[Federal Register Volume 72, Number 66 (Friday, April 6, 2007)]
[Rules and Regulations]
[Pages 17001-17024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-6194]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 401, 404, 405, 406, 413, 415, 420, 431, and 437

[Docket No.: FAA-2006-24197; Amendment Nos. 401-5, 404-4, 405-3, 406-4, 
413-9, 420-3, 431-2, 437-0]
RIN 2120-AI56


Experimental Permits for Reusable Suborbital Rockets

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

DATES: These amendments become effective June 5, 2007.

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:

Availability of Rulemaking Documents

    You can get an electronic copy using the Internet by:
    (1) Searching the Department of Transportation's electronic Docket 
Management System (DMS) web page (http://dms.dot.gov/search);
    (2) Visiting the FAA's Regulations and Policies 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 amendment number or docket number of this 
rulemaking.
    Anyone is able to search the electronic form of all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted 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 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires the FAA to comply with small entity requests for 
information or advice about compliance with statutes and regulations 
within its jurisdiction. If you are a small entity and you have a 
question regarding this document, you may contact the person listed 
under FOR FURTHER INFORMATION CONTACT. You can find out more about 
SBREFA on the Internet at http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

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). Also, 
the recently enacted Commercial Space Launch Amendments Act of 2004 
(the CSLAA) mandates this rulemaking through section 70105a, 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.

I. Background

    Chapter 701 authorizes the Secretary of Transportation and, through 
delegations, the FAA's Associate Administrator for Commercial Space 
Transportation, to oversee, authorize, 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, 70105a; 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, 70105a.
    On December 23, 2004, President Bush signed into law the Commercial

[[Page 17002]]

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 manned and unmanned developmental 
reusable suborbital rockets, is the subject of this rulemaking. The FAA 
is implementing other terms of the CSLAA in a companion rule, ``Human 
Space Flight Requirements for Crew and Space Flight Participants'' 71 
FR 75616 (Dec. 15, 2006).
    A permit provides 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 may only be flown for the following purposes:
     Research and development to test new design concepts, new 
equipment, or new operating techniques,
     Showing compliance with requirements to obtain a license 
under Chapter 701, or
     Crew training before obtaining a license for the same 
design. 49 U.S.C. 70105a(d).
    The reusable suborbital rocket must also be flown on a 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.
    On March 31, 2006, the FAA published a notice of proposed 
rulemaking (NPRM) containing proposed requirements for operators of 
experimental reusable suborbital rockets. Experimental Permits for 
Reusable Suborbital Rockets, 71 FR 16251 (Mar. 31, 2006). In the 
notice, the FAA proposed part 437, which contains requirements for 
obtaining and operating under an experimental permit. The FAA also 
proposed changes to existing regulations to reflect the agency's new 
authority to issue permits.

II. Description of Final Rule and Discussion of Comments

    The FAA received comments from 12 entities, including aerospace 
companies, associations, individuals, service providers, and other 
agencies of the U.S. Government. Aerospace companies who provided 
comments include Blue Origin, LLC (Blue Origin), Masten Space Systems 
(Masten), the Personal Spaceflight Federation \1\ (Federation), 
Rocketplane Limited, Inc. (Rocketplane), and XCOR Aerospace (XCOR). The 
following associations, individuals, and service providers also 
commented: Beyond Earth Enterprises (Beyond Earth), Paul T. Breed, Air 
Line Pilots Association International (ALPA), the National Association 
of Rocketry, Spaceport Associates, SpaceShot, Inc. (SpaceShot). The FAA 
also received consolidated comments from Tripoli Rocketry Association, 
Experimental Rocketry of the Pacific, Stratofox Aerospace Tracking 
Team, and a number of individuals from those organizations (Tripoli).
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    \1\ The Federation is a non-profit trade association consisting 
of companies whose business involves or will involve commercial 
human space flight. The Federation provided consensus comments on 
the NPRM and consists of the following entities: Air Launch, 
Armadillo Aerospace, Bigelow Aerospace, Mojave Spaceport, 
RocketPlane Limited, Inc., Scaled Composites, Space Adventures, 
SpaceDev, Space Explorations Technologies Corporation (SpaceX), The 
SpaceShip Company, XCOR Aerospace, the X PRIZE Foundation, and 
Virgin Galactic.
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    In general, the commenters supported the proposed requirements, but 
with several suggested changes to what the FAA proposed in its NPRM. 
Permit requirements and the comments addressing them are discussed in 
section A below.\2\ Changes to other regulations as proposed in the 
NPRM are discussed in section B.
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    \2\ The FAA is adopting the following sections without 
modification from what it proposed in the NPRM: Sec. Sec.  437.1, 
437.9, 437.13, 437.15, 437.17, 437.27, 437.29, 437.31, 437.35, 
437.37, 437.39, 437.41, 437.59, 437.75, 437.81, 437.83, 437.87, and 
437.93. Sections 437.27, 437.29, 437.31, 437.33, 437.35, 437.37, 
437.39, and 437.41 require that an applicant demonstrate 
satisfaction of subpart C safety requirements by providing the FAA 
with operational safety documentation. These requirements remain the 
same as proposed in the NPRM, except for Sec.  437.33, which was 
modified to be consistent with Sec.  437.61.
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A. Part 437--Experimental Permits

1. Eligibility for an Experimental Permit
    Section 437.5 contains the eligibility requirements for an 
experimental permit. As proposed in the NPRM, the FAA will issue a 
permit for the launch or reentry of a reusable suborbital rocket only 
for research and development, demonstrating compliance with FAA license 
requirements or crew training.
a. Reentry
    A suborbital rocket may engage in reentry.\3\ For most suborbital 
launches, whether the flight entails a reentry will not matter from a 
regulatory perspective. The FAA will authorize the flight under a 
single license or permit, implementing safety requirements suitable to 
the safety issues involved. Recognizing suborbital reentry matters for 
two reasons. First, if a suborbital rocket is flown from a foreign 
country by a foreign entity into the United States, that entity may 
require a reentry license or permit from the FAA, depending on whether 
the planned trajectory of the rocket includes flight in outer space. 
Second, a permanent site that supports the landing of suborbital 
rockets may now be considered a reentry site depending, once again, on 
whether the planned trajectory reaches outer space.
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    \3\ Historically, the FAA has treated the whole of a suborbital 
operation as a launch because it did not obtain reentry authority 
until 1998.
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    Blue Origin notes that use of ``reentry'' to describe descent of a 
suborbital vehicle entails a change in FAA's regulatory terminology. 
The FAA previously took the position that suborbital rockets do not 
``reenter'' and are not ``reentry vehicles.'' This change is made 
necessary by the CSLAA. As acknowledged by Blue Origin, the CSLAA 
describes suborbital rockets as reentering. See 49 U.S.C. 70105(b)(4). 
Congress made clear that a suborbital rocket can ``reenter'' for 
purposes of licensing or permitting.
    Blue Origin stated that treating a suborbital mission in part as a 
``reentry'' creates definitional inconsistency under Chapter 701. In 
particular, it points to the definition of ``reenter'' and ``launch.'' 
Reenter means ``to return or attempt to return, purposefully, a reentry 
vehicle and its payload, crew, or space flight participants, if any, 
from Earth orbit or from outer space to Earth.'' 49 U.S.C. 70102(13). 
Blue Origin stated that a suborbital reusable launch vehicle (RLV) is 
neither in ``orbit'' nor in ``outer space.''
    It is not necessary to reach orbit to be in outer space. Outer 
space has yet to be defined, but is commonly understood to mean 
something more than orbit. Although a suborbital rocket does not reach 
the velocity necessary to orbit the Earth, the vehicle can reach 
altitudes sufficient to be considered outer space. With respect to the 
term ``launch,'' the FAA proposed in the NPRM that for a suborbital 
RLV, ``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.'' Blue Origin pointed out that this 
definition fails to account for ``reentry.'' The FAA agrees, and now 
defines launch to end ``after reaching apogee if the flight includes a 
reentry, or otherwise after vehicle landing or impact on Earth and 
after activities necessary to return the reusable suborbital rocket to 
a safe

[[Page 17003]]

