[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
NECESSARY UPDATES TO THE
COMMERCIAL SPACE LAUNCH ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON SPACE
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 4, 2014
__________
Serial No. 113-63
__________
Printed for the use of the Committee on Science, Space, and Technology
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Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR., DANIEL LIPINSKI, Illinois
Wisconsin DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
PAUL C. BROUN, Georgia DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi ALAN GRAYSON, Florida
MO BROOKS, Alabama JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois SCOTT PETERS, California
LARRY BUCSHON, Indiana DEREK KILMER, Washington
STEVE STOCKMAN, Texas AMI BERA, California
BILL POSEY, Florida ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky MARK TAKANO, California
KEVIN CRAMER, North Dakota ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS COLLINS, New York
VACANCY
------
Subcommittee on Space
HON. STEVEN M. PALAZZO, Mississippi, Chair
RALPH M. HALL, Texas DONNA F. EDWARDS, Maryland
DANA ROHRABACHER, California SUZANNE BONAMICI, Oregon
FRANK D. LUCAS, Oklahoma DAN MAFFEI, New York
MICHAEL T. McCAUL, Texas JOSEPH KENNEDY III, Massachusetts
MO BROOKS, Alabama DEREK KILMER, Washington
LARRY BUCSHON, Indiana AMI BERA, California
STEVE STOCKMAN, Texas MARC VEASEY, Texas
BILL POSEY, Florida JULIA BROWNLEY, California
DAVID SCHWEIKERT, Arizona FREDERICA S. WILSON, Florida
JIM BRIDENSTINE, Oklahoma EDDIE BERNICE JOHNSON, Texas
CHRIS STEWART, Utah
LAMAR S. SMITH, Texas
C O N T E N T S
February 4, 2014
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Steven Palazzo, Chairman,
Subcommittee on Space, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 8
Written Statement............................................ 9
Statement by Representative Donna F. Edwards, Ranking Minority
Member, Subcommittee on Space, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 10
Written Statement............................................ 11
Submitted statement of Representative Lamar S. Smith, Chairman,
Committee on Science, Space, and Technology.................... 12
Written Statement............................................ 13
Witnesses:
Dr. George Nield, Associate Administrator for Commercial Space
Transportation, Federal Aviation Administration
Oral Statement............................................... 15
Written Statement............................................ 18
Dr. Alicia Cackley, Director of Financial Markets and Community
Investment Team, Government Accountability Office
Oral Statement............................................... 26
Written Statement............................................ 28
Dr. Henry Hertzfeld, Research Professor of Space Policy and
International Affairs, Elliot School of International Affairs,
George Washington University
Oral Statement............................................... 59
Written Statement............................................ 61
Discussion....................................................... 72
Appendix I: Answers to Post-Hearing Questions
Dr. George Nield, Associate Administrator for Commercial Space
Transportation, Federal Aviation Administration................ 84
Dr. Alicia Cackley, Director of Financial Markets and Community
Investment Team, Government Accountability Office.............. 99
Dr. Henry Hertzfeld, Research Professor of Space Policy and
International Affairs, Elliot School of International Affairs,
George Washington University................................... 105
NECESSARY UPDATES TO THE COMMERCIAL SPACE LAUNCH ACT
----------
TUESDAY, FEBRUARY 4, 2014
House of Representatives,
Subcommittee on Space
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:16 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Steven
Palazzo [Chairman of the Subcommittee] presiding.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Palazzo. The Subcommittee on Space will come to
order.
Good afternoon. Welcome to today's hearing entitled
``Necessary Updates to the Commercial Space Launch Act.'' In
front of you are packets containing the written testimony,
biographies, and required truth-in-testimony disclosures for
today's witnesses. I recognize myself for five minutes for an
opening statement.
I want to take a moment to acknowledge the NASA Day of
Remembrance, which was observed last Friday as a tribute to the
crews of Apollo I and the Space Shuttles Columbia and
Challenger. These men and women lost their lives in the pursuit
of exploration and discovery and they will never be forgotten.
In his 1984 State of the Union speech, President Reagan
reminded us that our progress in space ``is a tribute to
American teamwork and excellence.'' He challenged our best and
brightest to develop launch companies ready to lift payloads to
orbit regularly with minimal government interference. Shortly
after his speech, Congress responded with passage of the
Commercial Space Launch Act.
As we once more consider changes to this groundbreaking
legislation, President Reagan's words ring just as true for us
today as they did three decades ago. We must continue providing
a framework for supporting the development of commercial space
launch. As the commercial space industry evolves, so too should
our laws and federal regulations. While there are many issues
we will address in the next CSLA, it is my desire that we give
special focus to issues surrounding launch indemnification and
the regulatory learning period.
The third-party liability risk-sharing regime, which we
know today as indemnification, provided a much-needed safety
net for new companies that were developing to fill the Nation's
launch needs after commercial satellite launches with Shuttle
ended. Since it was first created in 1988, the regime has been
extended six times, most recently a few weeks ago on the
omnibus spending bill. I look forward to hearing what our
witnesses have to say about this provision and any changes to
it that might be helpful.
In 2004, as part of the Commercial Space Launch Amendments
Act, Congress placed a moratorium on most regulations related
to spaceflight participants and vehicle design to ensure ample
flexibility for a developing commercial human space launch
industry. The need for this provision at the time was clear:
How can the FAA regulate an industry that does not exist and
has not flown a single paying customer? Today, the situation
hasn't changed much. The FAA still has no data to use for
regulations and the commercial human space launch industry is
still working hard to get off the ground.
The Commercial Crew Development Program at NASA has done a
lot to move the industry along by providing an anchor tenant
for orbital commercial human spaceflight, funding for early
stage development, and funding to mature spacecraft designs.
While the suborbital market seems to be maturing rapidly, it is
still not clear that there is a business case for nongovernment
orbital human space tourism in the near future. What is clear
is that if the FAA begins trampling on these companies with
regulations based in speculation instead of data, we may never
see the promise of commercial human spaceflight realized. The
learning period will expire in 2015 and I look forward to what
our witnesses have to say about this provision and its relative
importance to the industry.
There are many other issues that may need to be addressed
in a potential commercial space bill such as streamlining the
permitting process, offering more flexibility for experimental
aircraft, better defining the various types of spacecraft, and
strengthening the informed consent provisions. We must also
ensure that export controls and International Trafficking in
Arms Regulations are rational and productive. We need to
provide stable, certain, and competitive regulatory
environments at the Federal Aviation Administration, the
Federal Communications Commission, and the National Oceanic and
Atmospheric Administration that facilitate domestic investment.
I have to mention that as I prepared for this hearing I
reviewed an article in the Journal of Space Law, which is
published by the University of Mississippi School of Law. Ole
Miss has a world premier space law program, and I am happy to
know that Mississippi is at the forefront of these challenging
issues. I look forward to working with both sides of the aisle
in the next few months to come up with bipartisan solutions to
these issues. There is a lot of promise in the future of
commercial spaceflight, and if we work together, I know we can
put in place policies that will help grow our economy and this
great industry.
With that, I yield to the Ranking Member, the gentlewoman
from Maryland, Ms. Edwards.
[The prepared statement of Mr. Palazzo follows:]
Prepared Statement of Subcommittee on Space Chairman Steven Palazzo
Chairman Palazzo: Good morning. I would like to welcome everyone to
our hearing today and I want to thank our witnesses for taking time to
appear before the Committee.
Before we get started I want to take a moment to acknowledge the
NASA Day of Remembrance, which was observed last Friday, as a tribute
to the crews of Apollo 1 and the space shuttles Columbia and
Challenger. These men and women lost their lives in the pursuit of
exploration and discovery, and they will never be forgotten.
In his 1984 State of the Union speech, President Reagan reminded us
that our progress in space ``is a tribute to American teamwork and
excellence.'' He challenged our best and brightest to develop launch
companies ready to lift payloads to orbit regularly with minimal
government interference. Shortly after his speech, Congress responded
with passage of the Commercial Space Launch Act.
