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Monitoring to Oversee the Safety of the Emerging Space Tourism 
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Report to the Ranking Democratic Member, Committee on Transportation 
and Infrastructure, House of Representatives: 

United States Government Accountability Office: 

GAO: 

October 2006: 

Commercial Space Launches: 

FAA Needs Continued Planning and Monitoring to Oversee the Safety of 
the Emerging Space Tourism Industry: 

Commercial Space Launches: 

GAO-07-16: 

GAO Highlights: 

Highlights of GAO-07-16, a report to the Ranking Democratic Member, 
Committee on Transportation and Infrastructure, House of 
Representatives 

Why GAO Did This Study: 

In 2004, the successful launches of SpaceShipOne raised the possibility 
of an emerging U.S. commercial space tourism industry that would make 
human space travel available to the public. The Federal Aviation 
Administration (FAA), which has responsibility for safety and industry 
promotion, licenses operations of commercial space launches and launch 
sites. To allow the industry to grow, Congress prohibited FAA from 
regulating crew and passenger safety before 2012, except in response to 
high-risk events. GAO evaluated FAA’s (1) safety oversight of 
commercial space launches, (2) response to emerging issues, and (3) 
challenges in regulating and promoting space tourism and responding to 
competitive issues affecting the industry. GAO reviewed FAA’s 
applicable safety oversight processes and interviewed federal and 
industry officials. 

What GAO Found: 

Several measures indicate that FAA has provided a reasonable level of 
safety oversight for commercial launches. For example, none of the 179 
commercial launches that FAA licensed over the past 17 years resulted 
in fatalities, serious injuries, or significant property damage. 
However, FAA shared safety oversight with the Department of Defense 
(DOD) for most of these launches because they took place at federal 
launch sites operated by DOD. In addition, FAA’s licensing activities 
incorporate a system safety process, which GAO recognizes as effective 
in identifying and mitigating risks. GAO’s analysis of FAA records 
indicates that the agency is appropriately applying management controls 
in its licensing activities, thereby helping to ensure that the 
licensees meet FAA’s safety requirements. 

In response to emerging issues in the commercial space launch industry, 
such as the potential development of space tourism, FAA has developed 
safety regulations and training for agency employees. The industry has 
raised concerns about the costs of complying with regulations and about 
the flexibility of the regulations to accommodate launch differences. 
However, FAA believes it has minimized compliance costs by basing its 
regulations on common safety standards and has allowed for flexibility 
by taking a case-by-case approach to licensing and by providing waivers 
in certain circumstances. 

FAA faces several challenges and competitive issues in regulating and 
promoting space tourism. For example, FAA expects to need more 
experienced staff for safety oversight as new technologies for space 
tourism evolve, but has not estimated its future resource needs. Other 
challenges for FAA include determining the specific circumstances under 
which it would regulate space flight crew and passenger safety before 
2012 and balancing its responsibilities for safety and promotion to 
avoid conflicts. Recognizing the potential conflict in the oversight of 
commercial space launches, Congress required the Department of 
Transportation (DOT) to commission a report by December 2008 on several 
issues, including whether the promotion of human space flight should be 
separate from the regulation of such activity. In addition, U.S. 
commercial space launch industry representatives said that they face 
competitive issues concerning high launch costs and export controls 
that can affect their ability to sell services overseas. The federal 
government has provided support to the industry to help lower launch 
costs. 

Figure: 

[See PDF for Image] 

Source: Scaled Composites. SpaceShipOne. 

[End of Figure] 

What GAO Recommends: 

If DOT’s commissioned report on dual safety and promotion roles does 
not fully address the potential for a conflict of interest, GAO 
suggests that Congress revisit FAA’s promotional role and decide 
whether it should be eliminated. GAO recommends that FAA assess its 
future safety oversight resource needs and identify the circumstances 
that would trigger passenger safety regulation before 2012. Relevant 
federal agencies reviewed the draft and DOT agreed with the 
recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-16]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gerald L. Dillingham at 
(202) 512-2834 or dillinghamg@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

FAA Has Met Its Safety Performance Goal While Using a System Safety 
Process and Management Controls: 

FAA Has Developed Regulations and Training to Respond to Emerging 
Issues: 

FAA Faces Challenges in Fulfilling Its Responsibilities for Regulating 
the Emerging Space Tourism Sector: 

To Help Address Key Competitive Issues Facing the Industry, the U.S. 
Government Has Played an Important Role: 

Conclusions: 

Matter for Congressional Consideration: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objective, Scope, and Methodology: 

Appendix II: Economic Impact of the Commercial Space Industry: 

Appendix III: FAA's Launch and Reentry Licensing Process: 

Appendix IV: Timeline and List of FAA Commercial Space Launch 
Rulemaking and Guidance: 

Appendix V: Comments from the Department of Commerce: 

Appendix VI: Comments from the National Aeronautics and Space 
Administration: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Comparison of Expendable and Reusable Launch Vehicles for 
Commercial Launches: 

Table 2: Examples of Federal Support to the Commercial Space Launch 
Industry: 

Table 3: Experts Providing Input on GAO's Review: 

Table 4: List of Organizations That GAO Interviewed: 

Figures: 

Figure 1: Worldwide Commercial Orbital Launches, 1997-2005: 

Figure 2: Examples of Expendable and Reusable Launch Vehicles: 

Figure 3: Federal Launch Sites and Existing and Proposed Spaceports in 
the United States, as of August 2006: 

Figure 4: Federal Agencies' Roles and Responsibilities in the 
Commercial Space Launch Industry: 

Figure 5: Examples of Vertical Federal Launch Sites and Horizontal 
Spaceports: 

Figure 6: FAA's and Department of Commerce's Statutory Promotional 
Responsibilities: 

Figure 7: Commercial Space-Related Industries: 

Figure 8: Distribution of Economic Activity Impacts Resulting from 
Commercial Space Transportation and Enabled Industries, 2004: 

Figure 9: FAA's Launch Licensing Process: 

Abbreviations: 

DARPA: Defense Advanced Research Projects Agency: 
DHS: Department of Homeland Security: 
DOD: Department of Defense: 
DOT: Department of Transportation: 
FAA: Federal Aviation Administration: 
MPL: maximum probable loss: 
NASA: National Aeronautics and Space Administration: 
NSC: National Security Council: 
OSTP: Office of Science and Technology Policy: 
TSA: Transportation Security Administration: 
USTR: Office of the U.S. Trade Representative: 

United States Government Accountability Office: 
Washington, DC 20548: 

October 20, 2006: 

The Honorable James L. Oberstar: 
Ranking Democratic Member: 
Committee on Transportation and Infrastructure: 
House of Representatives: 

Dear Mr. Oberstar: 

In 2004, the successful launches of SpaceShipOne raised the possibility 
of an emerging commercial space tourism industry that would make human 
space travel available to the public for the first time. Previously, 
human space travel in the United States was limited to the National 
Aeronautics and Space Administration's (NASA) flights. SpaceShipOne is 
a reusable launch vehicle[Footnote 1] that resembles an airplane. It 
was launched from an airplane into space, where it traveled nearly 70 
miles above the earth (an altitude known as suborbital space), and 
returned to the original launch site. Designed to carry two crew 
members and one passenger, SpaceShipOne is the first commercial 
reusable launch vehicle licensed by the Federal Aviation Administration 
(FAA). Several companies in addition to SpaceShipOne's designer, Scaled 
Composites, LLC, are developing reusable launch vehicles for commercial 
space tourism and plan to start operations within the next few years. 
Historically, commercial space launches carried payloads, generally 
satellites, into orbit using expendable launch vehicles[Footnote 2] 
that did not return to earth. 

In 2004, the U.S. commercial space launch industry accounted for $1.7 
billion in economic impact, according to FAA.[Footnote 3] At that time, 
the industry consisted of a few FAA-licensed launch companies that 
operated primarily from Department of the Air Force launch sites. 
Currently, the industry appears to be expanding--more firms are 
applying to FAA for launch licenses, and several commercial spaceports 
are being planned.[Footnote 4] One space tourism company, Virgin 
Galactic, which intends to start operations in 2009 and to initially 
charge $200,000 per passenger, plans to carry 3,000 passengers over the 
subsequent 5 years on space flights, with 100 individuals having 
already paid the full fare. In addition, the U.S. commercial space 
launch industry faces strong competition from international companies, 
primarily from Russia and Europe, offering satellite launches on 
expendable launch vehicles. Russia is also the only nation that has 
commercially launched humans into space, with four individuals having 
paid an estimated $20 million each for orbital space flights. 

The federal government regulates and supports the commercial space 
launch industry to varying degrees. In 1984, the Commercial Space 
Launch Act gave the Department of Transportation (DOT) the authority to 
license and monitor the safety of commercial space launches and to 
promote the industry. In 2004, the Commercial Space Launch Amendments 
Act gave FAA the specific responsibility of overseeing the safety of 
space tourism, but the act prohibits FAA from regulating crew and 
passenger safety before 2012, except in response to high-risk 
incidents, serious injuries, or fatalities. The Department of Defense 
(DOD), through the Air Force, provides infrastructure, operations 
support, and safety oversight for government and commercial launches at 
its launch sites. The Department of Commerce (Commerce) is also 
responsible for promoting the commercial space industry. 

This report discusses the federal role in commercial space launches and 
the government's response to emerging industry trends--both 
domestically and internationally. In this review, we addressed the 
following questions: 

* How well does FAA oversee the safety of commercial space launches? 

* To what extent is FAA responding to key emerging issues in the 
commercial space launch industry? 

* What challenges does FAA face in regulating and promoting the 
commercial space launch industry? 

* What are the key competitive issues affecting the U.S. commercial 
space launch industry, and to what extent are the industry and 
government responding to them? 

To determine how well FAA is overseeing the safety of commercial space 
launches, we reviewed the agency's safety oversight processes, 
including the documentation of its licensing and safety monitoring 
processes, internal guidance and policies, applicable regulations, and 
memoranda of agreement with other federal agencies. We also reviewed 
FAA's use of system safety procedures[Footnote 5] and interviewed 
industry experts and FAA officials. Because FAA relies on the Air Force 
to conduct safety oversight at the Air Force's two primary launch sites 
in Florida and California, we reviewed Air Force launch safety 
requirements and interviewed FAA and Air Force officials about their 
respective responsibilities and interaction. In addition, we examined 
FAA's application of certain management controls in its licensing and 
monitoring processes using our guidelines for management controls at 
federal agencies, such as documentation and timeliness of the review 
process and communication and consultation with relevant federal 
agencies.[Footnote 6] To determine the extent to which FAA is 
responding to key emerging issues in the commercial space launch 
industry, such as space tourism, we identified these issues through 
literature reviews and assessed the extent of FAA's response through 
interviews with federal government officials and industry 
representatives. These industry representatives were from associations 
that represent the commercial space launch industry and from entities 
that had received launch or launch-site licenses from FAA or were 
consulting with FAA about receiving such licenses as of September 2005. 
We also interviewed these officials and representatives to identify the 
challenges FAA faces in regulating and promoting the commercial space 
launch industry. To determine the key competitive issues affecting the 
U.S commercial space launch industry and the extent to which the 
industry and the federal government are responding to them, we 
conducted a literature review that included applicable laws affecting 
industry competitiveness and interviewed agency officials, industry 
representatives, and industry experts to obtain their views. We 
conducted our review from August 2005 through October 2006 in 
accordance with generally accepted government auditing standards. 
Appendix I contains additional information about our objective, scope, 
and methodology. 

Results in Brief: 

Several measures indicate that FAA has provided a reasonable level of 
safety oversight for expendable launch vehicles, including the 
industry's launch safety record and FAA's safety licensing process and 
use of management controls in its license application reviews. FAA has 
licensed 179 commercial launches over the past 17 years that have 
resulted in no fatalities, serious injuries, or significant property 
damage. However, the Air Force's oversight for launches from its launch 
sites has contributed to this achievement. From March 1989 to August 
2006, FAA exercised sole safety oversight for 27 of the 179 commercial 
launches. Of the remaining 152 launches, other entities, primarily the 
Air Force, provided on-site safety oversight of launches from their 
launch sites. In addition, FAA's licensing activities use a system 
safety process, which we recognize as an effective evaluative method of 
identifying and mitigating risks. Furthermore, our analysis of FAA 
records indicated that the agency is appropriately applying management 
controls, such as timely reviews and verification of data, in its 
licensing of commercial launches and launch sites, thereby helping to 
ensure that the licensees satisfy FAA's safety requirements. 

FAA is responding to emerging issues in the U.S. commercial space 
launch industry, such as the development of space tourism at 
spaceports, by issuing safety regulations and has developed training 
for agency employees to use in overseeing the safety of these launches. 
However, some industry representatives expressed concern about (1) the 
costs of complying with both FAA's regulations and the Air Force's 
existing requirements at federal launch sites and (2) the flexibility 
the regulations would afford to accommodate special launch 
circumstances. According to FAA, it has minimized the costs of 
compliance by basing its regulations on common safety standards that it 
shares with the Air Force, and it has allowed for flexibility by taking 
a case-by-case approach to licensing and by providing waivers in 
certain circumstances. 

FAA faces several challenges in regulating and promoting an emerging 
sector of the U.S. commercial space launch industry--space tourism from 
spaceports--that could affect its safety oversight of the evolving 
industry. First, FAA faces the challenge of providing a sufficient 
number of personnel with the experience and training needed to evaluate 
and oversee the safety of an uncertain but potentially escalating 
number of space tourism launches. FAA's experience with such launches 
is limited because just five have taken place and all have used the 
same launch vehicle--SpaceShipOne. At the same time, a wide variety of 
launch vehicles and technologies are being designed, and FAA is 
expecting its workload to increase. FAA has not estimated the level of 
resources needed to oversee this developing sector of the industry and 
has indicated that it will not do so until the industry further 
develops. Second, FAA faces the challenge of ensuring that its 
regulations for operations of launch vehicles and launch sites are 
suitable not only for operations at federal launch sites but also for 
spaceports. FAA's regulations are based on common safety standards 
developed by FAA and the Air Force, primarily on the basis of the Air 
Force's range safety requirements for expendable launch vehicle 
operations from federal launch sites. Third, FAA faces the challenge of 
determining the circumstances under which it would regulate the safety 
of crew and space flight participants before 2012. Congress prohibited 
FAA from regulating crew and space flight participant safety before 
2012, except in response to high-risk incidents, serious injuries, or 
fatalities, to allow the industry to grow and innovate; therefore, FAA 
has not developed criteria for those circumstances. Finally, FAA faces 
the challenge of balancing its responsibilities for safety and 
promotion and distinguishing its promotion role from that of Commerce, 
which is also mandated to promote the commercial space industry. 
According to some experts, FAA's safety oversight and promotional 
responsibilities do not conflict because its promotional activities are 
centered on providing a safe industry. However, according to other 
experts, FAA's dual role may create a potential conflict of interest as 
space tourism develops, particularly in FAA's determination of whether 
or when to regulate crew and flight participant safety. Recognizing the 
potential conflict in the oversight of commercial space launches, 
Congress required DOT to commission an independent study by December 
2008 on whether the promotion of human space flight should be separate 
from the regulation of such activity. In addition, some of FAA's 
promotional activities, such as publishing economic impact studies on 
the industry, have the potential of overlapping with those of Commerce. 