condition on the ground.'' This definition thus accounts for the two 
types of suborbital rockets: those that reenter and those that do not. 
Because Congress defines reentry as, in relevant part, the return of a 
reentry vehicle ``from Earth orbit or from outer space to Earth,'' a 
suborbital rocket that reaches outer space reenters as part of its 
mission. Suborbital rockets that do not reach outer space are treated 
as just launching and landing.
    Lastly, Blue Origin stated that this change has other regulatory 
implications, particularly for financial responsibility. These 
implications have been covered in a companion rulemaking on human space 
flight and financial responsibility 71 FR 75616 (Dec. 15, 2006).
b. Amateur Rocketry
    Tripoli Rocketry Association requested that any amateur rocketry 
project of its members that exceeded the thresholds for amateur rocket 
activity be covered under the experimental permit regime. To that end, 
Tripoli suggested that the FAA include ``non-profit rocketry research, 
education, recreation, and sporting competition projects'' as eligible 
for a permit under Sec.  437.5. Paul T. Breed would like the 
experimental permit rules to apply to non-reusable expendable flights, 
including launches of sounding rockets. The FAA is bound by the 
restrictions of Congress, which plainly defined the eligibility 
requirements by statute. Whether any particular rocketry project can be 
covered under an experimental permit regime depends on whether the 
rocket in question is a reusable suborbital rocket, and whether the 
purpose of the flight program meets the requirements of Sec.  437.5. 
The FAA thus cannot accommodate Tripoli's request to make recreation 
and sporting competition projects eligible for permits. Similarly, 
Congress determined that expendable launch vehicles, including sounding 
rockets, are not eligible for a permit.
c. Foreign Entities
    Spaceport Associates recommended that the FAA re-examine the 
applicability of FAA space transportation regulations to U.S. citizens 
or U.S. entities outside the United States. It believes that the 
requirement for FAA authorization might prevent foreign operators from 
using American spacecraft or personnel in creating their own domestic 
space tourism operations. This, in turn, would reduce the market 
opportunity for U.S. manufacturers of suborbital spacecraft. This 
requirement is governed by statute. Under 49 U.S.C. 70104(a), a U.S. 
citizen must obtain a license or permit to launch, regardless of 
whether he does so outside the United States or not.
d. Single License or Permit
    For operators of vehicles that have characteristics common to both 
rockets and aircraft, 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 (referred to as 
experimental airworthiness certificates for the remainder of this 
discussion). The FAA noted in the NPRM that for some vehicles an 
operator could conduct early test flights, including glide tests or 
flights under jet power only, under a special airworthiness 
certificate, before transitioning to an experimental permit. 71 FR 
16252. The Federation requested that the FAA further emphasize that 
reusable suborbital rocket operators and developers will not be 
required to obtain an experimental airworthiness certificate to obtain 
a permit or license.
    The Federation is correct that reusable suborbital rocket operators 
and developers will not be required to obtain an experimental 
airworthiness certificate to obtain a permit or license. However, an 
operator cannot fly under a permit or license unless its vehicle is a 
reusable suborbital rocket or otherwise subject to Chapter 701. A 
suborbital rocket is 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(19). If an operator plans to fly its vehicle 
as a suborbital rocket, the operator must fly it in accordance with the 
requirements of an experimental permit or license.
    The Federation also asked that the FAA clarify that it will not 
require someone to obtain a permit to obtain a license. A permit is not 
a prerequisite for a license. Nonetheless, data obtained while 
operating under a permit may be useful in applying for a license.
2. Scope of an Experimental Permit
    Section 437.7 states that an experimental permit authorizes launch 
and reentry of a reusable suborbital rocket, as proposed in the NPRM. 
The authorization includes pre- and post-flight ground operations. A 
permit could be issued for a launch, a reentry, or both a launch and a 
reentry.
    Paul T. Breed asked that the FAA distinguish between manned 
vehicles and unmanned vehicles. The requirements do make these 
distinctions. Part 437 of 14 CFR applies whether a vehicle is manned or 
unmanned. If a person is on board a permitted vehicle, 14 CFR part 461 
contains added requirements.
3. Duration of an Experimental Permit
    As proposed in the NPRM, Sec.  437.11 provides that an experimental 
permit will last one year from the date of issuance. Spaceport 
Associates and Blue Origin questioned whether one year was long enough 
to complete a flight test program, and proposed a duration of 18 months 
or longer.
    As the FAA has learned in its licensing program, combining a 
specific end date for an authorization with the ability to renew allows 
the FAA and a vehicle operator to re-examine the assumptions that went 
into and the requirements arising out of the earlier determination. The 
FAA chose a one-year permit because of the dynamic nature of a flight 
test program. A flight test program will likely result in design and 
operational changes. The FAA also based the term on experimental 
airworthiness certificates used for aircraft, consistent with 
Congress's desire for the FAA to model experimental permits after 
experimental airworthiness certificates. An experimental airworthiness 
certificate for research and development and showing compliance with 
regulations is effective for one year or less after the date of 
issuance. 14 CFR 21.181(a)(4).
    The duration of an experimental permit does not need to be longer, 
because a permittee may obtain a renewal. If the permittee has been 
operating in compliance with the regulations and terms and conditions 
of its permit, it should not be difficult to obtain a renewal. To avoid 
any disruption to the schedule, a permittee should apply for renewal at 
least 60 days before its permit expires, in accordance with 14 CFR 
413.23.
4. General Application Requirements for Obtaining an Experimental 
Permit
    Section 437.21 requires an applicant to make demonstrations and 
provide information in order to obtain a permit. These requirements 
include demonstrating compliance with part 437; providing enough 
information for the FAA to analyze the environmental impacts associated 
with a proposed launch or reentry; providing information for the FAA to 
conduct a maximum probable loss analysis under part 440; complying with 
human space flight requirements under part 460; and making each 
reusable suborbital rocket

[[Page 17004]]

to be flown available to the FAA for inspection. Section 437.21 also 
states that if an applicant proposes to use any launch vehicle, reentry 
vehicle, safety system, process, service, or personnel for which the 
FAA has issued a safety approval under part 414 of this subchapter, the 
FAA will not reevaluate that safety element to the extent its use is 
within its approved envelope.\4\
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    \4\ The FAA can issue a safety approval for (1) a launch 
vehicle, reentry vehicle, safety system, process, service, or any 
identified component thereof; or (2) qualified and trained 
personnel, performing a process or function related to licensed 
launch activities or vehicles. A safety approval is an FAA 
determination that the defined safety element, when used or employed 
within a defined envelope, parameter, or situation, will not 
jeopardize public health and safety of property. 14 CFR 414.3.
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a. Private Use Launch Site
    In 2000, the FAA announced that a launch licensee who operated a 
private site for its own launches did not need a license to operate a 
launch site. The FAA announced in the NPRM that it had to revisit this 
issue for both licenses and permits. The FAA proposed that 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.
    Several commenters objected to the FAA's proposed change in policy. 
According to Blue Origin, the Federation, and XCOR, the FAA should 
impose requirements related to the operation of a launch site through a 
launch license or permit. They objected not to the safety issues 
themselves but to having to satisfy part 420 in its entirety.
    The FAA has decided against adopting the proposed change in this 
rulemaking. Today's rule addresses launches conducted under a permit 
rather than a license, and the agency believes the rulemaking should be 
limited to those differences. Because the proposed change in policy 
would apply to all private launch sites, the FAA has determined that 
any change in policy is more appropriately addressed by a separate 
rulemaking. The FAA will consider the comments submitted to the NPRM in 
evaluating whether a change to part 420 is merited.
b. Use of Safety Approval
    Section 437.21(c) states that the FAA will not evaluate those 
portions of an application from an applicant who proposes to use any 
reusable suborbital rocket, safety system, process, service, or 
personnel for which the FAA has issued a safety approval under part 
414. Although the FAA did not obtain any comment regarding safety 
approvals, the FAA is adopting this provision as part of 437.21 to 
clarify that an applicant for a permit may rely on a safety approval 
obtained under part 414.
c. Inspection
    As proposed in the NPRM, under Sec.  437.21(c), an applicant must 
make its reusable suborbital rocket available to the FAA for inspection 
before the FAA issues an experimental permit. XCOR agreed with the 
requirement because it believes someone should ``come out and kick the 
tires and make sure the vehicle isn't a piece of junk.'' Blue Origin 
recommended that the FAA conduct this inspection before flight rather 
than before issuing a permit to promote regulatory certainty and 
predictability, and because the focus of a permit is on the safety of 
launch and reentry as opposed to certification of the vehicle design. 
Such an approach, according to Blue Origin, would allow vehicle 
operators to obtain regulatory approval for a vehicle prior to paying 
the expense of building the vehicle. The FAA has decided against Blue 
Origin's approach, because a determination on the safety of the vehicle 
is difficult to make before the safety systems have been built and 
verified. Also, the FAA will inspect the vehicle to ensure compliance 
with application representations.
5. Program Description
    Section 437.23 requires an applicant to provide a program 
description. Under Sec.  437.23(b)(1), a permit applicant must describe 
all reusable suborbital rocket systems, including any structural, 
flight control, thermal, pneumatic, hydraulic, propulsion, electrical, 
environmental control, software and computing systems, avionics, and 
guidance systems used in the reusable suborbital rocket. In response to 
a comment from the Federation, this requirement marks a slight change 
from what the FAA proposed in the NPRM. The requirement recognizes, by 
the inclusion of ``any'' before the different kinds of systems, that 
not all vehicles will have all systems.
    The Federation recommended that FAA describe the intent of the 
program description, and clarify the expected level of detail required. 
As suggested by the Federation, the FAA agrees that the description 
required for any system is a general overview or basic description of 
the system. However, when showing compliance with the containment 
requirements of Sec.  437.31, an applicant will need to provide a more 
detailed description of any system that has been identified in its 
hazard analysis as safety critical.
    Requiring a description of ``software and computing systems,'' 
rather than just software systems as proposed in the NPRM, clarifies 
that computer system hardware, which includes physical devices that 
assist in the transfer of data and perform logic operations, are 
included in the description of vehicle systems. Computing systems may 
include such hardware as central processing units (CPU), busses, 
display screens, memory cards, or peripherals, and may include stand-
alone systems, such as off-the-shelf digital controllers.
6. Flight Test Plan
    Section 437.25 requires an applicant to provide a flight test plan. 
Under Sec.  437.25(a), an applicant must describe any flight test 
program, including the estimated number of flights and key flight-
safety events. For each operating area, an applicant must also provide 
the maximum altitude it expects the reusable suborbital rocket to 
reach. This represents a clarification of what the FAA originally 
proposed. In the NPRM, the FAA proposed to require an applicant to 
describe the maximum altitude without reference to the operating area.
7. Rest Requirements
    As proposed in the NPRM, Sec.  437.51 requires that a permittee 
comply with crew rest rules. The rules require that vehicle safety 
operations personnel not work more than 12 consecutive hours, more than 
a total of 60 hours in the 7 days preceding a permitted activity, or 
more than 14 consecutive work days.\5\ ALPA agreed that prescriptive 
duty limits are suitable and necessary to mitigate the likelihood of 
human error related to fatigue. ALPA did not agree, however, that the 
rules adequately or accurately incorporate principles established by 
current scientific research and literature.
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    \5\ In the NPRM, the FAA, as XCOR pointed out, mistakenly said 
``and'' rather than ``or.''
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    ALPA cited a June 1987 Report of the Presidential Commission on the 
Space Shuttle Challenger Accident (The Rogers Report). The Rogers 
Report noted that a number of authoritative scientific studies have 
shown: (1) That multiple strings of 11 to 12-hour workdays produce 
worker fatigue, negatively impact worker effectiveness, and present a 
threat to public safety; 2) that night work and shift changes produce 
sleep loss and fatigue by disrupting workers' circadian rhythms; and 
(3) that shift workers often require a week or

[[Page 17005]]

more to adapt to new shifts, especially if one of the shifts is a night 
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shift.