As we once more consider changes to this ground-breaking
legislation, President Reagan's words ring just as true for us today as
they did three decades ago. We must continue providing a framework for
supporting the development of commercial space launch. As the
commercial space industry evolves, so too should our laws and federal
regulations. While there are many issues we will address in the next
CSLA, it is my desire that we give special focus to issues surrounding
launch indemnification and the regulatory learning period.
The third-party liability risk-sharing regime, which we know today
as indemnification, provided a much needed safety net for new companies
that were developing to fill the nation's launch needs after commercial
satellite launches with shuttle ended. Since it was first created in
1988, the regime has been extended six times, most recently a few weeks
ago on the omnibus spending bill. I look forward to hearing what our
witnesses have to say about this provision and any changes to it that
might be helpful.
In 2004, as part of the Commercial Space Launch Amendments Act,
Congress placed a moratorium on most regulations related to space
flight participants and vehicle design to ensure ample flexibility for
a developing commercial human space launch industry. The need for this
provision at the time was clear, how can the FAA regulate an industry
that does not exist and has not flown a single paying customer? Today,
the situation hasn't changed much. The FAA still has no data to use for
regulations and the commercial human space launch industry is still
working hard to get off the ground.
The Commercial Crew Development Program at NASA has done a lot to
move the industry along by providing an anchor tenant for orbital
commercial human spaceflight, funding for early stage development, and
funding to mature spacecraft designs. While the suborbital market seems
to be maturing rapidly, it is still not clear that there is a business
case for non-government orbital human space tourism in the near future.
What is clear is that if the FAA begins trampling on these companies
with regulations based in speculation instead of data, we may never see
the promise of commercial human spaceflight realized. The learning
period will expire in 2015 and I look forward to what our witnesses
have to say about this provision and its relative importance to the
industry.
There are many other issues that may need to be address in a
potential commercial space bill such as streamlining the permitting
process, offering more flexibility for experimental aircraft, better
defining the various types of spacecraft, and strengthening the
informed consent provisions. We must also ensure that export controls
and International Trafficking in Arms Regulations (ITAR) are rational
and productive. We need to provide stable, certain, and competitive
regulatory environments at the Federal Aviation Administration (FAA),
the Federal Communications Commission (FCC), and the National Oceanic
and Atmospheric Administration (NOAA) that facilitate domestic
investment.
I have to mention that as I prepared for this hearing I reviewed an
article in the Journal of Space Law, which is published by the
University of Mississippi School of Law. Ole' Miss has a world premier
space law program, and I'm happy to know that Mississippi is at the
forefront of these challenging issues. I look forward to working with
both sides of the aisle in the next few months to come up with
bipartisan solutions to these issues. There is a lot of promise in the
future of commercial spaceflight. If we work together I know we can put
in place policies that will help grow our economy and this great
industry.
With that I recognize the ranking member, Ms. Edwards, for an
opening statement.
Ms. Edwards. Thank you very much, Mr. Chairman. And I hope
you all will bear with my voice. I promised the Chairman of the
full Committee that I would go easy on him today because I
don't have a voice and I will honor that promise.
I appreciate all our witnesses here today. Looking back to
when the Commercial Space Launch Act was passed in 1984 and I
think it is--and then amendments of course in 1988 and 2004,
and I think it is fair to say that the commercial space
industry indeed has come a long way. Not only has it come a
long way but it is growing and changing every day as companies
and entrepreneurs continue to generate new ideas and technical
concepts for potential commercial space transportation systems.
Mr. Chairman, I think this type of ingenuity and innovative
spirit that defines our Nation and our economic potential is
great and I want to see it succeed.
And as I said before, I am one of those adventurers who
wants to be a passenger, but of course I want it to be safe.
And of course my enthusiasm is tempered by the recognition that
there are a number of questions that remain outstanding in this
growing industry that need to be answered and issues that need
to be resolved.
The recently passed extension in the third-party liability
indemnification regime for three years I think means that we
have the time for a thorough and thoughtful examination of
these questions, and I look forward to our Subcommittee
conducting future hearings to address them. For example, should
we be providing indemnification permanently or should we be
laying the groundwork for an insurance-based regime? How might
such a transition occur and on what timeline? What would such a
transition mean for the insurance industry? And what other
industry models can we examine for good practices? There are
also questions about how liability should be treated for
passengers or spaceflight participants as they are called, and
that brings me to the question of whether the policy and
regulation for commercial spaceflight with humans should differ
from that for commercial launches carrying satellites, cargo,
or other payloads, which have comprised the commercial space
industry to date.
In short, the real question is whether a one-size-fits-all
approach to commercial space transportation and policy and
regulation are appropriate for this industry or should we
consider different frameworks for commercial human and
commercial un-crewed space transportation systems? Already we
are seeing existing statute being tested every day by the
evolving nature of the industry. So I hope that we are going to
be able to answer some of these questions.
I am going to enter my full statement into the record so
that I can relieve your ears of my voice, but I will say that I
think this sampling of the range of questions for our witnesses
today tells us that we have so much more to learn, and I really
do hope that this Committee will do what is intended and, that
is, really thoroughly and thoughtfully examine all of these
questions, because I think it is important both for the
maturing and growing industry but it is also important for any
potential passenger and crews.
And I know that we hadn't had that time before, but
certainly with this three-year extension in place, we have the
time for that kind of thoughtful consideration right now. And
we also have the time to examine other industries that have
evolved and we have examples of them that may show us some
window into the way that we need to deal with the potential
liabilities of this industry. And with that, I yield.
[The prepared statement of Ms. Edwards follows:]
Prepared Statement of Subcommitee on Space
Ranking Member Donna Edwards
Thank you, Mr. Chairman, for holding today's hearing on ``Necessary
Updates to the Commercial Space Launch Act,'' and welcome to our
witnesses. Looking back to when the Commercial Space Launch Act (CSLA)
was passed in 1984, followed by the Commercial Space Launch Act
Amendments in 1988, and the Commercial Space Launch Amendments Act in
2004, it is fair to say that the commercial space industry has come a
long way. Not only has it come a long way, but it's growing and
changing as companies and entrepreneurs continue to generate new ideas
and technical concepts for potential commercial space transportation
systems and related operations.
Mr. Chairman, this is the type of ingenuity and innovative spirit
that defines our nation and our economic potential; and I want to see
it succeed. I've said it before and I'll say it again, I want to fly as
a passenger one day. However, Mr. Chairman, my enthusiasm is tempered
by the recognition that there are number of questions about this
growing industry that remain unanswered, and issues that need to be
resolved. I raise them because they are questions of national policy
and safety that deserve our due diligence and that help us, as Members
of Congress, to fulfill our responsibilities to the American taxpayers.
Commercial space transportation, in fact, draws heavily on
government support through contracts for launches, use of
infrastructure, technical assistance, and financial support for the
development of government-required transportation services. I want to
recognize the significant taxpayer investments involved in supporting
this industry as we consider any direction on policy or regulation.
Mr. Chairman, the recently passed extension of the third-party
liability and indemnification regime for three years means that we have
the time for a thoughtful examination of these questions, and I look
forward to our Subcommittee conducting future hearings to address them.
For example, should we be providing indemnification permanently or
should we be laying the groundwork for a shift toward an insurance-
based regime? How might such a transition occur and on what timeline?
What would such a transition mean for the insurance industry? What
other industry models should we examine?
There are also questions about how liabilities should be treated
for passengers, or space flight participants as they are called. And
that brings me to the question of whether the policy and regulations
for commercial space flights with humans should differ from that for
commercial launches carrying satellites, cargo or other payloads, which
have comprised the commercial space launch industry to date. In short,
is a ``one-size-fits-all'' approach to commercial space transportation
policy and regulation appropriate? Or should we consider different
frameworks for commercial human and commercial uncrewed space
transportation systems?
Already, we are seeing the existing statute being tested by the
evolving nature of the industry. For example, the current statute does
not allow a commercial launch provider to hold a license on a launch
vehicle design being used for paid flights, while also holding an
experimental permit to test out improvements or modifications on
another vehicle of the same design that is not being used for paid
flights. This would seem to be something that could be remedied quickly
through either legislative or administrative action, and I look forward
to getting the FAA's thoughts on the matter at today's hearing.
