Status Report

Invited written testimony of James A. M. Muncy: H.R. 3245 – The Commercial Space Act of 2003

By SpaceRef Editor
November 5, 2003
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Frequently Asked Questions about the emerging U.S. Commercial Human Space Flight Industry (and H.R. 3245, as amended)

Invited written testimony of James A. M. Muncy
Space Policy Consultant to the Subcommittee on Space & Aeronautics of the
Committee on Science, U.S. House of Representatives

Hearing on “H.R. 3245 (Commercial Space Act of 2003)”

Wednesday, November 5, 2003

For additional information, please contact:


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I very much appreciate the opportunity to present my views on H.R. 3245, the Commercial Space Act of 2003. To make this testimony as useful as possible for Members and staff, I have structured it in the form of a “Frequently Asked Questions” document, essentially a tutorial on the issues underlying the legislation along with my recommended positions on those issues. I have also attached a copy of my recent Space News column as further background.

What’s the historical context for this legislation?

When the Congress crafted the Commercial Space Launch Act of 1984, it demonstrated bipartisan foresight in promoting the emergence of a now-vital commercial space transportation industry. For two decades, the role and capabilities of that industry have grown to encompass the launch of nearly all military and civilian spacecraft as well as many commercial satellites. While only commercial launches by U.S. providers are licensed by the Department of Transportation, the CSLA’s creation of a streamlined, “one stop shop” to regulate and promote the industry has enabled it to serve public as well as private interests. From time to time, the Congress has amended the CSLA to add new statutory authority or clarify the mission of the Office of Commercial Space Transportation (OCST) based on new industrial, technological or policy developments.

Today, the nascent suborbital reusable launch vehicle (RLV) industry seeks to pioneer new commercial human space flight market opportunities, as well as offer microgravity research, remote sensing/surveillance, and micro-satellite launch services.

So will OCST will regulate and promote these new RLVs?

Unfortunately, in 1995 the previous Administration transferred the OCST into the Federal Aviation Administration, a much larger and, by all accounts, more bureaucratically conservative organization. Coincidentally, Congress had removed the FAA’s promotional authority regarding commercial aviation in 1996. This confluence of events, along with a lack of clear definitions for important terms in the original CSLA (‘suborbital rocket’ and ‘suborbital trajectory’) has created some confusion over regulatory jurisdiction within the FAA, which in turn has hindered private investment in the suborbital RLV industry.

On July 24, 2003, a joint hearing before the Senate Subcommittee on Science, Technology and Space and the House Subcommittee on Space & Aeronautics featured strong and unanimous testimony that this jurisdictional issue should be resolved by legislation that would define key terms and restore the sole authority of the Office of Commercial Space Transportation to regulate and promote this industry.

It is this need to create a predictable and enabling business environment for the emerging U.S. suborbital RLV industry that calls for enactment of the Commercial Space Act of 2003.

Is this all just about space tourism?

No. While suborbital RLVs do not, by definition, fly all the way into Earth orbit like the Space Shuttle, they can provide a scientific experiment with a few minutes of microgravity time or an environmental sensor with a high enough altitude to collect timely data over a large region. Furthermore, using low-cost expendable upper stages, suborbital RLVs can provide affordable launch services for small (<250 kg) satellites or scientific probes, a class of spacecraft that universities can often afford to build but not launch.

That said, travel and tourism is one of America’s largest industries, and the adventure travel market is its fastest growing sector. If we have learned anything from the few successes and many failures of “space commercialization”, it is that we need to identify and promote space activities which have a large terrestrial market. Communications satellites paid off because there was a preexisting demand for long-distance communications, which then continued to grow as space technology lowered prices and improved quality. Direct broadcast satellites are paying off because there is a preexisting demand for affordable and diverse entertainment and information. So too, expanding America’s adventure travel industry into space will tap into a pent-up market demand, thus winning significant private investments in suborbital RLVs.

Of course, the benefits of giving more Americans the opportunity to experience space flight go well beyond new jobs and profits. As the public reaction to Dennis Tito’s 2001 flight to the International Space Station proved, the American people believe that they too have “the right stuff” and might one day be able to fly into space, even if they choose not to. The more real this opportunity becomes, the more children will be inspired to study math and science so they can participate in this exciting future.

If NASA can’t build a new RLV… how can entrepreneurs?

The cost and difficulty of developing a heavy-lift (i.e. Shuttle-class) RLV that could carry astronauts, modules, or large satellites into space is indeed daunting. NASA’s own estimates for a 2nd Generation RLV ran over $30 billion before that program’s cancellation in 2002.

