedures in place. Federal launch ranges already coordinate these 
matters for range users. A licensed launch site operator is required, 
under part 420, to have agreements with the FAA and USCG for launches 
taking place from its launch site.

h. Collision Avoidance

    Based on an analysis of a catalog of orbiting objects performed by 
the U.S. Strategic Command (USSTRATCOM), the FAA proposes a collision 
avoidance analysis for a suborbital launch with a planned maximum 
altitude greater than 150 kilometers. The collision avoidance analysis 
would establish each period of time during which a permittee could not 
initiate flight in order to ensure that a permitted vehicle and any 
jettisoned components did not pass closer than 200 kilometers to a 
manned or mannable orbital object throughout the flight. This analysis 
would be performed by USSTRATCOM based on information provided by the 
permittee. The FAA may approve the use of an alternate separation 
distance on a case-by-case basis.

i. Tracking

    The FAA would require a permittee to operate a reusable suborbital 
rocket in a manner that provided Air Traffic Control with the real time 
position and velocity of the reusable suborbital rocket while operating 
in the National Airspace System (NAS). Air traffic controllers will 
require this information to integrate reusable suborbital rockets into 
the NAS. At this time, the FAA does not propose explicit requirements 
for the necessary tracking methods.
    The FAA would also require a permittee to operate a reusable 
suborbital rocket in a manner that provides position and velocity data 
for post-flight use. The FAA would use this data for compliance 
monitoring. The FAA would also use this data to focus on the continuous 
improvement of the safety of this industry. The CSLAA, 49 U.S.C. Sec.  
70103(c), states, ``[i]n carrying out the responsibilities under 
subsection (b), the Secretary shall encourage, facilitate, and promote 
the continuous improvement of the safety of launch vehicles designed to 
carry humans, and the Secretary may, consistent with this chapter, 
promulgate regulations to carry out this subsection.'' An applicant 
would have to demonstrate to the FAA how it would meet these tracking 
requirements in its application.

j. Communications

    The FAA would require that a permittee be in contact with Air 
Traffic Control while operating in the NAS. The FAA would also require 
a permittee to record communications affecting the safety of flight. 
Recording communication is necessary for mishap investigations. Some 
suborbital operators will use a central control room for 
communications, while others plan to rely solely on a pilot 
communicating with Air Traffic Control. In either case, the FAA 
proposes that the permit holder record these communications. The FAA 
would verify that the permit holder is in compliance with this 
requirement during inspections.

k. Flight Rules

    The FAA continues to find that the use of flight rules and 
procedures by a launch operator contribute significantly to the overall 
safety of the flight during all phases of flight. Therefore, the FAA 
would require an operator to implement flight rules associated with--
     Conducting operations within a pre-approved operating 
area;
     Conducting key flight-safety events over unpopulated or 
sparsely-populated areas;
     Using suitable locations for nominal landing, any 
contingency abort landing, or any reusable suborbital rocket component 
impact or landing; and
     Implementing the hazard analysis process.
    In addition, the FAA would require that, before initiating flight, 
the operator check that all systems required for safe flight are within 
acceptable limits. An applicant must provide its flight rules to the 
FAA in its application.
    The FAA would require certain flight rules similar to those used in 
aviation. A permittee would be forbidden to operate a reusable 
suborbital rocket in a careless or reckless manner so as to endanger 
members of the public. A permittee would also be forbidden to operate a 
reusable suborbital rocket within Class A, Class B, Class C, or Class D 
airspace or within the boundaries of the surface area of Class E 
airspace designated for an airport, unless the permittee has prior 
authorization from the air traffic control

[[Page 16260]]

facility having jurisdiction over that airspace. A permittee would not 
be permitted to operate a reusable suborbital rocket in areas 
designated in a Notice to Airmen under Sec.  91.137, Sec.  91.138, 
Sec.  91.141, or Sec.  91.145 of this title, unless authorized by air 
traffic control or a Flight Standards Certificate of Waiver or 
Authorization.
    Lastly, for phases of flight where a reusable suborbital rocket is 
operated like an aircraft in the National Airspace System, the FAA may 
specify in the permit those portions of 14 CFR part 91 necessary to 
protect public health and safety and safety of property. 14 CFR part 91 
prescribes rules governing the operation of aircraft within the United 
States, including the waters within 3 nautical miles of the U.S. coast.

l. Anomaly Recording and Reporting

    The FAA proposes to require that a permittee record anomalies, 
analyze the root cause of each anomaly, and implement corrective 
actions for those anomalies. An operator would have to report to the 
FAA any anomaly to any system or process associated with containing the 
vehicle's IIP within an operating area, restricting the location of key 
flight-safety events, and the mitigation and safety measures obtained 
from a hazard analysis. The permittee would have to report to the FAA 
any anomaly or failure of those systems or processes during 
verification (including ground test and inspection) or flight.
    Analyses of mishaps often show that clues existed prior to the 
mishap in the form of anomalies during the project life cycle. 
Examination and understanding of launch vehicle system and subsystem 
anomalies throughout the life cycle can warn of an impending mishap and 
can provide important information about what conditions need to be 
controlled to mitigate risk to the public.
    The FAA requires reporting of certain anomalies so it can analyze 
and evaluate operations under permits and verify that the operator is 
making informed safety decisions. Anomaly reporting to the FAA also 
facilitates continuous improvement of the safety of launch vehicles.

m. Mishap Reporting, Responding, and Investigating

    The FAA proposes to require a permittee to respond to mishaps in 
accordance with a mishap response plan. The FAA would require that the 
plan be submitted as part of an application. The FAA would also require 
a permittee to report mishaps to the FAA, to investigate mishaps, and 
to cooperate with any FAA or National Transportation Safety Board 
(NTSB) investigation.

n. Additional Safety Requirements

    Applicants proposing activities creating hazards not otherwise 
addressed in proposed part 437, such as the use of toxic materials or 
solid propellants, may be subject to additional requirements. These 
hazards may pose risks to the public that may require additional 
analyses or mitigation measures.
4. Subpart D--Terms and Conditions of an Experimental Permit

a. Public Safety Responsibility

    A permittee would be responsible for ensuring the safe conduct of a 
launch or reentry conducted under an experimental permit, and for 
protecting public health and safety and the safety of property during 
the conduct of the launch or reentry.

b. Compliance With Experimental Permit

    As is the case for a licensee, a permittee would have to conduct 
all launches and reentries under an experimental permit in accordance 
with representations made in its application, with subparts C and D, 
and with terms and conditions contained in the permit. A permittee 
would be responsible for the continuing accuracy of representations 
contained in its application for the entire term of the experimental 
permit and would have to inform the FAA of any proposed changes.

c. Permit Modifications

    The FAA will identify in a permit the type of modifications that 
the permittee may make to the vehicle design without invalidating the 
permit. The FAA will work closely with applicants on a case-by-case 
basis to determine what modifications may be made.
    Once a permit has been issued, except for the allowable design 
changes, the permittee must apply to the FAA for modification of the 
permit. If a permittee proposes to conduct permitted activities in a 
manner not authorized by the permit, it must apply to the FAA to modify 
the permit. It must also apply to the FAA to modify the permit if any 
representation contained in the permit application that is material to 
public health and safety or the safety of property is no longer 
accurate or complete.
    The FAA realizes that a flight test program may also entail 
frequent operational changes throughout the term of a permit. If an 
applicant desires, the FAA will work with the applicant to set up an 
alternate method for applying for modifications to the permit.

d. Records

    The FAA would require a permittee, like a licensee, to maintain for 
three years all records, data, and other material necessary to verify 
that a permitted launch is conducted in accordance with representations 
contained in the permittee's application. In the event of a launch 
accident or launch incident, a permittee must preserve all records 
related to the event. Records would be retained until completion of any 
Federal investigation and the FAA advised the permittee that the 
records no longer need to be retained. The permittee would make all 
records required to be maintained under the regulations available to 
Federal officials for inspection and copying.

e. Pre-Flight Reporting

    The FAA proposes that not later than 30 days before each flight or 
series of flights conducted under an experimental permit, a permittee 
would provide the FAA with the following information:
     Any payload to be flown, including any payload operations 
during the flight,
     When the flight or series of flights are planned,
     The operating area for each flight, and
     The planned maximum altitude for each flight.
    Not later than 15 days before each permitted flight planned to 
reach greater than 150 km altitude, a permittee would need to provide 
its planned trajectory to the FAA. This information is needed for a 
USSTRATCOM collision avoidance analysis.

f. For-Hire Prohibition

    Under 49 U.S.C. 70105a(h), no person may operate a reusable 
suborbital rocket under a permit for carrying any property or human 
being for compensation or hire. With one exception, the definition of 
``compensation or hire'' is the same as that used in the aviation 
context where it is broadly interpreted and includes an operator 
furthering his economic interest by transporting persons or property by 
air. For aviation, it is not necessary that there be an actual payment 
of cash for the flight or that there be actual profit to constitute 
compensation. Compensation may include--
     Any form of payment--including payment of operating costs 
such as fuel and oil;
     A tax deduction--if a flight is for charity;

[[Page 16261]]

     Goodwill--a person is carried without any payment of cash 
but the operator expects or receives paying customers because of the 
free flight;
     Payment by a third party, such as when a third party 
arranges and pays for the flight;
     A non-monetary exchange--for carrying a person for free 
the operator receives free advertising, parts, maintenance, etc; or
     Any exchange of value, including bartering goods or 
services in exchange for the transportation.
    The FAA proposes to allow the launch of a space flight participant 
so long as the space flight participant or a representative does not 
provide compensation to the holder of a permit. With the exception of 
allowing goodwill, the FAA proposes to use the aviation approach to 
determining when compensation is provided for a flight. An operator 
would also be able to receive payment for the display of logos because 
it is a service and thus not a person or property launched for 
compensation. Events such as the X Prize Cup provide an incentive for 
research and development. The FAA does not propose to consider as 
compensation any prize money won at such events.

g. Compliance Monitoring

    As is the case for a licensee, a permittee would have to allow 
access by, and cooperate with, Federal officers or employees or other 
individuals authorized by the FAA to observe any activities of the 
permittee, or of the permittee's contractors or subcontractors, 
associated with the conduct of permitted pre-flight and flight 
operations.