    ALPA stated that the rules fail to mitigate against these known 
risks.
    First, the proposed rule would allow a string of workdays for 
vehicle safety operations personnel, with shifts each up to 11 hours 
and 59 minutes, without any required rest period at all. Second, 
requiring a ``rest'' period of 8 hours after a 12-hour shift simply 
fails to provide an adequate period for sleep, increasing the 
likelihood of both acute and accumulated or chronic, fatigue. 
Further, the combination of 12 hours on and 8 hours off would tend 
to generate schedules for safety sensitive personnel based on a 20-
hour clock, rather than the 24-hour clock, potentially disrupting 
the workers' circadian rhythms and introducing a significant 
potential for fatigue related error. Third, the proposed rule fails 
to provide any mechanism to compensate for the time period required 
for workers to readjust to changes in the time of day for 
commencement of shift work. This lack of time to adapt to a new 
sleep/wake cycle is a factor that could lead to safety critical 
tasks being performed during a worker's physiological window of 
circadian low, a factor that has been scientifically shown to be a 
major and recurring factor in industrial accidents.

    Although the FAA is adopting the requirements as proposed, it does, 
however, intend to give ALPA's comments and this issue the study and 
attention they deserve. The FAA would need to assess the cost and 
operational effects of these changes. The crew rest rules in part 437 
are similar to those in part 431 that apply to the licensing of 
reusable launch vehicle missions. The rest rules were originally based 
on crew rest requirements imposed by the Air Force at Federal launch 
ranges. Moreover, the FAA cannot impose more rigorous requirements 
without providing additional notice and seeking additional comment.
8. Pre-Flight and Post-Flight Operations
    Section 437.53 requires a permittee to establish a safety clear 
zone and verify that the public is outside that zone before and during 
any hazardous operation. Masten Space Systems recommended that the FAA 
clarify how this requirement applies to post-flight ``safing'' where 
the vehicle lands, shuts off its engines, and then waits some period of 
time before it restarts its engines and takes off again. A permit is 
not required for operations between flights. Under Sec.  437.53, ``pre-
flight'' operation begins when a permittee prepares a reusable 
suborbital rocket for flight and ``post-flight'' operation ends when a 
permittee returns the reusable suborbital rocket to a safe condition 
after flight. In the X Prize Cup's Lunar Lander Challenge and Rocket 
Racing League examples provided by Masten, post-flight activities would 
begin once the vehicle is no longer in flight. Pre-flight activities 
would begin when preparations for the next flight meet the four-part 
test addressed in the scope of launch. However, operations between 
landing and take-off may all be covered under a permit if the vehicle 
is never safed.
9. Hazard Analysis
    Section 437.55 requires a permittee to identify and characterize 
each of the hazards resulting from each permitted flight. An applicant 
would then assess the risks of each hazard. A pemittee must also carry 
out the risk elimination and mitigation measures derived from its 
hazard analysis, and ensure the continued accuracy and validity of its 
hazard analysis throughout the term of its permit.
    The hazard analysis required by Sec.  437.55 must determine the 
likelihood of occurrence and the potential consequence of each hazard 
before risk elimination or mitigation. In the NPRM, the FAA proposed 
that the applicant determine the likelihood of occurrence and 
consequence for each hazard. It was not clear in the NPRM that the 
applicant must analyze the risk of each hazard before identifying 
measures to mitigate or eliminate that risk. This step helps 
distinguish between those hazards requiring mitigation and those that 
pose little apparent risk to the public, and allows the operator to 
focus its system safety effort on the most significant risks to the 
public.
    As part of the hazard analysis required by Sec.  437.55, an 
applicant must identify and describe the risk elimination and 
mitigation measures necessary to ensure that the likelihood of adverse 
consequence of each hazard meets the following criteria:
    (A) The likelihood of any hazardous condition that may cause death 
or serious injury to the public must be extremely remote.
    (B) The likelihood of any hazardous condition that may cause major 
property damage to the public, major safety-critical system damage or 
reduced capability, a significant reduction in safety margins, or a 
significant increase in crew workload must be remote.
    These qualitative criteria are statements of risk, including both 
the severity of the consequences and the likelihood. They are necessary 
to define an acceptable inverse relationship between likelihood and the 
severity of each hazard. The qualitative criteria are derived from FAA 
aircraft regulations and standards that the military has historically 
applied to launch safety. These standards have not quantified the 
likelihood of a hazard occurring. The probability of some hazards 
occurring cannot be quantified with certainty. For example, the 
likelihood of a procedure failing is difficult to quantify prior to 
obtaining experience with that procedure. The failure rate may not be 
available for the new systems being created. Even if the aircraft 
regulations and launch safety requirements assigned quantitative 
criteria to the likelihood of all hazards, the commercial launch 
industry is still too new to provide the data necessary for 
quantitative criteria.
    The Federation pointed out that Advisory Circular (AC) 25.1309-1A 
does not identify all decreased safety margins or all increased 
workload as areas of concern. Instead, the AC refers only to reductions 
or increases that are significant. The Federation and XCOR were 
concerned that they could not meet the proposed requirement that any 
hazardous condition that could lead to either a decreased safety margin 
or an increased workload be remote. The FAA did not intend so broad a 
requirement and is, therefore, requiring that the likelihood of 
significant changes be remote.
    Section 437.55(a)(1)(ii) requires an applicant to identify and 
describe hazards, including but not limited to software errors, if an 
operator uses software. XCOR was concerned that this requirement could 
be used to deny a permit to an applicant whose vehicle used no 
software, and thus had no software error hazards to describe. The FAA 
agrees that if the operator does not use software there is no potential 
for software errors.
    Although the FAA requires that a permittee conduct a hazard 
analysis, the FAA does not require a permittee to have a System Safety 
Program Plan (SSPP). An SSPP defines the methodology and products of a 
system safety program. The SSPP helps ensure that safety, consistent 
with overall system objectives and requirements, is designed into the 
system. An SSPP can also ensure that methods employed to remove hazards 
and reduce risks are properly applied and documented, and that changes 
in system design, configuration, or application are evaluated and 
analyzed for impacts to overall system safety. Spaceport Associates 
agreed with the FAA that no SSPP should be required for a permit. While 
the FAA does not require a SSPP for experimental permits, the FAA 
strongly encourages an operator to develop its own plan as part of a 
strong safety culture.

[[Page 17006]]

10. Operating Area Containment
    As proposed in the NPRM, Sec.  437.57(a) requires that during each 
permitted flight, a permittee contain its reusable suborbital rocket's 
instantaneous impact point (IIP) within an operating area and outside 
any exclusion area. During the application process, an applicant must 
demonstrate, at a minimum, either that there are physical limits on the 
ability of the reusable suborbital rocket to leave the operating area, 
or that an operator will use abort procedures and other safety measures 
derived from a system safety engineering process to contain the IIP. 
Section 437.57(b) defines an acceptable operating area, and Sec.  
437.57(c) states that the FAA may prohibit a reusable suborbital 
rocket's IIP from traversing certain areas within an operating area, by 
designating one or more areas as exclusion areas. These sections are 
the same as proposed in the NPRM, except for Sec.  437.57(b).
    The FAA has clarified Sec.  437.57(b)(3) and (4). Section 
437.57(b)(3) requires that an operating area not contain or be adjacent 
to a densely populated area or large concentrations of members of the 
public. The reference to large concentrations of members of the public 
was moved from proposed Sec.  437.57(b)(4) to Sec.  437.57(b)(3) for 
consistency. Section 437.57(b)(4) now requires that an operating area 
not contain or be adjacent to significant automobile traffic, railway 
traffic, or waterborne vessel traffic. This new requirement is 
important to ensure that hazards associated with a failure do not harm 
the public, as pointed out by a NASA commenter.
a. Reliability
    A representative from NASA recommended during interagency 
coordination that the FAA require information on the reliability of any 
system used to ensure containment. Information on reliability can 
include reliability prediction, reliability test data, and corrective 
actions taken as a result of operational anomalies. Reliability 
predictions may not be necessary or valid in all cases. Reliability 
test data, on the other hand, will likely be developed because of the 
requirement for verification evidence, which is measurable evidence 
that safety measures are effective and have been properly implemented. 
The requirement for verification evidence may be satisfied by the 
submission of reliability analysis and test data necessary to support 
an applicant's demonstration of vehicle containment. As stated in the 
FAA Guide to Reusable Launch and Reentry Vehicle Reliability Analysis, 
reliability analysis techniques such as Fault Tree Analysis and 
Reliability Block Diagrams, supplemented by reliability test data, are 
acceptable approaches for design verification. Therefore, reliability 
analysis and test methods could be used in verifying containment 
systems. In addition, Sec.  437.73(b) requires that a permittee report 
any anomaly (and corrective actions for each anomaly) of any system 
necessary to keep the vehicle within its operating area. Anomaly 
reporting is part of a strong reliability engineering effort, and 
provides the operator and the FAA with added information to evaluate 
the reliability of those systems.
    The NASA representative also noted that the hazards associated with 
a failure are what should be contained, not the vehicle's instantaneous 
impact point. NASA defines containment as a ``technique that precludes 
hazards (such as vehicle, debris, explosive, or toxic) from reaching 
the public, the workforce, or property in the event of a vehicle 
failure or other mishap.'' NASA Procedural Requirement 8715.5, Range 
Safety Program, 29 (Jul. 8 2005). The commenter made a similar comment 
about Sec.  437.57(b)(1), which requires that an operating area be 
large enough to contain each planned trajectory and all expected 
vehicle dispersions. The commenter noted that this requirement seems to 
imply that it would be acceptable to run a planned instantaneous impact 
point trajectory right along the boundary of the operating area. The 
commenter suggested also requiring a margin that accounts for the 
potential dispersions of debris and any other hazard caused by a 
vehicle failure. The FAA agrees that what is important for public 
safety is that hazards are contained, not a rocket's IIP. For this 
reason, Sec.  437.57(b)(3) mandates that a densely populated area may 
not be adjacent to an operating area. The separation of the edge of the 
operating area from densely populated area effectively creates a buffer 
around an applicant's operating area. That buffer will serve to keep 
hazards away from the public in the event of a mishap.
b. Operating Area Publication
    In the NPRM, the FAA stated that it would publish approved 
experimental permit operating areas on its Web site. Although XCOR 
Aerospace agreed with informing the public of potential hazards, it was 
concerned that doing so might encourage members of the public to 
converge on that area to watch the flights, potentially creating an 
unsafe condition. Although the FAA agrees that publication may invite 
undesirable attention, the FAA believes it is important to inform the 
public of potential hazardous operations so that they can be aware of 
potential hazards. In addition, the FAA intends to use its Web site as 
a repository for locations and characteristics of acceptable operating 
areas to provide guidance to future applicants proposing operating 
areas. In this fashion, the operating area list will provide examples 
of acceptable operating area characteristics, such as amounts of 
unpopulated and sparsely populated areas and automobile, railway, and 
waterborne vessel traffic.
c. Definitions of Unpopulated, Sparsely Populated, and Densely 
Populated Areas
    In the NPRM, the FAA requested comments as to whether it should 
adopt specific definitions for ``unpopulated,'' ``sparsely populated,'' 
and ``densely populated'' areas for purposes of determining an 
acceptable operating area. The Federation and XCOR agree that the FAA 
should not define these terms. The Federation commented that operating 
areas are site dependent. The Federation's statement is true because 
similarly sized operating areas with identical total populations may 
have a different distribution of the population, leading to different 
risks. Likewise, how the calculations are performed may change the 
apparent population density. For example, there may be an area of 100 
square miles, with all the population clustered in the southeast corner 
in a town. The density would appear to be low if the population were 
distributed over the whole 100 square miles. On the other hand, if the 
operating area were assessed in blocks of one square mile at a time, 
certain areas would show high density.
    Because the FAA wants to gain experience in assessing these 
questions, the FAA will define these terms on a case-by-case basis for 
now. However, the FAA may in the future define these terms if 
experience shows the merits of doing so. Those definitions could be 
provided as guidance material rather than as a change to the 
regulation.
d. Risk Criteria: Qualitative or Quantitative
    As the FAA discussed in the NPRM, the FAA will not require an 
applicant to perform a quantitative risk analysis to obtain a permit. 
This means that a permittee will not have to calculate expected 
casualty and individual risk, which are the measures of acceptable risk 
for licensed activities. In their stead, the FAA is mandating 
qualitative risk criteria under section 437.55(a)(3), containment 
within an operating area,