In addition, when will Congress allow FAA to issue safety
regulations for these new vehicles? I know that some in industry would
like to put that date off for as long as possible. But, Mr. Chairman,
we all know that spaceflight involves risk, and I don't think we should
wait until there is an accident to put sensible safety regulations in
place.
Finally, I also hope we can begin serious consideration of how we
are going to handle accident investigation of commercial space
launches, because we are getting closer to the day when humans will be
flying on commercial suborbital, and eventually orbital systems. And
when inevitably there is a ``bad day,'' I don't think the government,
the industry, or the families of those who might potentially be lost
will benefit if we wind up developing an accident investigation
framework under pressure and in reaction to a catastrophic event.
We have the opportunity and the time to thoughtfully consider what
is needed to develop a structure for accident investigation, including
the expertise that would be required and the data that industry should
be collecting to facilitate a potential investigation, should an
accident occur, and how other high-risk operations handle accident
investigation.
Well, this is just a sample of questions that I hope we can explore
with industry, government, academia and other stakeholders through
hearings and dialogue, over at least the coming year, to inform what
will be important legislation. So, let's not rush a bill, Mr. Chairman,
when there are too many critical questions and issues that need our
careful consideration. Let's take the time to get it right. I look
forward to working with you to ensure the safety and success of the
commercial space transportation industry.
Thank you, and I yield back the balance of my time.
Chairman Palazzo. Thank you, Ms. Edwards.
I now recognize the Chairman of the full Committee for a
statement.
Chairman Smith. Thank you, Mr. Chairman.
Let me confess at the outset and say to the Ranking Member
Donna Edwards that there are some days I wish she had
laryngitis but today is actually not one of them. Furthermore,
now that she is engaged to a Texan, I assume she will be voting
with me more often.
Ms. Edwards. Mr. Chairman, that was not really public.
Chairman Smith. Oh, well, I was looking at your engagement
ring. I thought that was a giveaway. Sorry.
Ms. Edwards. In that case, thank you.
Chairman Smith. We will scratch that for the record just
for the--thank you, Mr. Chairman, for having this hearing.
Also, I want to say we have excellent witnesses today.
Americans' record of ingenuity is filled with examples of
entrepreneurs who pushed the boundaries of the possible. The
commercial space industry relies on this same creative spirit.
Three decades ago, Congress and President Reagan worked
together to pass the Commercial Space Launch Act. This
legislation paved the way for American entrepreneurs to reach
for the stars.
America has always been a nation of innovators and
explorers. We continue to remain on the forefront of new
discoveries and technologies. Members of Congress were looking
toward the future when they passed the Commercial Space Launch
Act. They had the foresight to understand that space may not be
the final frontier, but it is certainly the next frontier.
Were it not for this legislation, perhaps we would not have
some of the modern conveniences that we take for granted today.
The Space Subcommittee recently held a hearing with
representatives of the commercial space industry. The message
from those witnesses was clear. They need the government to be
consistent in its policy and regulations need to allow them
flexibility to develop their businesses and hire more American
workers.
In 1984, there were 18 federal agencies involved in every
launch. The system was inefficient and suffocated the industry.
Congress passed the Commercial Space Launch Act to get
government out of the way and reduce bureaucracy so American
businesses could be innovative and develop. Perhaps we can
continue to learn from that strategy.
Today, the Subcommittee will examine various aspects of the
commercial space launch industry and how it is affected by the
act. There are several provisions of the law that need to be
updated, and the industry continues to evolve, so must the laws
that govern it.
So, Mr. Chairman, I look forward to working with you and
the Ranking Member and our friends on the other side of the
aisle to draft a commercial space bill that will encourage the
growth of the commercial space industry.
Before I yield to the gentleman from California, Mr.
Rohrabacher, I would like to single out and recognize Stu Witt
in the front row there, who is the Chairman of the Commercial
Spaceflight Federation and is here from California. Stu,
welcome to the hearing.
With that, Mr. Chairman, I will yield to the Vice Chairman
of the full Committee, the gentleman from California, Mr.
Rohrabacher.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Committee on Science, Space and Technology
Chairman Lamar S. Smith
Thank you Chairman Palazzo for holding this hearing. And I thank
the witnesses for being here to share their expertise on this topic.
Americans' record of ingenuity is filled with examples of
entrepreneurs who pushed the boundaries of the possible. The commercial
space industry relies on this same creative spirit. Three decades ago,
Congress and President Reagan worked together to pass the Commercial
Space Launch Act. This legislation paved the way for American
entrepreneurs to reach for the stars.
America has always been a nation of innovators and explorers. We
continue to remain on the forefront of new discoveries and
technologies. Members of Congress were looking toward the future when
they passed the Commercial Space Launch Act. They had the foresight to
understand that space may not be the final frontier, but it is
certainly the next one.
Were it not for this legislation, perhaps we would not have some of
the modern conveniences that we take for granted today. The Space
Subcommittee recently held a hearing with representatives of the
commercial space industry. The message from those witnesses was clear.
They need the government to be consistent in its policy. And
regulations need to allow them flexibility to develop their businesses
and hire more American workers.
In 1984, there were 18 federal agencies involved in every launch.
The system was inefficient and suffocated the industry. Congress passed
the Commercial Space Launch Act to get government out of the way and
reduce bureaucracy so American businesses could be innovative and
develop. Perhaps we can continue to learn from that wise strategy.
Today the subcommittee will examine various aspects of the
commercial space launch industry and how it is affected by the act.
There are several provisions of the law that need to be updated. As the
industry continues to evolve, so must the laws that govern it.
As Chairman Palazzo pointed out, by working together we can develop
bipartisan solutions to the various issues that face the commercial
space sector.
I look forward to working with him and our friends on the other
side of the aisle to draft a commercial space bill that will encourage
the growth of the commercial space industry.
Thank you Mr. Chairman, I yield back.
Mr. Rohrabacher. Thank you very much, and let me just note,
as the author of the Commercial Space Launch Act of 2004, I
would like to briefly touch on just three aspects of today's
hearing, first, the regulatory learning period of commercial
space regulations. Overcoming the challenges of creating and
perfecting new space technologies has taken longer than we
predicted ten years ago when we passed this act and we expected
flights to begin much earlier than they actually have begun.
What we should have done is structure this so the eight-year
timeline started with the first commercial flight carrying a
spaceflight participant. The most important point, however, is
that we move forward, and that as we are moving forward, that
regulating in the absence of actual flight data is the worst
choice that we can make.
So item number two is the limits on testing of space
vehicles once launch licenses have been issued. Virgin Galactic
is continuing their powered test flights on SpaceShipTwo and
the FAA is close to a decision on their license application.
Their ability to complete their test programming, however, may
be at risk once they have received the license. So I mean the
last thing I can assure everyone here that we never intended a
company's ability to test their vehicle or gather additional
safety information to be limited simply because the license has
been approved.
And finally, the current law indemnifies launch providers
from claims above the insurance requirements but it also
indemnifies government against the most probable claims in the
case of an incident. This shared indemnification is important
to both the government and the industry and we should make sure
that we look at it as such.
And so I look forward to our hearing of our witnesses. I
have to leave at three o'clock but I am really looking forward
to your testimony and I may not be able to stay for the
question period, but thank you very much for yielding time and
letting me put this on the record.
Chairman Palazzo. Thank you. If there are Members who wish
to submit additional opening statements, your statements will
be added to the record at this point.
Chairman Palazzo. At this time, I would like to introduce
our panel of witnesses. Our first witness is Dr. George Nield,
Associate Administrator for Commercial Space Transportation at
the Federal Aviation Administration. Dr. Nield came to the FAA
from the Orbital Sciences Corporation where he served as senior
scientist for the Advanced Programs Group. He was the manager
of the Flight Integration Office for the Space Shuttle Program
at Johnson Space Center, a graduate of the United States Air
Force Academy. He holds an M.S. and Ph.D. in aeronautics and
astronautics from Stanford University and an MBA from George
Washington University.