C. Changes to Existing Regulations

    In addition to the requirements to obtain and operate under an 
experimental permit, the FAA proposes to amend existing regulations to 
reflect the CSLAA's new authority. Many of the proposed amendments 
consist simply of replacing the term ``license'' with ``license or 
permit.'' Other changes are minor, such as updating references to a 
``Director'' to the ``Associate Administrator.'' The FAA proposes to 
revise the definition of amateur rocket activities, which do not 
require a license or permit, to encompass only unmanned activities 
because the CSLAA prohibits the FAA from authorizing the launch or 
reentry of a launch vehicle or a reentry vehicle without a license or 
permit if a human being will be on board. The FAA proposes to add 
application procedures for experimental permits to part 413, including 
a review period of 120 days for permits as congressionally mandated, in 
addition to the licensing review period of 180 days.
    The FAA proposes to revise the launch site location review of part 
420. Currently, a launch site operator applicant must demonstrate that 
its proposed launch site can support the launch of a launch vehicle 
meeting a specified collective risk criteria. The FAA proposes that for 
any launch site operated solely for permitted flights, an FAA-approved 
operating area will be sufficient demonstration.

D. Other Issues and Recommendations

1. Contrasts Between Licenses and Permits
    Before the CSLAA, a launch license was the only mechanism available 
to the FAA to authorize the launch of a launch vehicle. Although the 
FAA proposes here a number of ways that a permit will be different from 
a license, there are also those that are mandated by statute and of 
which an operator should be aware. Under the CSLAA, an experimental 
permit differs from a license in several ways.
     The FAA must determine whether to issue an experimental 
permit within 120 days of receiving an application. For a license, the 
FAA must make a similar determination within 180 days of receiving an 
application.
     No person may operate a reusable suborbital rocket under a 
permit for carrying any property or human being for compensation or 
hire. No such restriction applies for a license.
     A permit is not transferable. A license is transferable 
from one entity to another. This is usually sought after a merger or 
acquisition.
     Damages arising out of a permitted launch or reentry are 
not eligible for ``indemnification,'' the provisional payment of claims 
under 49 U.S.C. 70113. To the extent provided in an appropriation law 
or other legislative authority, damages caused by licensed activities 
are eligible for the provisional payment of claims.
     A permit must authorize an unlimited number of launch and 
reentries for a particular reusable suborbital rocket design. Although 
licenses can be structured to authorize an unlimited number of 
launches, no statutory mandate to do so exists.
2. Considerations for Obtaining a License After Operating Under a 
Permit
    One purpose of conducting operations under a permit would be for an 
operator to show compliance with the requirements for obtaining a 
license. The FAA recommends that all permit applicants be well versed 
in the requirements of both the RLV mission license and the 
experimental permit. The FAA particularly recommends that a permittee 
plan the flight test program under a permit to collect all the 
validation and verification data on systems and subsystems needed to 
provide to the FAA during the license application process.
    It should be noted that a reusable suborbital rocket operator would 
not be required to get a permit before applying for a license. However, 
applicants proposing certain vehicle operations may not be capable of 
demonstrating compliance with the collective and individual risk 
criteria of a license without the flight test data obtained under a 
permit. This is particularly true for operations at inland launch 
sites.

Paperwork Reduction Act

    This proposal contains the following new information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the FAA has submitted the information requirements 
associated with this proposal to the Office of Management and Budget 
(OMB) for its review. Persons are not required to respond to a 
collection of information unless it displays a currently valid OMB 
number.
    Title: Experimental Permits for Reusable Suborbital Rockets.
    Summary: The Associate Administrator for Commercial Space 
Transportation of the Federal Aviation Administration (FAA), Department 
of Transportation, proposes to amend the FAA's commercial space 
transportation regulations under the Commercial Space Launch Amendments 
Act of 2004. The FAA proposes application requirements for an operator 
of a reusable suborbital rocket to obtain an experimental permit. The 
FAA also proposes operating requirements and restrictions on permitted 
launch and reentry.
    Use of: The information collected will be used by the FAA to decide 
whether or not to issue an experimental permit to an applicant, and to 
monitor a permittee's compliance with its permit and with applicable 
regulations.
    Respondents (including number of): The likely respondents to this 
proposed information requirement are private entities planning to 
conduct developmental testing of reusable suborbital rockets. The FAA 
estimates that there will be eight to twelve private operators who 
would obtain permits over ten years.
    Frequency: The frequency of this collection is determined by the 
respondents. They notify the FAA on

[[Page 16262]]

the occasion of launching or applying for a permit.
    Annual Burden Estimate: This rule contains information collections 
that are subject to review by OMB under the Paperwork Reduction Act of 
1995 (Pub. L. 104-13). The title, description, and respondent 
description of the annual burden are shown below.
    Estimated Burden: The FAA expects that private entities would incur 
reporting and recordkeeping costs when applying for and operating under 
a permit, as follows:
     Permittees would take 178.4 to 267.6 hours annually to 
submit materials to the FAA to renew their permits at an annual cost of 
$12,381 to $18,571.
     Permit applicants would spend 432 to 648 hours annually to 
provide information for the FAA to analyze environment impacts and to 
conduct a maximum probable loss analysis at a cost of $29,981 to 
$44,971 annually.
     Permit applicants would need 7.68 to 11.52 hours annually 
to describe methods used to meet tracking requirements at a cost of 
$533 to $799 annually.
     Permit applicants would need 1,248 to 1,872 hours annually 
to demonstrate to the FAA that their operations would protect public 
safety at an annual cost of $86,611 to $129,917.
     Permit applicants would need 96 to 144 hours annually to 
prepare a mishap response plan at a cost of $6,662 to $9,994 annually.
     Permittees would need 91 to 182 hours annually to provide 
the FAA with pre-flight information at an annual cost of $6,315 to 
$12,631.
    The total estimated industry annual paperwork burden would range 
from 2,053 to 3,125 at a cost ranging from $142,483 to $216,883. The 
estimated average annual hour burden would be 2,589 at an estimated 
average cost of $179,683.
    The proposed rule would also increase paperwork costs for the 
Federal government because the FAA would have to spend hours on the 
following activities.
     The FAA would spend 4,992 to 7,488 hours annually at an 
annual cost of $259,784 to $389,676 consulting with applicants and 
reviewing and approving permit applications.
     The FAA would spend 57.6 to 86.4 hours annually at an 
annual cost of $5,651 to $8,475 (including travel expenses) to travel 
to and inspect suborbital rockets.
     The FAA would spend 96 to 144 hours annually at an annual 
cost of $4,996 to $7,494 identifying the types of changes that may be 
made to each reusable suborbital rocket without invalidating its 
permit.
     The FAA would spend 84 to 132 hours annually at an annual 
cost of $4,371 to $6,869 to re-inspect a vehicle during the permit 
renewal process.
     The FAA would require 436.8 to 686.4 hours annually at an 
annual cost of $22,731 to $35,721 to conduct the reviews required to 
determine whether a permit can be renewed.
    The total estimated FAA annual paperwork burden would range from 
5,666 to 8,537 hours at a cost ranging from $297,533 to $448,235. The 
estimated average annual hour burden to the Federal government would be 
7,102 at an estimated average cost of $372,884.
    The agency is soliciting comments to--
    (1) Evaluate whether the proposed information requirement is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Individuals and organizations may submit comments on the 
information collection requirement by May 30, 2006, and should direct 
them to the address listed in the ADDRESSES section of this document. 
Comments also should be submitted to the Office of Information and 
Regulatory Affairs, OMB, New Executive Building, Room 10202, 725 17th 
Street, NW., Washington, DC 20053, Attention: Desk Officer for FAA.

Economic Assessment, Regulatory Flexibility Determination, Trade Impact 
Assessment, and Unfunded Mandates Assessment

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866, ``Regulatory Planning and 
Review,'' (58 FR 51736, September 30, 1993) directs that each Federal 
agency shall propose or adopt a regulation only upon a reasoned 
determination that the benefits of the intended regulation justify its 
costs. Second, the Regulatory Flexibility Act of 1980 requires agencies 
to analyze the economic impact of regulatory changes on small entities. 
Third, the Trade Agreements Act, (19 U.S.C. 2531-2533), prohibits 
agencies from setting standards that create unnecessary obstacles to 
the foreign commerce of the United States. In developing U.S. 
standards, this Trade Act requires agencies to consider international 
standards and, where appropriate, to use the international standards as 
the basis for U.S. standards. Fourth, the Unfunded Mandates Reform Act 
of 1995 (Pub. L. 104-4) requires agencies to prepare a written 
assessment of the costs, benefits, and other effects of proposed or 
final rules that include a Federal mandate likely to result in the 
expenditure by State, local, or tribal governments, in the aggregate, 
or by the private sector, of $100 million or more annually as adjusted 
for inflation.
    In conducting these analyses, FAA has determined this rule: (1) Has 
benefits that justify its costs, (2) is not an economically 
``significant regulatory action'' as defined in section 3(f) of 
Executive Order 12866, and is ``significant'' as defined in DOT's 
Regulatory Policies and Procedures; (3) will not have a significant 
economic impact on a substantial number of small entities; (4) will 
have a neutral impact on international trade; and (5) does not impose 
an unfunded mandate on state, local, or tribal governments, or on the 
private sector. These analyses, available in the docket, are summarized 
below.

Potentially Impacted Parties

Private Sector

     Operators who would be conducting reusable suborbital 
rocket launches for the three purposes mentioned above.
     The public who might be exposed to more risk.