[[Page 17007]]

risk mitigation measures derived from hazard analyses, and corrective 
actions that respond to anomalies.
    Most commenters agreed with not requiring a permittee to meet 
quantitative risk criteria. SpaceShot stated that the FAA's current 30 
in a million expected casualty criterion is too stringent, even under a 
launch license. Spaceport Associates agreed that no quantitative risk 
should be required under a permit because there is not enough real 
data. Blue Origin agreed with the FAA that the reliability data 
necessary for a quantitative analysis typically can be obtained by the 
very research and development testing that Congress intended permits to 
enable. Blue Origin also considered the approach consistent with the 
legislative history of the CSLAA, where the FAA was urged to assess the 
appropriateness of requiring risk calculations for permits, and to 
explore alternatives. XCOR also agreed that expected casualty was not a 
proper tool for assessing risk.
    The Federation stated that calculating a probability of failure for 
newly developed reusable suborbital rockets would be extremely 
difficult, if not impossible. Any vehicle operating under an 
experimental permit will be testing new technologies and, by 
definition, will lack the flight history and operational experience 
needed to determine the probability of failure. Also, the capability of 
most reusable suborbital rockets to use incremental testing and 
envelope expansion may provide for a higher probability of success for 
a vehicle's ultimate design as compared to the initial launches of 
expendable launch vehicles. For these reasons, the Federation believes 
it would be inapposite to apply commonly accepted probabilities of 
failure for expendable launch vehicles to early launches of reusable 
suborbital rockets.
    XCOR suggested that the FAA should encourage applicants to perform 
quantitative risk analyses and that, if an applicant were to submit 
such an analysis, the FAA would have to accept it. The FAA agrees that 
performing valid quantitative risk analyses should be encouraged, even 
if these analyses are not required to obtain a permit. In addition to 
the added perspective on safety that these analyses provide, the 
experience gained in performing such an analysis could prove valuable 
if the permit applicant wishes to apply for a launch license. However, 
a quantitative risk analysis is not a substitute for any of the other 
analyses required to obtain a permit, and the performance and 
submission of such an analysis does not excuse an applicant from any of 
the requirements of part 437.
    Quantitative risk analysis by itself does not minimize the risk to 
the uninvolved public. Rather, the decisions made based on the results 
of the assessment reduce the risk. At this stage, the hazard analysis 
and the qualitative risk assessment provide the best route to making 
those informed decisions.
    Rocketplane stated that requiring an estimate of the probability of 
a third-party catastrophic event, which it described as ``expected 
casualty,'' would ensure adequate safety analyses to minimize the risk 
to the uninvolved public, especially in the case of flight over a 
populated area. Rocketplane stated that without an expected casualty 
calculation, the industry would be subjected to a major setback if an 
experimental vehicle were to crash and harm members of the public.
    Although the FAA shares some of Rocketplane's concerns, it is not 
practicable to mandate quantitative risk assessments for experimental 
permits at this time. As discussed in the NPRM, the FAA considered 
requiring quantitative risk analyses. However, uncertainties in launch 
vehicle reliability, operating environments, and the consequences of a 
failure prevent a straightforward application of this analysis 
technique. The data concerning reliability, operating environment, and 
consequences typically can be obtained by the very research and 
development testing that Congress intends permits to enable.
11. Key Flight-Safety Events
    ``Key flight-safety event'' means a permitted flight activity that 
has an increased likelihood of causing a launch accident compared with 
other portions of flight. In the NPRM, the FAA proposed a similar 
definition, but referred to ``failure'' instead of ``launch accident,'' 
which is already defined by Sec.  401.5.\6\ Under Sec.  437.59, 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.
---------------------------------------------------------------------------

    \6\ A launch accident means:
    (1) A fatality or serious injury (as defined in 49 CFR 830.2) to 
any person who is not associated with the flight;
    (2) Any damage estimated to exceed $25,000 to property not 
associated with the flight that is not located at the launch site or 
designated recovery area; or
    (3) An unplanned event occurring during the flight of a launch 
vehicle resulting in the known impact of a launch vehicle, its 
payload or any component thereof:
    (i) For an expendable launch vehicle (ELV), outside designated 
impact limit lines; and
    (ii) For an RLV, outside a designated landing site. 14 CFR 
401.5.
---------------------------------------------------------------------------

12. Landing and Impact Locations
    Section 437.61 requires a permittee to use a landing or impact 
location that is big enough to contain an impact, including debris 
dispersion; and that does not contain any members of the public at the 
time of landing or impact. This requirement applies for nominal landing 
or any contingency abort landing of a reusable suborbital rocket, or 
for any nominal or contingency impact or landing of a component of that 
rocket.
    This section is a clarified version of that proposed in the NPRM. 
It requires an operator to account for nominal or contingency impacts 
or landings of a rocket component rather than all possible impacts. 
This clarification should assuage XCOR's concern that the requirement 
could be interpreted to mean that wherever a component could possibly 
impact must not contain any members of the public, thus precluding any 
flight over any members of the public.
    XCOR and the Federation were also concerned that this section could 
be interpreted to mean that a spaceport operator would have to close 
its spaceport to all other traffic during every flight of a reusable 
suborbital rocket. They believe that at Mojave Airport, where the FAA 
has defined the launch site as all active runways, taxiways and 
hangars, this interpretation would effectively close the airport for 
the duration of every suborbital rocket flight.\7\ This was never the 
FAA's intent. The requirement says that a landing location has to be 
big enough to contain impact hazards. The landing or impact location, 
not the whole launch site, has to be clear of members of the public. A 
landing area could be a runway. A landing area may or may not include 
the whole launch site and could simply be a runway. The size of the 
landing area must be large enough to contain impact hazards in the case 
of a hard landing or impact at the planned location. An entire 
spaceport, including hangar areas, would only have to be closed if 
necessary to contain impact hazards.
---------------------------------------------------------------------------

    \7\ XCOR raised the closing of runways at Mojave Airport for the 
landing of SpaceShipOne as an example of the FAA not permitting 
overflight because of concerns of any impact. The runways were 
closed not because of potential crashes during overflight as XCOR 
suggests, but because of the need to account for the debris of a 
potential impact on landing. Runways that intersected the landing 
runway also had to be closed so that no planes would enter the 
landing location.

