Statement of Marion Blakey, FAA, Before the House Transportation Committee Hearing on Commercial Space Transportation

STATEMENT OF MARION C. BLAKEY, ADMINISTRATOR OF THE FEDERAL
AVIATION ADMINISTRATION, BEFORE THE AVIATION SUBCOMMITTEE OF
THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, U.S.
HOUSE OF REPRESENTATIVES, ON COMMERCIAL SPACE TRANSPORTATION

FEBRUARY 9, 2005

Chairman Mica, Mr. Costello, and Members of the Subcommittee:

Good afternoon. It is a pleasure to be here today at the Subcommittee’s first hearing of
the 109th Congress. Today I would like to provide a brief overview of the Federal
Aviation Administration’s activities in overseeing the commercial space transportation
industry. Specifically, I will address how we plan to implement the most recent changes
that Congress enacted in December, and how we see the future of this growing industry.
But first, I wish to offer my congratulations to the new Members of the Subcommittee. I
would also like to extend my best wishes to the new Ranking Democrat on the
Subcommittee, Mr. Costello. Congressman Costello has been a valuable Member of this
Committee since his election to Congress. I look forward to working with all of you, as
well as the returning Members of the Subcommittee, on the important agenda ahead of
us. Secretary Mineta and I truly value our partnership with Congress and the work we do
together to make our nation’s aviation and space transportation systems the safest and
most efficient in the world.

Commercial space transportation is an increasingly important part of our nation’s
transportation system. Last year, the FAA completed a study examining the contributions
of commercial space transportation, and other industries that are linked to space
transportation. We found that in 2002, commercial space transportation and enabled
industries created more than $95 billion in economic activity, $23.5 billion in earnings,
and 576,400 jobs. Commercial space launches deliver communications, weather and
science satellites to orbit. Satellite communications are integrated now into our daily
lives, providing us with television, access to the Internet, credit card purchasing, and
digital radio.

The timing of this hearing is particularly appropriate given that tomorrow is the opening
of the FAA’s annual Commercial Space Transportation Conference here in D.C. This
event will feature remarks by some of the key individuals in both industry and
government and will include panels on the X Prize and Beyond, Emergent ELV
Technologies, Regulating Outside the Box, Space and Air Traffic Management, and
Educating Tomorrow’s Engineers.

The FAA’s Commercial Space Transportation Office is responsible for protecting public
health and safety through the licensing and regulation of commercial space launches and
reentries and the operation of launch and reentry sites. Our Commercial Space Office
encourages, facilitates and promotes commercial launches and reentries and to facilitate
the strengthening and expansion of the U.S. space transportation infrastructure. As
always, our first priority is the safety of the public at large.

The Commercial Space Office was originally established in 1984, by President Reagan,
following the passage of the first law governing the commercial space industry. It was
located at that time in the Office of then Secretary of Transportation Elizabeth Dole. The
Office was later transferred to the FAA in 1995. The Office licensed its first launch of an
expendable, vertically launched rocket in 1989. Since then there have been 168 licensed
launches by U.S. companies such as Lockheed Martin, Boeing, Orbital Sciences, and
most recently Scaled Composites. Headed by Mr. Burt Rutan, Scaled Composites
SpaceShipOne was the first private, manned vehicle to reach space. While the FAA does
not license launches performed by and for the U.S. government—we do work very
closely with our colleagues at NASA and the Air Force to establish seamless safety rules
for both government and private launch facilities.

As you may know, commercial space launches are inherently dangerous and risky
operations– a fact that is recognized not just by those who are directly involved but also
by the law and regulatory regime that governs the industry. As a result, the approach to
safety in the commercial space arena differs from the approach for civil aviation, where safety is achieved with the high reliability of today’s aircraft. The FAA’s safety focus in
commercial space transportation has been on protecting the general public and their
property from the dangers inherent in such operations. For launches, the safety approach
is to contain the hazards. As noted above, rocket failures occur with some regularity.
Historically, the failure rate has been approximately 10 percent for licensed launches.
The mission of the FAA is to ensure that each rocket that fails has a safety system that
ensures no damage is done to life or property on the ground.