The U.S. commercial space launch industry faces key competitive issues 
concerning high launch costs and U.S. export controls. Space launches 
incur high costs for launch vehicle development and for launch facility 
operations and maintenance. The government has helped to lower these 
costs by investing in the design and development of vehicles for its 
use, making its launch infrastructure available for commercial launches 
when space is available, and providing business opportunities to 
companies for launches of national defense and scientific payloads. The 
government also provides indemnification[Footnote 7] for commercial 
launches and has attempted to reduce costs to the industry by 
streamlining the licensing of commercial launches through FAA's and the 
Air Force's development of common safety standards and acceptance of 
each other's waivers of specific licensing requirements. In addition, 
industry representatives that we interviewed said that they would like 
fewer items to be regulated by export controls or a streamlining of the 
process for obtaining authorization to export these items to improve 
the U.S. industry's competitive position. Export controls are in place 
to ensure that sales and leases of controlled U.S. technologies are 
consistent with U.S. national security and foreign policy interests. 
Although we have not examined the issue of which specific items should 
be subject to export controls, we have examined the export control 
system and have recommended ways to improve its overall 
efficiency.[Footnote 8] 

We suggest that, if DOT's 2008 report on the dual safety and promotion 
roles does not fully address the potential for a conflict of interest, 
Congress consider revisiting FAA's promotional role and decide whether 
to eliminate it to alleviate a potential conflict of interest. For FAA 
to be prepared for a potential increase in space tourism launches, we 
are recommending that FAA plan for the level of resources and expertise 
needed to assume its additional responsibilities for overseeing the 
safety of reusable launch vehicle operations at spaceports. In 
addition, we are recommending that FAA develop and issue guidance on 
the circumstances under which it would regulate crew and flight 
participant safety before 2012. Furthermore, to distinguish between 
FAA's and Commerce's promotional responsibilities, we are recommending 
that FAA develop a memorandum of understanding with Commerce. We 
provided a draft of this report to the Departments of Transportation, 
Defense, Commerce, State, and Homeland Security (DHS); NASA; the White 
House Office of Science and Technology Policy; and the Office of the 
U.S. Trade Representative. State, Defense, and DHS had no comments and 
the other agencies provided technical comments, and generally agreed 
with the facts presented in the report. They provided technical 
corrections and clarifications, which we incorporated as appropriate. 
DOT and Commerce agreed with the report's recommendations. 

Background: 

There are three main types of space launches--national security, civil, 
and commercial. National security launches are by DOD for defense 
purposes, and civil launches are by NASA for scientific and exploratory 
purposes. Many commercial launches are internationally competed and 
carry payloads, such as satellites, that generate revenue. In 1984, the 
Commercial Space Launch Act required the Secretary of Transportation to 
"encourage, facilitate, and promote commercial space launches by the 
private sector." At that time, the U.S. government was the sole entity 
launching civil and commercial payloads into orbit from the United 
States. However, as a result of the Space Shuttle Challenger accident 
in January 1986, the U.S. government transferred responsibilities for 
commercial payload launches to the private sector. Space launches by 
private sector companies grew as U.S. commercial launch companies 
responded to the increase in global demand for commercial satellite 
launch services in the mid-1990s. Nonetheless, following a downturn at 
the beginning of this century in the business of the commercial space 
launch industry's primary commercial customer, the telecommunications 
services industry, the demand for commercial space launches has 
generally declined. As shown in figure 1, the total number of U.S. and 
worldwide commercial orbital launches has declined from a peak of 41 
launches in 1998. 

Figure 1: Worldwide Commercial Orbital Launches, 1997-2005: 

[See PDF for Image] 

Source: GAO analysis of FAA data.

Note: These launches used expendable launch vehicles, which are 
designed to be launched once, to deliver satellites into orbit. 
Launches are grouped by the country in which the primary vehicle is 
manufactured. Exceptions to this are launches by Sea Launch Company, 
LLC, which is designated as multinational and launches from 
international waters. Sea Launch, whose partners include Boeing 
Commercial Space Company of the United States, S.P. Korolev Rocket and 
Space Corporation Energia of Russia, Kvaerner of Norway, and SKO 
Yuzhnoye/PO Yuzhmash of Ukraine, is required to have an FAA license 
because Boeing, a U.S. company, has a controlling interest in the 
company. 

[End of Figure] 

The U.S. commercial space launch industry, comprising a few launch 
companies, has historically used federal sites to launch satellites 
using expendable vehicles, which are designed to be launched once. 
According to FAA, the launch vehicle manufacturing and services sector 
of the commercial space industry had $1.7 billion in economic impact on 
the U.S. economy for 2004, with the greatest economic impacts to 
enabling industry sectors such as satellite manufacturing and 
services.[Footnote 9] (See app. II for more information on the industry 
and its economic impact.) 

The commercial space launch industry is changing with the emergence of 
suborbital reusable launch vehicles that enable space tourism from 
state-sponsored or private launch sites, known as spaceports. (See fig. 
2 for examples of expendable and reusable launch vehicles.) 

Figure 2: Examples of Expendable and Reusable Launch Vehicles: 

[See PDF for image] 

Source: FAA> 

Note: Falcon I is partially reusable because its first stage is 
designed to be recovered and reused. 

[End of figure] 

The prospect for commercial space tourism materialized in 2004 when 
SpaceShipOne, developed by Scaled Composites, flew to space twice, 
achieving a peak altitude of about 70 miles to win the Ansari X 
Prize.[Footnote 10] Several entrepreneurial launch companies are 
planning to start taking paying passengers, also known as space flight 
participants, on suborbital flights within the next few years. Virgin 
Galactic intends to enter commercial suborbital space flight service 
around 2009, launching from a spaceport in New Mexico, and according to 
the company, plans to carry 3,000 passengers over the subsequent 5 
years, with 100 individuals having already paid the full fare of 
$200,000. In addition, 4 individuals have already paid an estimated $20 
million each for space flights to the International Space Station on a 
Russian vehicle that launches from Kazakhstan. According to a Futron 
Corporation market study on space tourism, the orbital and suborbital 
space tourism market could attract up to 15,000 passengers and generate 
revenues in excess of $1 billion per year by 2021, with suborbital 
space tourism likely generating the most demand.[Footnote 11] Several 
other companies in the United States and elsewhere, including former 
Ansari X Prize competitors, continue to develop their vehicles for 
space tourism. For example, Russia is developing a reusable launch 
vehicle, Cosmopolis 21, for space tourism flights. 

Spaceports are being developed to accommodate anticipated commercial 
space tourism flights and are expanding the nation's launch capacity. 
As of August 2006, the United States had five federal launch sites, six 
spaceports with an FAA launch site operator's license, and an 
additional eight spaceports have been proposed (see fig. 3). Although 
their individual capabilities and level of infrastructure development 
vary, these facilities may house launch pads and runways as well as the 
buildings, equipment, and fuels needed to prepare vehicles and payloads 
before launch. The spaceports are operated by state or local 
governments and authorities and by private entities. These spaceports 
also face competition from abroad. Space Adventures, a U.S.-based space 
tourism broker, in partnership with other investors, plans to develop a 
$115 million spaceport near Changi Airport in Singapore and a $265 
million spaceport in Ras Al-Khaimah near Dubai in the United Arab 
Emirates. 

Figure 3: Federal Launch Sites and Existing and Proposed Spaceports in 
the United States, as of August 2006: 

[See PDF for Image] 

Source: FAA and GAO. 

[End of Figure] 

Federal Agencies' Roles and Responsibilities in the Commercial Space 
Launch Industry: 

Several federal agencies regulate and support the commercial space 
launch industry. FAA oversees the safety of all commercial launches-- 
both expendable and reusable launch vehicles from federal launch sites 
and spaceports--through its licensing, compliance monitoring, and 
safety inspection activities.[Footnote 12] FAA licenses launches to 
ensure the health and safety of the public and the safety of property. 
The agency licenses all commercial launches that take place in the 
United States. In addition, it licenses all overseas launches by U.S. 
citizens or companies. FAA generally does not license launches by the 
U.S. government, nor does it license the operation of federal launch 
sites.[Footnote 13] In issuing launch and launch-site operator 
licenses, FAA does not certify the launch vehicle as safe; in contrast, 
FAA's Office of Aviation Safety provides initial certification of 
aircraft and periodically inspects an aircraft and certifies it as safe 
to fly. FAA can also issue experimental permits for launches of 
reusable vehicles conducted for research and development, for 
demonstrations of compliance with licensing requirements, or for crew 
training before obtaining a license. During commercial launches, FAA 
aerospace engineers are on-site to monitor licensees' compliance with 
license and permit requirements. For 179 commercial launches conducted 
between March 1989 and August 2006, FAA has issued licenses for 63 
launch vehicles and six spaceports. In addition, FAA has issued one 
experimental permit for a suborbital reusable vehicle. (See app. III 
for more information about FAA's launch licensing process.) 
Furthermore, FAA is responsible for promoting the industry, which the 
agency said it accomplishes by sponsoring an annual industry forecast 
conference, publishing industry studies, and conducting outreach to 
potential launch companies. FAA also consults with industry through its 
advisory committee, the Commercial Space Transportation Advisory 
Committee, which provides advice and recommendations to the FAA 
Administrator. This advisory committee has working groups comprising 
industry representatives who consult on reusable launch vehicle 
development and launch operations and support, among other commercial 
space subjects. 

Other federal agencies support the commercial space launch industry to 
varying degrees. DOD provides guidance and safety oversight for 
government and commercial launches at federal launch sites. The Air 
Force also operates the government's two primary commercial launch 
sites--Cape Canaveral Air Force Station in Florida and Vandenberg Air 
Force Base in California--and provides infrastructure and operations 
support. In addition, the Department of the Army operates a launch site 
at the White Sands Missile Range in New Mexico and at the Ronald Reagan 
Ballistic Missile Test Site in the Marshall Islands. Commercial 
launches at federal launch sites occur when "excess capacity" is 
available and the launch company reimburses DOD for the direct use of 
government services.[Footnote 14] Three U.S. companies--Boeing, 
Lockheed Martin, and Orbital Sciences--have been the primary commercial 
users of DOD launch facilities. In support of its mission to have 
assured access to space, DOD also has supported the industry through 
investments in the design and development of small, medium, and heavy 
lift launch vehicles, which have been used for both government and 
commercial launches.[Footnote 15] 

Under the Technology Administration Act of 1998, Commerce is to serve 
as an advocate for the commercial space industry. Its Office of Space 
Commercialization, established in 1988 within the Office of the 
Secretary of Commerce and now located within the National Oceanic and 
Atmospheric Administration, is responsible for promoting commercial 
investment in the industry by, among many activities, collecting and 
disseminating information on space markets; conducting workshops on 
commercial space opportunities; promoting space-related exports; and 
seeking the removal of legal, policy, and institutional impediments to 
space activities. Commerce's International Trade Administration also 
promotes the commercial space industry in matters concerning 
international trade through such activities as trade events, advocacy 
programs, and the development of policies to further U.S. industry 
competitiveness. In addition, Commerce regulates export of space 
technologies that are considered dual-use items--that is, items with 
military and civilian uses--and is a customer of satellite launches. 

NASA's support for the commercial space launch industry includes (1) 
providing infrastructure and range support from its Wallops Flight 
Facility in Virginia and radar support for commercial launches from DOD 
launch sites[Footnote 16] and (2) encouraging private sector investment 
in NASA launches and other activities. Since the 1985 National 
Aeronautics and Space Administration Authorization Act, Congress has 
required NASA to "seek and encourage, to the maximum extent possible, 
the fullest commercial use of space." In January 2004, the President 
announced the Vision for U.S. Space Exploration, which directed NASA to 
pursue commercial opportunities for providing transportation and other 
services supporting the International Space Station and exploration 
missions beyond low-Earth orbit.[Footnote 17] Congress supported this 
direction in the NASA Authorization Act of 2005 by requiring NASA to 
develop a commercialization plan that (1) identifies opportunities for 
the private sector to participate in NASA missions and activities in 
space and (2) emphasizes the use of advancements made by the private 
sector in developing launch vehicles.[Footnote 18] One such opportunity 
is NASA's Commercial Orbital Transportation Services demonstration 
program, for which NASA solicited proposals from private industry in 
March 2006 to demonstrate cargo and crew space transportation to low- 
Earth orbit and awarded two contracts in August 2006. 

Other federal agencies support commercial launches in various ways. 
DHS's Transportation Security Administration (TSA) is responsible for 
security policy, compliance, and related issues for commercial space 
transportation. TSA also is responsible for establishing national 
standards for transportation and infrastructure security for commercial 
space transportation. The Department of State ensures that domestic 
space policies support U.S. foreign policy objectives and international 
commitments. State also regulates the export of space technology and 
represents the United States on the United Nations Committee on the 
Peaceful Uses of Outer Space. The White House Office of Science and 
Technology Policy (OSTP) and the National Security Council (NSC) 
develop and manage commercial space launch policymaking by mediating 
among federal agencies and reporting to the President on space policy 
issues, among other duties. The Office of the U.S. Trade Representative 
(USTR) negotiates and monitors commercial space launch industry trade 
agreements as needed. (See fig. 4 for a summary of federal agencies' 
roles and responsibilities.) 

Figure 4: Federal Agencies' Roles and Responsibilities in the 
Commercial Space Launch Industry: 

[See PDF for image] 

Source: GAO analysis of agency information. 

[End of figure] 

FAA Has Met Its Safety Performance Goal While Using a System Safety 
Process and Management Controls: 

FAA has met its safety performance goal of no fatalities, serious 
injuries, or significant property damage to the public; however, the 
Air Force's oversight of its launch sites has contributed to this 
achievement. FAA's oversight of launches includes the use of a system 
safety process in its licensing and monitoring process and 
incorporation of management controls, which we have reported to be 
effective means of providing safety oversight and program management. 