---------------------------------------------------------------------------

[[Page 17008]]

13. Agreements With Other Entities Involved in a Launch or Reentry
    Section 437.63 requires an applicant to have 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 the safe launch or reentry under a permit. 
Although the FAA did not receive a comment about this, the agency is 
adopting a narrower version of the requirement than originally 
proposed. In the NPRM, the FAA proposed that the applicant enter into a 
written agreement with ``* * * any other party that provides access to 
or use of property and services required to support a permitted 
flight'' regardless of whether the property or services were required 
for safety.
    Blue Origin commented that the FAA should not require that a 
permittee enter into such agreements if the permittee intends to use 
its own launch site exclusively. Such agreements may not be necessary 
if the private use operator has no need for the property or services of 
another. However, even operators of private sites may need the safety 
services of outside parties. For example, a local fire department may 
be used for emergency response.
    When a launch occurs over navigable waters, Sec.  437.63 requires 
that a permittee enter into and comply with a written agreement between 
the applicant and the local United States Coast Guard (USCG) district 
to establish procedures for issuing a Notice to Mariners before flight. 
In the NPRM, the FAA proposed that this requirement apply to overflight 
of any water. The Federation and XCOR recommended limiting this 
requirement to overflight of ``navigable'' water. Because the U.S. 
Coast Guard only has jurisdiction over navigable water, the FAA is 
adopting this narrower version. Section 437.63 also requires a written 
agreement between the applicant and the Air Traffic Control authority 
with jurisdiction over the airspace through which a flight is to take 
place, for measures necessary to ensure the safety of aircraft, such as 
launch notification procedures and limitations on days or times of 
launches. This is the same as proposed in the NPRM, but now 
specifically identifies that the agreement must demonstrate 
satisfaction of Sec. Sec.  437.69(a) and 437.71(d). This clarification 
will ensure that the agreement covers the communications and airspace 
issues addressed in those sections.
14. Collision Avoidance Analysis
    Section 437.65 requires a collision avoidance analysis for a 
suborbital launch with a planned maximum altitude greater than 150 
kilometers. A permitted launch may not pass within 200 kilometers of a 
manned or mannable orbital object throughout flight. Although Spaceport 
Associates supported a minimum altitude for requiring a collision 
avoidance analysis, it suggested that the FAA continue to work with the 
U.S. Strategic Command (USSTRATCOM) to determine an alternate distance, 
because as flight rates increase it could be more difficult to schedule 
suborbital flights in general. The FAA consulted with USSTRATCOM during 
the development of the NPRM and intends to continue the partnership to 
explore methods of improving the process as activity increases. Efforts 
are underway to modernize the collision avoidance analysis. Meanwhile, 
the FAA will continue to allow an applicant to propose an alternate 
distance, provided the distance demonstrates an equivalent level of 
safety and accounts for all uncertainties.
15. Tracking a Reusable Suborbital Rocket
    Under Sec.  437.67, a permittee must, during permitted flight, 
measure in real time the position and velocity of its reusable 
suborbital rocket. This is a change from the NPRM, which proposed that 
a permittee provide 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. The purpose of this proposal 
was to allow Air Traffic Control to track a permitted vehicle if it 
were to fly outside its operating area. The proposal prompted 
opposition from Blue Origin, the Federation, and XCOR. Blue Origin 
commented that the proposed tracking and data requirements may not be 
possible to fulfill for short duration, low-altitude testing, and asked 
that the FAA not mandate such tracking.
    The Federation and XCOR had no objection, in principle, to being 
required to make real time position and velocity information available 
to Air Traffic Control, but felt they could not accept responsibility 
for what Air Traffic Control did, or failed to do, with the 
information. Nor, the Federation pointed out, could permittees be 
responsible for overcoming the limitations of the air traffic control 
system, or for fulfilling a technical requirement if no technology was 
available at a reasonable price.
    The Federation noted that the most likely method of complying with 
the proposed requirement was to use a standard, commercially available 
transponder. However, commercially available Mode C transponders cannot 
currently report an altitude greater than 62,000 feet. In addition, by 
FAA regulations, such transponders must report pressure altitude, and 
for a vehicle going faster than the speed of sound while increasing in 
altitude, the pressure altitude can lag actual altitude by thousands of 
feet. The Federation described ADS-B as much more appropriate, and 
affordable, but noted that its use is constrained by the fact that the 
FAA's air traffic control system does not offer ADS-B throughout the 
United States.
    The FAA agrees with the comments for the reasons provided. The 
requirement for a permittee to measure in real time the position and 
velocity of its reusable suborbital rocket, coupled with the 
requirement, discussed below, that a permittee communicate with Air 
Traffic Control during all phases of flight, should provide Air Traffic 
enough information to protect the public if a permitted vehicle flies 
outside its assigned operating area. However, the FAA may require the 
permittee to carry a transponder or similar device to allow Air Traffic 
Control to know directly the real time position and velocity of the 
reusable suborbital rocket if a vehicle is flying below 62,000 feet and 
slowly enough to communicate with Air Traffic Control's system. 
Satisfaction of these conditions is extremely unlikely given the 
velocities of suborbital rockets. The FAA will implement this 
requirement on a case-by-case basis through the terms and conditions of 
a permit, because the agency does not believe that the need for such a 
requirement is sufficiently widespread to implement a requirement of 
general applicability. Nor may it always be necessary. The 
characteristics of both the vehicle and the surrounding area will have 
to necessitate imposing the requirement.
    As proposed in the NPRM, Sec.  437.67 also requires a permittee to 
provide position and velocity data for post-flight use.
16. Communications
    Section 437.69 requires that a permittee communicate with Air 
Traffic Control during all phases of flight, as proposed in the NPRM. 
XCOR agreed that continuous communication is necessary, even when 
flying above 60,000 feet. This requirement has greater import now that 
the FAA does not require Air Traffic tracking of a

[[Page 17009]]

launch vehicle. If a vehicle leaves an operating area, this 
communication link will allow a permittee to relay position and 
velocity information to Air Traffic.
17. Flight Rules
    Section 437.71 requires that a permittee follow certain flight 
rules. They are the same as proposed in the NPRM, with one exception. 
In the NPRM, the FAA proposed that a permittee could not operate a 
reusable suborbital rocket within Class A, Class B, Class C, or Class D 
airspace or within the boundaries of the surface of Class E airspace 
designated for an airport, unless the permitee had prior authorization 
from the air traffic control facility having jurisdiction over that 
airspace. The FAA is not adopting this provision because it is 
unnecessary. The agreement with the responsible Air Traffic Control 
authority required by Sec.  437.63 should include any need for prior 
authorization.
18. Anomaly Recording and Reporting and Implementation of Corrective 
Actions
    Section 437.3 defines ``anomaly'' as a problem that occurs during 
verification or operation of a system, subsystem, process, facility or 
support equipment. Section 437.73 requires a permittee to record and 
report anomalies and implement corrective actions for those anomalies. 
A permittee must also report to the FAA any anomaly to, and corrective 
action for, any system that is necessary for compliance with the 
requirements to perform a hazard analysis, to contain a rocket within 
an operating area, and to conduct key flight-safety events properly. A 
permittee must take each corrective action before the next flight.
    The FAA had proposed to define ``anomaly'' as an apparent problem 
or failure that occurs during verification or operation and affects a 
system, a subsystem, a process, support equipment, or facilities. The 
Federation questioned whether, by defining ``anomaly'' to include 
failures while simultaneously defining failures to include any 
anomalous condition, the definitions created a circular loop whose real 
meaning would be open to broad interpretation.\8\
---------------------------------------------------------------------------

    \8\ The Federation also recommended against using or defining 
the term ``anomaly'' and replacing it with the term ``failure.'' The 
FAA agrees that some confusion could have resulted from defining 
``anomaly'' in terms of failure. Anomalies are meant to encompass 
not only failures in flight but also problems that could result in 
flight failures in the future, including human errors, software 
faults, and incorrect procedures. Because ``problem'' encompasses 
failures, reference to ``failure'' is not necessary.
---------------------------------------------------------------------------

    Spaceport Associates suggested that the FAA limit anomalies to 
those that were potentially safety-critical. The FAA recognizes that 
the term anomaly is a broad term, and chose it to include issues during 
verification and operation of systems and subsystems that are not 
necessarily flight failures but could put the public at risk. The FAA 
is adopting the term anomaly with the modifications discussed above, 
but is clarifying the anomaly reporting requirements of Sec.  437.73 to 
reduce concerns about the standard being too broad and burdensome. The 
FAA is only concerned about anomalies of systems, subsystems, 
processes, facilities, and support equipment that are essential for 
safe performance or operation. Therefore, the FAA is only requiring, 
under Sec.  437.73, a permittee to report anomalies that are safety-
critical.
    Spaceport Associates commented that hazard analysis and anomaly 
reporting are good ideas, and will normally be done internally in any 
case by an operator conducting the test flights. Blue Origin suggested 
limiting the recording requirement to anomalies that occur during 
permitted flight. Blue Origin also recommended that the FAA only 
require an operator to report anomalies for specific systems, such as 
guidance and propulsion systems.
    Anomalies that occur during system and subsystem verification 
testing are potential precursors to launch accidents. Recording and 
reporting these anomalies allow the operator and the FAA to analyze and 
evaluate problems that could lead to launch accidents. The goal of a 
strong system safety program is to prevent mishaps. Analyses of 
accidents often show that clues existed before the mishap in the form 
of anomalies during the project life cycle, including before flight. 
Anomalies that occur throughout the life cycle can provide important 
information about what conditions an operator needs to control. 
Therefore, it is prudent for the launch vehicle operator to identify, 
analyze, and mitigate not just anomalies that occur during flight, but 
also anomalies in vehicles and safety-related subsystems and components 
that occur on the ground. Although the FAA will not limit the reporting 
requirement to anomalies that occur during flight, the FAA does not 
wish to impose an unnecessary recordkeeping burden on the launch 
vehicle industry. Therefore, the FAA is not requiring that an operator 
report all anomalies, but only those that are safety-related.
    The FAA is not limiting the reporting requirement to specific 
systems, but does limit the reporting requirement to anomalies 
associated with those systems necessary for complying with the hazard 
analysis, operating area, and key flight-safety event requirements. 
Therefore, the requirements are sufficiently narrowly drawn.
19. Additional Safety Requirements
    Under Sec.  437.77, the FAA may impose additional safety 
requirements on an applicant or permittee proposing an activity with a 
hazard not otherwise addressed in part 437. This activity 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. XCOR agrees that the FAA needs this 
regulation because no one can predict every vehicle concept that will 
come along. XCOR stated, however, that the FAA must use common sense in 
its application.
20. Allowable Design Changes; Modification of an Experimental Permit
    Section 437.85(a) states the FAA will identify in an experimental 
permit the type of changes that a permittee may make to the reusable 
suborbital rocket design without invalidating the permit. This is the 
same as proposed in the NPRM.
    Blue Origin was concerned that the requirement might restrict 
modifications to the vehicle design, other than changes to the rocket 
motor. The requirement's reference to a ``suborbital rocket'' includes 
the entire vehicle, not just the rocket motor.
21. Pre-Flight Reporting
    Section 437.89 requires a permittee to provide information 
regarding its payload, timing of flights, the operating area for each 
flight, and the planned maximum altitude not later than 30 days before 
each flight or series of flights conducted under an experimental 
permit. In addition, not later than 15 days before each permitted 
flight of greater than 150 km altitude, a permittee must provide the 
FAA its planned trajectory for a collision avoidance analysis. This 
requirement is the same as that proposed in the NPRM.
    Spaceport Associates was concerned with submitting a flight 
trajectory at least two weeks before each flight, because an operator 
may want to insert a new mission with minimal changes just a few days 
after a previous flight. As Spaceport Associates recognized, this 
information is for USSTRATCOM so it can perform a collision avoidance 
analysis. Spaceport Associates asked what flexibility would be possible 
as flight rates increased. The FAA will