Government

     Federal Aviation Administration that would be reviewing 
and approving applications, inspecting the vehicles and permitted 
operations, identifying allowable changes to the vehicle, and renewing 
permits.

Assumptions and Ground Rules Used in Analysis (Discount Rate, Period of 
Analysis, Value of Life, Cost of Injuries)

     All monetary values are expressed in 2004 dollars.
     The time horizon for the analysis is 10 years (2006 to 
2016).
     Costs are discounted at 7%.
     Hourly burdened industry rate is $69.40.
     Hourly burdened government rate is $52.04.
     8 to 12 private sector entities would obtain permits over 
ten years.
     Permit issued to an entity is used for one year. It is 
renewed only once for the following year.

[[Page 16263]]

     Each permit holder would construct one vehicle to carry 
out all flights under the permit.
     Private sector entities would perform from 455 to 910 
flights under experimental permits over ten years.
     Requirements fulfilled by Scaled Composites to license 
SpaceShipOne launches are considered current practice.
    Some provisions would cause a private sector entity to incur 
additional costs over the requirements of a license. The estimated 
additional person hours required per permit for each proposed rule 
section are as follows:

------------------------------------------------------------------------
                                                           Person-hours
                    Proposed section                       incurred per
                                                              permit
------------------------------------------------------------------------
Sec.   437.21 General...................................              24
Sec.   437.37 Tracking..................................              96
Sec.   437.67 Tracking.
Sec.   413.23 License or permit renewal.................              24
------------------------------------------------------------------------

    Some provisions would allow a private sector entity to realize cost 
savings over the licensing regime. The estimated person hours saved per 
permit under each proposed rule section are as follows:

------------------------------------------------------------------------
                                                           Person-hours
                                                            avoided per
                  Proposed rule section                    permit or per
                                                              flight
------------------------------------------------------------------------
Sec.   437.25 Flight test plan..........................           4,680
Sec.   437.27 Pre-flight and post-flight operations.....
Sec.   437.29 Hazard analysis...........................
Sec.   437.31 Verification evidence of operating area
 containment and key flight-safety event limitations....
Sec.   437.53 Pre-flight and post-flight operations.....
Sec.   437.55 Hazard analysis...........................
Sec.   437.57 Operating area containment................
Sec.   437.59 Key flight-safety event limitations.......
Sec.   437.41 Mishap response plan......................             120
Sec.   437.75 Mishap reporting, responding and
 investigating..........................................
Sec.   437.69 Communications............................             160
Sec.   431.33 Safety organization.......................           2,080
Sec.   431.37 Mission readiness \a\.....................              40
Sec.   431.43 Reusable launch vehicle mission                     2,080
 operational requirements and restrictions..............
------------------------------------------------------------------------
\a\ Person hours avoided are per flight.

    Some provisions would cause the FAA to incur additional costs over 
the requirements of a license. The estimated additional person hours 
required per permit for each proposed rule section are as follows:

------------------------------------------------------------------------
                                                           Person-hours
                  Proposed rule section                    incurred per
                                                              permit
------------------------------------------------------------------------
Sec.   437.21 General...................................              72
Sec.   437.85 Allowable design changes; Modification of              120
 an experimental permit.................................
Sec.   413.23 License or permit renewal.................             120
------------------------------------------------------------------------

    Some provisions would allow the FAA to realize cost savings over 
the launch licensing regime. The estimated person hours saved per 
permit for each proposed rule section are as follows:

------------------------------------------------------------------------
                                                           Person-hours
                      Proposed rule                         avoided per
                                                              permit
------------------------------------------------------------------------
Pre-application consultation, and permit application              10,400
 review and issuance activities.........................
------------------------------------------------------------------------

Benefits

    The proposed rule would provide an expeditious avenue for 
experimental commercial space transportation initiatives that would 
enhance and accelerate advances in this arena. This could lead to 
significant engineering breakthroughs that would benefit public 
consumption of commercial space transportation. Further, the cost 
savings realized by the commercial space transportation industry could 
be used to advance the overall safety of reusable suborbital rocket 
technology.

[[Page 16264]]

    The FAA solicits comments and any other information to help 
validate and derive quantitative estimates pertaining to the costs and 
benefits of this rulemaking.

Total Net Costs



 Summary of Incremental Cost Impacts and Cost Savings Attributable to the Proposed Rule for the Ten-Year Period,
                                                2006 Through 2015
                                                [In 2004 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                   Upper bound                Lower bound
                                                           -----------------------------------------------------
                         Category                                          Discounted                 Discounted
                                                            Undiscounted       a       Undiscounted       a
----------------------------------------------------------------------------------------------------------------
Commercial Space Transportation Industry Compliance Costs.      $141,058      $97,469       $93,483      $63,475
Federal Aviation Administration Administrative Costs......       264,862      180,919       173,387      116,757
                                                           -----------------------------------------------------
    Total Costs...........................................       405,920      278,388       266,870      180,232
Commercial Space Transportation Industry Cost Savings.....    11,709,168    8,049,830     7,336,968    4,976,830
Federal Aviation Administration Cost Savings..............     6,494,592    4,512,659     4,329,728    2,951,467
                                                           -----------------------------------------------------
    Total Cost Savings....................................    18,203,760   12,562,489    11,666,696    7,928,297
                                                           =====================================================
    Total Net Cost Savings................................    17,797,840   12,284,101    11,399,826   7,748,065
----------------------------------------------------------------------------------------------------------------
a Calculated using a discount factor of seven percent over a ten-year period. (See Tables A-5 to A-30 in the
  Appendix.)

Comparison of Benefits and Costs

    The proposed rule would result in a net cost savings of $11.4 
million ($7.7 million discounted) to $17.8 million dollars ($12.3 
million discounted). The proposed rule is expected to enhance and 
accelerate advances in commercial space transportation. It would do so 
by making it less costly for the industry to fly research and 
development missions to test new design concepts, new equipment or new 
operating techniques, to perform crew training, and to demonstrate 
compliance with license requirements. Without the new availability of a 
permit, an operator would have to obtain a license, which imposes more 
costs for these activities.
    The proposed rule might increase risk to public safety because it 
would require fewer safety analyses and would eliminate other 
requirements such as mission readiness review, a communications plan 
prepared in advance of the launch (the proposed rule would require the 
private sector entity to be in contact with Air Traffic), and a safety 
organization that are required under a launch license. At this stage of 
industry development, and the FAA having yet to issue a permit, it is 
premature to quantify any potential risk increase because too little is 
known about the safety impacts these measures may have. Additionally, 
the FAA has attempted to counterbalance any negative effects on safety 
of the more lenient permitting requirements by requiring operations to 
occur within a specified area where risk of harming others is reduced 
even further. The FAA anticipates that it will eventually obtain the 
experience and information necessary to quantify any increase in risk 
in a measurable fashion. This is because the FAA plans to monitor the 
safety of permitted launches to ensure that the proposed approach is 
adequate to protect public safety.

Regulatory Flexibility Determination

    The proposed rule would not have a significant economic impact on a 
substantial number of small entities. The FAA concludes that a 
substantial number of firms in the human space flight industry would be 
affected by the rule because many of the companies in the fledgling 
industry are small. The proposed rule would allow these entities to 
realize cost savings that they would otherwise not have gained under a 
license-only regime. Because, with the exception of Virgin Galactic, 
all the entities assessed in the regulatory evaluation are small 
entities, the same analysis used there applies to the regulatory 
flexibility determination. Accordingly, pursuant to the Regulatory 
Flexibility Act, 5 U.S.C. 605(b), the FAA Administrator certifies that 
the proposed rule would not have a significant economic impact on a 
substantial number of small entities.

Trade Impact Assessment

    The FAA has assessed the potential effect of this proposed rule and 
determined that it would impose the same costs on domestic and 
international entities launching from the U.S. under an experimental 
permit, and thus would have a neutral trade impact.

Unfunded Mandates Assessment

    The Unfunded Mandates Reform Act of 1995 (the Act) is intended, 
among other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of the Act 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final agency rule 
that may result in an expenditure of $100 million or more (adjusted 
annually for inflation) in any one year by State, local, and tribal 
governments, in the aggregate, or by the private sector; such a mandate 
is deemed to be a ``significant regulatory action.'' The FAA currently 
uses an inflation-adjusted value of $120.7 million in lieu of $100 
million.
    This proposed rule does not contain an unfunded mandate. The 
requirements of Title II do not apply.

Executive Order 13132, Federalism

    The FAA has analyzed this proposed rule under the principles and 
criteria of Executive Order 13132, Federalism. We determined that this 
action would not have a substantial direct effect on the States, on the 
relationship between the national Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, and therefore would not have federalism implications.

Plain English

    Executive Order 12866 (58 FR 51735, October 4, 1993) requires each 
agency to write regulations that are simple and easy to understand. We 
invite your comments on how to make these proposed regulations easier 
to understand, including answers to questions such as the following:
     Are the requirements in the proposed regulations clearly 
stated?

[[Page 16265]]

     Do the proposed regulations contain unnecessary technical 
language or jargon that interferes with their clarity?
     Would the regulations be easier to understand if they were 
divided into more (but shorter) sections?
     Is the description in the preamble helpful in 
understanding the proposed regulations?
    Please send your comments to the address specified in the ADDRESSES 
section.

Environmental Analysis

    FAA Order 1050.1E identifies FAA actions that are categorically 
excluded from preparation of an environmental assessment or 
environmental impact statement under the National Environmental Policy 
Act in the absence of extraordinary circumstances. The FAA has 
determined this proposed rulemaking action qualifies for the 
categorical exclusion identified in paragraph 312f and involves no 
extraordinary circumstances.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

    The FAA has analyzed this NPRM under Executive Order 13211, Actions 
Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). We have determined that it is not 
a ``significant energy action'' under the executive order because it is 
not a ``significant regulatory action'' under Executive Order 12866, 
and it is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy.

List of Subjects

14 CFR Part 401

    Organization and functions (Government agencies), Space safety, 
Space transportation and exploration.