FAA Has Met Its Safety Performance Goal of No Fatalities or Substantial 
Property Damage: 

FAA has met its annual performance goal to have no fatalities, serious 
injuries, or significant property damage to the public during licensed 
space launches and reentries since establishing this goal in 2003. 
Moreover, according to FAA, none of the 179 commercial launches that 
occurred between March 1989 and August 2006 resulted in casualties or 
substantial property damage. Of these 179 launches, FAA had joint 
oversight responsibility with other federal agencies for 152 (about 85 
percent) and sole responsibility for 27 (about 15 percent) that 
included sea launches and the launches of SpaceShipOne from Mojave 
Spaceport. FAA shared responsibility with the Air Force for 132 
launches at Air Force launch sites and with NASA, the Army, or foreign 
governments for 20 launches at NASA's Wallops Flight Facility in 
Virginia, the Army's White Sands Missile Range in New Mexico, and other 
facilities. Thus, the majority of commercial space launches during this 
period took place at Air Force launch sites where the Air Force had 
primary responsibility for safety oversight. We discuss later in this 
report the challenges that FAA faces in the future in assuming sole 
responsibility for launch safety oversight at spaceports. 

FAA's Licensing Process Incorporates System Safety: 

FAA incorporates a system safety process in its oversight of commercial 
launches by requiring the launch company to use system safety in the 
development and operation of its vehicle and in applying system safety 
methodologies to calculate the risk posed by a launch. As we have 
reported, a system safety process is an effective evaluative method of 
identifying and mitigating risks.[Footnote 19] Specifically, system 
safety relies on the application of technical and managerial skills to 
identify, analyze, and control hazards and risks. An objective of a 
system safety process is to identify hazard trends to spot and correct 
problems at their root cause before an incident occurs. 

During the licensing process, the launch company is responsible for 
system safety by demonstrating that it has assessed all hazards and 
risks posed by its launch operations and has proposed how to mitigate 
them. The assessment is focused on safety critical systems, such as a 
vehicle's main structure, propulsion system, and flight safety systems, 
whose performance or reliability can affect public safety and the 
safety of property. Through the development of a system safety program 
plan, the launch company applicant demonstrates that the proposed 
vehicle design and operations satisfy regulatory requirements, and that 
the system is capable of performing safely during all flight phases, 
including launch and reentry. The plan provides a description of the 
strategy by which recognized and accepted safety standards and 
requirements, including organizational responsibilities, resources, 
methods of accomplishment, milestones, and levels of effort, are to be 
tailored and integrated with other system engineering functions. FAA 
consults with an applicant early in its launch vehicle development to 
help the applicant understand what must be included in the system 
safety program plan. In addition, FAA reviews the final system safety 
program plan as part of its safety review of the license 
application.[Footnote 20] 

Another way in which FAA incorporates system safety in its oversight of 
commercial launches is by conducting a risk analysis for each launch. 
FAA calculates, for each launch, the expected average number of 
casualties (deaths or serious injuries) to the public from debris 
hazards in the proposed flight path. This risk level--no more than 30 
per million for the public and no more than 1 per million for an 
individual--is consistent with the launch standards used at federal 
launch sites. According to FAA, the risk to the public from commercial 
launches should not exceed "normal background risk"--that is, no 
greater risk than is voluntarily accepted in the course of normal day- 
to-day activities. For licensing launch-site operations, FAA performs a 
similar safety review that includes a risk analysis, which considers 
the site's proximity to populated areas and a review of security 
planned at the facility. The risk analysis is both site-specific and 
vehicle-specific, and FAA reviews the results on a case-by-case basis 
because of differences between launch sites and vehicle designs. 

An expert on system safety confirmed our assessment that FAA has 
appropriately applied a system safety process to its launch license 
activities. In particular, the expert said that FAA has identified all 
of the safety systems that are critical to commercial space launches, 
made the proper assumptions of risk, and used proper validation 
methodologies. He also noted that FAA has used a higher factor of 
safety for commercial space launches than is commonly used in other 
industries, which is appropriate given that the space launch industry 
has a high-risk profile. However, the expert said that FAA should 
update its system safety handbook as the space tourism sector matures 
to incorporate different launch methods, such as launches from land, 
sea, and air, which may have different safety implications. 

FAA Has Applied Management Controls in Its Licensing Process: 

FAA is applying relevant management controls in its licensing process. 
Management controls that we reviewed include the documentation of the 
review and approval of licenses, compliance with timely review 
requirements, communication with other federal agencies, and 
reliability and verification of data. According to our review of the 19 
applications for launch and launch-site licenses that were active as of 
January 2006, FAA is applying these management controls.[Footnote 21] 
FAA accurately documented the review and approval process and completed 
its reviews of license applications within 180 days, as required by the 
Commercial Space Launch Act. However, FAA starts counting the 180 days 
after deciding that an application is sufficiently complete. Our 
analysis showed that FAA communicated and consulted on an as-needed 
basis with other federal agencies that are members of an interagency 
advisory group on expendable launch vehicles, as required by an 
executive order[Footnote 22] that designates DOT as lead agency within 
the federal government for commercial space launches. This 
communication includes coordinating with other federal agencies during 
the licensing process. Representatives from the majority of agencies 
serving on the group told us that FAA had periodically contacted them 
during its review of license applications. For example, agency 
representatives told us that FAA had checked with DOD on whether 
certain launches would negatively affect national security, and with 
State on whether launches were consistent with international treaties. 
In addition, our analysis showed that FAA verified the information in 
the applications for accuracy. 

FAA Has Developed Regulations and Training to Respond to Emerging 
Issues: 

In response to changes in the commercial space launch industry, 
including the emerging issues of anticipated growth in space tourism, 
FAA issued regulations in 2000 for the licensing of launch and reentry 
of reusable launch vehicles. The regulations for reusable launch 
vehicles require launch operators to obtain a safety approval from FAA 
in order to receive a license.[Footnote 23] In August 2006, FAA issued 
regulations that include safety requirements that applicants must meet 
to obtain a license for operations of expendable launch 
vehicles.[Footnote 24] The 2006 regulations cover license requirements 
for any launch of a commercial expendable launch vehicle from any 
launch site, whether a federal launch site or a spaceport. However, 
some industry experts raised questions about the appropriateness of the 
regulations for operations at spaceports and also expressed concern 
about both existing and potential future safety requirements for 
reusable launch vehicles, which can vary widely in design and 
operation. In addition, FAA has developed training for its aerospace 
engineers to help prepare them to assume safety oversight 
responsibility at spaceports. 

FAA Has Developed Safety Regulations for Launch Vehicles and Launch 
Sites: 

FAA's regulations for operations of launch vehicles and launch sites 
are based on common safety standards, which were developed jointly by 
FAA and the Air Force to harmonize the respective agencies' safety 
practices. (See app. IV for a timeline and list of FAA's commercial 
space launch rulemaking and guidance.) These safety standards cover 
vehicle design and operations and criteria for acceptable risks for 
launch and launch-site operations, such as the siting of hazardous 
materials.[Footnote 25] The regulations build on those common standards 
with the goal of promoting consistent, streamlined safety reviews of 
launch operations. 

However, concerns have been raised regarding the suitability of the 
2006 regulations, which are based on the experience of expendable 
launch vehicles at federal launch sites, for launches at spaceports. 
Some industry experts that we interviewed noted that differences in 
spaceports from which vehicles are or will be launched raise questions 
about the appropriateness of the regulations. Additionally, while the 
2006 regulations only apply to expendable launch vehicles, industry 
experts expressed concern about safety regulation of reusable launch 
vehicles, given the difference in the design of vehicles and the 
methods for launching them. FAA stated that it addresses these concerns 
by (1) making license determinations on a case-by-case basis using 
common performance standards and (2) providing waivers in special 
circumstances. Performance standards require launch companies to meet 
certain performance thresholds--a risk level, calculated by an expected 
casualty analysis, of no more than 30 per million for the public and 1 
per million for an individual--while allowing these companies to 
develop their own specific launch vehicle design. FAA said that it uses 
performance standards to encourage innovation in vehicle design, rather 
than being prescriptive on how the vehicle should be designed. FAA said 
that its ability to issue waivers of license requirements for special 
circumstances allows it to assess the unique characteristics of a 
launch and its impact on safety. FAA, for example, granted a waiver at 
Mojave Spaceport that allowed for the storage and handling of liquid 
propellants closer to the runway--which would be used for a horizontal 
launch, such as SpaceShipOne--than would have been allowed for a 
vertical launch. Later in this report, we discuss the challenges that 
FAA faces in ensuring that its regulations are suitable for the 
emerging space tourism sector. 

In addition, industry officials and one expert with whom we spoke 
raised concerns about the costs that expendable launch vehicle 
companies would incur to comply with the proposed regulations, because 
they believe that FAA's safety requirements at federal launch sites 
will be in addition to the Air Force's requirements. However, according 
to FAA, it has minimized these companies' costs by ensuring that its 
safety standards are the same as the Air Force's, and that waivers 
issued by FAA or the Air Force are accepted by both agencies. FAA 
officials also noted that they have the authority to implement an 
option that they said could potentially reduce costs for both launch 
companies and the agency--namely, to issue a safety approval that is 
separate from a licensing determination. For example, they said that 
FAA could approve a component of a vehicle, such as a flight 
termination system, which could then be used for multiple 
licenses.[Footnote 26] This approval could reduce uncertainty and costs 
for the vehicle manufacturer and save FAA the cost of evaluating the 
component for each license. As of August 2006, FAA had not made any 
such approvals. 

FAA Has Developed Training to Respond to Space Tourism: 

FAA has developed training for its aerospace engineers that focuses on 
oversight duties and technical areas. According to FAA, the oversight 
training addresses evaluations of license and permit applications; 
safety inspections of launch, reentry, and site operations; and mishap 
investigations of launch and reentry vehicles. Technical training 
addresses system safety, flight safety analyses, and flight safety 
systems. The training is either provided in-house or obtained from 
commercially available sources and other government agencies. In 
addition, to help its aerospace engineers develop expertise that will 
be applicable to reusable launch vehicles, employees from FAA's Office 
of Commercial Space Transportation who are pilots and familiar with 
aircraft certification systems share their expertise with other staff. 
FAA also has sent its aerospace engineers to NASA and Air Force courses 
on launch and space flight operations, which include procedures for the 
launch and recovery of vehicles; FAA courses on avionics and aircraft 
operations, which are relevant because reusable launch vehicles have 
aircraft characteristics; and National Transportation Safety Board 
courses on aviation accident investigation, which includes procedures 
that would be useful in the event of a launch incident. While this 
training will help FAA to respond to current emerging issues, it will 
be important for FAA to keep abreast of industry changes and train 
their aerospace engineers accordingly. 

FAA Faces Challenges in Fulfilling Its Responsibilities for Regulating 
the Emerging Space Tourism Sector: 

FAA faces multiple challenges in responding to the emergence of the 
space tourism sector. Those challenges include obtaining the expertise 
and resources needed to provide safety oversight of the sector, 
ensuring that its various regulations are suitable for the different 
launches and launch sites it licenses, determining the circumstances 
under which it would regulate passengers and crew, and ensuring that 
its industry promotion responsibilities do not conflict with its safety 
oversight responsibilities. 

FAA Faces Human Resources and Workload Challenges in Addressing Its 
Responsibilities for Licensing Reusable Vehicles: 

If the space tourism industry develops as rapidly as some industry 
representatives suggest, FAA's responsibility for licensing reusable 
launch vehicles will greatly expand. However, FAA's experience in this 
area is limited because its launch safety oversight has focused 
primarily on unmanned orbital launches. From 1989 to 2005, FAA issued 
two reusable launch vehicle licenses that were mission- 
specific[Footnote 27] and conducted compliance monitoring and safety 
inspections for five reusable launch vehicle missions. Although FAA 
gained some experience and expertise from these missions, some industry 
representatives and experts with whom we spoke questioned whether FAA 
is prepared for its expanded role and raised concerns about whether FAA 
has sufficient experience and expertise. Experts also indicated that 
FAA must stay ahead of the development of the reusable launch vehicle 
industry to fulfill its safety oversight responsibilities, because many 
companies are developing space hardware for the first time and are 
producing different designs that have not been tested. For example, a 
safety incident[Footnote 28] occurred during a SpaceShipOne flight when 
the vehicle deviated from the launch trajectory and flew over a 
populated area. FAA evaluated this incident and required Scaled 
Composites, the developer of SpaceShipOne, to take corrective measures 
to continue its licensed flights. During its next flight, SpaceShipOne 
unexpectedly rolled 29 times, which FAA did not classify as an 
incident.[Footnote 29] In addition, retaining staff expertise may also 
be a challenge, given federal funding constraints and competition 
within the industry for qualified aerospace engineers. We have reported 
on the challenges the aerospace industry faces in attracting, training, 
and retaining new workers with the engineering, science, and technical 
capabilities it needs, given recent trends in the decline of the future 
supply of such workers.[Footnote 30] In FAA's case, two of the five 
aerospace engineers who worked on the licensing and monitoring of 
SpaceShipOne flights are no longer with the agency. However, FAA said 
that it has since filled these positions. 

To help evaluate the safety of reusable vehicle launches, FAA's Office 
of Commercial Space Transportation has obtained expertise from outside 
firms and other FAA offices. For example, FAA contracted with a 
consulting firm to verify the expected casualty analysis involving 
SpaceShipOne's flights. In addition, because of certain similarities 
between reusable launch vehicles and aircraft, the Office of Commercial 
Space Transportation has consulted with FAA's Office of Aviation 
Safety. Both of these FAA offices, for example, worked on 
SpaceShipOne's license application and had a documented agreement that 
described how the offices would work together. However, according to 
Scaled Composites, confusion existed during the licensing process 
regarding the respective authorities of the FAA offices. For instance, 
Scaled Composites was required to have two authorizations--one for its 
vehicle and one for its launch operations. Initial vehicle flight tests 
to demonstrate "proof of concept" were conducted by the Office of 
Aviation Safety. Once Scaled Composites was ready to conduct launch 
operations, the Office of Aviation Safety transferred the vehicle 
review to the Office of Commercial Space Transportation, which reviewed 
the launch for licensing. According to an Office of Aviation Safety 
inspector, communication between the two offices, especially during the 
transfer stage of the review of SpaceShipOne, was not clear. In 
addition, an FAA engineer stated that distinctions between the two 
offices' respective authorities had to be made so that there was no 
overlap and disagreement between the offices. Since the licensing of 
SpaceShipOne, the Commercial Space Launch Amendments Act of 2004 
clarified responsibility by stating that only one license would be 
required by DOT to approve commercial space launches, and this 
responsibility has been designated to the Office of Commercial Space 
Transportation. However, the two offices still need to coordinate on 
license reviews for operations of hybrid vehicles having both aircraft 
and rocket-like characteristics, according to officials in both 
offices. Nonetheless, no formal process exists between the two offices 
that outlines when and under what circumstances the offices should 
consult. While the documented agreement between the offices described 
how they would authorize flights of SpaceShipOne, this document is 
specific to those flights and is not generic for future reusable launch 
vehicle licenses. 

