This is the accessible text file for GAO report number GAO-11-629T 
entitled 'Commercial Space Transportation: Industry Trends and Key 
Issues Affecting Federal Oversight and International Competitiveness' 
which was released on May 5, 2011. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 


Before the Subcommittee on Space and Aeronautics, Committee on 
Science, Space, and Technology, House of Representatives: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT:
Thursday, May 5, 2011: 

Commercial Space Transportation: 

Industry Trends and Key Issues Affecting Federal Oversight and 
International Competitiveness: 

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


GAO Highlights: 

Highlights of GAO-11-629T, a testimony before the Subcommittee on 
Space and Aeronautics, Committee on Science, Space, and Technology, 
House of Representatives. 

Why GAO Did This Study: 

Since GAO reported on the commercial space launch industry in 2006 and 
2009, the industry has evolved and moved further toward space tourism. 
Commercial space tourism promises to make human space travel available 
to the public for the first time. In addition, the National 
Aeronautics and Space Administration (NASA) plans to use private 
companies to transport cargo, and eventually personnel, to the 
International Space Station after NASA retires the space shuttle later 
in 2011. The Federal Aviation Administration (FAA) oversees the safety 
of commercial space launches, licensing and monitoring the safety of 
such launches and of commercial spaceports (sites for launching 
spacecraft), and promotes the industry. 

This testimony addresses (1) recent industry trends, (2) FAA’s related 
budget request for fiscal year 2012, and (3) challenges that FAA 
faces. This statement is based on GAO’s October 2006 report and 
December 2009 testimony on commercial space launches, updated with 
information GAO gathered from FAA and industry experts in April 2011 
on industry trends and recent FAA actions. 

In past work, GAO recommended that FAA take several actions to improve 
its oversight of commercial space launches, including assessing its 
future resource needs. FAA has taken some steps to address the 

What GAO Found: 

Historically, the commercial space launch industry focused primarily 
on putting payloads, such as satellites, into orbit, using launch 
vehicles that did not return to earth. Such launches have dropped off, 
and the industry is increasing its focus on space tourism. Five manned 
commercial flights took place in 2004, demonstrating the feasibility 
of commercial space tourism. Since then, companies have pursued 
research and development and are further developing vehicles for 
manned flights. Concurrently, companies and states are developing 
additional spaceports to accommodate anticipated commercial space 
tourism flights. States have provided economic incentives for 
development, and FAA has helped to support infrastructure development. 

FAA also anticipates an increase in commercial launches, which it 
expects will increase its oversight responsibilities; thus the agency 
has requested significantly more resources. FAA will become 
responsible in the near term for the commercial transport of NASA 
cargo and in the longer term for the licensing and oversight of space 
tourism flights and for safety regulations for all human commercial 
space travel. Anticipating an increase in responsibilities, FAA’s 
fiscal year 2012 budget request would increase spending on commercial 
space transportation by nearly 75 percent from about $15 million in 
actual obligations in fiscal year 2010 to about $26.6 million in 
fiscal year 2012. This would fund an increase of about 45 percent in 
staffing. GAO agrees that FAA’s workload is likely to increase but 
also believes there are uncertainties about how fast the demands on 
FAA’s resources will grow. 

In overseeing the commercial space launch industry, including the 
safety of space tourism, FAA faces several challenges. These include 
determining whether its current safety regulations are appropriate for 
all types of commercial space vehicles, operations, and launch sites; 
continuing to avoid conflicts between its dual role as safety 
regulator and industry promoter; and addressing policy and procedural 
issues when it integrates the operations of spacecraft into its next 
generation air transportation system. In addition, coordinating the 
federal response to the commercial space industry’s expansion is an 
issue for the federal government in the absence of a national space 
launch strategy for setting priorities and establishing federal roles. 

Figure: Several Commercial Space and Space Launch Vehicles Being 

[Refer to PDF for image: 3 photographs] 

Sources: Virgin Galactic (left); Blue Origin (middle); and XCOR 
Aerospace (right). 