14 CFR Part 404

    Administrative practice and procedure, Space safety, Space 
transportation and exploration.

14 CFR Part 405

    Investigations, Penalties, Space safety, Space transportation and 
exploration.

14 CFR Part 406

    Administrative practice and procedure, Space safety, Space 
transportation and exploration.

14 CFR Part 413

    Confidential business information, Human space flight, Reporting 
and recordkeeping requirements, Space safety, Space transportation and 
exploration.

14 CFR Part 420

    Airspace, Human space flight, Space safety, Space transportation 
and exploration.

14 CFR Part 431

    Aviation safety, Environmental protection, Investigations, Human 
space flight, Reporting and recordkeeping requirements, Rockets, Space 
safety, Space transportation and exploration.

14 CFR Part 437

    Aviation safety, Airspace, Human space flight, Rockets, Space 
safety, Space transportation and exploration.

The Proposed Amendment

V. The Proposed Amendment

    For the reasons discussed above, the Federal Aviation 
Administration proposes to amend Chapter III of Title 14, Code of 
Federal Regulations, as follows:

TITLE 14--AERONAUTICS AND SPACE

CHAPTER III--COMMERCIAL SPACE TRANSPORTATION, FEDERAL AVIATION 
ADMINISTRATION, DEPARTMENT OF TRANSPORTATION

PART 401--ORGANIZATION AND DEFINITIONS

    1. The authority citation for part 401 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    2. Revise Sec.  401.3 to read as follows:


Sec.  401.3  The Associate Administrator of Commercial Space 
Transportation.

    The Office is headed by an Associate Administrator to exercise the 
Secretary's authority to license or permit and otherwise regulate 
commercial space transportation and to discharge the Secretary's 
responsibility to encourage, facilitate, and promote commercial space 
transportation by the United States private sector.
    3. Amend Sec.  401.5 as follows:
    A. Add definitions for ``experimental permit'', ``validation'', and 
``verification'' in alphabetical order to read as set forth below.
    B. Revise the definitions for ``amateur rocket activities'', 
``launch'', ``launch incident'', and ``reentry incident'' to read as 
set forth below.


Sec.  401.5  Definitions.

* * * * *
    Amateur rocket activities means unmanned launch activities 
conducted at private sites involving rockets powered by a motor or 
motors having a total impulse of 200,000 pound-seconds or less and a 
total burning or operating time of less than 15 seconds, and a rocket 
having a ballistic coefficient--that is, gross weight in pounds divided 
by frontal area of rocket vehicle--less than 12 pounds per square inch.
* * * * *
    Experimental permit or permit means an authorization by the FAA to 
a person to launch or reenter a reusable suborbital rocket.
* * * * *
    Launch means to place or try to place a launch vehicle or reentry 
vehicle and any payload from Earth in a suborbital trajectory, in Earth 
orbit in outer space, or otherwise in outer space, and includes 
preparing a launch vehicle for flight at a launch site in the United 
States. Launch includes the flight of a launch vehicle and pre-flight 
ground operations beginning, under a license, with the arrival of a 
launch vehicle or payload at a U.S. launch site. For launch of an 
expendable launch vehicle (ELV), flight ends after the licensee's last 
exercise of control over its launch vehicle. For launch of an orbital 
reusable launch vehicle (RLV) launch with a payload, flight ends after 
deployment of the payload. For any other orbital RLV, flight ends upon 
completion of the first sustained, steady-state orbit of an RLV at its 
intended location. For a suborbital RLV launch, flight ends after 
vehicle landing or impact on Earth, and after activities necessary to 
return the reusable suborbital rocket to a safe condition on the ground 
end.
* * * * *
    Launch incident means an unplanned event during the flight of a 
launch vehicle, other than a launch accident, involving a malfunction 
of a flight safety system or safety-critical system, or a failure of 
the licensee's or permittee's safety organization, design, or 
operations.
* * * * *
    Reentry incident means any unplanned event occurring during the 
reentry of a reentry vehicle, other than a reentry accident, involving 
a malfunction of a reentry safety-critical system or failure of the 
licensee's or permittee's safety organization, procedures, or 
operations.
* * * * *
    Validation means an evaluation to determine that each safety 
measure derived from a system safety process is correct, complete, 
consistent, unambiguous, verifiable, and technically feasible. 
Validation ensures that the right safety measure is implemented, and 
that the safety measure is well understood.

[[Page 16266]]

    Verification means an evaluation to determine that safety measures 
derived from a system safety process are effective and have been 
properly implemented. Verification provides measurable evidence that a 
safety measure reduces risk to acceptable levels.

PART 404--REGULATIONS AND LICENSING REQUIREMENTS

    4. The authority citation for part 404 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    5. Revise Sec.  404.1 to read as follows:


Sec.  404.1  Scope.

    This part establishes procedures for issuing regulations to 
implement 49 U.S.C. Subtitle IX, chapter 701, and for eliminating or 
waiving requirements for licensing or permitting of commercial space 
transportation activities under that statute.
    6. Revise Sec.  404.3 to read as follows:


Sec.  404.3  Filing of petitions to the Associate Administrator.

    (a) Any person may petition the Associate Administrator to:
    (1) Issue, amend, or repeal a regulation to eliminate as a 
requirement for a license or permit any requirement of Federal law 
applicable to commercial space launch and reentry activities and the 
operation of launch and reentry sites;
    (2) Waive any such requirement in the context of a specific 
application for a license or permit; or
    (3) Waive the requirement for a license or permit.
    (b) Each petition filed under this section must:
    (1) Be submitted in duplicate to the Documentary Services Division, 
Attention Docket Section, Room 4107, U.S. Department of Transportation, 
400 Seventh Street, SW., Washington, DC 20590;
    (2) Set forth the text or substance of the regulation or amendment 
proposed, the regulation to be repealed, or the licensing or permitting 
requirement to be eliminated or waived, or the type of license or 
permit to be waived;
    (3) In the case of a petition for a waiver of a particular 
licensing or permitting requirement, explain the nature and extent of 
the relief sought;
    (4) Contain any facts, views, and data available to the petitioner 
to support the action requested; and
    (5) In the case of a petition for a waiver, be submitted at least 
60 days before the proposed effective date of the waiver unless good 
cause for later submission is shown in the petition.
    (c) A petition for rulemaking filed under this section must contain 
a summary, which the Associate Administrator may cause to be published 
in the Federal Register, which includes:
    (1) A brief description of the general nature of the action 
requested; and
    (2) A brief description of the pertinent reasons presented in the 
petition for instituting the rulemaking.
    7. Revise Sec.  404.17 to read as follows:


Sec.  404.17  Additional rulemaking proceedings.

    The FAA may initiate other rulemaking proceedings, if necessary or 
desirable. For example, it may invite interested people to present oral 
arguments, participate in conferences, appear at informal hearings, or 
participate in any other proceedings.

PART 405--INVESTIGATIONS AND ENFORCEMENT

    8. The authority citation for part 405 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    9. Revise Sec.  405.1 to read as follows:


Sec.  405.1  Monitoring of licensed and other activities.

    Each licensee or permittee must allow access by and cooperate with 
Federal officers or employees or other individuals authorized by the 
Associate Administrator to observe licensed facilities and activities, 
including launch sites and reentry sites, as well as manufacturing, 
production, testing, and training facilities, or assembly sites used by 
any contractor, licensee, or permittee to produce, assemble, or test a 
launch or reentry vehicle and to integrate a payload with its launch or 
reentry vehicle. Observations are conducted to monitor the activities 
of the licensee, permittee, or contractor at such time and to such 
extent as the Associate Administrator considers reasonable and 
necessary to determine compliance with the license or permit or to 
perform the Associate Administrator's responsibilities pertaining to 
payloads for which no Federal license, authorization, or permit is 
required.
    10. Revise Sec.  405.3(a), (b), and (d) to read as follows:


Sec.  405.3  Authority to modify, suspend or revoke.

    (a) The FAA may modify a license or permit issued under this 
chapter upon application by the licensee or permittee or upon the FAA's 
own initiative, if the FAA finds that the modification is consistent 
with the requirements of the Act.
    (b) The FAA may suspend or revoke any license or permit issued to 
such licensee or permittee under this chapter if the FAA finds that a 
licensee or permittee has substantially failed to comply with any 
requirement of the Act, any regulation issued under the Act, the terms 
and conditions of a license or permit, or any other applicable 
requirement, or that public health and safety, the safety of property, 
or any national security or foreign policy interest of the United 
States so require.
* * * * *
    (d) Whenever the FAA takes any action under this section, the FAA 
immediately notifies the licensee or permittee in writing of the FAA's 
finding and the action, which the FAA has taken or proposes to take 
regarding such finding.
    11. Revise Sec.  405.5, introductory text and paragraph (a) to read 
as follows:


Sec.  405.5  Emergency orders.

    The Associate Administrator may immediately terminate, prohibit, or 
suspend a licensed or permitted launch, reentry, or operation of a 
launch or reentry site if the Associate Administrator determines that--
    (a) The licensed or permitted launch, reentry, or operation of a 
launch or reentry site is detrimental to public health and safety, the 
safety of property, or any national security or foreign policy interest 
of the United States; and
* * * * *

PART 406--INVESTIGATIONS, ENFORCEMENT, AND ADMINISTRATIVE REVIEW

    12. The authority citation for part 406 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    13. Revise Sec.  406.1 heading and paragraphs (a)(2) through (3), 
and add paragraphs (a)(4) and (5) to read as follows:


Sec.  406.1  Hearings in license, permit, and payload actions.