Our second witness is Dr. Alicia Cackley, Director of the
Financial Markets and Community Investment Team at the
Government Accountability Office. She oversees policy research
and program evaluation on a broad range of insurance, consumer
protection, housing, and finance issues. Dr. Cackley received
her Ph.D. in economics from the University of Michigan and has
been with the GAO since 1990.
Our third witness is Dr. Henry Hertzfeld, Research
Professor of Space Policy and International Affairs at the
Elliott School of International Affairs at George Washington
University. He is also an adjunct professor of law at GW. Dr.
Hertzfeld has served as a senior economist and policy analyst
at both NASA and the National Science Foundation and is a
consultant to both U.S. and international agencies and
organizations. Dr. Hertzfeld is a member of the bar in
Pennsylvania and the District of Columbia. He received his
Ph.D. from Temple University.
As our witnesses should know, spoken testimony is limited
to five minutes each after which Members of the Committee have
five minutes each to ask questions. Your written testimony will
be included in the record of the hearing.
I now recognize our first witness, Dr. Nield, for five
minutes.
TESTIMONY OF DR. GEORGE NIELD,
ASSOCIATE ADMINISTRATOR FOR COMMERCIAL
SPACE TRANSPORTATION, FEDERAL AVIATION ADMINISTRATION
Dr. Nield. Chairman Palazzo, Ranking Member Edwards, and
distinguished Members of the Subcommittee, thank you for
inviting me to speak with you today. This is an exciting time
for commercial space transportation, and I appreciate having
the opportunity to provide you with an update.
Since I last testified before the Subcommittee in 2012, the
level of commercial space transportation activity in the United
States has increased significantly. For example, in Fiscal Year
2012 there were only three FAA licensed or permitted launches.
In Fiscal Year 2013 there were 18, a sixfold increase.
The prospects for continued growth are solid. Both SpaceX
and Orbital Sciences Corporation are now conducting launches
under FAA licenses in order to deliver supplies to our
astronauts onboard the International Space Station. Sierra
Nevada Corporation, Boeing, and SpaceX are all developing
systems to carry NASA astronauts to and from the Space Station
as part of NASA's Commercial Crew Program. The development of
suborbital vehicles is also continuing with a number of flight
tests expected during the coming year.
Virgin Galactic and XCOR Aerospace have signed up nearly
1,000 potential participants, yet space tourism is just the tip
of the iceberg. Potential suborbital missions include
conducting scientific research, demonstrating new technologies,
media and public relations, educational outreach, and satellite
deployment. New ideas and plans are coming our way with
increasing frequency. Right now, we have about 25 ongoing pre-
application consultations. This number includes proposals for
new vehicles, new spaceports, safety approvals, and requests
for payload reviews. All of these indicators are signs of
industry growth.
The FAA Office of Commercial Space Transportation has a
twofold mission: To ensure protection of the public, property,
and the national security and foreign-policy interests of the
United States during commercial launch and reentry activities;
and to encourage, facilitate, and promote commercial space
transportation. To carry out our safety responsibilities, we
develop and issue regulations, grant licenses, permits, and
safety approvals, and conduct safety inspections during every
licensed or permitted launch.
With the advent of on-orbit commercial space
transportation, the FAA has begun a dialogue with our
stakeholders to explore the need for adjustments to the FAA's
statutory authority. As the number of commercial space
transportation vehicles increases, it is appropriate to
consider closing the current regulatory and safety gap between
launch and reentry. The FAA believes it is time to explore the
orbital safety of commercial space transportation under the
Commercial Space Launch Act licensing regime.
As the popular film Gravity was able to illustrate so
dramatically, collisions in space can have devastating effects.
The FAA's experience with collision avoidance includes
conducting analyses and implementing orbital debris mitigation
practices for U.S. licensed launches. The National Space
Transportation Policy, which was issued in November of 2013,
calls on the FAA to execute exclusive authority in this area.
Should the FAA's authority be increased, we would work to
ensure that appropriate levels of orbital safety are maintained
in addition to our responsibility for launches and reentries.
The goal would be for the FAA to address orbital transportation
safety, including for orbital debris mitigation, for spacecraft
whose primary function was transportation.
Finally, I would like to assure the Subcommittee that our
partnership with NASA with respect to its commercial activities
is proceeding very smoothly. We strongly support the
Administration's requested changes for the Commercial Space
Launch Act that would add a third category of occupants called
government astronauts. The changes would complement our
existing definitions of crew and spaceflight participants, and
would increase transparency and ease the administration of our
regulations in the context of NASA astronauts serving as crew.
Mr. Chairman, this concludes my prepared remarks. I will be
pleased to answer any questions that you may have.
[The prepared statement of Dr. Nield follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Palazzo. Thank you, Dr. Nield.
I now recognize our next witness, Dr. Cackley, for five
minutes.
TESTIMONY OF DR. ALICIA CACKLEY,
DIRECTOR OF FINANCIAL MARKETS AND
COMMUNITY INVESTMENT TEAM,
GOVERNMENT ACCOUNTABILITY OFFICE
Dr. Cackley. Chairman Palazzo, Ranking Member Edwards, and
Members of the Subcommittee, I am pleased to be here today to
talk about the Federal Aviation Administration's Commercial
Space Launch Indemnification Program.
As you are aware, a catastrophic commercial launch accident
could have a significant impact on the uninvolved public or
third parties in the form of personal injuries or property
damage. In anticipation of such an event, a launch company must
purchase a fixed amount of insurance for each launch per
calculation by the FAA. According to the 1988 amendments of the
Commercial Space Launch Act, or CSLA, the federal government is
then potentially liable for claims above that amount up to an
additional $3 billion as adjusted for inflation and subject to
Congressional appropriations.
My statement today is based on work that we completed in
July of 2012 at the request of this Committee and the Senate
Committee on Commerce, Science, and Transportation, with some
updates as of January 2014 of FAA launch data and insurance
industry capacity, as well as FAA's progress on implementing
our recommendation.
In July 2012 we compared the U.S. Government's
indemnification policy with those of other countries and found
that the United States provides less indemnification for third-
party losses than key competitors such as China, France, and
Russia because these countries put no upper limit on the amount
of their coverage, while in the United States, coverage stops
at about $3 billion per launch. However, for a given launch,
the point at which the U.S. Government starts to cover losses,
the maximum probable loss, may be lower than in other
countries.
In all these countries, including the United States, these
commitments to pay have never been tested because there has
never been a third-party claim that exceeded the launch
companies' insurance and thus reached the level of government
indemnification. As a result, the potential cost to the federal
government of indemnification for third-party losses is
unclear. Estimating probable losses from a rare catastrophic
event is difficult, but how accurate that calculation is
depends on the soundness of the methodology that generates it.
In July 2012, insurance industry officials and risk
modeling experts told us that FAA's method of calculating
maximum probable loss was outdated, had not been reviewed by
outside experts, and may not be sound. An inaccurate
calculation that understates the amount of insurance a launch
provider must obtain would increase the likelihood of cost to
the federal government and lower insurers' cost, whereas a
calculation that overstates the amount of insurance would
decrease the likelihood of federal costs and raise insurers'
costs. In addition, the possible growth in commercial launches,
including manned launches, could increase the number of
launches eligible for CSLA coverage and thus potential costs
for the federal government.
In July 2012, FAA officials said that their method for
calculating maximum probable loss was reasonable and
conservative but they agreed that a review could be beneficial
and that involvement of outside experts might be helpful for
improving their methodology. In January 2014, FAA told us they
have taken some initial steps toward revising and updating
their maximal probable loss methodology but that budget
constraints had prevented further progress in the short term.
We continue to believe that our July 2012 recommendation that
FAA periodically review and update as appropriate its
methodology for calculating launch providers' insurance
requirements has merit and should be fully implemented.