FAA's safety oversight of the commercial space launch industry may be 
further challenged, in part, because of the expected increase in 
workload demands facing agency staff. FAA is anticipating a substantial 
increase in the number of permit and launch applications that could be 
submitted for reusable launch vehicle and launch-site operations in the 
near future, but FAA has not quantified the magnitude of applications. 
For example, FAA's annual industry forecast does not include projected 
reusable vehicle launches. FAA said that its anticipated increase in 
applications is based on preapplication consultations that FAA has 
conducted with reusable launch vehicle companies and spaceports. In 
addition, an FAA official noted that companies with existing reusable 
launch vehicle licenses are likely to apply for additional permits or 
licenses for the new vehicles they are developing. Furthermore, launch 
companies participating in NASA's Lunar Lander Challenge and Commercial 
Orbital Transportation Services demonstration program and Commerce's 
Geostationary Operational Environmental Satellite Program are required 
to obtain commercial launch permits or licenses from FAA.[Footnote 31] 
FAA initially plans to be present for every licensed launch of a 
reusable vehicle. If FAA carries out this plan, its staff workload 
would increase, since the proposed spaceports for space tourism flights 
are located throughout the country and space tourism companies are 
planning frequent launches. FAA has not determined the level of 
resources needed to meet this expected increase in responsibilities 
involving reusable launch vehicles. Agency officials said that they 
monitor the industry to assess how its development could impact 
resource requirements and will not make a budget request for additional 
resources until the workload has grown to justify the request. However, 
the agency has not conducted scenarios of different workload 
projections on the basis of increased space tourism launches. 

FAA Faces the Challenge of Ensuring That Its Various Regulations Are 
Suitable for Launches: 

FAA faces the challenge of ensuring that its 2006 regulations on 
licensing and safety requirements for launch, which are based on the 
Air Force's safety requirements for expendable launch vehicle 
operations at federal launch sites, will be suitable not only for 
operations at federal launch sites, but also for operations at 
spaceports. As we previously mentioned, industry representatives and 
experts are concerned that the safety regulations for reusable launch 
vehicles may not be suitable for space tourism flights because of 
differences in vehicle types and launch operations. Table 1 contains a 
comparison of some of the differences between expendable and reusable 
launch vehicles. 

Table 1: Comparison of Expendable and Reusable Launch Vehicles for 
Commercial Launches: 

Expendable launch vehicle: Vehicle not reused; 
Reusable launch vehicle: All or part of vehicle reused. 

Expendable launch vehicle: Flight may be terminated by destroying the 
vehicle; 
Reusable launch vehicle: Flight may be terminated by landing the 
vehicle. 

Expendable launch vehicle: Generally not piloted and not designed to 
carry passengers; 
Reusable launch vehicle: Piloted or unpiloted and most are designed to 
carry passengers. 

Expendable launch vehicle: Generally launched vertically or in the air; 
Reusable launch vehicle: May be launched vertically, horizontally, or 
in the air. 

Expendable launch vehicle: May be used for either orbital or suborbital 
flights; 
Reusable launch vehicle: May be used for either orbital or suborbital 
flights. 

Expendable launch vehicle: Proven safety records; 
Reusable launch vehicle: Generally unproven safety records. 

Expendable launch vehicle: Typically launched over unpopulated ocean 
areas; 
Reusable launch vehicle: May be launched over partially populated 
areas. 

Expendable launch vehicle: Primarily launched by established launch 
companies, such as Boeing, Lockheed Martin, and Orbital Sciences 
Corporation, at federal launch sites; 
Reusable launch vehicle: Will be launched primarily by new launch 
companies at spaceports. 

Expendable launch vehicle: Currently subject to Air Force and FAA 
safety requirements; 
Reusable launch vehicle: Subject to FAA licensing regulations, which 
require safety approvals. 

Expendable launch vehicle: Generally use liquid and solid rocket fuels; 
Reusable launch vehicle: Generally use liquid rocket fuels. 

Expendable launch vehicle: Not required to withstand the heat of 
reentry; 
Reusable launch vehicle: Required to withstand the heat of reentry. 

Source: GAO analysis of comments from the Air Force, FAA, aerospace 
representatives, and experts. 

[End of table] 

Three of the six operators of licensed spaceports and six of the eight 
operators of spaceports in the licensing process told us they did not 
believe that FAA's regulations should apply to the new spaceports. Five 
of these spaceport officials said that since reusable vehicles can be 
launched differently from expendable vehicles and can return to earth, 
the reusable vehicles present different safety implications. 

In addition, concerns about the suitability of the safety regulations 
were raised by experts we interviewed and by comments filed in the 
public docket for these regulations. While it was noted that the 
regulations were appropriate to spaceports if the vehicles launching 
from them are using exotic or dangerous fuels, concerns were raised 
that the rules may be too stringent for the currently proposed and 
operating reusable launch vehicles. Although the safety regulations 
applicable to expendable launch vehicles are separate from the safety 
approvals required to obtain a reusable launch vehicle license, some 
experts are concerned about similarities in the safety rules. For 
example, two experts noted that the expected casualty analysis[Footnote 
32] that is the same for launches of expendable and reusable vehicles 
might be too high for reusable vehicles, given the vehicles' different 
safety implications. Experts also said that safety regulations should 
be customized for each spaceport to address the different safety issues 
raised by different orbital trajectories and the differences in the way 
that vehicles launch and return to Earth--whether vertically or 
horizontally. (See fig. 5 for examples of vertical federal launch sites 
and spaceports.) To address these concerns, experts have noted that it 
will be important to measure and track safety information and use it to 
determine if the regulations should be revised. For example, an expert 
noted that FAA should identify and track safety indicators for launch 
companies and spaceports and, as the industry matures, conduct trend 
analyses with the objective of eliminating negative situations 
representative in the trends. Another expert noted that any safety 
performance measure should account for different launch and trajectory 
tracks, such as over land or over water. Yet another expert noted that 
FAA's proposed regulations for experimental permits allow FAA to 
collect statistical data that could then be applied to develop safety 
standards criteria. FAA says that it collects data on anomalies and 
failures of safety-critical systems, which will allow it to analyze 
safety trends and determine potential precursors to accidents. However, 
the agency has not conducted trend analyses of that information. Other 
industry experts noted that the regulations should be revisited when 
the space tourism sector has further developed. Meanwhile, the 
Commercial Space Launch Amendments Act of 2004 requires DOT to 
commission an independent report to be issued to Congress and completed 
by December 2008. This report is to analyze whether expendable and 
reusable vehicles should be regulated differently from each other, and 
whether either of the vehicles should be regulated differently if 
carrying passengers. This report could provide FAA with information to 
address industry concerns about the suitability of its regulations to 
space tourism. 

Figure 5: Examples of Vertical Federal Launch Sites and Horizontal 
Spaceports: 

[See PDF for image] 

Sources: GAO and FAA. 

[End of figure] 

FAA Faces the Challenge of Determining the Circumstances under Which It 
Would Regulate Crew and Flight Participant Safety on Space Tourism 
Flights before 2012: 

The Commercial Space Launch Amendments Act of 2004 requires that a 
phased approach be used in regulating commercial human space flight, 
and that regulatory standards evolve as the industry matures. The act 
prohibits FAA from regulating crew and space flight participant safety 
before 2012, except in response to incidents that either pose a high 
risk or result in serious or fatal injury. However, the act maintains 
FAA's authority over protecting the uninvolved public, and FAA stated 
that it has the authority to regulate crew and passenger safety to the 
extent that the public would be affected. According to FAA, it is only 
prohibited from issuing regulations that apply solely to crew and 
passenger safety, and any situation that implicates the public would 
allow FAA to regulate. FAA asserts that it has the authority to protect 
the crew because they are part of the flight safety system that 
protects the general public. FAA's proposed regulations for human space 
flight[Footnote 33] would establish requirements for crew 
qualifications and training and space flight participant training and 
informed consent. Although these proposed regulations address passenger 
and crew behavior, FAA believes that the regulations are within its 
authority because they are intended to protect the public--not space 
flight participants. For example, the proposed regulations would 
require an operator to train each space flight participant before the 
flight on how to respond to emergency situations, including loss of 
cabin pressure, fire, smoke, and emergency egress. The proposed 
training requirement is aimed at protecting public safety, because if a 
space flight participant did not receive this training, he or she might 
interfere with the crew's ability to protect public safety. 

The proposed regulations are not aimed solely at crew and passenger 
safety and, as a result, there have been instances in which FAA has not 
stepped in and imposed additional regulations or requirements for 
safety reasons because the public was not implicated. For example, 
Scaled Composites' SpaceShipOne rolled 29 times, and, according to FAA, 
it did not impose additional requirements because the flight was over a 
unpopulated area, and because FAA concluded that the pilot was in 
control of the vehicle. FAA monitored and reviewed the corrective 
actions taken by Scaled Composites prior to its next flight. 
Additionally, FAA has not developed specific criteria regarding when an 
incident would qualify as contributing to "an unplanned event or series 
of events…that pose a high risk of causing a serious or fatal injury" 
that would trigger FAA's authority to issue regulations specific to 
crew and passenger safety. 

Experts and industry representatives that we interviewed expressed 
different opinions about whether FAA should regulate crew and flight 
participant safety and, if so, when. Some industry representatives and 
experts we interviewed agreed that the Commercial Space Launch 
Amendments Act of 2004 provides the industry with the flexibility 
needed to innovate and grow. However, other experts said that there is 
too much flexibility in the act. One of these experts noted that FAA 
should publish the criteria that would cause it to regulate crew and 
flight participant safety before 2012. Another expert said that FAA's 
having the discretion to decide when it would regulate crew and flight 
participant safety creates uncertainty for the industry, noting that 
without published criteria, the industry does not know how FAA would 
react to an incident involving a space tourism company, which could 
seriously hurt the industry. The designer of a reusable launch vehicle 
told us that FAA should regulate crew and flight participant safety for 
commercial space flight because he believes that space tourism needs to 
be as safe as commercial aviation. 

Meanwhile, a trade association made up of space tourism companies and 
spaceports--called the Personal Spaceflight Federation--plans to 
commission standards for vehicles and their operation, including space 
flight participant safety, as the space tourism industry 
develops.[Footnote 34] The federation believes that ensuring the 
highest-possible level of safety for the industry and sharing best 
practices will be essential to promote the safety and growth of the 
industry. The federation intends to commission an independent standards 
organization, such as the American Society for Testing and Materials, 
to develop accredited industry standards for voluntary testing and 
approval, much as Underwriters Laboratories, an independent 
organization that tests electrical devices, has done. According to an 
expert, while companies do not have to submit their products to 
Underwriters Laboratories for testing, market acceptance is low and 
liability exposure is high without the Underwriters Laboratories' stamp 
of approval. The expert believes that a similar approach will work for 
space flight participants, who are more likely to choose to fly on a 
launch vehicle that has been approved according to industry standards 
than on one that has not been approved. 

FAA's Dual Role of Promotion and Safety May Pose a Challenge: 

FAA faces the potential challenge of overseeing the safety of 
commercial space launches while promoting the industry as the space 
tourism sector develops. According to our analysis, FAA's current 
promotional activities have not conflicted with its safety regulatory 
role; however, industry experts have noted that potential challenges 
may arise as the space tourism sector develops. FAA is mandated to 
regulate the commercial space transportation industry to protect public 
safety and property while encouraging, facilitating, and promoting 
commercial space launches. According to FAA, its promotional activities 
include sponsoring an annual industry conference, sponsoring Commercial 
Space Transportation Advisory Committee meetings and work groups, 
presenting space-related topics at various aerospace professional 
association conferences, creating forums at which industry elements 
network, publishing economic impact studies and launch forecast 
reports, and conducting outreach to potential license applicants. These 
are all activities that experts say, and we agree, do not conflict with 
FAA's safety oversight responsibilities. According to some experts, 
FAA's promotional activities have not conflicted with the agency's role 
as a safety regulator because the activities do not involve advocacy 
for the industry, nor do they increase demand in the industry. 
Furthermore, experts noted that some of these activities promote FAA's 
safety role. For example, outreach to potential license applicants is a 
means of ensuring that new launch companies know about and adhere to 
federal safety regulations. Experts also noted that industry 
conferences are a means by which FAA can have a dialogue with industry 
to ascertain new industry trends and issues. FAA also has provided an 
estimated $200,000 for Mojave Spaceport to complete its environmental 
impact study, which FAA deems a promotional activity. According to its 
statutory responsibility, FAA can take action to facilitate private 
sector involvement in spaceport infrastructure. 

However, as the commercial space launch industry matures, there is a 
greater risk that FAA's role as both the regulator and a promoter of 
the industry may pose a conflict of interest. Experts told us, and we 
agree, that as the commercial space launch industry evolves, it may be 
necessary to separate FAA's regulatory and promotional activities. For 
example, one expert indicated that with the emergence of space tourism, 
FAA's dual role could pose a potential conflict of interest between 
creating an enabling business environment and not compromising safety 
with regard to the agency's determining when and if it would regulate 
crew and passenger safety on space launches. Other experts cited 
Congress's removal of FAA's promotional responsibilities for commercial 
aviation in 1996 as evidence of the importance of maintaining FAA's 
focus on safety oversight. In response to the ValuJet accident of May 
11, 1996, the DOT Secretary asked Congress to restrict FAA's mandate to 
safety, eliminating its role in promoting the airline industry. 
According to the conference report that accompanied the legislative 
change, Congress withdrew FAA's promotional role in commercial aviation 
to address public perceptions that might exist that the promotion of 
air commerce by FAA could create a conflict with its safety regulatory 
mandate. Congress also has withdrawn promotional responsibilities from 
other transportation entities. In 1961, the Federal Maritime Board was 
dissolved and its promotion and safety responsibilities were 
transferred to Commerce and the Federal Maritime Commission, 
respectively. In proposing the legislative change, the President stated 
that this change was made to eliminate the intermingling of regulatory 
and promotional functions that had diluted responsibility and led to 
serious inadequacies, particularly in the administration of regulatory 
functions. Recognizing the potential conflict in the oversight of 
commercial space launches, Congress required DOT to report by December 
2008, among other things, on whether the federal government should 
separate the promotion of human space flight from the regulation of 
such activity. 