[[Page 17010]]

facilitate an agreement with USSTRATCOM to accommodate the needs of any 
particular flight test program, but operators must still provide the 
information 15 days in advance so the collision avoidance analysis may 
be conducted. The FAA does entertain requests for waivers to its timing 
requirements, but any flexibility in that regard will depend on the 
availability of USSTRATCOM resources.
22. For-Hire Prohibition
    Section 437.91 states that no person may operate a reusable 
suborbital rocket under a permit for carrying any property or human 
being for compensation or hire. This is unchanged from the NPRM.
    In the NPRM, the FAA proposed that, with one exception, the 
definition of ``compensation or hire'' is the same as that used in the 
aviation context. The FAA explained that compensation may include any 
form of payment including payment of operating costs such as fuel, a 
tax deduction if a flight is for charity, payment by a third-party, any 
non-monetary exchange for carrying a person for free (for example, the 
operator receives free advertising, parts, or maintenance, and the 
like), or any exchange of value including the bartering of goods or 
services in exchange for the transportation. The one exception, as 
stated in the NPRM, is that the FAA does not consider goodwill 
compensation. The FAA also explained that winning prize money, 
advertising revenue from logos, and flying space flight participants 
for free \9\ would be allowed under this section. The Federation and 
XCOR applauded the FAA's proposal and requested no changes.
---------------------------------------------------------------------------

    \9\ Masten questioned why space flight participants could board 
a flight under a permit but an operator could not charge for 
carriage of property. There is no difference: an operator may not 
charge for the carriage of either.
---------------------------------------------------------------------------

    Masten, Mr. Paul T. Breed, Spaceport Associates, and Beyond Earth 
suggested that inert payloads such as souvenirs and trinkets should be 
allowed for compensation to help fund entrepreneurial companies during 
vehicle development. The FAA is bound by the CSLAA and unable to make 
this exception. The CSLAA prohibits carrying property for compensation 
or hire under a permit. Any payload, including a souvenir, constitutes 
property and its carriage for hire is not allowed. Masten inquired 
about the sale of images from onboard cameras. The sale of images from 
onboard still or video cameras would violate Sec.  437.91. Mr. Breed 
requested clarification on whether the sale of used rocket parts would 
be permissible. The sale of a used rocket part would not violate Sec.  
437.91 if the rocket part was not carried on board for compensation or 
hire. The FAA can, however, envision a launch operator changing out a 
component of a vehicle that has flown in space if, due to the component 
having flown in space, the used component is worth more than a 
replacement. Or, as Paul Breed also suggests, selling used propellant 
tank insulation that has been imprinted with post card images. These 
practices are prohibited under Sec.  437.91.
    Tripoli commented that some high power rocket practitioners partner 
with universities to fly student research payloads, generally no bigger 
than a coffee can. The university pays for the rocket motors. Tripoli 
wants to ensure that this kind of cooperation is not considered ``for 
hire.'' This type of cooperation would not be allowed under an 
experimental permit. A launch operator may not receive any 
compensation, including the cost of a motor, for transporting a 
payload.
    Any interpretation of the statutory prohibition will be guided by 
the principle that a permit is to be used for research and development, 
crew training, or showing compliance with license requirements. An 
operator seeking to generate revenue may do so under a license.
23. Inspection
    As proposed in the NPRM, under Sec.  437.95, 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. Blue Origin commented that inspecting any additional 
vehicles once a permit has been issued ``seems particularly 
unnecessary.'' This inspection, however, is necessary to ensure that 
any new vehicle is built as represented in the original application for 
the permit issued.

B. Other Regulatory Provisions Affected by Permit Authority and This 
Rulemaking

    In addition to proposing a new part 437, the FAA proposed changes, 
mostly administrative in nature, to existing regulations to reflect the 
FAA's new authority to issue permits. Specifically, the FAA proposed 
changes to parts 401, 404, 405, 406, 413, 420, and 431. The FAA did not 
receive any substantive comments on parts 404, 405, 406, or 415. The 
FAA received comments on parts 401, 413, 420, and 431, as discussed 
below.
1. Activities Exempt From Licensing or Permitting
    In Sec.  401.5, the FAA defines amateur rocket activities as 
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. Under Sec.  400.2, the licensing and 
permitting requirements do not apply to amateur rocket activities. As 
proposed in the NPRM, the definition of amateur rocket activities now 
only applies to 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.
    Paul T. Breed recommended that the FAA incorporate a waiver process 
in the proposed regulations for ``flying unmanned hovering/control 
development flights.'' The FAA notes that under Sec.  400.2, the launch 
of unmanned vehicles does not require a license or permit, provided 
that the launch falls under the definition of amateur rocket 
activities. If a hovering vehicle does not meet the definition of 
amateur rocket activities, it must operate under a license or permit. 
Part 404 provides a process for otherwise obtaining a waiver.
    XCOR suggested that, if the definition of amateur rocket activities 
requires everyone who proposes to fly a human being on a rocket to get 
an experimental permit, FAA oversight of rocket belt flights would be 
required. XCOR believes this would be a mistake in that rocket belt 
operators have made over 2000 public demonstration flights without 
harming a member of the public, all without oversight. XCOR believes 
rocket belts are sporting equipment, like SCUBA gear, rather than 
vehicles, and thus not subject to FAA oversight. The FAA agrees with 
XCOR that rocket belts, as they currently exist, are not vehicles. As 
such, they are not regulated under Chapter 701.
    The National Association of Rocketry and Tripoli requested that 
sport rocketry be explicitly exempt from any regulation implementing 
the Commercial Space Launch Amendments Act of 2004. This is not 
necessary, because the requirements of 14 CFR chapter III currently do 
not apply to amateur rocket activities, as

[[Page 17011]]

defined in 14 CFR 401.5. An operator need only satisfy the amateur 
definition to avoid having to comply with 14 CFR Ch. III.
2. Scope of ``Launch''
    This final rule modifies the definition of ``launch'' to ensure 
that the FAA issues a permit only for activities that are closely 
proximate in time to flight, entail critical steps preparatory to 
initiating flight, are unique to space launch, and are inherently so 
hazardous as to warrant the FAA's regulatory oversight (the ``four-part 
test''). The FAA is also defining the end of launch for a suborbital 
RLV flight after vehicle landing or impact on Earth, and after each 
activity necessary to return the reusable suborbital rocket to a safe 
condition after the vehicle lands or impacts. Blue Origin and XCOR\10\ 
agreed with the FAA's proposal to use the four-part test to interpret 
the beginning of launch on a case-by-case basis for each vehicle.
    The same commenters also recommended that the FAA apply the four-
part test to all RLV launches, regardless of whether conducted under a 
license or a permit. The commenters noted that unlike expendable launch 
vehicles (ELVs), RLVs may stay at a launch site for multiple flights, 
in cycles of storage, pre-flight, launch, and return to storage. These 
cycles may last days or years, depending on the RLV. Applying the same 
approach used for one-time expendable vehicles would mean perpetual 
regulatory oversight for RLVs. Without addressing the merits of these 
arguments, the FAA notes that a change to the RLV licensing 
requirements is outside the scope of this rulemaking. The FAA does plan 
to update 14 CFR part 431 in the near future and will consider the 
issue at that time.
    XCOR appeared to suggest that the definition of launch not include 
pre-flight activities. Congress, however, mandated that pre-flight 
activities be included in the definition of launch when it amended 
Chapter 701 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.'' 49 U.S.C. 70102(4). Accordingly, 
the FAA must treat preparatory activities as part of a launch. For 
purposes of issuing a permit, it will do so in accordance with the 
four-part test.
3. Permit as a Pre-Requisite to a License
    Section 413.3(f) allows a person, individual, or foreign entity 
otherwise requiring a license under Sec.  413.3(a) to instead obtain an 
experimental permit to launch or reenter a reusable suborbital rocket. 
In the NPRM, the FAA noted that 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. The Federation pointed out that this language implies that, 
if an applicant is unable to show compliance with the criteria of a 
license without the use of a permit, then it effectively requires 
someone to obtain a permit before obtaining a license.
    To clarify, demonstrating compliance with the collective and 
individual risk criteria of a license without the flight test data may 
be challenging, time consuming, and expensive for certain operators of 
unproven launch vehicles. How much of a challenge this is depends on 
the launch vehicle characteristics, launch location, and flight 
profile. The experimental permit is designed to enable a launch 
operator to test its vehicle and obtain necessary flight test data for 
a license. Section 413.3 clearly states that the experimental permit is 
a voluntary alternative option to a license.
4. Address Change
    In this final rule, the FAA has modified the address in Sec.  413.7 
for applicants to send a license or permit application. It is now more 
generic to apply to both licenses and permits.
5. Launch Site Location Review
    Under Sec.  420.30, if an applicant plans to use its proposed 
launch site solely for launches conducted under an experimental permit, 
the FAA will approve the launch site location if the FAA has already 
approved an operating area under part 437. XCOR agreed with this 
approach, approving of the fact that it would allow multiple operators 
to build on each others' regulatory successes.
6. Verification of System Safety Analysis
    Section 431.35(d)(7) requires an applicant for a RLV license to 
provide data that verifies the risk elimination and mitigation measures 
resulting from the applicant's system safety analyses. In the NPRM, the 
FAA proposed that an applicant provide data that verifies the 
applicant's system safety analyses. XCOR stated that, according to the 
proposed definition of verification, the FAA would require the 
applicant to demonstrate, by measurement, that its safety system 
performed as intended. Therefore, XCOR believes that the FAA proposed 
that the applicant verify its safety system through flight test before 
an operator may be awarded a license or permit to perform that flight 
test, which would be impossible.
    The FAA did not intend require an applicant to demonstrate a safety 
system by flight test before the FAA authorizes the flight test. The 
FAA proposed the change to Sec.  431.35(d)(7) to clarify that it 
requires evidence that risk elimination and mitigation measures 
resulting from the system safety analysis are effective and have been 
properly implemented. The risk mitigation measures need not be a single 
safety system. In addition, this verification data requirement can be 
met through analysis, test, demonstration or inspection, and does not 
have to be met through flight test.