With respect to the ability and willingness of the
insurance market to provide additional third-party liability
coverage, industry representatives we contacted in July 2012
told us the market was generally willing and able to provide up
to $500 million per launch, and one insurer recently confirmed
this is still the case. Because the amount of insurance FAA
requires launch providers to obtain averages about $82 million
per launch as of 2014 and coverage available through CSLA is
about $3 billion above a given launch's maximum probable loss,
insurers could provide some of the coverage currently available
through CSLA, namely, the difference between the maximum
probable loss and the $500 million the industry indicated was
the most they might provide. However, industry representatives
cautioned that the amount and price of insurance that they
might provide could change quickly if a large loss were to
occur. If those costs are passed on to customers, U.S. launch
companies could be more expensive and therefore less
competitive than their foreign counterparts.
Oh, I am sorry. Let me start this last part over.
Finally, while ending indemnification could potentially
decrease U.S. competitiveness, this depends on many factors and
the actual effects are currently unknown. Launch companies and
customers GAO contacted in July 2012 believe that ending
federal indemnification could lead to higher launch costs for
U.S. launch companies. If those costs are passed on to
customers, U.S. launch companies could be more expensive, and
therefore, less competitive than their foreign counterparts.
However, it is unclear exactly how much the cost of third-party
liability insurance, which brokers told us is about one percent
of the total insurance coverage purchased by launch companies,
might increase in the absence of federal coverage. And while
launch customers said that price and vehicle reliability were
key factors in their choice of a launch company, it is also not
clear whether the increase in insurance costs alone would be
sufficient reason for a launch customer to choose a foreign
launch company over a U.S. company.
Mr. Chairman, this concludes my prepared statement. I would
be happy to respond to any questions.
[The prepared statement of Dr. Cackley follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Palazzo. Thank you, Dr. Cackley.
I now recognize our final witness, Dr. Hertzfeld, for five
minutes.
TESTIMONY OF DR. HENRY HERTZFELD,
RESEARCH PROFESSOR OF SPACE POLICY
AND INTERNATIONAL AFFAIRS,
ELLIOT SCHOOL OF INTERNATIONAL AFFAIRS,
GEORGE WASHINGTON UNIVERSITY
Dr. Hertzfeld. Thank you very much. Thank you for the
opportunity to testify today on the topic of updating the
Commercial Space Launch Act.
Chairman Palazzo. Microphone, please.
Dr. Hertzfeld. I am sorry. I will start again.
Thank you for the opportunity to testify today on the topic
of updating the Commercial Space Launch Act. This act has
proven to be a very powerful and productive force in
stimulating commercial space transportation in the United
States. The Department of Transportation through the Federal
Aviation Administration has carried out its obligations well
and the United States is recognized as a responsible nation in
administering commercial space launch activities. The FAA has
also been successful in promoting commercial space endeavors.
The fact that regulations have remained predictable, stable,
consistent, and have been administered with fairness and
transparency is alone enough to provide confidence in the
domestic and international commercial communities.
But there are some considerations that the Congress should
address as commercial space activities evolve. The first is
jurisdictional. The DOT is an agency with expertise in
administering rules concerning all types of transportation but
it has no special expertise in the fields of resource
extraction, energy generation, or Moon landings, all of which
are being seriously proposed for outer space commercial
projects. In fact, Congress has not granted to any agency
specific regulatory powers over most activities in outer space.
And examples of that include launching a payload from a
platform in space; oversight of a commercial payload landing on
an asteroid or other celestial body; extracting, moving, or
returning Earth resources from space.
It is important to remember that by treaty agreements, the
United States Government as a launching state is ultimately
liable for damages from these activities should something go
wrong. Rather than expand the scope of the CSLA, I would
recommend that Congress consider allocating future jurisdiction
over nontransportation issues to agencies with the required
expertise in those areas. That has been the approach Congress
has chosen in the past, witnessed by the Department of Commerce
licensing of remote sensing payloads in the earlier FCC
licensing of telecommunications satellites.
The--at the same time, Congress should clearly define the
jurisdictional limits of the CSLA in order to avoid overlaps.
The topic of indemnification, if there were a catastrophic
accident in space involving a U.S. Government or corporate
asset, politics and international relations rather than any
Congressional limit would likely determine who would pay and
how much. The good news of course is that the probability of
such a catastrophic accident in space is relatively small. The
bad news is that some orbits are becoming crowded and there is
a growing probability that an accident with large economic
consequences could happen.
This coupled with emerging space capabilities such as
satellite servicing, active debris removal, or moving asteroids
will raise new insurance and indemnification issues. Examples
again are, although launch insurance is required, satellite
insurance is not. The United States could undertake an effort
to negotiate international agreements for limits to liability
for damages in space. There is no international enforceable and
binding dispute resolution system for commercial accidents in
outer space. Binding arbitration might be one to consider. The
United States Government should adopt incentives for private
industry to develop its own insurance pool to possibly
eliminate the need for government indemnification.
Regarding the experimental period for suborbital human
flight, there is no clear answer to when the experimental
period should end, but it certainly will have to be extended
beyond 2015. There are a number of companies developing human
suborbital systems. Each company has a different technological
approach making any end to an experimental period unique to
each. Congress is faced with a dilemma. If it ends the
experimental period when the first company is deemed to be
successful, it penalizes late starters, but if it continues it
indefinitely, then final regulations for safety in suborbital
vehicles will be greatly delayed, possibly risking lives and
damage.
In regard to other nations, all launching states are
parties to the Outer Space Treaty, have agreed to assume
liability and indemnify launches, but there is no guarantee
that if a problem occurs in space, all will handle it the same
way or in a way that will be satisfactory to other nations.
With the exception of a major unilateral shift in the
indemnification regime such as terminating the U.S.
Government's guarantee, it is unlikely that the current CSLA or
any changes to it will significantly alter the competitiveness
of U.S. launch companies.
In summary, the CSLA has proven to be effective and
responsive to U.S. industry's needs. However, because of the
diverse spread of expertise and responsibility among different
federal agencies, the Congress should address the interagency
coordination of all United States space activities so that
future commercial space licenses will be handled effectively,
efficiently, and quickly with the maximum transparency that is
possible.
Thank you very much.
[The prepared statement of Dr. Hertzfeld follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Palazzo. Thank you, Dr. Hertzfeld.
I thank the witnesses for being available for questioning
today. Reminding Members that Committee rules limit questioning
to five minutes, the Chair will at this point open the round of
questions. The Chair recognizes himself for five minutes.
When Congress enacted the law to promote commercial human
spaceflight in 2004, it included an eight-year learning period
to allow industry to innovate without excessive regulation
while allowing the FAA to write rules based on actual problems
during licensed flights. Unfortunately, it has taken a long
time for the industry to emerge so Congress extended this for
the full duration of the FAA Reauthorization Act in 2012,
basically until September 30, 2015. It is my understanding that
FAA's Commercial Space Transportation Advisory Committee,
COMSTAC, has recommended that the learning period be restored
to a full eight years from the first licensed flight of a
spaceflight participant. Do you agree with the FAA advisory
committee's recommendation? I would like to start with Dr.
Nield.
Dr. Nield. Mr. Chairman, if I could, I would like to tell
you a little bit about what the FAA has been doing since
Congress extended the learning period to give some context to
the question itself.
When we were asked to engage with industry about this
subject, we went out and consulted with industry, specifically
with COMSTAC, with NASA, with the Civil Aerospace Medical
Institute (CAMI) as part of the FAA, and with academia,
specifically the Center of Excellence for Commercial Space
Transportation, and asked for their help and advice. We then
held a series of eight public teleconferences to discuss what
the FAA's oversight should look like, what levels of safety are
appropriate, abort systems, fault tolerance, design margins,
medical best practices, communications, and many other topics.
And after reviewing the data and the lessons learned from
the last 50 years of human spaceflight, we developed a draft
document entitled ``The Established Practices of Human
Spaceflight Occupant Safety.'' We posted that on our website
and asked for comments from industry and from NASA. We are
currently in the process of reviewing those comments and we
hope to finalize the document this year. The ultimate goal is
to gain the consensus of government, industry, and academia.
And really, the document has two purposes, first of all, to
serve as a framework and a benchmark for industry to use in
developing industry consensus standards, and secondly, to serve
as a baseline and a starting point should there be a need for
government to issue regulations at some point in the future
once the moratorium has expired. So, that sets the stage for
where we are. I would be happy to expand on that later if you
have time.