Furthermore, the limited market for launching satellites is not encouraging large orbital RLV development today because the demand for those launch services cannot grow quickly enough to repay investors for the high costs of developing orbital RLVs. That is one of the tragic mistakes of NASA’s RLV development efforts over the past decade: assuming that commercial industry would invest in a capability it cannot financially justify simply because NASA wants to get that capability on the cheap. (The other mistake is the assumption that better technology will somehow overcome this economic reality.)

On the other hand, suborbital RLVs are smaller, simpler, easier, and (therefore) much cheaper to develop. And unlike satellite launch, the space adventure travel market does appear to be large enough to justify these much-lower development costs. Of course, suborbital RLVs can’t solve NASA’s real and pressing space transportation problems today, or anytime soon.

But one day these vehicles and markets may grow up and enable a true revolution in access to orbital space, much as home-built personal computers eventually displaced the “mainframes” of the old 1970’s data processing industry.

How should the federal government regulate suborbital RLVs?

Answer #1: Moderately, and primarily to protect the uninvolved general public, while allowing investors and adventure-seeking customers to take informed risks so the industry can “grow up”.

Answer #2: Not at all like it regulates commercial aviation, which is a mature, well-established industry that provides commodity transportation services for the general public.

Answer #3: Not exactly the way it regulates the current expendable launch vehicle (ELV) industry either, because suborbital RLVs aren’t as big or potentially destructive as ELVs, they will become inherently more reliable via reusability, and – of course – they will carry human beings and not just satellites as payloads.

What part of the federal government should regulate suborbital RLVs?

As is so often the case, who you give the job to will determine how well the job gets done. This is the key issue H.R. 3425 seeks to answer. While some proposed suborbital RLVs look every bit like a Goddard, Heinlein, or Von Braun rocket, others look a lot like airplanes. They may have wings, use aerodynamic lift during their flight profiles, and even take off and land horizontally at runways. But they are not at all conventional aircraft, and must not be regulated as if they were.

American aviation will celebrate 100 years of success next month. The level of safety we enjoy today is not simply the result of tough regulation but rather that regulation enforces safety-promoting best practices that have evolved over time based on real-world experiences from millions of flights. Of course, the FAA has built up a very large bureaucracy over this time in order to carry out its regulatory duties: some 50,000 employees. In 1996 the Congress even took away the FAA’s job of “promoting” aviation so it could focus on doing its regulatory and airspace management jobs more effectively, allowing more passengers to fly more places more safely and affordably.

All of these facts disqualify the aviation side of the FAA from providing the modest, enabling regulatory framework that the suborbital RLV industry needs during its formative years.

But isn’t the FAA in charge of regulating launch vehicles too?

Yes, and that is an Executive Branch mistake Congress should fix. The Commercial Space Launch Act created a separate Office of Commercial Space Transportation reporting directly to the Secretary. A misguided attempt to “flatten” government in 1995 ended up transferring OCST into the very organization the CSLA’s sponsors never wanted involved in regulating space transportation, namely the FAA. OCST is now the Office of the FAA Associate Administrator for Commercial Space Transportation, but this 50-person office’s de jure independence is de facto circumscribed by living inside a 50,000 person bureaucracy. To be sure, there may be some unplanned synergies or efficiencies made possible by this situation, but those have been demonstrably overwhelmed by the legal, bureaucratic, and cultural barriers to effective action this reorganization created.

As witnesses testified on July 24th, the mere possibility that a suborbital RLV company might have to win regulatory approval of both the aviation and space launch sides of the FAA has already delayed or prevented private investment in this industry.

How can Congress fix this confusion?

First and foremost, the Congress needs to confirm its original intent in enacting the CSLA. All commercial space transportation ventures – including suborbital RLVs carrying human spaceflight participants – should be regulated by one organization that also has the mandate (and temperament) to promote the growth and competitiveness of the industry as a whole.

Enacting into law the FAA’s recently-published definitions of “suborbital rocket” and “suborbital trajectory” will give clear regulatory jurisdiction to the FAA’s Associate Administrator for Commercial Space Transportation. Those (and other useful) definitions are already contained in H.R. 3245, and must be preserved in the final enacted legislation.

Do any RLV companies prefer the aviation side of FAA to the space side?