III. Rulemaking Analyses

Paperwork Reduction Act

    This final rule 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, is amending the FAA's commercial space 
transportation regulations under the Commercial Space Launch Amendments 
Act of 2004. The FAA adopts application requirements for an operator of 
a reusable suborbital rocket to obtain an experimental permit. The FAA 
also adopts operating requirements and restrictions on permitted launch 
and reentry.
    Use of: The information collected will be used by the FAA to decide 
whether 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 
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 the occasion of launching or 
applying for a permit.

[[Page 17012]]

    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 156 to 245 hours annually to submit 
materials to the FAA to renew their permits at an annual cost of 
$10,833 to $17,024.
     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 8 to 12 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 2,031 to 3,103 hours at a cost ranging from $142,483 to $216,883. 
The estimated average annual hour burden would be 2,562 at an estimated 
average cost of $179,683.
    The final 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 58 to 86 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 437 to 686 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.
    An agency may not collect or sponsor the collection of information, 
nor may it impose an information collection requirement unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number.
    In the NPRM, the FAA solicited comments on minimizing ``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.'' XCOR stated that it has in the past had trouble sending 
large electronic files to the FAA. The FAA could improve this process 
by setting up a secure gateway. The FAA agrees that a simple process 
for exchanging electronic information could minimize the burden of the 
permit application process. Although the FAA does not have such 
capabilities at this time, a dedicated FTP server and the ability to 
accept electronic signatures are two possible enhancements to the FAA's 
capabilities. The FAA will consider acquiring such capabilities if 
enough demand for such capabilities arises.
    Spaceport Associates stated that although there is no doubt that 
the proposed experimental permit regime will reduce paperwork for 
launch vehicle operators, the amount that remains due to what it 
described as the high initial burden is still going to cause a 
significant economic impact to small entities. To carry out the 
reporting would require the equivalent of a full-time staff member, in 
an organization that may have no more than ten to twenty people who are 
carrying out all the other functions of a company. Measures necessary 
to conduct launches or reentries safely may indeed require the 
equivalent of a full-time staff member or more, depending on the safety 
issues inherent in the launch vehicle characteristics, launch location, 
and flight profile. However, an organization with a good safety culture 
understands that spending money to prevent accidents is as important to 
the success of an organization as the money spent on critical 
components. Conducting safe launches is as important as conducting 
successful launches, and the resources to ensure safety should enjoy 
equal status with other aspects of the program. Relative to the current 
licensing regime the rule will not have a significant impact on small 
entities. The cost savings that a private entity will attain under this 
rule from not having to follow the current licensing regime will exceed 
the costs imposed by this rule.

International Compatibility

     In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to comply with 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA has 
determined that there are no ICAO Standards and Recommended Practices 
that correspond to these regulations.

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

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 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 (Pub. L. 96-354) requires 
agencies to analyze the economic impact of regulatory changes on small 
entities. Third, the Trade Agreements Act (Pub. L. 96-39) 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, that they be the basis of 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 (adjusted for inflation with base year of 
1995). Currently, DOT agencies set the level at $128.1 million. This 
portion of the preamble summarizes the FAA's analysis of the economic 
impacts of this final rule. We suggest readers seeking greater detail 
read the full regulatory

[[Page 17013]]

evaluation, a copy of which we have placed in the docket for this 
rulemaking.
    In conducting these analyses, FAA has determined this final rule 
has benefits that justify its costs, and is a ``significant regulatory 
action'' as defined in section 3(f) of Executive Order 12866 because it 
raises novel policy issues contemplated under that executive order. 
Accordingly, OMB has reviewed this final rule. The rule is also 
``significant'' as defined in DOT's Regulatory Policies and Procedures. 
The final rule, if adopted, will not have a significant economic impact 
on a substantial number of small entities, will not create unnecessary 
obstacles to international trade and will not impose an unfunded 
mandate on state, local, or tribal governments, or on the private 
sector. These analyses, available in the draft regulatory evaluation 
supporting this final rule, are summarized below.

Potentially Impacted Parties

Private Sector

     Operators who will be conducting reusable suborbital 
rocket launches for research and development, showing compliance with 
license requirements, or crew training.
     The public who might be exposed to more risk.

Government

     Federal Aviation Administration that will be reviewing and 
approving applications, inspecting the vehicles and permitted 
activities, 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 entities will obtain permits over ten years.
     Permit issued to an entity is used for one year. It is 
renewed only once for the following year.
     Each permit holder will construct one vehicle to carry out 
all flights under the permit.
     As advised by industry, private sector entities will 
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 for a license.
    Some provisions will 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 rule section are 
as follows.

 
------------------------------------------------------------------------
                                                          Person-hours
                        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 will allow a private sector entity to realize cost 
savings over the licensing regime. The estimated person hours saved per 
permit under each rule section are as follows.

 
------------------------------------------------------------------------
                                                          Person hours
                                                           avoided per
                     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 readinessa \a\..................                40
Sec.   431.43 Reusable launch vehicle mission                      2,080
 operational requirements and restrictions............
------------------------------------------------------------------------
\a\ Person hours avoided are per flight.

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

[[Page 17014]]



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

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

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

Benefits

    The rule will provide an expeditious avenue for experimental 
commercial space transportation initiatives that will 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.

Total Net Costs

   Summary of Incremental Cost Impacts and Cost Savings Attributable to the Rule for the Ten-Year Period, 2006
                                                  Through 2015
                                                [In 2004 dollars]
----------------------------------------------------------------------------------------------------------------
                                                            Upper bound                     Lower bound
                    Category                     ---------------------------------------------------------------
                                                   Undiscounted   Discounted \a\   Undiscounted   Discounted \a\
----------------------------------------------------------------------------------------------------------------
Commercial Space Transportation Industry                $141,058         $97,469         $93,483         $63,475
 Compliance Costs...............................
Federal Aviation Administration Administrative           264,862         180,919         173,387         116,757
 Costs..........................................
                                                 ---------------------------------------------------------------
    Total Costs.................................         405,920         278,388         266,870         180,232
                                                 ===============================================================
Commercial Space Transportation Industry Cost         11,709,168       8,049,830       7,336,968       4,976,830
 Savings........................................
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 rule will result in an estimated net cost savings of $11.4 
million ($7.7 million discounted) to $17.8 million dollars ($12.3 
million discounted). The rule is expected to enhance and accelerate 
advances in commercial space transportation. It will 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 
will have to obtain a license, which imposes more costs for these 
activities.
    The rule might increase risk to public safety, because it will 
require fewer safety analyses and will eliminate other requirements 
such as a mission readiness review, a communications plan prepared in 
advance of the launch (the 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, 
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. 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 approach 
is adequate to protect public safety.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale

[[Page 17015]]

of the businesses, organizations, and governmental jurisdictions 
subject to regulation. To achieve this principle, agencies are required 
to solicit and consider flexible regulatory proposals and to explain 
the rationale for their actions to assure that such proposals are given 
serious consideration.'' The RFA covers a wide-range of small entities, 
including small businesses, not-for-profit organizations, and small 
governmental jurisdictions.
    Agencies must perform a review to determine whether a rule will 
have a significant economic impact on a substantial number of small 
entities. If the agency determines that it will, the agency must 
prepare a regulatory flexibility analysis as described in the RFA.
    However, if an agency determines that a rule is not expected to 
have a significant economic impact on a substantial number of small 
entities, section 605(b) of the RFA provides that the head of the 
agency may so certify and a regulatory flexibility analysis is not 
required. The certification must include a statement providing the 
factual basis for this determination, and the reasoning should be 
clear.
    The FAA believes that this final rule will not have a significant 
impact on a substantial number of entities for the following reason:
    The FAA concludes that a substantial number of firms in the human 
space flight industry will be affected by the rule because many of the 
companies in the fledgling industry are small. The rule will 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 rule will not have a significant economic impact on 
a substantial number of small entities.
    Therefore, as the FAA Administrator, I certify that this rule will 
not have a significant economic impact on a substantial number of small 
entities.

International Trade Impact Assessment

    The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal 
agencies from establishing any standards or engaging in related 
activities that create unnecessary obstacles to the foreign commerce of 
the United States. Legitimate domestic objectives, such as safety, are 
not considered unnecessary obstacles. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards. For experimental commercial space 
transportation activities, there are no international standards. The 
FAA has assessed the potential effect of this 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

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) 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 with the base year 1995) 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 $128.1 million in lieu of $100 million.
    This final rule does not contain such a mandate. The requirements 
of Title II of the Act, therefore, do not apply.