Furthermore, FAA's promotional role has the potential to overlap with 
that of Commerce's role--given the broad definition of FAA's statutory 
promotional responsibilities, the more detailed definition of 
Commerce's promotional responsibilities, and the efforts of Commerce to 
fully staff its Office of Space Commercialization. Commerce's 
International Trade Administration, which is responsible for promoting 
U.S. exports and competitiveness of U.S. companies in foreign markets, 
has remained fully staffed and provides assistance to the U.S. 
commercial space industry. However, the Office of Space 
Commercialization within NOAA did not have a permanent director from 
1999 through January 2006 and had been staffed with one permanent 
employee who had been charged with work related to satellite services. 
In February 2006, a new director was appointed, and, as of June 2006, 
the office has been fully staffed. The Office of Space 
Commercialization is currently developing a strategic plan that is to 
be completed by the end of 2006. Some of FAA's promotional activities, 
such as publishing economic impact studies on the industry, have been 
undertaken due to past understaffing at Commerce, according to an FAA 
official. FAA has not revisited which promotional activities it should 
continue to undertake in light of these new developments at Commerce. 
(Fig. 6 describes FAA's and Commerce's statutory promotional 
responsibilities.) 

Figure 6: FAA's and Department of Commerce's Statutory Promotional 
Responsibilities: 

[See PDF for Image] 

Source: GAO analysis of statutory authorities. 

[End of Figure] 

To Help Address Key Competitive Issues Facing the Industry, the U.S. 
Government Has Played an Important Role: 

The U.S. commercial space launch industry faces key competitive issues 
concerning high launch costs and export controls. Space launches incur 
high costs for launch vehicle development and for launch facility 
operations and maintenance. The U.S. government has responded by 
providing support, such as launch contracts, the use of its launch 
facilities, and launch vehicle development infrastructure. 

Some foreign competitors have historically offered lower launch prices 
than U.S. launch providers. During the rise of the commercial launch 
industry in Russia, Ukraine, and China in the 1980s and 1990s, 
bilateral agreements between these countries and the United States (1) 
limited the number of launches in those countries of commercial 
satellites containing U.S. licensed components and (2) imposed pricing 
restrictions. According to a Commerce official, the United States 
entered into these agreements because foreign countries were nonmarket 
economies and there was the potential to employ nonmarket-based 
practices or offer prices substantially below international market 
value. According to an USTR official, which negotiated these 
agreements, the agreements required the countries to price their 
commercial launch services "on a par" with Western companies, which 
allowed the nonmarket economies to evolve their industries while 
competing on a fair basis. These foreign governments were required to 
sign the agreements with the United States as a condition of launching 
U.S. satellites or of launching any satellites containing U.S. licensed 
parts. According to an USTR official, these agreements were intended to 
be transitional to allow time for U.S. competitors to adjust to the 
entry of new launch companies from nonmarket economies. The bilateral 
agreement with Ukraine was terminated in 2000, while agreements with 
Russia and China were allowed to expire in 2000 and 2001, respectively, 
because of the changing dynamics in the marketplace--including, for 
example, the emergence of international partnerships in the expendable 
launch vehicle industry. 

U.S. Industry Formed International Partnerships in Response to Foreign 
Price Competition: 

The creation of international partnerships in the commercial space 
launch industry could allow expendable launch vehicle companies to 
offer commercial launches at lower prices. International Launch 
Services, formed in 1995, is an international partnership of Lockheed 
Martin and a Russian launch company that markets launches of the U.S. 
Atlas vehicle from Cape Canaveral and the Russian Proton vehicle from 
Baikonur in Kazakhstan. According to representatives from International 
Launch Services, between 1995 and 2005, the company contracted for 48 
commercial launches from Cape Canaveral and Baikonur. Sea Launch, 
formed in 1995, is an international partnership between the Boeing 
Commercial Space Company and companies from Ukraine, Russia, and Norway 
that launches from a sea platform near the equator. Between 1999 and 
2005, Sea Launch conducted 18 launches on a Ukrainian launch vehicle. 
Sea Launch has also partnered with Russia's Space International 
Services to form Land Launch, which will offer launches on the same 
Ukrainian vehicle from Baikonur beginning in 2007. 

U.S. Government Supports the Industry through Launch Vehicle 
Development Contracts, Access to Infrastructure, Industry Competitions, 
and Indemnification: 

The United States, like foreign governments, supports its commercial 
launch industry in several ways. The U.S. government encourages federal 
agencies to acquire space transportation from U.S. commercial launch 
companies. Some of these companies have also received DOD funds to 
develop new launch vehicles that are intended to provide low-cost 
access to space for government purposes. Once developed, these vehicles 
could also be used for commercial purposes. For example, DOD's Evolved 
Expendable Launch Vehicle Program, a government-industry partnership 
whose objective is to lower the cost of medium-to-heavy lift vehicle 
launches, has led to the development of Lockheed Martin's Atlas V 
vehicle and Boeing's Delta IV vehicle. DOD has provided $1.4 billion to 
the program as of fiscal year 2006, with an additional investment of 
$4.6 billion provided by Lockheed Martin and Boeing. With the objective 
of reducing U.S. government launch costs, Lockheed Martin and Boeing 
have proposed a joint venture of their vehicle programs, called the 
United Launch Alliance, for which DOD gave conditional approval in 
January 2006 and for which the Federal Trade Commission gave 
conditional clearance in October 2006. In addition, DOD has funded 
small vehicle development.[Footnote 35] For example, SpaceX, which has 
received DOD funding, has developed and is testing its Falcon I vehicle 
that will carry a small government payload and will launch from the 
Army's Ronald Reagan Ballistic Missile Test Site on Kwajalein Atoll in 
the Marshall Islands.[Footnote 36] SpaceX then plans on launching a 
small commercial payload to low-Earth orbit from Kwajalein at an 
estimated cost of under $7 million (in 2006 dollars).[Footnote 37] This 
cost is in contrast to launch prices for small payloads averaging $15 
million, according to a report on space transportation costs.[Footnote 
38] Furthermore, whereas international competitors launch prices for 
medium-to-heavy payloads to geosynchronous transfer orbit[Footnote 39] 
average $56 million for medium and $87.5 million for heavy 
payloads,[Footnote 40] SpaceX plans to launch medium payloads on its 
Falcon 9 vehicle from $27 million and heavy payloads from $78 million. 
SpaceX said that it has reduced launch costs in a number of ways, 
including the simplification of vehicle design akin to Russian 
vehicles. Another example of new lower-cost vehicles that have been 
developed with DOD support is AirLaunch, LLC, which has developed a 
small lift vehicle that launches from the air from a military cargo 
aircraft and is intended to put a small payload into orbit for less 
than $5 million.[Footnote 41] A representative from AirLaunch said that 
it plans to use this technology in partnership with t/Space to develop 
a vehicle that will compete in NASA's Commercial Orbital Transportation 
Services demonstration program.[Footnote 42] 

The U.S. government also supports the industry by making infrastructure 
and support staff available at its launch sites. Air Force launch pads 
leased by launch companies may be used for government or commercial 
launches. The commercial launch company pays the Air Force the direct 
costs associated with its use of facilities and services for a 
commercial launch.[Footnote 43] The Air Force is not reimbursed for 
indirect costs such as infrastructure improvements or base support that 
involves the use of Air Force active-duty personnel.[Footnote 44] NASA 
provides launch vehicle development facilities, including rocket 
propulsion test stands, wind tunnels, and thermal vacuum chambers to 
vehicle developers. Other types of government support include prize 
competitions and indemnification. (See table 2.) 

Table 2: Examples of Federal Support to the Commercial Space Launch 
Industry: 

Type of federal support: Launch vehicle design and development; 
Example: DOD's Evolved Expendable Launch Vehicle Program's objective is 
to lower the cost of launches and has led to the development of the 
medium-to-heavy lift Atlas V and Delta IV vehicles. DOD's Defense 
Advanced Research Projects Agency (DARPA) and Air Force Falcon 
Program's goal is to develop a low-cost small launch vehicle that can 
be rapidly deployed. NASA's Commercial Orbital Transportation Services 
demonstration program will provide $500 million through 2009 to one or 
more developers who demonstrate and successfully launch a vehicle that 
can deliver cargo and crew to the International Space Station. 

Type of federal support: Infrastructure and support personnel; 
Example: DOD facilities at Cape Canaveral, Vandenberg, and White Sands 
and NASA facilities at Wallops Island provide some infrastructure and 
personnel support. NASA also provides launch vehicle development 
facilities, such as rocket propulsion test stands, wind tunnels, and 
thermal vacuum chambers. 

Type of federal support: Prize competitions; 
Example: NASA's Lunar Lander Challenge is designed to accelerate 
technology developments supporting the commercial creation of a vehicle 
capable of ferrying cargo or humans back and forth between lunar orbit 
and the surface of the moon. DARPA's Vertical Rocket Challenge is 
designed to accelerate technology developments supporting the 
commercial creation of vehicles capable of performing vertical takeoffs 
and vertical landings under rocket power. The combined prize money that 
could be awarded to one or more developers for these challenges is $3 
million. 

Type of federal support: Indemnification; 
Example: The U.S. government may pay third-party liability claims in 
excess of required launch insurance, up to $1.5 billion above the 
amount of the insurance. This catastrophic loss protection in the event 
of a commercial launch incident is known as indemnification.[A]. 

Source: GAO analysis of agency data. 

[A] FAA has commissioned a study, which is expected to be published in 
the fall of 2006, that will propose alternatives to indemnification. 

[End of table] 

Demonstration programs, such as NASA's Commercial Orbital 
Transportation Services, have received positive feedback from launch 
vehicle developers, according to a NASA official. In addition, the 
official said that the agency's prize competitions, such as the Lunar 
Lander Challenge competition, have inspired many new launch vehicle 
companies to design vehicles using different launch approaches that 
could be used for human space flight. According to a launch company, 
the Commercial Orbital Transportation Services demonstration program 
allows for solicitations that encourage innovation and investment in 
the space industry by specifying an objective, such as carrying 
payloads to the International Space Station, rather than detailed 
requirements for a particular aircraft type. 

States Are Offering Economic Incentives to Develop Spaceports for Space 
Tourism: 

States are offering economic incentives to develop spaceports to 
attract space tourism and provide economic benefits to localities. The 
New Mexico legislature approved $100 million in February 2006 for 
construction of the Southwest Regional Spaceport in Upham, New Mexico. 
The spaceport is expected to be completed in 2008 or 2009, with three 
vertical launch pads; two runways; and service facilities for fuel 
service, payload processing, launch control, and mission control. 
Currently, the Southwest Regional Spaceport has 5 signed 
customers,[Footnote 45] including Virgin Galactic, which plans to 
launch its initial commercial space flights from the spaceport and 
expects to fly 3,000 passengers within five years after commercial 
launches begin. According to an official from the Oklahoma spaceport, 
Oklahoma provides approximately $500,000 annually to the spaceport for 
operations, and the state paid for the environmental impact statement 
and the safety analysis needed to apply for an FAA license. Existing 
infrastructure includes a 13,500-foot runway capable of accommodating 
the Space Shuttle, maintenance and repair hangars, and a rail spur. 
Furthermore, the Oklahoma spaceport has offered incentives valued at 
over $128 million over 10 years to attract space companies. Rocketplane 
Kistler, which has developed a reusable vehicle, plans to launch from 
the Oklahoma spaceport starting in mid-2007.[Footnote 46] 

The Florida Space Authority, a state agency, has an arrangement with 
the Cape Canaveral Air Force Station to use a launch pad for expendable 
vehicle launches when excess capacity exists. The Florida Space 
Authority has invested over $500 million in new space industry 
infrastructure development, including upgrades to the launch pad, a new 
space operations support complex, and a reusable launch vehicle support 
complex. Lockheed Martin's Athena and Atlas vehicles and Boeing's Delta 
vehicle launch from the spaceport. Although a launch site primarily for 
vertical launches, the Florida Space Authority is also considering the 
development of a commercial spaceport at a Florida airport to 
accommodate horizontally launched space tourism flights. The Mid- 
Atlantic Regional Spaceport, colocated at NASA's Wallops Flight 
Facility, owns two launch pads for expendable vehicle launches and has 
access to three runways. The spaceport receives half of its funding 
from Virginia and Maryland, with the remainder coming from revenue from 
operations. According to the spaceport's executive director, the 
spaceport will compete for Commercial Orbital Transportation Services 
demonstration program launches. The Mojave Spaceport in Mojave, 
California, is owned and operated by the East Kern Airport District and 
consists of three runways with associated taxiways and other support 
facilities. With an FAA Airport Improvement Program grant of $7.5 
million, one of these runways will be extended to allow for the reentry 
of horizontally landing reusable vehicles.[Footnote 47] The spaceport 
also received FAA financial support to conduct its environmental 
assessment. Scaled Composites, XCOR Aerospace, and Interorbital 
Systems--companies that plan to enter the space tourism business--are 
tenants at the airport.[Footnote 48] Officials from spaceports told us 
the competition among the spaceports is positive. One licensed 
spaceport official mentioned that because each spaceport will attract a 
market unique to its launch capability; this competition will help the 
overall industry to grow. 

Industry Raised Concerns about Export Controls: 

Industry representatives that we interviewed identified export 
licensing requirements under the International Traffic in Arms 
Regulations as a competitive issue facing the U.S. space launch 
industry. The regulations establish controls to ensure that arms 
exports are consistent with national security and foreign policy 
interests. Launch vehicles are included on State's munitions list that 
is part of these regulations because these vehicles can deliver 
chemical, biological, and nuclear weapons. In the 1990s, U.S. space 
technology was divulged to a foreign country, which led to improvements 
of the reliability of its ballistic missiles that could be used against 
the United States. Industry representatives said that they would like 
fewer items to be regulated or a streamlined process for obtaining 
authorization to export launch vehicles. While we have not examined the 
issue of which specific items should be subject to export controls, we 
have examined the export control system and have recommended ways to 
improve its overall efficiency.[Footnote 49] 

Conclusions: 

As the commercial space launch industry expands to include the 
transportation of humans as well as satellites and other payloads into 
space and the use of inland as well as coastal launch sites, FAA's 
safety oversight responsibilities will grow. To carry out these 
responsibilities and address the serious safety implications of the 
industry's expansion for people both on the ground and in the launch 
vehicles, FAA will need sufficient expertise, either in-house or 
available from an impartial source, to evaluate a range of highly 
complex launch technologies. Such expertise may be difficult for FAA to 
obtain and maintain, given federal funding constraints and competition 
from the industry for qualified aerospace engineers. While FAA's 
decision not to request additional safety oversight resources until the 
space tourism industry materializes is prudent in light of the 
industry's uncertain pace of development, FAA also needs to be prepared 
to provide competent safety oversight if and when its workload 
increases in order to continue to provide timely license approvals and 
monitoring. 