Our licensing process includes a pre-licensing consultation period during which our
technical team begins a dialogue with launch applicants regarding what they propose and
requirements they must meet to receive a license. After this initial dialogue, we proceed
to a more comprehensive review and analysis during which we analyze and evaluate
every possible aspect of a proposed space launch operation. This includes a policy
review, payload review, safety evaluation, financial responsibility determination, and an
environmental review. We issue a license only after we determine that an applicant’s
launch or reentry proposal will not jeopardize public health and safety, the safety of
property, or conflict with U.S. national security or foreign policy interests and
obligations.

In addition to licensing launches, the FAA is also responsible for licensing and regulating
the operation of launch sites. We have licensed four launch sites in the U.S. – in
California, Florida, Virginia, and Alaska. Last year, we added a fifth—the Mojave
Airport in California, which is a dual use facility. In fact, it is the first inland launch site
in the country to receive a license. States are increasingly interested in hosting a launch
site because they see spaceports as potential sources of future economic growth. We are
currently in discussions with Oklahoma, New Mexico, and Texas about their license
applications. In the future, we anticipate there will be a network of non-federal launch
sites throughout the U.S.

During the 20-year history of the government’s oversight of commercial space launches,
there have been no launch accidents that have resulted in loss of life, serious injuries, or major property damage. While there have been rocket launch failures, where, for
example, the rocket malfunctioned or had to be destroyed deliberately because it veered
from its intended trajectory, or where a satellite payload was not successfully inserted
into orbit, the uninvolved public was still protected. We believe that this is an impressive
safety record that speaks to the skill, dedication, and commitment to safety of the FAA’s
team, our industry partners, and of our government partners like NASA and the Air
Force.

One of the key ways the U.S. supports the commercial space industry is through a
statutory risk-sharing program between private industry and the federal government. It
consists of three major components: (1) liability and government property insurance that
is obtained by the launch operator; (2) cross-waivers of liability; and (3) provisions for
payment by the government of third-party liability claims in excess of required liability
insurance, up to $ 1.5 billion, as adjusted for inflation. This liability risk-sharing
arrangement was recently extended by Congress through 2009 with a provision for a
comprehensive study on whether this program could be eliminated and what alternatives
there are to maintain a viable and competitive U.S. industry. Because of the excellent
safety record of the industry, the indemnification provision has never been invoked.
Let me now briefly discuss FAA’s recent commercial space activities. Last year the FAA
licensed 14 commercial launches, the most since 1999 and more than what both NASA
and DOD launched in 2004. These included five Atlas launches, three Sea Launch
missions, one Taurus Launch, and five launches by SpaceShipOne. The industry is
continuing to develop and evolve to an era of reusable launch vehicles, suborbital launch
vehicles and, most recently, personal human spaceflight.

You may recall that last June, we all witnessed the first privately funded launch of a
manned vehicle into space. Before that day, the commercial space industry dealt only in
unmanned vehicles. Burt Rutan and his team at Scaled Composites accomplished this
historic feat. Mike Melville piloted SpaceShipOne–traveling to an altitude of 337,500
feet and reaching the X-Prize threshold of space. The FAA’s Associate Administrator, Patti Grace Smith, presented Mr. Melville with the first FAA-issued commercial
astronaut wings. A few short months later, on October 4th, I had the privilege of
awarding the next set of wings to Astronaut Brian Binnie. Astronaut Binnie’s flight on
SpaceShipOne was the flight that won the $10 million Ansari X-Prize, which was
awarded to the first company to launch a vehicle that carried the equivalent of three
persons on board and returned twice within a two-week span.

Mr. Rutan and his team earned the respect and admiration of the entire country with the
accomplishment. I am also proud of the exceptional licensing and safety work done by
our FAA team, which included not only staff from our Commercial Space Office, but
also experts from our Aviation Safety Organization and from our Air Traffic
Organization. Our people worked tirelessly with Mr. Rutan’s company throughout the
development of SpaceShipOne to enable these historic flights and to fully protect the
American public.