Executive Order 13132, Federalism

    The FAA has analyzed this final rule under the principles and 
criteria of Executive Order 13132, Federalism. We determined that this 
action will not have a substantial direct effect on the States, or 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 does not have federalism implications.

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 rulemaking qualifies for the categorical exclusion 
identified in paragraph 312f and involves no extraordinary 
circumstances. Also, the FAA conducts environmental reviews at the time 
it issues permits.

Regulations That Significantly Affect Energy Supply, Distribution, or 
Use

    The FAA has analyzed this Final Rule 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 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 415

    Aviation safety, Environmental protection, 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.

IV. Regulatory Text

0
For the reasons discussed above, the Federal Aviation Administration 
amends Chapter III of Title 14, Code of Federal Regulations, as 
follows:

[[Page 17016]]

TITLE 14--AERONAUTICS AND SPACE

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

PART 401--ORGANIZATION AND DEFINITIONS

0
1. The authority citation for part 401 continues to read as follows:

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


0
2. Revise Sec.  401.3 to read as follows:


Sec.  401.3  The Associate Administrator for 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.

0
3. Amend Sec.  401.5 as follows:
0
A. Add definitions for ``experimental permit'', ``validation'', and 
``verification'' in alphabetical order to read as set forth below.
0
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--
    (1) Powered by a motor or motors having a total impulse of 200,000 
pound-seconds or less;
    (2) Powered by a motor or motors having a total burning or 
operating time of less than 15 seconds; and
    (3) 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 includes 
pre- and post-flight ground operations as follows:
    (1) Beginning of launch.
    (i) Under a license, launch begins with the arrival of a launch 
vehicle or payload at a U.S. launch site.
    (ii) Under a permit, launch begins when any pre-flight ground 
operation at a U.S. launch site meets all of the following criteria:
    (A) Is closely proximate in time to flight,
    (B) Entails critical steps preparatory to initiating flight,
    (C) Is unique to space launch, and
    (D) Is inherently so hazardous as to warrant the FAA's regulatory 
oversight.
    (2) End of launch.
    (i) For launch of an orbital expendable launch vehicle (ELV), 
launch ends after the licensee's last exercise of control over its 
launch vehicle.
    (ii) For launch of an orbital reusable launch vehicle (RLV) with a 
payload, launch ends after deployment of the payload. For any other 
orbital RLV, launch ends upon completion of the first sustained, 
steady-state orbit of an RLV at its intended location.
    (iii) For a suborbital ELV or RLV launch, launch ends after 
reaching apogee if the flight includes a reentry, or otherwise after 
vehicle landing or impact on Earth, and after activities necessary to 
return the vehicle to a safe condition on the ground.
* * * * *
    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.
    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

0
4. The authority citation for part 404 continues to read as follows:

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


0
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.

0
6. 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

0
7. The authority citation for part 405 continues to read as follows:

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


0
8. Revise Sec.  405.1 to read as follows:


Sec.  405.1  Monitoring of licensed, permitted, 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.

0
9. 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

[[Page 17017]]

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.

0
10. 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

0
11. The authority citation for part 406 continues to read as follows:

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


0
12. Revise Sec.  406.1 heading and paragraphs (a)(2) and (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;
    (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 or to terminate, prohibit, or suspend any permitted 
activity.
* * * * *

0
13. 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.
* * * * *

0
14. Revise Sec.  406.5 heading to read as follows.


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

* * * * *

0
15. 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.
* * * * *

0
16. Revise Sec.  406.127(a)(3)(ii) to read as follows:


Sec.  406.127  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

0
17. The authority citation for part 413 continues to read as follows:

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


0
18. 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
------------------------------------------------------------------------
(1) Obtaining a Launch License.................................      415
(2) License to Operate a Launch Site...........................      420
(3) Launch and Reentry of a Reusable Launch Vehicle (RLV)......      431
(4) License to Operate a Reentry Site..........................      433
(5) Reentry of a Reentry Vehicle other than a Reusable Launch        435
 Vehicle (RLV).................................................
(6) Experimental Permits.......................................      437
------------------------------------------------------------------------


0
19. 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

[[Page 17018]]

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 the United States;
    (3) Reenter a reentry vehicle outside the United States; or
    (4) Operate a reentry site outside 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.

0
20. 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.

0
21. Revise Sec.  413.7(a), (b)(3), and (c)(1) and (3) to read as 
follows:


Sec.  413.7  Application.

    (a) Form. An application must be in writing, in English and filed 
in duplicate with the Federal Aviation Administration, Associate 
Administrator for Commercial Space Transportation, Room 331, 800 
Independence Avenue, SW., Washington, DC 20591. Attention: Application 
Review.
    (b) * * *
    (3) The type of license or permit for which the applicant is 
applying.
    (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.
* * * * *

0
22. Revise Sec. 1A413.11 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 the required actions.

0
23. 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.

0
24. 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.

0
25. 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

[[Page 17019]]

States Code, and by administrative sanctions in accordance with part 
405 of this chapter.

0
26. 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.

0
27. 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
* * * * *

0
28. 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 Sec.  413.21 of 
this part.

PART 415--LAUNCH LICENSE

0
29. The authority citation for part 415 continues to read as follows:

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


0
30. Revise Sec.  415.1 to read as follows:


Sec.  415.1  Scope.

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

0
31. The authority citation for part 420 continues to read as follows:

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


0
32. 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.
* * * * *

0
33. Revise Sec.  420.25(b) to read as follows:


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

* * * * *
    (b) For licensed launches, the FAA will not approve the location of 
the proposed launch point if the estimated expected casualty exceeds 30 
x 10-6.

0
34. 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 that site.

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

0
35. The authority citation for part 431 continues to read as follows:

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


0
36. 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 risk elimination and mitigation 
measures resulting from the applicant's system safety analyses required 
by paragraph (c) of this section; and
* * * * *

0
37. 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.

[[Page 17020]]

437.65 Collision avoidance analysis.
437.67 Tracking a reusable suborbital rocket.
437.69 Communications.
437.71 Flight rules.
437.73 Anomaly recording, reporting and implementation of corrective 
actions.
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 a problem that occurs during verification or 
operation of a system, subsystem, process, facility, or support 
equipment.
    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.
    Key flight-safety event means a permitted flight activity that has 
an increased likelihood of causing a launch accident 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 or reentry 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.


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 or 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) 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) Use of a safety approval. If an applicant proposes to use any 
reusable suborbital rocket, safety system, process, service, or 
personnel for which the FAA has issued a safety approval under part 414 
of this subchapter, the FAA will not reevaluate that safety element to 
the extent its use is within its approved

[[Page 17021]]

envelope. As part of the application process, the FAA will evaluate the 
integration of that safety element into vehicle systems or operations.
    (d) 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.
    (e) 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 any 
structural, flight control, thermal, pneumatic, hydraulic, propulsion, 
electrical, environmental control, software and computing systems, 
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) The types and quantities of any hazardous materials used 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 and key flight-safety events.
    (b) Identify and describe the geographic coordinates of the 
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.
    (c) For each operating area, provide the planned maximum altitude 
of the reusable suborbital rocket.

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.


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 location for nominal 
landing or any contingency abort landing of the reusable suborbital 
rocket, and each location for any nominal or contingency impact or 
landing of a component of that rocket, satisfies Sec.  437.61.


Sec.  437.35  Agreements.

    An applicant must enter into 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, or
    (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 permittee 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. This hazard analysis 
must--

[[Page 17022]]

    (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 before risk elimination or mitigation.
    (3) Ensure that the likelihood and consequence of each hazard meet 
the following criteria through risk elimination and mitigation 
measures:
    (i) The likelihood of any hazardous condition that may cause death 
or serious injury to the public must be extremely remote.
    (ii) The likelihood of any hazardous condition that may cause major 
property damage to the public, major safety-critical system damage or 
reduced capability, a significant reduction in safety margins, or a 
significant increase in crew workload must be remote.
    (4) Identify and describe the risk elimination and mitigation 
measures required to satisfy paragraph (a)(3) of this section. The 
measures must include one or more of the following:
    (i) Designing for minimum risk,
    (ii) Incorporating safety devices,
    (iii) Providing warning devices, or
    (iv) Implementing procedures and training.
    (5) 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) 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 or 
large concentrations of members of the public; and
    (4) May not contain or be adjacent to significant automobile 
traffic, railway traffic, or waterborne vessel traffic.
    (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.


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.

    For a nominal or any contingency abort landing of a reusable 
suborbital rocket, or for any nominal or contingency impact or landing 
of a component of that rocket, a permittee must use a location 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 comply with the agreements required by this 
section.
    (a) A permittee must have an agreement in writing 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 the safe launch or reentry under a permit.
    (b) Unless otherwise addressed in agreements with a licensed launch 
site operator or a Federal launch range, a permittee must have an 
agreement in writing with the following:
    (1) For overflight of navigable water, a written agreement between 
the applicant and the local United States Coast Guard 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 permitted launch or reentry is to take place, for measures 
necessary to ensure the safety of aircraft. The agreement must, at a 
minimum, demonstrate satisfaction of Sec. Sec.  437.69(a) and 
437.71(d).


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 reusable suborbital rocket.

    A permittee must--
    (a) During permitted flight, measure in real time the position and 
velocity of its reusable suborbital rocket; and
    (b) Provide position and velocity data to the FAA 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

[[Page 17023]]

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 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.
    (e) 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, reporting and implementation of 
corrective actions.

    (a) A permittee must record each anomaly that affects a safety-
critical system, subsystem, process, facility, or support equipment.
    (b) A permittee must identify all root causes of each anomaly, and 
implement all corrective actions for each anomaly.
    (c) 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 must report the corrective action for each reported 
anomaly.
    (d) A permittee must implement 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, in accordance with this section.
    (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
    (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 upon completion; 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

[[Page 17024]]

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 23, 2007.
Marion C. Blakey,
Administrator.
[FR Doc. E7-6194 Filed 4-5-07; 8:45 am]
BILLING CODE 4910-13-P