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Spacelift Washington: Space Loan Bill May Re-emerge Attached to NASA Spending

By frank_sietzen

October 29, 2001

Filed under General Story, National Aeronautics and Space Administration

WASHINGTON Oct. 29 – Sen. Pete Domenici (R-N.M.)’s effort at crafting loan guarantees for in-space transportation entrepreneurs may live on as a rider attached to NASA spending, sources tell SpaceRef. The bill, first proposed as an amendment to the FY02 DoD budget, may get a second chance if attached to the budget for the civil space agency. Domenici’s text (contained below as submitted to S. 1438) would give the loan authority to the NASA Administrator.

Late last month, as the Senate was considering the stalled FY 2002 Defense Appropriations bill (S. 1438), Domenici proposed a series of amendments, one of which would have granted loans and loan guarantees to certain types of space launch projects. Ultimately, all of the amendments were deferred and the defense bill passed the Senate intact. Final action on the 2002 defense budget remains pending in the Congress, which will require a House-Senate Conference Committee to write a final version both houses will have to approve.

Domenici’s amendment, called the “Commercial Reusable In-Space Transportation Act of 2001” would not have aided launch vehicle makers. Instead, the bill was intended to assist proposers of in-space transportation systems, which according to the New Mexico Senator “be developed and operated by the private sector on commercial basis.”

What systems would be aided by the loans or loan guarantees?

Reusable upper stages capable of orbit transfer, vehicles that refurbished or refueled satellites, interplanetary transfer vehicles, and any system that could recover spacecraft and return them to earth. The bill proposes making available “limited direct loans” and loan guarantees to firms proposing the development and marketing of such space vehicles provided that the firm receiving the loan pay back the cost of the loan to the “Administrator”.

Other provisions of the proposal:

The in-space transportation system would include any vehicle based and operated in space, its supporting ground elements, supporting space systems, control facilities and associated equipment.
The NASA Administrator would collect from each recipient 0.5 percent of the proceeds of the loan
Companies must be commercial space providers located in the United States
The NASA Administrator would draft language that would determine the eligibility requirements for space firms
The Bill authorizes the appropriation of $1,500,000,000 for the making of such loans
In-space transportation means “operations and activities involved in the direct transportation or attempted transportation of a payload or object from one orbit to another by means of an in-space transportation vehicle.”

Text of Amendment offered to S. 1438

SA 1656. Mr. DOMENICI submitted an amendment intended to be proposed by him to the bill S. 1438, to authorize appropriations for fiscal year 2002 for military activities of the Department of Defense, for military constructions, and for defense activities of the Department of Energy, to prescribe personnel strengths for such fiscal year for the Armed Forces, and for other purposes; which was ordered to lie on the table as follows:

On page 600, after line 6, add the following:

TITLE XXXV–COMMERCIAL REUSABLE IN-SPACE TRANSPORTATION

SEC. 3501. SHORT TITLE.

This title may be cited as the “Commercial Reusable In-Space Transportation Act of 2001”.

SEC. 3502. FINDINGS.

Congress makes the following findings:

(1) It is in the national interest to encourage the utilization of cost-effective, in-space transportation systems, which would be developed and operated by the private sector on commercial basis.

(2) The use of reusable in-space transportation systems will enhance performance levels of in-space operations, enhance efficient and safe disposal of satellites at the end of their useful lives, and increase the capability and reliability of existing ground-to-space launch vehicles.

(3) Commercial reusable in-space transportation systems will enhance the economic well-being and national security of the United States by reducing space operations costs for commercial and national space programs and by adding new space capabilities to space operations.

(4) Commercial reusable in-space transportation systems will provide new cost-effective space capabilities (including orbital transfers from low altitude orbits to high altitude orbits and return, the correction of erroneous satellite orbits, and the recovery, refurbishment, and refueling of satellites) and the provision of upper stage functions to increase ground-to-orbit launch vehicle payloads to geostationary and other high energy orbits.

(5) Commercial reusable in-space transportation systems can enhance and enable the space exploration of the United States by providing lower cost trajectory injection from earth orbit, transit trajectory control, and planet arrival deceleration to support potential National Aeronautics and Space Administration missions to Mars, Pluto, and other planets.

(6) Satellites stranded in erroneous earth orbit due to deficiencies in their launch represent substantial economic loss to the United States, estimated at as much as $3,000,000,000 to $4,000,000,000 in a recent 12-month period, and present substantial concerns for the current backlog of national space assets valued at $20,000,000,000.

(7) Commercial reusable in-space transportation systems can provide new options for alternative planning approaches and risk management to enhance the mission assurance of national space assets.

(8) Commercial reusable in-space transportation systems developed by the private sector can provide in-space transportation services to the National Aeronautics and Space Administration, the Department of Defense, the National Reconnaissance Office, and other agencies without the need for the United States to bear the cost of development of such systems.

(9) The availability of limited direct loans and loan guarantees, with the cost of credit risk to the United States paid by the private-sector, is an effective means by which the United States can help qualifying private-sector companies secure otherwise unattainable private financing for the development of commercial reusable in-space transportation systems, while at the same time minimizing Government commitment and involvement in the development of such systems.

SEC. 3503. LOANS AND LOAN GUARANTEES FOR DEVELOPMENT OF COMMERCIAL REUSABLE IN-SPACE TRANSPORTATION.