Experience has not yet shown whether FAA's regulations will be 
appropriate for the space tourism industry, given the differences in 
the operations of launch vehicles and the launch sites used to 
transport humans and payloads into space. FAA's plan to address these 
differences through case-by-case evaluations of individual launch 
license applications is reasonable for an emerging industry with a wide 
variety of products. A DOT commissioned report to be issued to Congress 
and completed by December 2008, which will analyze whether expendable 
and reusable launch vehicles should be regulated differently from each 
other, could provide FAA with information about the suitability of its 
regulations to space tourism. 

FAA is prohibited from regulating crew and passenger safety before 
2012, except in response to incidents that either pose a high risk or 
result in serious or fatal injury. FAA has interpreted this limited 
authority to allow it to regulate crew safety in certain circumstances 
and has been proactive in proposing regulations concerning emergency 
training for crews and passengers. However, FAA has not developed 
safety indicators by which it would monitor the developing space 
tourism sector and determine when to step in and regulate human space 
flight. 

Because FAA is a regulatory agency, it is important that its statutory 
responsibility to promote the commercial space launch industry not 
interfere with its safety oversight of the industry. We have no 
evidence that FAA's promotional activities have conflicted thus far 
with its safety regulatory role, but conflicts could occur as the 
industry matures. For example, such conflicts may have occurred or 
appeared to occur when FAA was responsible for promoting as well as 
regulating the airline industry. Recognizing the potential conflict in 
the oversight of commercial space launches, Congress required DOT to 
report by December 2008 on whether the federal government should 
separate the promotion of human space flight from the regulation of 
such activity. Furthermore, Commerce now has the staff resources to 
promote the commercial space industry, possibly eliminating the need 
for FAA to play a promotional role. 

Matter for Congressional Consideration: 

If DOT's 2008 commissioned report on the dual safety and promotion 
roles does not fully address the potential for a conflict of interest, 
Congress should revisit the granting of FAA's dual mandate for safety 
and promotion and decide whether the elimination of FAA's promotional 
role is necessary to alleviate the potential conflict. 

Recommendations for Executive Action: 

To prepare for a possible major expansion in its safety oversight 
responsibilities resulting from the emergence of the space tourism 
industry and spaceports, we recommend that the Secretary of 
Transportation direct the FAA Administrator to implement the following 
three recommendations: 

* As part of its strategic planning effort, FAA needs to assess the 
level of expertise and resources that will be needed to oversee the 
safety of the space tourism industry and the new spaceports under 
various scenarios and timetables. In addition, the Office of Commercial 
Space Transportation should develop a formal process for consulting 
with the Office of Aviation Safety about licensing reusable launch 
vehicles. The process should include the criteria under which the 
consultation takes place. 

* To allow the agency to be proactive about safety, rather than 
responding only after a fatality or serious incident occurs, FAA should 
identify and continually monitor space tourism industry safety 
indicators that might trigger the need to regulate crew and flight 
participant safety before 2012. As part of this effort, FAA should 
develop and issue guidance on the circumstances under which it would 
regulate crew and flight participant safety before 2012. 

* As long as FAA has a promotional role, it should work with the 
Department of Commerce to develop a memorandum of understanding that 
clearly delineates the two agencies' respective promotional roles in 
line with their statutory obligations and larger agency missions. This 
memorandum of understanding should reflect Commerce's role as an 
advocate of the industry, with the objective of increasing U.S. 
competitiveness and FAA's focus on providing a safe environment in 
which the emerging space tourism sector could operate. 

Agency Comments and Our Evaluation: 

We provided a draft of the report to Commerce, DHS, DOD, DOT, NASA, 
OSTP, State, and USTR. Commerce and NASA provided written comments (see 
apps. V and VI). State, DOD, and DHS had no comments. The four agencies 
that provided comments generally agreed with the findings presented in 
the report and FAA (within DOT) and Commerce agreed with the report's 
recommendations. FAA, Commerce, OSTP, and USTR provided technical 
corrections, which we incorporated as appropriate. 

In response to the draft report's discussion of resource challenges, 
FAA stated that it monitors commercial space launch developments to 
assess the impact on agency resources, and that it will request 
additional resources when they can be justified through the annual 
budget process. We agreed that FAA assesses resource requirements 
annually and added this information to the report; however, we have not 
seen evidence that it does so on a longer-term, strategic basis. In 
response to the draft report's discussion of the suitability of FAA's 
expendable launch vehicle regulations for reusable launch vehicles, FAA 
explained that the regulation is not intended to apply to reusable 
vehicles. We agreed with this comment and revised the draft to indicate 
the specific reusable launch vehicle regulation to which we were 
referring. Commerce agreed with our recommendation concerning the need 
for a memorandum of understanding between it and DOT that clearly 
delineates the two agencies' respective promotional roles. In addition, 
Commerce pointed out that the draft report did not reflect the industry 
advocacy role played by its International Trade Administration. We 
agreed and added that information to the report. OSTP stated that the 
report should include more discussion of competition challenges facing 
the industry. Although we agree that such challenges are important and 
addressed some competitive issues, such as foreign price competition, a 
larger study of these issues was beyond the scope of the report. 
Finally, NASA noted that the draft report did not reflect the 
infrastructure support, such as wind tunnels and rocket propulsion test 
stands, that it provides to the commercial space launch industry. We 
agreed that this information should be included and modified the text 
accordingly. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution of this report 
until 5 days after the date of this letter. At that time, we will send 
copies of this report to interested congressional committees, the 
Secretary of Transportation, the Administrator of FAA, the Secretary of 
Defense, the Secretary of Commerce, the Secretary of State, the 
Administrator of the National Aeronautics and Space Administration, the 
Secretary of Homeland Security, the Assistant Secretary of Homeland 
Security for the Transportation Security Administration, the Director 
of the White House Office of Science and Technology Policy, and the 
Assistant U.S. Trade Representative for Policy Coordination. We will 
also make copies available to others upon request. In addition, the 
report will be available at no cost on GAO's Web site at [Hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me on (202) 512-2834 or at dillinghamg@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix VII. 

Sincerely yours, 

Signed by: 

Gerald L. Dillingham, Ph.D. 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objective, Scope, and Methodology: 

Our objective was to assess the federal role regarding commercial space 
launches and the government's response to emerging industry trends 
both--domestically and internationally. To accomplish this, we 
addressed the following questions: (1) how well does the Federal 
Aviation Administration (FAA) oversee the safety of commercial space 
launches? (2) To what extent is FAA responding to key emerging issues 
in the commercial space launch industry? (3) What challenges does FAA 
face in regulating and promoting the commercial space launch industry? 
and (4) What are the key competitive issues affecting the U.S. 
commercial space launch industry, and to what extent are the industry 
and government responding to them? 

For background information on the commercial space launch industry, we 
reviewed reports prepared by the Congressional Research Service, FAA, 
the Department of Commerce (Commerce), and other sources to determine 
the composition of the industry and its role in the economy. We also 
obtained data on historical commercial launch activity worldwide, 
including the number of commercial space launches conducted, by 
country, from 1997 through 2005; the types of vehicles used; and the 
types of payloads launched. We did not independently verify this 
information because it was used for background purposes only. In 
addition, we identified the commercial launch infrastructure in the 
United States and observed the commercial launch facilities at Cape 
Canaveral Air Force Station and Vandenberg Air Force Base, which are 
the two main federal launch facilities. We also determined the roles 
and responsibilities of various federal agencies involved in commercial 
space launch activities by reviewing their respective statutory 
authorities and interviewing agency officials. These included officials 
from FAA, Commerce, the National Aeronautics and Space Administration 
(NASA), the Department of Defense (DOD), the Department of State, the 
Department of Homeland Security, the Office of the United States Trade 
Representative, and the Office of Science and Technology Policy. 

To determine how well FAA has overseen the safety of commercial space 
launches to date and to what extent it is responding to key emerging 
issues in the commercial space launch industry, we reviewed FAA's 
safety oversight processes, identified key emerging issues in the 
commercial space launch industry, and reviewed FAA's response to those 
issues. We reviewed FAA's safety oversight process by interviewing 
agency officials about their safety oversight activities and reviewed 
documentation on FAA's licensing and safety monitoring processes, 
including internal guidance and policies, applicable regulations, and 
memorandums of agreement with other federal agencies. Because FAA 
shares responsibility with the Department of the Air Force to conduct 
safety oversight at the Air Force's launch sites, we interviewed FAA 
and Air Force officials at Cape Canaveral Air Force Station and 
Vandenberg Air Force Base about their interaction and respective 
responsibilities, and reviewed Air Force launch safety requirements. We 
also interviewed representatives from eight commercial space launch 
companies that had received launch licenses from FAA and six launch 
companies that were consulting with FAA about obtaining licenses as of 
September 2005 about FAA's licensing process. We also interviewed an 
official heading a working group on reusable launch vehicles from the 
Commercial Space Transportation Advisory Committee, which is an 
industry group that provides advice to FAA on commercial launch issues. 
This official is also a key principal of the Personal Spaceflight 
Federation, which is an industry group. When we found that some 
companies were offering to sell tickets for flights into space, we also 
interviewed two firms that were selling such tickets or were planning 
to sell them about their services and related safety issues. In 
addition, because security is a component of safety, we interviewed 
officials from the Transportation Security Administration about its 
future role in securing new spaceports. 

To further assess how well FAA has overseen the safety of commercial 
space launches and because FAA conducts its safety oversight largely 
through its licensing process, we reviewed its application files for 
the licenses that were in effect in January 2006, which consisted of 13 
launch licenses and five launch-site licenses. In addition, although 
its license was no longer in effect at the time of our review, we 
reviewed the application file for Scaled Composites' launch of 
SpaceShipOne because the company had received the first license from 
FAA for a reusable vehicle. We reviewed these application files to 
determine the types of FAA safety issues that the agency examined and 
how it conducted those examinations. Because we were evaluating the 
management of a government program, we examined (1) how FAA applied 
certain management controls in its license approval process using our 
guidelines for management controls at federal agencies and (2) whether 
FAA met the 180-day review criteria established by the 1984 Commercial 
Space Launch Act.[Footnote 50] The management controls included 
documentation of the review process, effective communication, 
reliability and verification of data, supervisory review, and 
documentation of the approval process, which we determined from 
consulting Standards for Internal Control in the Federal Government for 
the elements needed for effective management of the licensing approval 
process. Furthermore, we assessed the extent to which FAA interacted 
with other federal agencies participating in an interagency advisory 
group on expendable vehicles, which was part of the application review 
process in some cases, by interviewing the interagency group members 
about their interaction with FAA on commercial launch issues. In 
addition, we reviewed FAA's safety monitoring process by examining its 
most recent compliance-monitoring reports that corresponded to the 
licenses that were in effect as of January 2006,[Footnote 51] as well 
as enforcement actions taken against commercial launch companies for 
noncompliance with safety issues. Moreover, to obtain an independent 
perspective on how well FAA has conducted launch safety oversight and 
responded to key emerging issues, we interviewed 11 experts from 
academia and industry that we selected with the assistance of the 
National Academy of Sciences. (See table 3 for a list of these 
experts.) 

Table 3: Experts Providing Input on GAO's Review: 

Expert: Robert Crippen, President, retired; 
Organization: Thiokol Propulsion Group. 

Expert: Donald Cromer, Lt. General and President, retired; 
Organization: United States Air Force and Hughes Space and 
Communications Company. 

Expert: Henry Hertzfeld, JD, Ph.D., Research Professor; 
Organization: The Space Policy Institute, Elliot School of 
International Affairs, George Washington University. 

Expert: Michael S. Kelly, Vice President, Operations; 
Organization: X PRIZE Cup. 

Expert: Christopher Kunstadter, Vice President; 
Organization: XL Insurance. 

Expert: Molly Macauley, Ph.D., Senior Fellow; 
Organization: Resources for the Future, Inc. 

Expert: James A. M. Muncy, Principal; 
Organization: PoliSpace. 

Expert: Elon Musk, CEO and CTO; 
Organization: SpaceX. 

Expert: Eligar Sadeh, Ph.D., Assistant Professor of Space Studies; 
Organization: School of Aerospace Sciences, Department of Space 
Studies, University of North Dakota. 

Expert: J.R. Thompson, Vice Chairman, President and Chief Operating 
Officer; 
Organization: Orbital Sciences Corporation. 

Source: GAO. 

Note: One expert asked to remain anonymous. 

[End of table] 

We identified key emerging issues through literature reviews and 
interviews with agency officials and industry representatives, 
including associations representing the commercial space launch 
industry and entities that had received launch or launch-site licenses 
from FAA or were consulting with FAA about receiving such licenses as 
of September 2005. To assess the extent to which FAA has responded to 
emerging issues in the commercial space launch industry, we interviewed 
federal government officials, including FAA officials and 
representatives from federal launch sites and FAA-licensed and proposed 
spaceports, launch companies, industry experts, and trade associations 
to obtain their views. See table 4 for a list of the organizations that 
we interviewed. 

Table 4: List of Organizations That GAO Interviewed: 

Industry category: Federal launch sites[A]; 
Organization interviewed: Cape Canaveral Air Force Station; Ronald 
Reagan Ballistic Missile Test Site; Vandenberg Air Force Base. 

Industry category: Industry associations; 
Organization interviewed: Aerospace Industry Association; American 
Institute of Aeronautics and Astronautics; Satellite Industry 
Association; Space Frontier Foundation; Space Transportation 
Association. 

Industry category: Launch companies; 
Organization interviewed: Arianespace; Armadillo Aerospace; ATK 
Thiokol, Inc; Blue Origin, LLC; Boeing Launch Services; Boeing Launch 
Services, Cape Canaveral Air Force Station; Interorbital Systems; 
Kistler Aerospace[B]; Lockheed Martin Corporation, Cape Canaveral Air 
Force Station; Rocketplane Limited, LLC[B]; Scaled Composites, LLC; Sea 
Launch Company, LLC; SpaceX; Sprague Astronautics, Inc; XCOR Aerospace. 

Industry category: Spaceports; 
Organization interviewed: Alaska Aerospace Development Authority; 
California Spaceport, Spaceport Systems International; Florida Space 
Authority; Mid-Atlantic Regional Spaceport; Mojave Spaceport; Oklahoma 
Space Industry Development Agency. 

Industry category: Spaceports (proposed); 
Organization interviewed: Blue Origin, LLC; Nevada Test Site 
Development Corporation[C]; New Mexico Office for Space 
Commercialization; Office of the Governor, Aerospace and Aviation/Gulf 
Coast Regional Spaceport, Texas; Office of the Governor, Aerospace and 
Aviation/South Texas Spaceport; Office of the Governor, Aerospace and 
Aviation/West Texas Spaceport; Spaceport Alabama; Spaceport Washington; 
Wisconsin Spaceport. 