    (a) * * *
    (2) An owner or operator of a payload regarding any decision to 
prevent the launch or reentry of the payload;
    (3) A licensee regarding any decision to suspend, modify, or revoke 
a license or to terminate, prohibit, or suspend any licensed activity 
therefore;
    (4) An applicant for a permit regarding an FAA decision to issue a 
permit with conditions or to deny the issuance of the permit; and
    (5) A permittee regarding any decision to suspend, modify, or 
revoke a permit

[[Page 16267]]

or to terminate, prohibit, or suspend any permitted activity.
* * * * *
    14. Revise Sec.  406.3 heading and paragraph (a) to read as 
follows:


Sec.  406.3  Submissions; oral presentation in license, permit, and 
payload actions.

    (a) The FAA will make decisions about license, permit, and payload 
actions under this subpart based on written submissions unless the 
administrative law judge requires an oral presentation.
* * * * *


Sec.  406.5  Administrative law judge's recommended decision in 
license, permit, and payload actions.

    15. Revise Sec.  406.5 heading to read as set forth above.
    16. Revise Sec.  406.9(a), (c) introductory text, and (f)(3) to 
read as follows:


Sec.  406.9  Civil penalties.

    (a) Civil penalty liability. Under 49 U.S.C. 70115(c), a person 
found by the FAA to have violated a requirement of the Act, a 
regulation issued under the Act, or any term or condition of a license 
or permit issued or transferred under the Act, is liable to the United 
States for a civil penalty of not more than $100,000 for each 
violation, as adjusted for inflation. A separate violation occurs for 
each day the violation continues.
* * * * *
    (c) Notice of proposed civil penalty. A civil penalty action is 
initiated when the agency attorney advises a person, referred to as the 
respondent, of the charges or other reasons upon which the FAA bases 
the proposed action and allows the respondent to answer the charges and 
to be heard as to why the civil penalty should not be imposed. A notice 
of proposed civil penalty states the facts alleged; any requirement of 
the Act, a regulation issued under the Act, or any term or condition of 
a license or permit issued or transferred under the Act allegedly 
violated by the respondent; and the amount of the proposed civil 
penalty. Not later than 30 days after receipt of the notice of proposed 
civil penalty the respondent may elect to proceed by one or more of the 
following:
* * * * *
    (f) * * *
    (3) The compromise order may not be used as evidence of a prior 
violation in any subsequent civil penalty action, license, or permit 
action.
* * * * *
    17. Revise Sec.  406.127(a)(3)(ii) to read as follows:


Sec.  406.12  Complaint and answer in civil penalty adjudications.

    (a) * * *
    (3) * * *
    (ii) Any requirement of the Act, a regulation issued under the Act, 
or any term or condition of a license or permit issued or transferred 
under the Act allegedly violated by the respondent.
* * * * *

PART 413--LICENSE AND EXPERIMENTAL PERMIT APPLICATION PROCEDURES

    18. The authority citation for part 413 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    19. Revise Sec.  413.1 to read as follows:


Sec.  413.1  Scope of this part.

    (a) This part explains how to apply for a license or experimental 
permit. These procedures apply to all applications for issuing a 
license or permit, transferring a license, and renewing a license or 
permit.
    (b) Use the following table to locate specific requirements:

------------------------------------------------------------------------
                             Subject                               Part
------------------------------------------------------------------------
Obtaining a Launch License......................................     415
License to Operate a Launch Site................................     420
Launch and Reentry of a Reusable Launch Vehicle (RLV)...........     431
License to Operate a Reentry Site...............................     433
Reentry of a Reentry Vehicle other than a Reusable Launch            435
 Vehicle (RLV)..................................................
Experimental Permits............................................     437
------------------------------------------------------------------------

    20. Revise Sec.  413.3 to read as follows:


Sec.  413.3  Who must obtain a license or permit.

    (a) A person must obtain a license in accordance with this section, 
unless eligible for an experimental permit under paragraph (f) of this 
section.
    (b) A person must obtain a license to--
    (1) Launch a launch vehicle from the United States;
    (2) Operate a launch site within the United States;
    (3) Reenter a reentry vehicle in the United States; or
    (4) Operate a reentry site within the United States.
    (c) A person who is a U.S. citizen or an entity organized under the 
laws of the United States or any State must obtain a license to--
    (1) Launch a launch vehicle outside the United States;
    (2) Operate a launch site outside of the United States;
    (3) Reenter a reentry vehicle outside of the United States; or
    (4) Operate a reentry site outside of the United States.
    (d) A foreign entity in which a United States citizen has a 
controlling interest must obtain a license to launch a launch vehicle 
from or to operate a launch site in--
    (1) Any place that is outside the territory or territorial waters 
of any nation, unless there is an agreement in force between the United 
States and a foreign nation providing that such foreign nation has 
jurisdiction over the launch or the operation of the launch site; or
    (2) The territory of any foreign nation, including its territorial 
waters, if there is an agreement in force between the United States and 
that foreign nation providing that the United States has jurisdiction 
over the launch or the operation of the launch site.
    (e) A foreign entity in which a U.S. citizen has a controlling 
interest must obtain a license to reenter a reentry vehicle or to 
operate a reentry site in--
    (1) Any place that is outside the territory or territorial waters 
of any nation, unless there is an agreement in force between the United 
States and a foreign nation providing that such foreign nation has 
jurisdiction over the reentry or the operation of the reentry site; or
    (2) The territory of any foreign nation if there is an agreement in 
force between the United States and that foreign nation providing that 
the United States has jurisdiction over the reentry or the operation of 
the reentry site.
    (f) A person, individual, or foreign entity otherwise requiring a 
license under this section may instead obtain an experimental permit to 
launch or reenter a reusable suborbital rocket under part 437 of this 
chapter.
    21. Revise Sec.  413.5 to read as follows:


Sec.  413.5  Pre-application consultation.

    A prospective applicant must consult with the FAA before submitting 
an application to discuss the application process and possible issues 
relevant to the FAA's licensing or permitting decision. Early 
consultation helps an applicant to identify possible regulatory issues 
at the planning stage when changes to an application or to proposed 
licensed or permitted activities are less likely to result in 
significant delay or costs to the applicant.
    22. Revise Sec.  413.7(b)(3) and (c)(1) and (3) to read as follows:


Sec.  413.7  Application.

* * * * *
    (b) * * *
    (3) The type of license or permit for which the applicant is 
applying.

[[Page 16268]]

    (c) * * *
    (1) For a corporation: An officer or other individual authorized to 
act for the corporation in licensing or permitting matters.
* * * * *
    (3) For a joint venture, association, or other entity: An officer 
or other individual authorized to act for the joint venture, 
association, or other entity in licensing or permitting matters.
    23. Revise Sec.  413.11 to read as follows:


Sec.  413.11  Acceptance of an application.

    The FAA will initially screen an application to determine whether 
it is complete enough for the FAA to start its review. After completing 
the initial screening, the FAA will notify the applicant in writing of 
one of the following:
    (a) The FAA accepts the application and will initiate the reviews 
required to make a decision about the license or permit; or
    (b) The application is so incomplete or indefinite that the FAA 
cannot start to evaluate it. The FAA will reject it and notify the 
applicant, stating each reason for rejecting it and what action the 
applicant must take for the FAA to accept the application. The FAA may 
return a rejected application to the applicant or may hold it until the 
applicant takes those actions.
    24. Revise Sec.  413.13 to read as follows:


Sec.  413.13  Complete application.

    The FAA's acceptance of an application does not mean it has 
determined that the application is complete. If, in addition to the 
information required by this chapter, the FAA requires other 
information necessary for a determination that public health and 
safety, safety of property, and national security and foreign policy 
interests of the United States are protected during the conduct of a 
licensed or permitted activity, an applicant must submit the additional 
information.
    25. Revise Sec.  413.15 to read as follows:


Sec.  413.15  Review period.

    (a) Review period duration. Unless otherwise specified in this 
chapter, the FAA reviews and makes a decision on an application within 
180 days of receiving an accepted license application or within 120 
days of receiving an accepted permit application.
    (b) Review period tolled. If an accepted application does not 
provide sufficient information to continue or complete the reviews or 
evaluations required by this chapter for a licensing or permitting 
determination, or an issue exists that would affect a determination, 
the FAA notifies the applicant, in writing, and informs the applicant 
of any information required to complete the application. If the FAA 
cannot review an accepted application because of lack of information or 
for any other reason, the FAA will toll the 180-day or 120-day review 
period until the FAA receives the information it needs or the applicant 
resolves the issue.
    (c) Notice. If the FAA does not make a decision within 120 days of 
receiving an accepted license application or within 90 days of 
receiving an accepted permit application, the FAA informs the 
applicant, in writing, of any outstanding information needed to 
complete the review, or of any issues that would affect the decision.
    26. Revise Sec.  413.17 to read as follows:


Sec.  413.17  Continuing accuracy of application; supplemental 
information; amendment.

    (a) An applicant must ensure the continuing accuracy and 
completeness of information furnished to the FAA as part of a pending 
license or permit application. If at any time the information an 
applicant provides is no longer accurate and complete in all material 
respects, the applicant must submit new or corrected information. As 
part of this submission, the applicant must recertify the accuracy and 
completeness of the application under Sec.  413.7. If an applicant does 
not comply with any of the requirements set forth in this paragraph, 
the FAA can deny the license or permit application.
    (b) An applicant may amend or supplement a license or permit 
application at any time before the FAA issues or transfers the license 
or permit.
    (c) Willful false statements made in any application or document 
relating to an application, license, or permit are punishable by fine 
and imprisonment under section 1001 of Title 18, United States Code, 
and by administrative sanctions in accordance with part 405 of this 
chapter.
    27. Revise Sec.  413.19 to read as follows:


Sec.  413.19  Issuing a license or permit.

    After the FAA completes its reviews and makes the decisions 
required by this chapter, the FAA issues a license or permit to the 
applicant.
    28. Revise Sec.  413.21 (a), (b) introductory text, and (b)(1) to 
read as follows:


Sec.  413.21  Denial of a license or permit application.