No. One funded RLV developer has loudly complained that he should be allowed to fly a suborbital RLV as easily as he has flown earlier experimental aircraft, i.e. with minimal government oversight. However, he has applied for a launch license. No credible industry official claims it would be easier to obtain commercial aircraft type certification for revenue-earning operations carrying spaceflight participants than it would be to get a launch license.

So are experimental aircraft rules easier for flight-testing of RLVs?

They may be easier to get than a launch license, but they don’t allow for the kind of flight profile even early suborbital RLVs will display. For one thing, RLVs will fly faster than the speed of sound, and eventually at hypersonic speeds. FAA environmental rules do not allow experimental aircraft to do so without a special waiver.

More importantly, the legal regimes under which aircraft and spacecraft operate are completely different. The Warsaw Convention limits private and public liability for aviation accidents. The UN’s Space Liability Convention makes the “launching state” (i.e. government) wholly liable for damage caused by any space object. Should the U.S. government allow a private RLV developer to incur international liability for taxpayers without having to obtain a federal launch license?

(See also my attached October 27, 2003, Space News column.)

What about expertise in regulating passenger flights?

Some inside the FAA’s Office of Regulation and Certification (FAA/AVR), which oversees airplanes and airlines, have said they should have a role in licensing of passenger-carrying RLV flights, because only they have expertise in passenger regulation. This is precisely the sort of regulatory confusion that stifles private investment in suborbital RLVs.

Actually, the only governmental organizations with experience in regulating human space flight are NASA, Russia’s Rosaviacosmos, and the emergent Chinese space program. And the only nation with expertise in commercial human space flight is Russia. So FAA/AVR has no claim to relevant expertise.

Obviously, the federal role in suborbital RLV flights carrying spaceflight participants cannot be as laissez-faire as the wholly unregulated days of airplane barnstorming. However, OCST (also known as FAA/AST) is perfectly capable of working with industry to set license-specific standards for training and medical qualification, as called for in H.R. 3245. AST does not need AVR looking over its shoulder.

What’s this “indemnification” thing, anyways?

Because the U.S. government and rocket companies are both liable under international law for damages caused by a space transportation accident, the Congress created a risk-sharing regime for so-called “excess third party claims” in its 1988 amendments to the CSLA. Usually referred to as indemnification, the regime provides for the following mutual protection. First, industry has to buy liability insurance or demonstrate financial resources to pay the “maximum probable loss” (MPL) from a licensed launch or reentry activity, and to use this coverage to protect the federal government from its legal exposure. In exchange, the federal government promises to indemnify the launch operator for up to $1.5 billion in “excess claims” above the MPL, after which the launch operator’s financial responsibility continues.

Why did the Congress create this regime?

After the Challenger accident in 1986, national policy decided to transfer the launch of all commercial and most military and civilian satellites from the Space Shuttle to the nascent commercial ELV industry. However, industry wasn’t willing to “bet the company” by assuming total liability for the improbable (less than 1 in 10 million) but huge losses that could result from a catastrophic launch accident. So far the regime has worked well, and never cost the government a penny.
Should the government indemnify space tourist rides, though?

First of all, the government is not protecting a suborbital RLV company from a lawsuit by its customer in the event of a tragic accident. Those “second party” liability issues will be handled by contractual cross-waivers and insurance.

Second, and more importantly, the government currently indemnifies U.S. entertainment companies that launch direct broadcast satellites on Ukrainian rockets by the Boeing-led Sea Launch consortium. Is fostering private investment in domestic reusable launch vehicles any less in the national interest than “subsidizing” people who watch the Playboy channel via satellite?

How should the government protect RLV “passengers”?

The very use of the word passenger, instead of the term used by the International Space Station partnership and in H.R. 3245 – spaceflight participant – conveys an inappropriate notion of everyday transportation. Suborbital RLV flights are, we all hope, going to become frequent and affordable opportunities for people to experience spaceflight, but they are not – at least not initially – going to be a means of transportation between points A and B.

Furthermore, these are inherently new kinds of vehicles. They certainly aren’t aircraft, but they also are very different from traditional ICBM-derived ELVs. Nobody has the knowledge base to write the level of safety regulations for RLVs that existed for aircraft even 50 years ago, because we haven’t flown many (or arguably any) RLVs yet.

That said, no one expects suborbital RLVs to enjoy (or endure) the same two-plus decades of laissez-faire that existed for the early aviation industry. America is less risk-tolerant in 2003 than 1903, and commercial human spaceflight will not be granted an exception to cultural reality.