Industry category: Space tourism operators; 
Organization interviewed: Space Adventures; Virgin Galactic. 

Industry category: Miscellaneous; 
Organization interviewed: Aerospace Corporation; California Space 
Authority; RAND Corporation. 

Source: GAO. 

[A] We did not interview two federal launch sites--White Sands Missile 
Range and Wallops Flight Facility--because they have had no commercial 
launches since 2000. 

[B] In February 2006, Rocketplane and Kistler Aerospace joined to form 
Rocketplane Kistler. 

[C] As of March 2006, the Nevada Test Site Development Corporation told 
us that it was no longer considering developing a spaceport. 

[End of table] 

We also reviewed the proposed and issued regulations relating to 
commercial space launches and comments published in the Federal 
Register on those regulations to assess how the agency had responded to 
the emerging issues. 

To determine the challenges that FAA faces in responding to emerging 
issues in the commercial space launch industry, we interviewed FAA 
officials, industry representatives, industry experts, and trade 
associations to obtain their views on how FAA would need to respond and 
the level of expertise and resources that would be required. This 
included considering the challenges that FAA may face in complying with 
requirements contained in both proposed regulations and under existing 
law to provide safety oversight over a new industry sector involving 
reusable launch vehicles. 

To determine the key competitive issues affecting the U.S commercial 
space launch industry and the extent to which the industry and federal 
government are responding to them, we conducted a literature review 
that included applicable laws affecting industry competitiveness and 
interviewed FAA officials, industry representatives, industry experts, 
and trade associations to obtain their views. This included 
interviewing officials from the Office of the U.S. Trade Representative 
about the U.S. government's past use of bilateral treaties with foreign 
governments regarding the commercial space market and from the 
Commercial Space Transportation Advisory Committee, which is an 
industry group that provides advice to FAA on commercial launch issues, 
about industry concerns regarding insurance and liability matters. We 
also interviewed U.S. commercial space launch companies, including U.S. 
partners in international partnerships. In addition, to obtain the 
perspective of a foreign commercial launch company on international 
competitive issues, we interviewed an official from Arianespace, which 
is a French commercial space launch company. To obtain the perspective 
of a domestic commercial launch company, we interviewed SpaceX. We also 
reviewed regulations affecting the competitiveness of the commercial 
space launch industry, such as the International Traffic in Arms 
Regulations, and reports on competitive issues prepared by the 
Congressional Research Service, FAA, Commerce, Futron, and others. We 
attempted to compare the extent to which countries were providing 
financial assistance to their commercial space launch industries, but 
we were unable to obtain transparent and quantifiable data. We 
conducted our review from August 2005 through October 2006 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II: Economic Impact of the Commercial Space Industry: 

The commercial space transportation industry as a whole represents a 
significant sector of the U.S. economy. The industry consists of the 
commercial launch industry as well as the industries that commercial 
space enables, such as satellite manufacturing and services, ground 
equipment manufacturing, remote sensing, distribution industries, and 
launch vehicle manufacturing and services (see fig. 7). 

Figure 7: Commercial Space-Related Industries: 

[See PDF for image] 

Source: FAA. 

[End of figure] 

According to FAA, the commercial space transportation and enabled 
industries were responsible for approximately 550,000 total jobs and 
$98 billion in economic activity[Footnote 52] in the United States in 
2004, with the satellite services industry, such as direct-to-home 
television services, having the largest economic activity impact (see 
fig. 8). Of this, launch vehicle manufacturing and services had $1.7 
billion in economic impact. 

Figure 8: Distribution of Economic Activity Impacts Resulting from 
Commercial Space Transportation and Enabled Industries, 2004: 

[See PDF for Image] 

Source: GAO analysis of FAA data. 

[End of Figure] 

[End of section] 

Appendix III: FAA's Launch and Reentry Licensing Process: 

FAA evaluates applications for launch licenses by reviewing the safety, 
environmental, payload, and policy implications of a launch and 
determining the launch company's insurance liability or financial 
responsibility. Figure 9 illustrates this process. 

Figure 9: FAA's Launch Licensing Process: 

[See PDF for image] 

Source: GAO presentation of FAA information. 

[End of figure] 

FAA's safety review includes an analysis of the reliability and 
functions of the vehicle, an assessment of the risk and hazards it 
poses to public property and individuals, and a review of the launch 
company's policies and practices to demonstrate that the operations 
"pose no unacceptable threat to the public."[Footnote 53] FAA conducts 
environmental reviews to fulfill its obligations under the National 
Environmental Policy Act,[Footnote 54] and FAA ensures that proposed 
commercial space transportation activities present "no unacceptable 
danger to the natural environment." In addition, FAA reviews a proposed 
payload to determine whether its launch or reentry would jeopardize 
public health and safety, safety of property, U.S. national security or 
foreign policy interests, or international obligations of the United 
States. During the policy review, FAA consults with other federal 
agencies to determine whether the launch license presents any issues 
affecting U.S. national security, foreign policy, or international 
obligations. FAA also determines the amount of liability 
insurance[Footnote 55] required to compensate third-parties for 
activities carried out under a license, up to a maximum of $500 million 
or the maximum liability insurance available on the world market at a 
reasonable cost as determined by FAA.[Footnote 56] FAA also sets 
insurance requirements for U.S. government range property on the basis 
of its determination of the maximum probable loss that would result 
from licensed launch or reentry activities, not to exceed the lesser of 
$100 million or the maximum available on the world market at reasonable 
cost. 

FAA's launch-site safety requirements are similar to those for launches 
of vehicles. FAA reviews a launch-site's application for environmental, 
policy, operations, and safety considerations that include the location 
of the spaceport and its siting of explosives. Applicants also are 
required to address how they will control public access to their sites, 
which would include the use of security personnel, surveillance 
systems, physical barriers, or other means approved during the 
licensing process. 

[End of section] 

Appendix IV: Timeline and List of FAA Commercial Space Launch 
Rulemaking and Guidance: 

August 25, 2006: 

Licensing and Safety Requirements for Launch; Final Rule (to amend 14 
C.F.R. parts 413, 415, 417). 71 Fed. Reg. 50508. 

March 31, 2006: 

Experimental Permits for Reusable Suborbital Rockets; Notice of 
Proposed Rulemaking (to amend 14 C.F.R. parts 401, 404, 405, 406, 413, 
420, 431, 437). 71 Fed. Reg. 16251. 

December 29, 2005: 

Human Space Flight Requirements for Crew and Space Flight Participants; 
Proposed Rule (to amend 14 C.F.R. parts 401, 431, 435, 440, 450, 460). 
70 Fed. Reg. 77262. 

July 20, 2005: 

Reusable Launch and Reentry Vehicle System Safety Process, AC 431.35- 
2A; Advisory Circular. 

June 1, 2005: 

Safety Approvals; Proposed Rule (to amend 14 C.F.R. part 414). 70 Fed. 
Reg. 32912. 

May 19, 2005: 

Miscellaneous Changes to Commercial Space Transportation Regulations; 
Proposed Rule (to amend 14 C.F.R. parts 401, 404, 413, 415, 420). 70 
Fed. Reg. 29164. 

March 1, 2005: 

Licensing and Safety Requirements for Launch; Availability of Draft 
Regulatory Language and Notice of Public Meeting (to amend 14 C.F.R. 
parts 415, 417). 70 Fed. Reg. 9885. 

October 20, 2003: 

Commercial Space Transportation; Suborbital Rocket Launch; Notice and 
Request for Comments. 68 Fed. Reg. 59977. 

August 15, 2002: 

Licensing Test Flight Reusable Vehicle Missions, AC 431.35-3; Advisory 
Circular. 

July 30, 2002: 

Licensing and Safety Requirements for Launch; Proposed Rule (to amend 
14 C.F.R. parts 413, 415, 417). 67 Fed. Reg. 49456. (This is a 
supplemental Notice of Proposed Rulemaking to the October 25, 2000, 
Proposed Rule.) 

January 10, 2001: 

Civil Penalty Actions in Commercial Space Transportation; Final Rule 
(14 C.F.R. parts 405, 406). 66 Fed. Reg. 2176. 

October 25, 2000: 

Licensing and Safety Requirements for Launch; Proposed Rule (to amend 
14 C.F.R. parts 413, 415, 417). 65 Fed. Reg. 63921. 

October 19, 2000: 

Licensing and Safety Requirements for Operation of a Launch Site; Final 
Rule (14 C.F.R. parts 401, 417, 420). 65 Fed. Reg. 62812. 

September 19, 2000: 

Commercial Space Transportation Reusable Vehicle and Reentry Licensing 
Regulations; Final Rule (14 C.F.R. parts 400-435). 65 Fed. Reg. 56618. 

September 19, 2000: 

Financial Responsibility Requirements for Licensed Reentry Activities; 
Final Rule (14 C.F.R. part 450). 65 Fed. Reg. 56670. 

August 30, 2000: 

Expected Casualty Calculations for Commercial Space Launch and Reentry 
Missions, AC 431.35-1; Advisory Circular. 

December 30, 1999: 

Small-Scale Rockets; Notice of Public Meeting (to solicit comments on 
possible FAA regulation of small-scale rocket launches). 64 Fed. Reg. 
73597. 

August 16, 1999: 

License Application Procedures, AC 413-1; Advisory Circular. 

April 21, 1999: 

Commercial Space Transportation Licensing Regulations; Final Rule (14 
CFR parts 401, 411, 413, 415, 417). 64 Fed. Reg. 19586. 

November 3, 1998: 

Part 440 Insurance Conditions, AC 440-1; Advisory Circular. 

August 26, 1998: 

Commercial Space Transportation Financial Responsibility Requirements 
for Licensed Launch Activities; Final Rule (14 C.F.R. part 440). 63 
Fed. Reg. 45592. 

April 4, 1988: 

Commercial Space Transportation Licensing Regulations; Final Rule (14 
C.F.R. Ch. III). 53 Fed. Reg. 11004. 

[End of section] 

Appendix V: Comments from the Department of Commerce: 

The Deputy Secretary Of Commerce: 
Washington, D.C. 20230: 

September 19, 2006: 

Mr. Gerald Dillingham: 
Director, Physical Infrastructure: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, D.C. 20548: 

Dear Mr. Dillingham: 

Thank you for the opportunity to review and comment on the Government 
Accountability Office's draft report entitled Commercial Space 
Launches: FAA Needs Better Planning and Monitoring to Oversee the 
Safety of the Emerging Space Tourism Industry (GAO-07-16). I enclose 
the Department of Commerce's comments from two of our agencies, 
National Oceanic and Atmospheric Administration and International Trade 
Administration, to the draft report. 

Sincerely, 

Signed by: 

David A. Sampson: 

Enclosure: 

U.S. Department of Commerce National Oceanic and Atmospheric 
Administration (NOAA) Comments on the Draft GAO Report Entitled 
"Commercial Space Launches: FAA Needs Better Planning and Monitoring to 
Oversee the Safety of the Emerging Space Tourism Industry" (GAO-07-16/ 
October 2006): 

General Comments: 

None. 

NOAA Response to GAO Recommendations: 

The draft GAO report states, "To prepare for a possible major expansion 
in its safety oversight responsibilities resulting from the emergence 
of the space tourism industry and spaceports, we recommend that the 
Secretary of Transportation direct the FAA Administrator to implement 
the following three recommendations: 

Recommendations 1 and 2 are not related to the Department of Commerce. 

Recommendation 3: "As long as FAA has a promotional role, it should 
work with the Department of Commerce to develop a memorandum of 
understanding which clearly delineates the two agencies' respective 
promotional roles in line with their statutory obligations and larger 
agency missions. This memorandum of understanding would reflect 
Commerce's role as an advocate of the industry with the objective of 
increasing U.S. competitiveness and FAA's focus on providing a safe 
environment in which the emerging space tourism sector could operate." 

NOAA Response: NOAH supports the recommendation to develop a memorandum 
of understanding defining the roles of FAA and the Department of 
Commerce in promoting the commercial space industry. 

U.S. Department of Commerce International Trade Administration (ITA) 
Comments on the Draft GAO Report Entitled "Commercial Space Launches: 
FAA Needs Better Planning and Monitoring to Oversee the Safety of the 
Emerging Space Tourism Industry" (GAO-07-16/October 2006): 

General Comments: 

The GAO report fairly addresses the role and responsibilities of the 
FAA's Office of Commercial Space Transportation, but failed to 
accurately represent the industry promotion, advocacy, and forecasting 
roles and responsibilities of the Commerce Department's International 
Trade Administration. 

Throughout the report, the GAO failed to include the statutory 
responsibilities of the International Trade Administration, which is 
the lead U.S. Government agency for industry and trade promotion and 
competitiveness. For instance, the 1974 Trade Act outlines the 
responsibilities assigned to the International Trade Administration to 
coordinate all issues concerning international trade and commercial 
policy, trade promotion, and trade competitiveness. ITA hosts an entire 
team of analysts who promote all sectors of U.S. industry, including 
the commercial space transportation industry, through trade events, 
advocacy programs, and the development of policies that promote overall 
industry competitiveness. These responsibilities should be incorporated 
into the text and figures in this report in order to accurately reflect 
the potential areas of overlap between the FAA and the Department of 
Commerce on industry promotion issues. 

ITA Response to GAO Recommendations: 

Executive Recommendation 1: "As part of its strategic planning effort, 
FAA needs to assess the level of expertise and resources that will be 
needed to oversee the safety of the space tourism industry and the new 
spaceports under various scenarios and timetables. In addition, the 
Office of Commercial Space Transportation should develop a formal 
process for consulting with the Office of Aviation Safety about 
licensing reusable launch vehicles. The process should include the 
criteria under which the consultation takes place." 

ITA Response: ITA has no comment on this recommendation. 

Executive Recommendation 2: "In order to allow the agency to be 
proactive about safety, rather than responding only after an incident 
or possibly serious incident occurs, FAA should identify and 
continually monitor space tourism industry safety indicators that might 
trigger the need to regulate crew and flight participant safety before 
2012. As part of this effort, FAA should develop and issue guidance on 
the circumstances under which it would regulate crew and flight 
participant safety before 2012." 

ITA Response: ITA has no comment on this recommendation. 

Executive Recommendation 3: "As long as FAA has a promotional role, it 
should work with the Department of Commerce to develop a memorandum of 
understanding that clearly delineates the two agencies' respective 
promotional roles in line with their statutory obligations and larger 
agency missions. This memorandum of understanding would reflect 
Commerce's role as an advocate of the industry with the objective of 
increasing U.S. competitiveness and FAA's focus on providing a safe 
environment in which the emerging space tourism sector could operate." 