SpaceShipOne marked the beginning of a new chapter in commercial space
transportation. A new generation of vehicles shows the potential for the development of
a space tourism industry. Congress recognized this new beginning in passing last
December the Commercial Space Launch Amendments Act of 2004, designed to promote
the development of human space flight. It does so by giving the FAA responsibility over
the safety of the crew and passengers. Under a new regulatory regime, paying
passengers, deemed “space flight participants,” will now be able to fly into space on
board commercial space vehicles after such passengers are informed of and assume the
significant risks of the venture. The new legislation sets an ambitious schedule for
issuing rules on commercial human space flight. The FAA’s staff are already working on
rules for experimental permits called for by the new law and for rules on medical and
training requirements for crew and space flight participants.

Advocates of this new law were concerned that “over-regulation” by the Federal
Government might stifle development of new launch vehicles. Today’s commercial
space innovators have been compared to the barnstorming aviators that created the foundation for what is now the safest form of transportation. Like those early pioneers,
the innovators of today need an environment that will allow them to develop the
spacecraft of the future. We agree that government regulation should not be the enemy of
innovation, particularly where design concepts and standard are unknown. At the dawn
of aviation, industry pioneers were left to create aircraft designs without benefit of
government oversight. The government requirements for building or designing an
aircraft date from 1926, more than 20 years after the Wright Brother’s historic flight.
Ensuring safety often is an evolutionary process. Part of the improvement to safety
involves the simple result of mitigating risks and learning from mistakes.

Government oversight of civil aviation evolved as the aircraft industry developed.
Likewise, government oversight of commercial space transportation must also evolve
appropriately as the industry matures. This may mean permitting more risk now to those
who choose to assume those risks in order to achieve an ultimately safer, more advanced
launch vehicle. At the same time, the new law does not disturb the FAA’s current
authority to fully protect the safety of the uninvolved public. I assure you, we will
continue to take that responsibility very seriously in conducting our licensing and
permitting reviews under the new law.

Finally, Mr. Chairman, let me say a few words about the current economic condition of
and outlook for the industry. In the orbital segment of the industry, there has been a
downturn in the launch of expendable launch vehicles (ELV’s) from 2000 to the present.
Today, the supply of available launch vehicles internationally has increased while
demand has not. As a result, launch prices have dropped compared to the mid-1990s. In
addition, U.S.-manufactured launch vehicles have to compete against low-cost Russian
rockets. At this time, the future outlook for 2004-2013 is for only slight growth in the
expected demand for commercial launch services.

We see future potential growth in the suborbital segment of the industry, as new U.S.-
built vehicles are developed to meet the demand for human space travel and tourism. As
noted above, SpaceShipOne’s five launches have led the way. Additional entrepreneurs are expected to enter the market. For example, Sir Richard Branson, owner of Virgin
Airlines, announced plans to fly customers into space aboard a fleet of five passenger
rockets on a service he will call Virgin Galactic. We understand he plans to lease or buy
these spacecraft from Scaled Composites, no doubt a welcome investment for the
innovative American company.

In conclusion, I want to assure the Committee that the FAA will continue to strive to be
proactive, vigilant, and responsive to the needs of the commercial space transportation.
We will create a sound regulatory framework that protects public safety while enabling
the industry to manage risk, evolve its technology, and bring its products to the global
marketplace with appropriate regulatory oversight. As Secretary Mineta recently said
before the Aero Club here in Washington: “The first rule, to quote an old adage, is ‘do
no harm.’ This means that your government will not stand in the way of airlines as they
seek to innovate. It means giving the fledgling commercial space industry the freedom to
develop, and I am very pleased that we now have a streamlined legislative foundation in
place to support this exciting new area of transportation.” I agree with the Secretary.

That concludes my prepared statement, Mr. Chairman. I would be happy to answer any
questions you and the Members of the Subcommittee may have.