Chairman Palazzo. Well, thank you, Dr. Nield.
Dr. Hertzfeld, would you like to add anything to that?
Dr. Hertzfeld. No, I don't think I can. I think that an
arbitrary extension at this point such as the eight years that
you had mentioned in your question might not be wise, but I
think there is at some point a judgment call that will have to
be made to end that period, and it should be based I think on
the technical basis of the experience that we have had,
particularly from the early flights and the expectations from
any of the companies that might be in the wings to begin to
start.
Chairman Palazzo. The FAA interprets the CSLA to require a
company with a licensed vehicle design to forfeit its ability
to continue testing and improving that design once it has been
put into service. Can you explain why the FAA believes it does
not have the flexibility to allow these vehicles to continue
testing, Dr. Nield?
Dr. Nield. Yes. Our interpretation of the current law is
that an experimental permit can only be used for specified
purposes, basically for training or for demonstrating
compliance, whereas a license can be used for compensation and
hire, basically for commercial use. And although it has been
mentioned already today that the intent was not to prevent or
make difficult the opportunity to go back and forth, the way we
read the current law, once a license is issued for a vehicle of
the same design that currently has a permit, the permit would
no longer be valid. Now, there is a way forward, which is you
can still continue to do testing under a launch license, but
under current law, we can't go back and forth.
Chairman Palazzo. In 2012, GAO recommended that FAA should
review the MPL calculation to ensure it is sound. How far along
is FAA in the process and what have you found so far, again,
Dr. Nield?
Dr. Nield. We completely agree with the GAO
recommendations. We believe we have a reasonable process which
has been conservative, but we solicited and welcomed outside
scrutiny and recommendations on how to improve the process. We
have come up in house with what we think is a more objective
and more accurate way of calculating the maximum probable loss.
What we would like to do is spend the next 12 months basically
to do an IV&V--independent verification and validation--of that
software to make sure that it can be used for these very
important decisions, basically how much insurance each company
has to go get, and, again, we think it would be also valuable
to have outside experts critique that, although there may be
some funding requirements that are associated with that. So we
would be happy to come back to the Committee later on in the
year and give you a better progress report, but that is where
we are right now.
Chairman Palazzo. Thank you.
I now recognize Ms. Bonamici for five minutes.
Ms. Bonamici. Thank you very much, Mr. Chairman, and thank
you to the witnesses for bringing your expertise to the
Subcommittee.
Dr. Hertzfeld, I want to ask about accident investigation
involving commercial space operations. What will we need to
know if we needed to determine what entity, whether it be an
existing or new entity, should have the authority to
investigate commercial spaceflight accidents, including those
involving human spaceflight participants? How should
investigations be handled? What type of expertise would be
needed? And are there other high-risk industries that can serve
as models?
Dr. Hertzfeld. I really have not given that any thought in
preparation for the testimony today, but when I testified in
2011, I believe I did address a couple of issues related to
that. And I think the National Transportation Safety Board
generally has authority to investigate accidents related to
transportation. Unless the law has been changed, space was left
out of the actual list of those modes to which they would
investigate. But I believe there is an MOU between the
Commercial Space Office and the National Transportation Safety
Board for accidents above a certain limit amount or those
involving human beings would be under their jurisdiction. And
if we go back to the Shuttle Columbia accident, I believe they
were also involved because they had a lot of expertise in this
area. NASA of course in the human spaceflight has had
experience as well in accident investigation, but when
something like this happens, the expertise within the
government is found among the various agencies and I don't
think any agency would decline to participate.
Ms. Bonamici. Thank you. And I am going to ask Dr. Nield,
what data should industry be required to collect in order to
facilitate a potential accident investigation should an
accident occur?
Dr. Nield. We currently require a lot of information as
part of a launch license process in terms of the vehicle and
toxic propellants and the trajectories, what the hazards are,
and so forth, so we already have that in place. And as Dr.
Hertzfeld mentioned, we currently have MOUs, Memorandums of
Understanding, between the FAA, the National Transportation
Safety Board, and the Department of the Air Force to conduct
investigations should there be an accident that occurs in the
future.
Ms. Bonamici. Can you think of any data that isn't being
collected that might facilitate an accident investigation or it
is your position that everything that should be collected is
already being collected?
Dr. Nield. I think we have a good set of requirements in
terms of what information we need upfront. To build on your
question though I think what could really help the industry
going forward is a greater willingness to share information
about close calls and incidents and accidents that do occur
among the various companies. And of course that could be a
difficult issue when you talk about proprietary data--
Ms. Bonamici. Right.
Dr. Nield. --and competition, but that could really help
the safety.
Ms. Bonamici. Terrific. Thank you.
And for all the members of the panel, the Commercial Space
Launch Act requires that space operators, before receiving
compensation or agreeing to fly a spaceflight participant,
inform each participant in writing about the risks of the
launch and reentry, and it is my understanding that that is
according to the vehicle type.
Now, some say that informed consent is not a waiver of
liability for any enhanced exposure to injury caused by the
operator's carelessness, if any, and they advocate having each
spaceflight participant exchange a liability waiver with the
commercial launch provider. So basically, parties would agree
not to file claims against the other party if there is an
accident. Now, there are concerns about the rights of the
passengers and their families and that they should be protected
in the event of an accident. So what are your views on whether
there should be cross waivers between spaceflight participants
and commercial launch providers? Is informed consent still
appropriate as we move to regularly scheduled and paid
suborbital flights?
And I think I will start with Dr. Hertzfeld. I don't know
if the other of you are lawyers. It is a bit of a legal
question.
Dr. Hertzfeld. The way the system works today is the
wording of the informed consent statement is left to the
companies, I believe. Many states that have spaceports or are
considering spaceports have passed legislation with wording on
the informed consent, and each one is slightly different. And I
think that is something of concern.
Looking ahead, it is quite fine for states to compete
against each other for economic reasons, but some of these laws
are aimed at protecting the operator from a suit by one of the
passengers if something went wrong and with the exception I
believe of willful actions or gross negligence. They read
differently and this may be something that the federal
government should consider for preemption and it might be--
because the FAA has more data, more information on all of the
companies and all of the risks, wording that perhaps should be
drafted by the FAA and be uniform throughout the country.
Ms. Bonamici. Thank you very much.
And I see my time is expired. I yield back. Thank you, Mr.
Chairman.
Chairman Palazzo. I now recognize Mr. Rohrabacher for five
minutes.
Mr. Rohrabacher. Thank you very much. And I am going to
have to be out of here in five minutes so I will get right to
it. Dr. Nield, now, you are going to have to correct me if I am
wrong in my assessment on what the law says, but right now,
when some company like I guess Virgin Galactic gets a space
launch license, at that point their ability to continue testing
is highly restricted, is that correct?
Dr. Nield. Just to be precise, currently Scaled Composites
has the permit for SpaceShipTwo.
Mr. Rohrabacher. All right.
Dr. Nield. Virgin will be the eventual customer and they
have applied for a launch license.
Mr. Rohrabacher. Right.
Dr. Nield. But once that license is issued, the use of a
permit is invalidated.
Mr. Rohrabacher. So they can't go--so what we are saying is
that it makes sense to restrict the testing of something that
has already been approved--well, we can't--we don't believe in
perfecting it anymore or make it even a little more safer. Does
that make any sense to you, that we are actually stopping a
company that might want to test to see if there is more
perfections they can do of their technology?
Dr. Nield. That doesn't make any sense at all, and I would
certainly not recommend that. Now--
Mr. Rohrabacher. Okay. So----
Dr. Nield. --additional testing could take place under a
license, but----
Mr. Rohrabacher. Yeah.
Dr. Nield. --if there is bureaucracy involved here, then we
ought to take a look at improving that.
Mr. Rohrabacher. Mr. Chairman, I guess that means that what
we--something we can do in the law to make sure that because
someone has received a license, that they are not cut off then
from improving what they have, the technology that they have,
but that is necessary right now for us to change the law for
that to happen.