    (a) The FAA informs an applicant, in writing, if it denies an 
application and states the reasons for denial.
    (b) If the FAA has denied an application, the applicant may either:
    (1) Attempt to correct any deficiencies identified and ask the FAA 
to reconsider the revised application. The FAA has 60 days or the 
number of days remaining in the review period, whichever is greater, 
within which to reconsider the decision; or
* * * * *
    29. Revise Sec.  413.23 to read as follows:


Sec.  413.23  License or permit renewal.

    (a) Eligibility. A licensee or permittee may apply to renew its 
license or permit by submitting to the FAA a written application for 
renewal at least 90 days before the license expires or at least 60 days 
before the permit expires.
    (b) Application. (1) A license or permit renewal application must 
satisfy the requirements set forth in this part and any other 
applicable part of this chapter.
    (2) The application may incorporate by reference information 
provided as part of the application for the expiring license or permit, 
including any modifications to the license or permit.
    (3) An applicant must describe any proposed changes in its conduct 
of licensed or permitted activities and provide any additional 
clarifying information required by the FAA.
    (c) Review of application. The FAA reviews the application to 
determine whether to renew the license or permit for an additional 
term. The FAA may incorporate by reference any findings that are part 
of the record for the expiring license or permit.
    (d) Renewal of license or permit. After the FAA finishes its 
reviews, the FAA issues an order modifying the expiration date of the 
license or permit. The FAA may impose additional or revised terms and 
conditions necessary to protect public health and safety and the safety 
of property and to protect U.S. national security and foreign policy 
interests.
    (e) Denial of license or permit renewal. The FAA informs a licensee 
or permittee, in writing, if the FAA denies the application for renewal 
and states the reasons for denial. If the FAA denies an application, 
the licensee or permittee may follow the procedures of section 413.21 
of this part.

PART 415--LAUNCH LICENSE

    30. The authority citation for part 415 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    31. Revise Sec.  415.1 to read as follows:


Sec.  415.1  Scope.

    This part prescribes requirements for obtaining a license to launch 
a launch

[[Page 16269]]

vehicle, other than a reusable launch vehicle (RLV), and post-licensing 
requirements with which a licensee must comply to remain licensed. 
Requirements for preparing a license application are in part 413 of 
this subchapter.

PART 420--LICENSE TO OPERATE A LAUNCH SITE

    32. The authority citation for part 420 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    33. Revise the definition of ``public'' in Sec.  420.5 to read as 
follows:


Sec.  420.5  Definitions.

* * * * *
    Public means people and property that are not involved in 
supporting a licensed or permitted launch, and includes those people 
and property that may be located within the boundary of a launch site, 
such as visitors, any individual providing goods or services not 
related to launch processing or flight, and any other launch operator 
and its personnel.
* * * * *
    34. Revise Sec.  420.25(b) to read as follows:


Sec.  420.25  Launch site location review--risk analysis.

* * * * *
    (b) For licensed activities, if the estimated expected casualty 
exceeds 30x10-6, the FAA will not approve the location of 
the proposed launch point.
    35. Add Sec.  420.30 to read as follows:


Sec.  420.30  Launch site location review for permitted launch 
vehicles.

    If an applicant plans to use its proposed launch site solely for 
launches conducted under an experimental permit, the FAA will approve a 
launch site location if the FAA has approved an operating area under 
part 437 for launches from the proposed launch site.

PART 431--LICENSE FOR LAUNCH AND REENTRY OF A REUSABLE LAUNCH 
VEHICLE (RLV)

    36. The authority citation for part 431 continues to read as 
follows:

    Authority: 49 U.S.C. 70101-70121.

    37. Revise Sec.  431.35(d)(7) to read as follows:


Sec.  431.35  Acceptable reusable launch vehicle mission risk.

* * * * *
    (d) * * *
    (7) Provide data that verifies the applicant's system safety 
analyses required by paragraph (c) of this section; and
* * * * *
    38. Add part 437 to read as follows:

PART 437--EXPERIMENTAL PERMITS

Subpart A--General Information

Sec.
437.1 Scope and organization of this part.
437.3 Definitions.
437.5 Eligibility for an experimental permit.
437.7 Scope of an experimental permit.
437.9 Issuance of an experimental permit.
437.11 Duration of an experimental permit.
437.13 Additional experimental permit terms and conditions.
437.15 Transfer of an experimental permit.
437.17 Rights not conferred by an experimental permit.
Subpart B--Requirements to Obtain an Experimental Permit
437.21 General.

Program Description

437.23 Program description.

Flight Test Plan

437.25 Flight test plan.

Operational Safety Documentation

437.27 Pre-flight and post-flight operations.
437.29 Hazard analysis.
437.31 Verification of operating area containment and key flight-
safety event limitations.
437.33 Landing and impact locations.
437.35 Agreements.
437.37 Tracking.
437.39 Flight rules.
437.41 Mishap response plan.
Subpart C--Safety Requirements
437.51 Rest rules for vehicle safety operations personnel.
437.53 Pre-flight and post-flight operations.
437.55 Hazard analysis.
437.57 Operating area containment.
437.59 Key flight-safety event limitations.
437.61 Landing and impact locations.
437.63 Agreements with other entities involved in a launch or 
reentry.
437.65 Collision avoidance analysis
437.67 Tracking a reusable suborbital rocket.
437.69 Communications.
437.71 Flight rules.
437.73 Anomaly recording and reporting.
437.75 Mishap reporting, responding, and investigating.
437.77 Additional safety requirements.
Subpart D--Terms and Conditions of an Experimental Permit
437.81 Public safety responsibility.
437.83 Compliance with experimental permit.
437.85 Allowable design changes; Modification of an experimental 
permit.
437.87 Records.
437.89 Pre-flight reporting.
437.91 For-hire prohibition.
437.93 Compliance monitoring.
437.95 Inspection of additional reusable suborbital rockets.

    Authority: 49 U.S.C. 70101-70102.

Subpart A--General Information


Sec.  437.1  Scope and organization of this part.

    (a) This part prescribes requirements for obtaining an experimental 
permit. It also prescribes post-permitting requirements with which a 
permittee must comply to maintain its permit. Part 413 of this 
subchapter contains procedures for applying for an experimental permit.
    (b) Subpart A contains general information about an experimental 
permit. Subpart B contains requirements to obtain an experimental 
permit. Subpart C contains the safety requirements with which a 
permittee must comply while conducting permitted activities. Subpart D 
contains terms and conditions of an experimental permit.


Sec.  437.3  Definitions.

    Anomaly means an apparent problem or failure that occurs during 
verification or operation and affects a system, a subsystem, a process, 
support equipment, or facilities.
    Envelope expansion means any portion of a flight where planned 
operations will subject a reusable suborbital rocket to the effects of 
altitude, velocity, acceleration, or burn duration that exceed a level 
or duration successfully verified during an earlier flight.
    Exclusion area means an area, within an operating area, that a 
reusable suborbital rocket's instantaneous impact point may not 
traverse.
    Failure means any anomalous condition that causes or potentially 
causes a reusable suborbital rocket, its components, or its debris to 
impact the Earth or leave the operating area during a flight.
    Instantaneous impact point means an impact point, following thrust 
termination of a launch vehicle, calculated in the absence of 
atmospheric drag effects.
    Key flight-safety event means a permitted flight activity that has 
an increased likelihood of causing a failure compared with other 
portions of flight.
    Operating area means a three-dimensional region where permitted 
flights may take place.
    Permitted vehicle means a reusable suborbital rocket operated by a 
launch operator under an experimental permit.
    Reentry impact point means the location of a reusable suborbital 
rocket's instantaneous impact point during its unpowered exoatmospheric 
suborbital flight.

[[Page 16270]]

Sec.  437.5  Eligibility for an experimental permit.

    The FAA will issue an experimental permit to a person to launch or 
reenter a reusable suborbital rocket only for--
    (a) Research and development to test new design concepts, new 
equipment, or new operating techniques;
    (b) A showing of compliance with requirements for obtaining a 
license under this subchapter; or
    (c) Crew training before obtaining a license for a launch or 
reentry using the design of the rocket for which the permit would be 
issued.


Sec.  437.7  Scope of an experimental permit.

    An experimental permit authorizes launch and reentry of a reusable 
suborbital rocket. The authorization includes pre- and post-flight 
ground operations as defined in this section.
    (a) A pre-flight ground operation includes each operation that--
    (1) Takes place at a U.S. launch site; and
    (2) Meets the following criteria:
    (i) Is closely proximate in time to flight,
    (ii) Entails critical steps preparatory to initiating flight,
    (iii) Is unique to space launch, and
    (iv) Is inherently so hazardous as to warrant the FAA's regulatory 
oversight.
    (b) A post-flight ground operation includes each operation 
necessary to return the reusable suborbital rocket to a safe condition 
after it lands or impacts.


Sec.  437.9  Issuance of an experimental permit.

    The FAA issues an experimental permit authorizing an unlimited 
number of launches or reentries for a suborbital rocket design for the 
uses described in Sec.  437.5.


Sec.  437.11  Duration of an experimental permit.

    An experimental permit lasts for one year from the date it is 
issued. A permittee may apply to renew a permit yearly under part 413 
of this subchapter.


Sec.  437.13  Additional experimental permit terms and conditions.

    The FAA may modify an experimental permit at any time by modifying 
or adding permit terms and conditions to ensure compliance with 49 
U.S.C. Subtitle IX, ch. 701.


Sec.  437.15  Transfer of an experimental permit.

    An experimental permit is not transferable.


Sec.  437.17  Rights not conferred by an experimental permit.

    Issuance of an experimental permit does not relieve a permittee of 
its obligation to comply with any requirement of law that applies to 
its activities.

Subpart B--Requirements To Obtain an Experimental Permit


Sec.  437.21  General.