ITA Response: ITA supports the GAO's recommendation to establish clear 
promotional responsibilities between the FAA and Department of 
Commerce. Due to ITA's lead responsibility for industry and trade 
promotion within the Department, ITA strongly recommends that the 
proposed MOU be negotiated with all interested DOC bureaus, and not 
only NOAA's Office of Space Commercialization. 

[End of section] 

Appendix VI: Comments from the National Aeronautics and Space 
Administration: 

National Aeronautics and Space Administration: 
Headquarters: 
Washington, DC 20546-0001: 

October 3, 2006: 

Space Operations Mission Directorate: 

Mr. Allen Li: 
Director: 
Acquisition and Sourcing Management: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Li: 

The Commercial Space Launch Industry is of vital importance to NASA and 
the Vision for Space Exploration. Overall the report captures the 
current role and challenges of the Federal Aviation Administration, and 
the federal sector in general, in support of the Commercial Space 
Launch Industry. Thank you for the opportunity to comment on the Draft 
Government Accountability Office (GAO) report entitled, "Commercial 
Space Launches: FAA Needs Better Planning and Monitoring to Oversee the 
Safety of the Emerging Space Tourism Industry" (GAO-07-17). 

The only additional point I would like to make is that it is important 
to note the role of NASA in support of the Commercial Space Launch 
Industry which goes well beyond the use of launch facilities. NASA 
provides support during the launch vehicle design and development 
phases by allowing the commercial sector the use of launch vehicle 
development infrastructure. The capital investment that would be 
required from the commercial sector to duplicate these development 
facilities would be prohibitive. These development facilities include 
such items as rocket propulsion test stands, wind tunnels, and thermal 
vacuum chambers. 

I recommend the following changes: 

Pg. 32, paragraph 1, last sentence, should read, "The U.S. government 
has responded by providing support such as launch contracts, use of 
launch facilities and launch vehicle development infrastructure. The 
capital investment that would be required from the commercial sector to 
duplicate the development facilities would be prohibitive. The 
development facilities include rocket propulsion test stands, wind 
tunnels, and thermal vacuum chambers." 

Pg. 36, Table 2. "Examples of Federal Support to the Commercial Space 
Launch Industry", under, "Infrastructure and support personnel" in the 
examples column please add this sentence: "Also, development facilities 
such as, the rocket propulsion test stands, wind tunnels and thermal 
vacuum chambers." 

Again, we appreciate the opportunity to provide our comments to the 
report. 

Sincerely, 

Signed by: 

Lynn F.H. Cline: 
Deputy Associate Administrator for Space Operations: 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gerald L. Dillingham, Ph.D., (202) 512-2834 or dillinghamg@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Teresa Spisak (Assistant 
Director), Maureen Luna-Long, Bob Homan, Ashley Alley, Elizabeth 
Eisenstadt, Jim Geibel, Dave Hooper, Rosa Leung, Sara Ann Moessbauer, 
Josh Ormond, and Sandra Sokol made key contributions to this report. 

FOOTNOTES 

[1] A reusable launch vehicle is one that is capable of being launched 
into space more than once. 

[2] An expendable launch vehicle, which looks like a rocket, is an 
unmanned, single-use vehicle that is usually used to launch a payload 
into space. 

[3] FAA defines "economic impact" as increases in revenues, earnings, 
and jobs that affect the national economy and occur as a result of the 
demand for commercial space launch products and services. 

[4] A spaceport is a site that is used for launching spacecraft. 

[5] System safety is the application of engineering and management 
principles, criteria, and techniques to optimize safety by the 
identification of safety-related risks and then the control or 
elimination of these risks by design and procedures, on the basis of 
acceptable system safety precedents. 

[6] GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G 
(Washington, D.C.: Aug. 1, 2001); and Standards for Internal Control in 
the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 
1999). 

[7] "Indemnification" is catastrophic loss protection in the event of a 
launch accident. Subject to congressional appropriations, the U.S. 
government may pay successful third-party liability claims in excess of 
required "maximum probable loss" (MPL)-based insurance up to $1.5 
billion above the amount of the MPL-based insurance. MPL-based 
insurance is launch insurance that the commercial space launch provider 
is required to obtain as part of its license. 

[8] GAO, Defense Trade: Arms Export Controls Vulnerabilities and 
Inefficiencies in the Post-9/11 Security Environment, GAO-05-468R 
(Washington, D.C.: Apr. 7, 2005); and Export Controls: Reengineering 
Business Processes Can Improve Efficiency of State Department License 
Reviews, GAO-02-203 (Washington, D.C.: Dec. 31, 2001). 

[9] Other sectors of the commercial space industry include satellite 
services and ground equipment manufacturing. 

[10] The X PRIZE Foundation was established in 1995 to award $10 
million to the first team to launch a suborbital, reusable launch 
vehicle capable of carrying three people to an altitude of 70 miles, 
return safely to earth, and repeat the exercise within 2 weeks using 
the same vehicle. Twenty-seven teams from seven countries competed. 

[11] Futron Corporation, Space Tourism Market Study: Orbital Space 
Travel and Destinations with Suborbital Space Travel (Bethesda, Md.: 
October 2002). Revenue information is based on a survey of 450 
individuals with annual incomes of at least $250,000 or a net worth of 
at least $1 million, who were questioned about their interest in taking 
a space flight. 

[12] FAA issues four types of licenses: a launch license (for 
expendable launch vehicles), a reusable launch vehicle mission license, 
a reentry license, and a launch or reentry site operator license. The 
first three types of licenses are issued to the operator of a launch 
vehicle, and the fourth is issued to the operator of a spaceport. 
Licenses for vehicle operations are granted for one launch or reentry, 
a series of launches or reentries, or a period of time. 

[13] FAA does license launches for the U.S. government if the launch 
has been procured commercially. 

[14] Reimbursable services include the direct use of DOD facilities, 
security personnel, and radar support. 

[15] Launch vehicles are defined by the weight of the payload that the 
vehicle can carry to orbit. 

[16] NASA provides tracking and telemetry support for commercial 
launches out of the Wallops Flight Facility in Virginia, Kennedy Space 
Center in Florida, Kodiak Launch Complex in Alaska, and Vandenberg Air 
Force Base in California. 

[17] Low-Earth orbit is an orbit around the Earth broadly defined as 
between 124 and 726 miles above the Earth's surface. 

[18] National Aeronautics and Space Administration Authorization Act of 
2005, Pub. L. No. 109-155 (Dec. 30, 2005). 

[19] GAO, Aviation Safety: System Safety Approach Needs Further 
Integration into FAA's Oversight of Airlines, GAO-05-726 (Washington, 
D.C.: Sept. 28, 2005). 

[20] FAA's review of the license can also include a policy review, a 
payload review, a financial responsibility determination, and an 
environmental determination. 

[21] Even though the document had expired, we also reviewed the 
application for Scaled Composites' SpaceShipOne, which at that time was 
the only licensed reusable launch vehicle that had flown. 

[22] Executive Order 12465, Commercial Expendable Launch Vehicle 
Activities (Feb. 24, 1984). The members of this advisory group include 
DOD, State, Commerce, the Federal Communications Commission, and NASA. 

[23] Commercial Space Transportation Reusable Launch Vehicle and 
Reentry Licensing Regulations, Final Rule, 14 C.F.R. Parts 400, 401, 
404, 405, 406, 413, 415, 431, 433, and 435; 65 Fed. Reg. 56618 
(September 19, 2000). 

[24] Licensing and Safety Requirements for Launch, Final Rule (to amend 
14 C.F.R. Parts 413, 415, and 417); 71 Fed. Reg. 50508 (August 25, 
2006). 

[25] Under the regulations, the launch company has responsibility for 
flight and ground safety at spaceports. 

[26] A safety approval would allow the use of an approved launch 
vehicle, a safety system, a process, a service, or personnel, without 
requiring reexamination of fitness for a particular launch or reentry 
proposal subject to FAA licensing. Any safety system or service 
integral to launch or reentry operations is a possible candidate for a 
safety approval, as well as the entire vehicle and personnel who 
perform key safety functions. 

[27] Launch vehicle licenses are granted for either specific missions 
or for all missions over a fixed period. 

[28] FAA defines an incident as an unplanned event occurring during the 
flight of a launch vehicle involving a malfunction of a flight safety 
system or safety-critical system or a failure of the licensee's safety 
organization, design, or operations. 

[29] FAA did not classify the unexpected rolls as a launch incident 
because the agency was listening to the transmission during the roll 
and concluded that the pilot was in command and control of the vehicle 
and the potential impact point of the vehicle was over an unpopulated 
area. 

[30] GAO, U.S. Aerospace Industry: Progress in Implementing Aerospace 
Commission Recommendations and Remaining Challenges, GAO-06-920 
(Washington, D.C.: Sept. 13, 2006). 

[31] The objective of NASA's Lunar Lander Challenge, conducted under 
the auspice of the agency's Centennial Challenges Program, is to 
accelerate technology developments supporting the commercial creation 
of a vehicle capable of ferrying cargo or humans back and forth between 
lunar orbit and the surface of the moon. An objective of the Commercial 
Orbital Transportation Services demonstration program is to develop a 
transportation system that can carry cargo and eventually crew to the 
International Space Station. The purpose of the Geostationary 
Operational Environmental Satellite Program, which is a joint effort of 
NASA and the National Oceanic and Atmospheric Administration, is to 
help meteorologists observe and predict local severe weather events. 

[32] Acceptable Reusable Launch Vehicle Mission Risk, 14 C.F.R. 431.35; 
Flight Safety, 14 C.F.R. 417.107 (b). 

[33] Human Space Flight Requirements for Crew and Space Flight 
Participants; Proposed Rule to amend 14 C.F.R. parts 401, 431, 435, 
440, 450, and 460; and 70 Fed. Reg. 77262. 

[34] Personal Spaceflight Federation members include AirLaunch, LLC; 
Armadillo Aerospace; Bigelow Aerospace; New Mexico Spaceport Authority; 
Mojave Spaceport; Oklahoma Spaceport; Rocketplane Kistler; Scaled 
Composites; SpaceDev; SpaceX; Space Adventures; Virgin Galactic; XCOR 
Aerospace; and X PRIZE Foundation. 

[35] The Defense Advanced Research Projects Agency and Air Force's 
Falcon program provides funding with the goal of developing a low-cost 
small launch vehicle that will place small satellites into low-Earth 
orbit and provide a low-cost means of launching suborbital hypersonic 
technology vehicles. 

[36] On March 25, 2006, Falcon I failed on its maiden launch. The 
failure is thought to have been due to a fuel leak. 

[37] These costs are for launch vehicle development and do not include 
launch costs. 

[38] Futron Corporation, Space Transportation Costs: Trends in Price 
Per Pound to Orbit 1990-2000, (Bethesda, Md.: Sept. 6, 2002). Estimated 
average launch prices are in 2000 dollars and are based on published 
data. Launch prices vary according to factors that include the weight 
of the payload and its intended orbit. Estimated average launch prices 
for small vehicles exclude the Russian Navy Shtil vehicle. 

[39] Geosynchronous transfer orbit is the orbit used to transfer a 
payload from an initial low-Earth orbit to the final orbit. It is used 
to calculate costs because most launch vehicles place geostationary 
orbit-bound payloads in an intermediate transfer orbit from which the 
spacecraft maneuvers into geosynchronous orbit. 

[40] Estimated average launch prices for large vehicles are from Futron 
(2002) and exclude NASA's space shuttle. 

[41] Costs are for launch vehicle development only. 

[42] In August 2006, NASA selected SpaceX and Rocketplane Kistler as 
finalists in the demonstration program. 

[43] Launch companies expressed several concerns about the charges they 
have received from the Air Force. For example, some commercial 
launchers said that bills have not provided sufficient detail about the 
charges incurred, have not always been accurate, and have arrived years 
after services were rendered. 

[44] A limited number of Air Force active-duty personnel may be used to 
support commercial space launches. The commercial customer could pay 
for extra civilian contractor positions but not for extra active-duty 
positions. 

[45] Other customers include the X PRIZE Cup, Rocket Racing League, 
Starchaser Industries, and UP Aerospace. 

[46] The Rocketplane Kistler vehicle is built on a Lear jet fuselage 
and launches horizontally. The company plans on flying passengers at 
$200,000 per passenger. In 2006, Rocketplane Kistler signed a marketing 
agreement with Incredible Adventures to sell suborbital tourist 
flights. 

[47] FAA's Airport Improvement Program allocates grants to airports 
that are part of the National Plan of Integrated Airport Systems. 
Mojave Spaceport is classified as a general aviation airport and, thus, 
is eligible to apply for and receive Airport Improvement Program 
grants. 

[48] XCOR is developing the Xerus vehicle, which could be used for 
space tourism as well as the launching of small satellites to orbit. 
Interorbital Systems is designing the Neptune launch vehicle, which 
would launch from the surface of the ocean. 

[49] GAO-05-468R and GAO-02-203. 

[50] GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G 
(Washington, D.C.: August 2001); Standards for Internal Control in the 
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 
1999); and the Commercial Space Launch Act, Pub. L. No. 98-575 (Oct. 
30, 1984). 

[51] In some cases, launch activity had not yet occurred after the 
licenses were issued; therefore, monitoring reports had not yet been 
prepared. 

[52] Each measure of economic impact comprises three components--direct 
impacts, indirect impacts, and induced impacts. Direct impacts are the 
expenditures on inputs and labor involved in the provision of any final 
goods or services relating to the industries analyzed; indirect impacts 
involve the purchases made by and labor supplied by the industries that 
provide inputs to the launch and enabled industries; and induced 
impacts are the successive rounds of increased household spending that 
result from the direct and indirect impacts (e.g., a launch vehicle 
engineer's increased spending on household goods and services). 

[53] FAA's safety review of a license includes the review of data 
provided by the license applicant on the proposed flight path of the 
launch vehicle and a determination of its potential risk to the 
noninvolved public and property. Federal launch sites conduct their own 
risk analysis, which FAA reviews. 

[54] The issuance of a license is considered to be a major federal 
action defined under the National Environment Policy Act, 42 U.S.C. 
4332. Therefore, a license applicant must comply with requirements 
stated in the National Environment Policy Act, the Council on 
Environmental Quality Regulations for Implementing the Procedural 
Provisions of the National Environment Policy Act, 40 C.F.R. parts 1500-
1508, and the FAA's Procedures for Considering Environmental Impacts, 
FAA Order 1050.1D. 

[55] Under the 2004 Commercial Space Launch Amendments Act, license 
holders must provide liability insurance to cover their licensed 
activities. The calculation of the amount of insurance required is 
based on a maximum probable loss determination, which is an assessment 
of the maximum monetary losses likely to be incurred by government and 
third-party personnel and property in the event of a mishap. 

[56] This liability insurance is separate from indemnification that FAA 
provides for commercial launches. 

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