And let me ask, right now, you have got 18 federal agencies
that in some way have something to do with the launch industry,
and it was decided and we tried to focus most of this
regulation on the Department of Transportation and the FAA
Commercial Space Office. Doctor, you seem to be suggesting that
we need to have more offices and more different bureaucrats
involved complicating the process more rather than facilitating
something that we need to develop in our country. You know what
they say is bureaucracy is the most efficient system ever
devised to turn creative energies into solid waste. And you
seem to be advocating more government bureaucrats than less.
Dr. Hertzfeld. Not exactly. I used the word agencies in my
testimony----
Mr. Rohrabacher. Yeah.
Dr. Hertzfeld. --that is correct, but I am focusing more on
expertise, wherever that might come from and however it might
be best coordinated throughout the federal government. And even
with 18 agencies involved, there is an intergovernmental review
of all these licenses that goes to a number of agencies, and
that process is apparently not working quite as well as it
might and has slowed down some licenses so that whether the--
there is also, as I mentioned, a void in the law about on-orbit
and in outer space activities----
Mr. Rohrabacher. Right.
Dr. Hertzfeld. --so that we are going to have to close that
at some point, and when we do, many of these areas of other
expertise will be necessary, and I think we have to----
Mr. Rohrabacher. Well, I would hope that when we have areas
of expertise that we don't set up a system in which someone who
wants to participate in this incredible new avenue for human
entrepreneurism, that we have them going to 20 different
offices in order to talk to 20 different government officials
in order to get--curry favor with each one of them, and if one
of them doesn't put the stamp on the paper, well, you can't do
what you want to do. And, believe me, there are a lot of
businesses in our country that face this kind of overregulation
and we should be very cautious not to put that type of burden
on this new entrepreneurial effort in space.
Dr. Hertzfeld. I agree with you. On the other hand, safety
is one of the things that we do have to be very much aware of
and that we do have to get the right information and have
people who understand what is going on, work with those who are
regulating.
Mr. Rohrabacher. Well, maybe we could put them in the same
office so they don't have to walk across town or something or--
--
Dr. Hertzfeld. Could happen.
Mr. Rohrabacher. Thank you very much. Thank you. And, Mr.
Chairman, thank you.
Chairman Palazzo. I now recognize Mr. Schweikert for five
minutes.
Mr. Schweikert. Thank you, Mr. Chairman.
Educate me a little bit. How many countries right now are
launch-capable or part of the international treaty, the
compact?
Dr. Nield. There are a number of countries who are involved
in space in some way, but today, only China and Russia are able
to launch people into space.
Mr. Schweikert. But how many are part of some of the treaty
mechanisms out there?
Dr. Nield. Over 100.
Mr. Schweikert. Okay. Out of those 100, how many of them
have a liability mitigation mechanic? Do they all take it as a
government indemnification? Are there others that have
bifurcated it or created a reinsurance mechanic? How do other
countries also deal with this?
Dr. Cackley. Most of the other countries that we looked
at--and we looked most specifically at China, Russia, France.
Those are some of the main countries, and they all have a
government indemnification program.
Mr. Schweikert. Is there any one that you know of--sorry,
Mr.--Doctor--anyone out there who has actually broken that
model of sort of a national insurance?
Dr. Cackley. Not that I am aware of but that doesn't mean
it doesn't exist, but it certainly isn't among the largest
companies that have the most launches that we have tracked.
Mr. Schweikert. Okay. To my other doctors--and this is
easy, doctor, doctor, doctor.
Dr. Hertzfeld. There are about--there are 180--28 countries
that have signed to ratify the Outer Space Treaty. There are
about 11 countries with launch capabilities. Most other
countries other than the ones mentioned are launching their own
government satellites, so we are not really talking about the
commercial end of it. And they have obligated themselves
through the treaties to indemnify.
I will point out though that the definition of a launching
state extends to countries that purchase a launch as well----
Mr. Schweikert. Well, you beat me to my next question. Is
there bifurcation? You know, I am a private concern out of
Taiwan. I approach the French. They are going to have--be my
lift vehicle to put up a satellite. Do I carry a
proportionality of risk? How is that mitigated?
Dr. Hertzfeld. Potentially, but the French----
Mr. Schweikert. Or--well, you only used the French but--
Dr. Hertzfeld. No, and I am using it as an example. They
would require insurance of some sort or indemnification for the
launch and----
Mr. Schweikert. How is that being acquired? So you are
telling me if I am buying lift capacity, that as that
purchaser, part of my--as I am out there in the market buying?
Dr. Hertzfeld. It would be included in the price of the
launch.
Mr. Schweikert. Okay. And--but ultimately, I am paying the
French Government for that?
Dr. Hertzfeld. Yes.
Mr. Schweikert. Okay. Just as a philosophical sort of
touch, Congressman Rohrabacher was actually coming close to
something and then let's see if I sort of express from a
personal view and you tell me where I am right or wrong. I look
at the internet, one of the most amazing sort of economic
curves we can get our heads around, how it has changed the
world, changed our lives, changed everything we are discussing
and how we do our businesses. It is also something that had a
very, very soft touch of government regulation, government
intrusion, government control, government definitions. Why does
that model not work in this world?
Dr. Nield. In general, I think it does work and you need to
look at the particular application. So when you are talking
computers, then privacy and information scams and so forth are
a concern, and the government has a role there----
Mr. Schweikert. But you also see what a great job the
government does in managing that and stopping it. I mean at
some point we have to deal with the reality of incentives and
smart people committing bad acts.
Dr. Nield. Good point, and I am all for industry designing,
developing, operating space vehicles. I think the government
does have an important role to ensure public safety, and to the
extent appropriate, to encourage, facilitate, and enable the
industry to be successful.
Mr. Schweikert. But if I was going to maximize public
safety, does that safety really come from a command-and-control
regulatory environment or does it come by actually sort of
indemnification and insurance environment where the insurance
world is actually able to think outside the box, think of other
types of mitigation? My best example is that we regulate
against securities fraud. You know, we have the entire SEC. We
have all sorts of robustness out there, but somehow, bad things
keep happening, but we do go in and bayonet the wounded after
it is all over. So my fear is command-and-control regulatory
environment often is at the back end of the disaster instead of
the front end.
So, Mr. Chairman, with that, I am over my time. I yield
back. Thank you.
Chairman Palazzo. I now recognize Mr. Bridenstine from
Oklahoma for five minutes.
Mr. Bridenstine. Thank you, Mr. Chairman.
Just a couple of questions, Dr. Nield. When you talk about
permitting, under a permit, that is when you do your testing,
right? And then when you get licensed, that is when you do your
operational flights?
Dr. Nield. Yes, although a permit is voluntary. You can go
right to license if you would like.
Mr. Bridenstine. Okay. But you mentioned that under a
license you can still do testing?
Dr. Nield. Absolutely correct.
Mr. Bridenstine. So how is that different than permitting?
Dr. Nield. Congress established permitting somewhat similar
to the way we have Experimental Airworthiness Certificates in
aviation before or instead of having a formal certification
process for the aircraft itself. So under commercial space, if
you want to do commercial ops, you need to have a license. If
you just want to do some testing or training, you can operate
under a permit and it is a little bit easier, a little bit----
Mr. Bridenstine. So even if you have a license, you can
still modify your aircraft for the betterment of the crew and
the safety of the crew and everything else.
Dr. Nield. Absolutely. And with your help, that would
continue.
Mr. Bridenstine. Okay. And then as far as the--we were
talking about the learning period. The Chairman asked a
question about extending it up to eight years after the first
spaceflight participant flight. It--now, eight years--do you
agree that we need to have the learning period extend beyond
where we currently are in 2015 and extend it to eight years
after the first spaceflight or I guess the first participant
spaceflight?
Dr. Nield. Thank you for that question, and I have to say,
no, I do not agree with that and let me tell you why. The
United States has over 50 years of experience in human
spaceflight. Alan Shepard had his suborbital flight back in
1961. The X-15 was making rocket-powered suborbital flights
back in 1962. The Space Shuttle, 135 flights over 30 years.