    To obtain an experimental permit an applicant must make the 
demonstrations and provide the information required by this section.
    (a) This subpart. An applicant must provide a program description, 
a flight test plan, and operational safety documentation as required by 
this subpart.
    (b) Other regulations. (1) Environmental. An applicant must provide 
enough information for the FAA to analyze the environmental impacts 
associated with proposed reusable suborbital rocket launches or 
reentries. The information provided by an applicant must be sufficient 
to enable the FAA to comply with the requirements of the National 
Environmental Policy Act, 42 U.S.C. 4321 et seq., and the Council on 
Environmental Quality Regulations for Implementing the Procedural 
Provisions of the National Environmental Policy Act, 40 CFR parts 1500-
1508.
    (2) Financial responsibility. An applicant must provide the 
information required by part 3 of appendix A of part 440 for the FAA to 
conduct a maximum probable loss analysis.
    (3) Operation of a private launch site. An applicant proposing to 
launch from a private launch site that contains permanent facilities or 
supports continuous operations must obtain a launch site operator 
license under part 420.
    (4) Human space flight. An applicant proposing launch or reentry 
with flight crew or a space flight participant on board a reusable 
suborbital rocket must demonstrate compliance with Sec. Sec.  460.5, 
460.7, 460.11, 460.13, 460.15, 460.17, 460.51 and 460.53 of this 
subchapter.
    (c) Inspection before issuing a permit. Before the FAA issues an 
experimental permit, an applicant must make each reusable suborbital 
rocket planned to be flown available to the FAA for inspection. The FAA 
will determine whether each reusable suborbital rocket is built as 
represented in the application.
    (d) Other requirements. The FAA may require additional analyses, 
information, or agreements if necessary to protect public health and 
safety, safety of property, and national security and foreign policy 
interests of the United States.

Program Description


Sec.  437.23  Program description.

    (a) An applicant must provide--
    (1) Dimensioned three-view drawings or photographs of the reusable 
suborbital rocket; and
    (2) Gross liftoff weight and thrust profile of the reusable 
suborbital rocket.
    (b) An applicant must describe--
    (1) All reusable suborbital rocket systems, including structural, 
flight control, thermal, pneumatic, hydraulic, propulsion, electrical, 
environmental control, software, avionics, and guidance systems used in 
the reusable suborbital rocket;
    (2) The types and quantities of all propellants used in the 
reusable suborbital rocket;
    (3) Any hazardous materials in the reusable suborbital rocket;
    (4) The purpose for which a reusable suborbital rocket is to be 
flown; and
    (5) Each payload or payload class planned to be flown.
    (c) An applicant must identify any foreign ownership of the 
applicant as follows:
    (1) For a sole proprietorship or partnership, identify all foreign 
ownership,
    (2) For a corporation, identify any foreign ownership interests of 
10% or more, and
    (3) For a joint venture, association, or other entity, identify any 
participating foreign entities.

Flight Test Plan


Sec.  437.25  Flight test plan.

    An applicant must--
    (a) Describe any flight test program, including estimated number of 
flights, key flight-safety events, and maximum altitude.
    (b) Identify and describe the geographic boundaries of one or more 
proposed operating areas where it plans to perform its flights and that 
satisfy Sec.  437.57(b) of subpart C. The FAA may designate one or more 
exclusion areas in accordance with Sec.  437.57(c) of subpart C.

Operational Safety Documentation


Sec.  437.27  Pre-flight and post-flight operations.

    An applicant must demonstrate how it will meet the requirements of 
Sec.  437.53(a) and (b) to establish a safety clear zone and verify 
that the public is outside that zone before and during any hazardous 
operation.

[[Page 16271]]

Sec.  437.29  Hazard analysis.

    (a) An applicant must perform a hazard analysis that complies with 
Sec.  437.55(a).
    (b) An applicant must provide to the FAA all the results of each 
step of the hazard analysis required by paragraph (a) of this section.


Sec.  437.31  Verification of operating area containment and key 
flight-safety event limitations.

    (a) An applicant must identify, describe, and provide verification 
evidence of the methods and systems used to meet the requirement of 
Sec.  437.57(a) to contain its reusable suborbital rocket's 
instantaneous impact point within an operating area and outside any 
exclusion area. The description must include, at a minimum--
    (1) Proof of physical limits on the ability of the reusable 
suborbital rocket to leave the operating area; or
    (2) Abort procedures and other safety measures derived from a 
system safety engineering process.
    (b) An applicant must identify, describe, and provide verification 
evidence of the methods and systems used to meet the requirements of 
Sec.  437.59 to conduct any key flight-safety event so that the 
reusable suborbital rocket's instantaneous impact point, including its 
expected dispersions, is over unpopulated or sparsely populated areas, 
and to conduct each reusable suborbital rocket flight so that the 
reentry impact point does not loiter over a populated area.


Sec.  437.33  Landing and impact locations.

    An applicant must demonstrate that each nominal landing, 
contingency abort landing, and reusable suborbital rocket component 
impact or landing location satisfies Sec.  437.61.


Sec.  437.35  Agreements.

    The applicant must complete the agreements required by Sec.  
437.63, and provide a copy to the FAA.


Sec.  437.37  Tracking.

    An applicant must identify and describe each method or system used 
to meet the tracking requirements of Sec.  437.67.


Sec.  437.39  Flight rules.

    An applicant must provide flight rules as required by Sec.  437.71.


Sec.  437.41  Mishap response plan.

    An applicant must provide a mishap response plan that meets the 
requirements of Sec.  437.75(b).

Subpart C--Safety Requirements


Sec.  437.51  Rest rules for vehicle safety operations personnel.

    A permittee must ensure that all vehicle safety operations 
personnel adhere to the work and rest standards in this section during 
permitted activities.
    (a) No vehicle safety operations personnel may work more than:
    (1) 12 consecutive hours,
    (2) 60 hours in the 7 days preceding a permitted activity, and
    (3) 14 consecutive work days.
    (b) All vehicle safety operations personnel must have at least 8 
hours of rest after 12 hours of work.
    (c) All vehicle safety operations personnel must receive a minimum 
48-hour rest period after 5 consecutive days of 12-hour shifts.


Sec.  437.53  Pre-flight and post-flight operations.

    A permittee must protect the public from adverse effects of 
hazardous operations and systems in preparing a reusable suborbital 
rocket for flight at a launch site in the United States and returning 
the reusable suborbital rocket and any support equipment to a safe 
condition after flight. At a minimum, a permittee must--
    (a) Establish a safety clear zone that will contain the adverse 
effects of each operation involving a hazard; and
    (b) Verify that the public is outside of the safety clear zone 
before and during any hazardous operation.


Sec.  437.55  Hazard analysis.

    (a) A hazard analysis must identify and characterize each of the 
hazards and assess the risk to public health and safety and the safety 
of property resulting from each permitted flight. A hazard analysis 
must--
    (1) Identify and describe hazards, including but not limited to 
each of those that result from--
    (i) Component, subsystem, or system failures or faults;
    (ii) Software errors;
    (iii) Environmental conditions;
    (iv) Human errors;
    (v) Design inadequacies; or
    (vi) Procedural deficiencies.
    (2) Determine the likelihood of occurrence and consequence for each 
hazard.
    (3) Identify and describe the risk elimination and mitigation 
measures necessary to ensure that the likelihood and consequence of 
each hazard meets the criteria of paragraph (a)(3)(i) of this section.
    (i) Criteria:
    (A) Any hazardous condition that may cause death or serious injury 
to the public must be extremely unlikely.
    (B) The likelihood of any hazardous condition that may cause major 
property damage to the public, major safety-critical system damage or 
reduced capability, decreased safety margins, or increased workload 
must be remote.
    (ii) Risk elimination and mitigation measures include one or more 
of the following:
    (A) Designing for minimum risk,
    (B) Incorporating safety devices,
    (C) Providing warning devices, or
    (D) Developing and implementing procedures and training.
    (4) Demonstrate that the risk elimination and mitigation measures 
achieve the risk levels of paragraph (a)(3)(i) of this section through 
validation and verification. Verification includes:
    (i) Test data,
    (ii) Inspection results, or
    (iii) Analysis.
    (b) During permitted activities, a permittee must carry out the 
risk elimination and mitigation measures derived from its hazard 
analysis.
    (c) A permittee must ensure the continued accuracy and validity of 
its hazard analysis throughout the term of its permit.


Sec.  437.57  Operating area containment.

    (a) During each permitted flight, a permittee must contain its 
reusable suborbital rocket's instantaneous impact point within an 
operating area determined in accordance with paragraph (b) and outside 
any exclusion area defined by the FAA in accordance with paragraph (c) 
of this section.
    (b) An operating area--
    (1) Must be large enough to contain each planned trajectory and all 
expected vehicle dispersions;
    (2) Must contain enough unpopulated or sparsely populated area to 
perform key flight-safety events as required by Sec.  437.59;
    (3) May not contain or be adjacent to a densely populated area; and
    (4) May not contain significant automobile traffic, railway 
traffic, waterborne vessel traffic, or large concentrations of members 
of the public.
    (c) The FAA may prohibit a reusable suborbital rocket's 
instantaneous impact point from traversing certain areas within an 
operating area, by designating one or more areas as exclusion areas, if 
necessary to protect public health and safety, safety of property, or 
foreign policy or national security interests of the United States. An 
exclusion area may be confined to a specific phase of flight.

[[Page 16272]]

Sec.  437.59  Key flight-safety event limitations.

    (a) A permittee must conduct any key flight-safety event so that 
the reusable suborbital rocket's instantaneous impact point, including 
its expected dispersion, is over an unpopulated or sparsely populated 
area. At a minimum, a key flight-safety event includes:
    (1) Ignition of any primary rocket engine,
    (2) Any staging event, or
    (3) Any envelope expansion.
    (b) A permittee must conduct each reusable suborbital rocket flight 
so that the reentry impact point does not loiter over a populated area.


Sec.  437.61  Landing and impact locations.

    A permittee must use a location for nominal landing, any 
contingency abort landing, or any reusable suborbital rocket component 
impact or landing that--
    (a) Is big enough to contain an impact, including debris dispersion 
upon impact; and
    (b) At the time of landing or impact, does not contain any members 
of the public.