(a) AUTHORITY TO MAKE LOANS AND LOAN GUARANTEES.–The Administrator may make loans, and may guarantee loans made, to eligible United States commercial providers for purposes of developing commercial reusable in-space transportation systems.

(b) ELIGIBLE UNITED STATES COMMERCIAL PROVIDERS.–The Administrator shall prescribe requirements for the eligibility of United States commercial providers for loans, and loan guarantees, under this section. Such requirements shall ensure that eligible providers are financially capable of undertaking a loan made or guaranteed under this section.

(1) CREDIT SUBSIDY.–

(A) COLLECTION REQUIRED.–The Administrator shall collect from each United States commercial provider receiving a loan or loan guarantee under this section an amount equal to the amount, as determined by the Administrator, to cover the cost, as defined in section 502(5) of the Federal Credit Reform Act of 1990, of the loan or loan guarantee, as the case may be.

(B) PERIODIC DISBURSEMENTS.–In the case of a loan or loan guarantee in which proceeds
of the loan are disbursed over time, the Administrator shall collect the amount required under this paragraph on a pro rata basis, as determined by the Administrator, at the time of each disbursement.

(2) ADMINISTRATIVE FEE.–

(B) AVAILABILITY.–Amounts collected by the Administrator under this paragraph shall be available to the Administrator for purposes of carrying out this section.

(3) PAYMENT OF AMOUNTS.–Amounts paid by a United States commercial provider under this subsection shall be derived from amounts other than the proceeds of the loan for which such amounts are paid.

(d) INTEREST RATE.–The interest rate on a loan made or guaranteed under this section may not be less than an interest rate determined by the Administrator based on a benchmark interest rate on marketable Treasury securities with a similar maturity to the loan.

(e) OTHER TERMS AND CONDITIONS.–

(1) AMORTIZATION PERIOD.–A loan made or guaranteed under this section shall be amortized over the shorter, as determined by the Administrator, of–

(A) 20 years; or

(B) the useful life of the physical asset to be financed by the loan.

(2) PROHIBITION ON SUBORDINATION.–A loan made or guaranteed under this section may not be subordinated to another debt contracted by the United States commercial provider concerned, or to any other claims against such provider.

(3) RESTRICTION ON INCOME.–A loan made or guaranteed under this section may not–

(A) provide income which is excluded from gross income for purposes of chapter 1 of the Internal Revenue Code of 1986; or

(B) in the case of a loan guaranteed under this section, provide significant collateral or security, as determined by the Administrator, for other obligations the income from which is so excluded.

(4) TREATMENT OF GUARANTEE.–The guarantee of a loan under this section shall be conclusive evidence of the following:

(A) That the guarantee has been properly obtained.

(B) That the loan qualifies for the guarantee.

(C) That, but for fraud or material misrepresentation by the holder of the loan, the guarantee is valid, legal, and enforceable.

(5) OTHER TERMS AND CONDITIONS.–The Administrator may establish any other terms and conditions for a loan made under this section, or for the guarantee of a loan under this section, as the Administrator considers appropriate to protect the financial interests of the United States.

(f) ENFORCEMENT OF RIGHTS.–

(1) IN GENERAL.–The Attorney General may take any action the Attorney General considers appropriate to enforce any right accruing to the United States under a loan or loan guarantee under this section.

(2) FORBEARANCE.–The Attorney General may, with the approval of the parties concerned, forebear from enforcing any right of the United States under a loan made or guaranteed under this section for the benefit of a United States commercial provider if such forbearance will not result in any cost, as defined in section 502(5) of the Federal Credit Reform Act of 1990, to the United States.

(3) UTILIZATION OF PROPERTY.–Notwithstanding any other provision of law and subject to the terms of a loan made or guaranteed under this section, upon the default of a United States commercial provider under the loan, the Administrator may, at the election of the Administrator–

(A) assume control of the physical asset financed by the loan; and

(B) complete, recondition, reconstruct, renovate, repair, maintain, operate, or sell the physical asset.

(g) AUTHORIZATION OF APPROPRIATIONS.–There is hereby authorized to be appropriated $1,500,000,000 for the making of loans under this section and for the administration of loans and loan guarantees under this section.

SEC. 3504. DEFINITIONS.

In this title:

(1) ADMINISTRATOR.–The term “Administrator” means the Administer of the National Aeronautics and Space Administration.

(2) COMMERCIAL PROVIDER.–The term “commercial provider” means any person or entity providing commercial reusable in-orbit space transportation services, primary control of which is held by persons other than the Federal Government, a State or local government, or a foreign government.

(3) IN-SPACE TRANSPORTATION SERVICES.–The term “in-space transportation services” means operations and activities involved in the direct transportation or attempted transportation of a payload or object from one orbit to another by means of an in-space transportation vehicle.

(4) IN-SPACE TRANSPORTATION SYSTEM.–The term “in-space transportation system” means the space and ground elements, including in-space transportation vehicles and support space systems, and ground administration and control facilities and associated equipment, necessary for the provision of in-space transportation services.

(5) IN-SPACE TRANSPORTATION VEHICLE.–The term “in-space transportation vehicle” means a vehicle designed–

(A) to be based and operated in space;

(B) to transport various payloads or objects from one orbit to another orbit; and

(6) UNITED STATES COMMERCIAL PROVIDER.–The term “United States commercial provider” means any commercial provider organized under the laws of the United States that is more than 50 percent owned by United States nationals.

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