Now, it is true that none of those carried a spaceflight
participant who actually bought a ticket, but as far as I am
concerned, the design and the operation of those vehicles
really were independent of who was riding on board. Now, we had
lots of lessons learned, data, problems solved, challenges
overcome during that 50 years, and for us to just put that
aside and say, well, let's start over without taking advantage
of what we have learned I think is irresponsible.
Mr. Bridenstine. Okay. So having that eight-year period
originally would have been incorrect then, right?
Dr. Nield. That would be my position, yes.
Mr. Bridenstine. Okay. So we shouldn't have had the eight
year--in your opinion, we shouldn't have had the eight years to
begin with, let alone eight years going forward?
Dr. Nield. That is correct. However, I am very sensitive to
the concerns that industry has about government being
overreaching and burdensome and holding things back. That is
not what we want to do in the Office of Commercial Space
Transportation. We want to enable safe and successful
commercial operations.
Mr. Bridenstine. Okay. Mr. Chairman, I yield back.
Chairman Palazzo. Thank you. At this time we are going to
go into a second round of questioning if there are no
objections.
All right. I will yield myself five minutes.
And according to the experts in the insurance industry,
there is a large pool of capital available for launch and
payload insurance but this pool is also used for various other
types of specialty insurance and is susceptible to quickly
changing world events. Does GAO believe there is a sufficient
amount of capital in the insurance market to allow for
insurance at a reasonable cost within indemnification, Dr.
Cackley?
Dr. Cackley. When we did our work in 2012, we spoke to a
number of insurance companies and insurance brokers. We looked
very carefully at the question of industry capacity to cover
more than the maximum probable loss that launch companies are
currently required. And we very much discovered that there is
more capacity than what is currently required, and the
insurance companies told us that they had the capacity to go as
high as $500 million in coverage, but they did talk about the
fact that that ability was very much dependent on future
events. So as soon as there--if there were to be a large
event--large impact event, that could change very quickly, and
therefore, there isn't necessarily stability of provision of
insurance going forward that the launch companies could
necessarily count on. So we don't have a position as to whether
there is and will always be greater capacity, but there
certainly is a possibility for greater capacity of--than what
insurance companies are currently providing.
Chairman Palazzo. Okay. And my final question, and this is
going to be for Dr. Nield, CSLA envisioned a single license to
launch for commercial spaceflight companies, essentially a one-
stop shop. It seems that FAA is having difficulty with how to
regulate hybrid space vehicles which are part aircraft and part
spacecraft. As I understand it, these vehicles are required to
operate under different sets of regulations at different times
of operation. This type of process is inefficient and
expensive. Additionally, any time there are two sets of rules,
gaps and conflicts can develop which can impact safety. How
could the Office of Commercial Space Transportation and the
Aviation Safety Office cooperate so that the aviation office
provides all necessary input and expertise on airplane
technology but the commercial space office has the one-stop
shop role for the industry?
Dr. Nield. Thank you for that question, and let me just say
that the Office of Commercial Space Transportation and the
Office of Aviation Safety do cooperate and do provide support
to one another as appropriate. In terms of specific
legislation, we certainly support a flexible regulatory
structure which promotes growth, safely integrates operations
into the National Airspace System, and leverages all the
capabilities of the FAA. And we welcome the opportunity to
provide additional technical assistance to the Committee as you
consider avenues to correct the perceived obstacles to a
streamlined operation.
Chairman Palazzo. Thank you.
At this time I recognize Ms. Bonamici for five minutes.
Ms. Bonamici. Thank you, Mr. Chairman, and thank you for
allowing this second round of questions, especially since
Members over here had to leave before they got to ask
questions.
So for all of the distinguished panel, think back to the
airline industry, the FAA previously had dual roles as both
advocate and regulator of the airline industry, and that was
eventually split and the FAA only retained the regulatory role.
But in contrast now, the FAA has both roles regarding
commercial space. So the Office of Space Commercialization in
the Department of Commerce seems to complicate the issue as
that office also has responsibilities that include industry
advocacy. So what are the pros and cons of removing the
advocacy role of the FAA, and if that decision is made, what
entity or entities would be--or could be given that
responsibility effectively? Dr. Nield, I will start with you.
Dr. Nield. Thank you. I would point out that from the first
passage of the Commercial Space Launch Act 30 years ago, there
has been this dual role, on one hand, promote safety and on the
other encourage, facilitate, and promote the industry. And that
sounds to a lot of people like it could be a conflict and that
question has come up over the years. Congress has asked for
report. We have done independent studies. We have had debates
about that. But as I look back, I think it has worked very
well. To me, the ``encourage, facilitate, and promote'' role is
a way of thinking. It is not a compromise of safety in any way.
And if you look at the record, there have been 254 licensed or
permitted launches in the last 30 years and none of them have
ever had a fatality, serious injuries, or significant property
damage. So I think we have the balance about right.
Ms. Bonamici. Dr. Cackley or Dr. Hertzfeld, do you have the
same opinion?
Dr. Cackley. Well, we haven't looked at the duplication
across FAA and the Department of Commerce in particular, so I
don't have an opinion specifically on them, but I do know that
GAO has looked at duplication across the federal government and
a lot of different areas and it is something we identify as a
concern and something that should always be reviewed and
considered as to whether there is something that could be done
differently.
Ms. Bonamici. Thank you. Dr. Hertzfeld?
Dr. Hertzfeld. Yes, certainly industry has not complained
at this point, and I agree, it has worked fine up to now. I
think there are a couple of issues that require monitoring in
this area. When the agency was established in--the commercial
space--launch regulation, we had one type of launch vehicle,
ELVs. And then there was at a point which could come back at
some day in the future reusable and relaunch and reentry
vehicles that can come, land, and take off again. We don't have
that now. But if we begin to have a series of different
technologies, a series of different types of vehicles all
regulated by one agency, then there could be an issue of some
regulations favoring one type over another, all of them well-
meaning but not coordinating in a way that--and it could affect
companies in terms of promoting space.
Ms. Bonamici. Thank you. And I am going to try to get one
more quick question in, Dr. Hertzfeld. With the likelihood of
more frequent commercial launches, I wanted to ask about your
position on whether developing incentives for private industry
to develop insurance pools rather than--as an alternative to
government indemnification. So in your view, are there some
examples of incentives that can have the potential for
encouraging those insurance pools? Are they a possible
alternative to indemnification, especially in light of the need
for newer launch vehicles to pay higher premiums until they
establish reliability?
Dr. Hertzfeld. I think the major test will be the growth of
the industry. If there are enough launches, then there is
possibly enough business to warrant that. In a slightly
different way but the same scheme of indemnification was
applied with the civil nuclear area and eventually they were
able when we built enough nuclear power plants to have their
own pool and cover their own insurance. I think it is a ways
off but it is possible.
Ms. Bonamici. Thank you very much, and I yield back. Thank
you, Mr. Chairman.
Chairman Palazzo. I now recognize Mr. Bridenstine for five
minutes.
Mr. Bridenstine. Thank you, Mr. Chairman.
Dr. Nield, your title, Associate Administrator for
Commercial Space Transportation of the Federal Aviation
Administration, and it was my understanding that--and correct
me if I am wrong--that the FAA's Commercial Space
Transportation Advisory Committee, COMSTAC, has recommended
that the learning period be restored to a full eight years from
the first licensed flight of a spaceflight participant. So what
is your relationship with the advisory committee, and do you
and the advisory committee differ in that opinion?
Dr. Nield. The COMSTAC provides advice to the Administrator
and to me about issues of interest to commercial space
transportation, and we very much appreciate their advice. We
are not looking for a rubberstamp or a validation of what we
are trying to do. In this particular case, there is a
difference that you pointed out between their recommendation
and my recommendation to the Congress.
Mr. Bridenstine. That is all I had, Mr. Chairman. Thank
you.
Chairman Palazzo. I want to thank the witnesses for their
valuable testimony and the Members for their questions. The
Members of the Committee may have additional questions for you,
and we will ask you to respond to those in writing. The record
will remain open for two weeks for additional comments and
written questions from Members.
The witnesses are excused and this hearing is adjourned.
[Whereupon, at 3:25 p.m., the Subcommittee was adjourned.]
Appendix I
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Answers to Post-Hearing Questions
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