What the federal government can and should do is foster the gathering of knowledge that will lead to safer vehicles by allowing persons to voluntarily assume an informed risk in order to achieve their dream of experiencing spaceflight. That requires that the government take an affirmative role in requiring each RLV operator to propose vehicle-specific training and medical requirements during the license application process, as well as mandating the disclosure of the safety record of the RLV type to spaceflight participants before they can be carried for revenue.

This is a common-sense, evolutionary approach that will allow government and industry to both learn how to promote safety, instead of trying to arbitrarily impose safety ahead of time.

What, if anything, would you change about H.R. 3245?

Frankly, the legislation as written provides most if not all required statutory authority and jurisdictional clarity to help enable a growing suborbital RLV industry. Of course, there are other current or potential governmental barriers to success that could be addressed in legislation.
First and foremost is the issue of further empowering OCST to its job of regulating and promoting the U.S. commercial space transportation industry by moving it out of the FAA and creating it as a separate modal administration within the Department of Transportation. I cannot imagine a stronger signal of political support for this industry than for Congress to decide that industry merits its own distinct Commercial Space Transportation Administration, with a Presidentially-appointed and Senate-confirmed Administrator that reports directly to the Secretary of Transportation.

Not only would a CSTA be free of jurisdictional interference from OCST’s more powerful siblings inside the FAA, but more importantly it would be free of the FAA’s dominant bureaucratic and hyper-regulatory culture.

To some extent, Section 4 of H.R. 3245 invites the Secretary of Transportation to take executive action that would produce this very result. By directing the Secretary to propose an enabling regime which promotes as well as regulates the nascent commercial human spaceflight industry, the Congress is setting forth the appropriate “performance requirements” that could justify a “separate modal administration” design solution. Arguably the existing language is sufficient, and may be as far as the Congress is willing to go at this time.

Anything else?

My second suggestion would be to authorize and direct OCST to create a less burdensome licensing process for the experimental flight test of RLVs. Available only to non-revenue, developmental flights, this regime could be modeled on the FAA’s minimalist regulation of experimental aircraft. Certainly OCST could be encouraged to waive or reduce those requirements which do not impact on public safety and which are within its control.

However, the largest single burden in the licensing process is not any requirement created by OCST itself, but rather the legally-imposed mandates of the National Environmental Policy Act (NEPA). Because issuing a launch, reentry, or site operator license constitutes a “major federal action”, an environmental assessment of the cumulative impact of the licensed space transportation activity must be conducted before the license can be issued.

It is this requirement that forces Elon Musk’s company, SpaceX, to pay to count the sea lions near the Vandenberg Air Force Base launch site, as he testified to on July 24th. It is this requirement that could cost spaceports hundreds of thousands of dollars before a single RLV flight can take place from their isolated location. It is this requirement that leads a few to wish they could launch RLVs under the “categorical exemption” (or “CATEX”) provided to aviation under the NEPA.

There is no way Congress could or would absolve OCST (and the suborbital RLV industry) from its NEPA responsibilities. But Congress could, conceivably, take two affirmative steps. First, legislation could direct OCST to use all available resources to pursue a CATEX for RLV operations with other federal agencies. Of course, there are no guarantees here, and a strong legislative solution would trigger a referral to committees more concerned about protecting the EPA’s (and their) jurisdiction than commercial space transportation.

The other option would be to take the same approach but seek a waiver of NEPA or other lessening of the environmental assessment burden only for research and development (i.e. experimental flight testing) of RLVs. Because these test flights could be more constrained (in location and quantity), presumably the environmental impact would be much more limited in amount and duration.

Of course, the issue is not actual environmental impact (all licensed launches have had a Finding of No Significant Impact), but the NEPA’s requirement of a lengthy and costly assessment for both the launch activity and the launch site, include all possible future licensed activities at the site. That burden should not be levied on non-revenue R&D activities.

Perhaps it would be possible for the Science Committee, given the Chairman’s and Ranking Member’s senior positions on two other committees of relevant jurisdiction, to explore possible solutions to this problem over the next few months. However, I would not recommend that this issue slow down passage of HR 3245 beyond early 2004.


On behalf of the emerging commercial suborbital RLV industry, let me once again state my appreciation for the time and attention given these issues by the Subcommittee. H.R. 3245 as introduced is an excellent start at crafting enabling bipartisan legislation that will help this industry create huge economic, scientific, and even national security benefits for the United States. Hopefully the full Committee on Science can hold a perfecting mark-up very early next year, followed by House passage, conference, and enactment into law as soon as possible.

SpaceRef staff editor.