Sec.  437.63  Agreements with other entities involved in a launch or 
reentry.

    A permittee must enter into and comply with the agreements required 
by this section.
    (a) An applicant must enter into a written agreement with a Federal 
launch range operator, a licensed launch site operator, or any other 
party that provides access to or use of property and services required 
to support a permitted flight.
    (b) Unless otherwise addressed in agreements with a licensed launch 
site operator or a Federal launch range, an applicant must complete the 
following:
    (1) For overflight of water, a written agreement between the 
applicant and the local USCG district to establish procedures for 
issuing a Notice to Mariners before a permitted flight, and
    (2) A written agreement between the applicant and responsible Air 
Traffic Control authority having jurisdiction over the airspace through 
which a flight is to take place, for measures necessary to ensure the 
safety of aircraft.


Sec.  437.65  Collision avoidance analysis

    (a) For a permitted flight with a planned maximum altitude greater 
than 150 kilometers, a permittee must obtain a collision avoidance 
analysis from United States Strategic Command.
    (b) The collision avoidance analysis must establish each period 
during which a permittee may not initiate flight to ensure that a 
permitted vehicle and any jettisoned components do not pass closer than 
200 kilometers to a manned or mannable orbital object. A distance of 
less than 200 kilometers may be used if the distance provides an 
equivalent level of safety, and if the distance accounts for all 
uncertainties in the analysis.


Sec.  437.67  Tracking a resuable suborbital rocket.

    A permittee must operate a reusable suborbital rocket to provide--
    (a) Air Traffic Control with the ability to know the real time 
position and velocity of the reusable suborbital rocket while operating 
in the National Airspace System; and
    (b) Position and velocity data for post-flight use.


Sec.  437.69  Communications.

    (a) A permittee must be in communication with Air Traffic Control 
during all phases of flight.
    (b) A permittee must record communications affecting the safety of 
the flight.


Sec.  437.71  Flight rules.

    (a) Before initiating rocket-powered flight, a permittee must 
confirm that all systems and operations necessary to ensure that safety 
measures derived from Sec. Sec.  437.55, 437.57, 437.59, 437.61, 
437.63, 437.65, 437.67, and 437.69 are within acceptable limits.
    (b) During all phases of flight, a permittee must--
    (1) Follow flight rules that ensure compliance with Sec. Sec.  
437.55, 437.57, 437.59, and 437.61; and
    (2) Abort the flight if it would endanger the public.
    (c) A permittee may not operate a reusable suborbital rocket in a 
careless or reckless manner that would endanger any member of the 
public during any phase of flight.
    (d) A permittee may not operate a reusable suborbital rocket within 
Class A, Class B, Class C, or Class D airspace or within the boundaries 
of the surface area of Class E airspace designated for an airport 
unless the permittee has prior authorization from the air traffic 
control facility having jurisdiction over that airspace.
    (e) A permittee may not operate a reusable suborbital rocket in 
areas designated in a Notice to Airmen under Sec.  91.137, Sec.  
91.138, Sec.  91.141, or Sec.  91.145 of this title, unless authorized 
by:
    (1) Air traffic control; or
    (2) A Flight Standards Certificate of Waiver or Authorization.
    (f) For any phase of flight where a permittee operates a reusable 
suborbital rocket like an aircraft in the National Airspace System, a 
permittee must comply with the provisions of part 91 of this title 
specified in an experimental permit issued under this part.


Sec.  437.73  Anomaly recording and reporting.

    (a) A permittee must record anomalies and implement corrective 
actions for those anomalies.
    (b) A permittee must report to the FAA any anomaly of any system 
that is necessary for complying with Sec. Sec.  437.55(a)(3), 437.57, 
and 437.59 and the corrective action for that anomaly. A permittee must 
take each corrective action before the next flight.


Sec.  437.75  Mishap reporting, responding, and investigating.

    A permittee must report, respond to, and investigate mishaps that 
occur during permitted activities.
    (a) Reporting requirements. A permittee must--
    (1) Immediately notify the FAA Washington Operations Center if 
there is a launch or reentry accident or incident or a mishap that 
involves a fatality or serious injury, as defined in 49 CFR 830.2;
    (2) Notify within 24 hours the FAA's Office of Commercial Space 
Transportation if there is a mishap that does not involve a fatality or 
serious injury, as defined in 49 CFR 830.2; and
    (3) Submit within 5 days of the event a written preliminary report 
to the FAA's Office of Commercial Space Transportation if there is a 
launch or reentry accident or incident during a permitted flight. The 
report must identify the event as a launch or reentry accident or 
incident, and must include:
    (i) The date and time of occurrence,
    (ii) A description of the event and sequence of events leading to 
the launch or reentry accident, or launch or reentry incident, to the 
extent known,
    (iii) The intended and actual location of launch or reentry, 
including landing or impact on Earth,
    (iv) A description of any payload,
    (v) The number and general description of any fatalities and 
injuries,
    (vi) Property damage, if any, and an estimate of its value,
    (vii) A description of any hazardous materials involved in the 
event, whether on the reusable suborbital rocket or on the ground,
    (viii) Action taken by any person to contain the consequences of 
the event, and
    (ix) Weather conditions at the time of the event.
    (b) Response requirements. A permittee must--
    (1) Immediately--
    (i) Ensure the consequences of a mishap are contained and 
minimized; and

[[Page 16273]]

    (ii) Ensure data and physical evidence are preserved.
    (2) Report to and cooperate with FAA and National Transportation 
Safety Board (NTSB) investigations and designate one or more points of 
contact for the FAA or NTSB; and
    (3) Identify and adopt preventive measures for avoiding a 
recurrence of the event.
    (c) Investigation requirements. A permittee must--
    (1) Investigate the root cause of an event described in paragraph 
(a) of this section;
    (2) Report investigation results to the FAA; and
    (3) Identify responsibilities, including reporting 
responsibilities, for personnel assigned to conduct investigations and 
for any unrelated persons that the permittee retains to conduct or 
participate in investigations.


Sec.  437.77  Additional safety requirements.

    The FAA may impose additional safety requirements on an applicant 
or permittee proposing an activity with a hazard not otherwise 
addressed in this part. This may include a toxic hazard or the use of 
solid propellants. The FAA may also require the permittee to conduct 
additional analyses of the cause of any anomaly and corrective actions.

Subpart D--Terms and Conditions of an Experimental Permit


Sec.  437.81  Public safety responsibility.

    A permittee must ensure that a launch or reentry conducted under an 
experimental permit is safe, and must protect public health and safety 
and the safety of property.


Sec.  437.83  Compliance with experimental permit.

    A permittee must conduct any launch or reentry under an 
experimental permit in accordance with representations made in its 
permit application, with subparts C and D of this part, and with terms 
and conditions contained in the permit.


Sec.  437.85  Allowable design changes; Modification of an experimental 
permit.

    (a) The FAA will identify in the experimental permit the type of 
changes that the permittee may make to the reusable suborbital rocket 
design without invalidating the permit.
    (b) Except for design changes made under paragraph (a) of this 
section, a permittee must ask the FAA to modify the experimental permit 
if--
    (1) It proposes to conduct permitted activities in a manner not 
authorized by the permit; or
    (2) Any representation in its permit application that is material 
to public health and safety or the safety of property is no longer 
accurate or complete.
    (c) A permittee must prepare an application to modify an 
experimental permit and submit it in accordance with part 413 of this 
subchapter. If requested during the application process, the FAA may 
approve an alternate method for requesting permit modifications. The 
permittee must indicate any part of its permit that would be changed or 
affected by a proposed modification.
    (d) When a permittee proposes a modification, the FAA reviews the 
determinations made on the experimental permit to decide whether they 
remain valid.
    (e) When the FAA approves a modification, it issues the permittee 
either a written approval or a permit order modifying the permit if a 
stated term or condition of the permit is changed, added, or deleted. 
An approval has the full force and effect of a permit order and is part 
of the permit record.


Sec.  437.87  Records.

    (a) Except as required by paragraph (b) of this section, a 
permittee must maintain for 3 years all records, data, and other 
material necessary to verify that a permittee conducted its launch or 
reentry in accordance with its permit.
    (b) If there is a launch or reentry accident or incident, a 
permittee must preserve all records related to the event. A permittee 
must keep the records until after any Federal investigation and the FAA 
advises the permittee that it may dispose of them.
    (c) A permittee must make all records that it must maintain under 
this section available to Federal officials for inspection and copying.


Sec.  437.89  Pre-flight reporting.

    (a) Not later than 30 days before each flight or series of flights 
conducted under an experimental permit, a permittee must provide the 
FAA with the following information:
    (1) Any payload to be flown, including any payload operations 
during the flight,
    (2) When the flight or series of flights are planned,
    (3) The operating area for each flight, and
    (4) The planned maximum altitude for each flight.
    (b) Not later than 15 days before each permitted flight planned to 
reach greater than 150 km altitude, a permittee must provide the FAA 
its planned trajectory for a collision avoidance analysis.


Sec.  437.91  For-hire prohibition.

    No permittee may carry any property or human being for compensation 
or hire on a reusable suborbital rocket.


Sec.  437.93  Compliance monitoring.

    A permittee must allow access by, and cooperate with, federal 
officers or employees or other individuals authorized by the FAA to 
observe any activities of the permittee, or of its contractors or 
subcontractors, associated with the conduct of permitted activities.


Sec.  437.95  Inspection of additional reusable suborbital rockets.

    A permittee may launch or reenter additional reusable suborbital 
rockets of the same design under the permit after the FAA inspects each 
additional reusable suborbital rocket.

    Issued in Washington, DC, on March 22, 2006.
Patricia Grace Smith,
Associate Administrator for Commercial Space Transportation.
[FR Doc. 06-3137 Filed 3-30-06; 8:45 am]
BILLING CODE 4910-13-P