[End of figure] 

View [hyperlink,] or key 
components. For more information, contact Gerald L. Dillingham at 
(202) 512-2834 or 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

Thank you for the opportunity to testify today on the fiscal year 2012 
budget request and oversight responsibilities of the Federal Aviation 
Administration's (FAA) Office of Commercial Space Transportation. 
Historically, commercial space launches carried "payloads," generally 
satellites, into orbit using expendable launch vehicles--that is, 
unmanned vehicles that are only used once. These launches took place 
primarily at federal launch sites. In recent years, however, the 
industry has changed significantly: now several companies are 
developing and have begun testing manned, reusable launch vehicles 
[Footnote 1] for commercial space tourism. In addition, the National 
Aeronautics and Space Administration (NASA) plans to retire the space 
shuttle later in 2011 and begin using commercial launches to carry 
cargo and possibly astronauts to the International Space Station. To 
support expected growth in commercial space launches, private 
companies and states are developing commercial spaceports--sites used 
for commercial (nongovernment) spacecraft launches. FAA's Office of 
Commercial Space Transportation is responsible for licensing and 
monitoring the safety of commercial space launches and commercial 
spaceports and promoting the industry. 

My testimony today focuses on (1) recent trends in the commercial 
space launch industry, (2) the fiscal year 2012 budget request for 
FAA's Office of Commercial Space Transportation, and (3) challenges 
that FAA faces in overseeing the industry. This statement is based on 
our October 2006 report and 2009 testimony on commercial space 
launches, and has been updated with information we gathered from FAA 
and industry experts in April and May 2011 on industry trends and 
recent FAA actions, and FAA documents pertaining to its fiscal year 
2012 budget request.[Footnote 2] Our work on the October 2006 report 
and 2009 testimony included reviewing FAA's safety oversight processes 
and interviewing federal government officials and industry 
representatives to assess FAA's response to emerging industry issues. 
Appendix I provides an update of the actions that FAA has taken in 
response to our previous recommendations. 

We conducted our work during April and May 2011 in accordance with all 
sections of GAO's Quality Assurance Framework that were relevant to 
our objectives. The framework requires that we plan and perform the 
engagement to obtain sufficient and appropriate evidence to meet our 
stated objectives and to discuss any limitations in our work. We 
believe that the information and data obtained, and the analysis 
conducted, provide a reasonable basis for any findings in this report. 

Commercial Space Launches Have Generally Declined, but Private 
Companies and States Are Building Commercial Spaceports Due to an 
Anticipated Increase: 

The Number of Licensed Commercial Launches Has Declined, but an 
Increase Is Expected Due to Research and Development Related to Space 

After reaching a peak of 22 launches in 1998 (see figure 1), the 
number of commercial space launches began to fluctuate and generally 
declined through 2003. This was due to a downturn in the 
telecommunications services industry, which had been the primary 
customer of the commercial space launch industry. Most of these 
launches were focused on putting payloads (e.g., satellites) into 
orbit. However, the 2004 spike in launches was caused, in part, by the 
five manned flights of SpaceShipOne, the first and only manned 
commercial spaceflights. 

Although anticipated additional manned commercial spaceflights have 
not materialized, research and development efforts that could lead to 
manned flights continued following the SpaceShipOne flights. FAA began 
issuing experimental permits in 2006 to companies seeking to conduct 
test launches of reusable space launch vehicles, which could be used 
for manned commercial flights.[Footnote 3] According to industry 
experts that we spoke with, since 2006 the commercial space launch 
industry has experienced a steady buildup of research and development 
efforts, including ground tests and low-altitude flight tests of 
reusable rocket-powered vehicles that are capable of takeoffs and 
landings. In 2008, FAA changed its regulations for amateur rockets, 
which allowed companies, under certain circumstances, to fly vehicles 
under the exemption provided by the amateur rocket regulations rather 
than obtain experimental permits.[Footnote 4] For this reason, FAA did 
not issue any experimental permits in 2009 or 2010. A senior FAA 
official estimated that a couple dozen permits would have been 
required during those years if the regulations had not been changed. 

Figure 1: U.S. Commercial Launches 1997 to 2010: 

[Refer to PDF for image: vertical bar graph] 

Year: 1997; 
FAA licensed launches: 17. 

Year: 1998; 
FAA licensed launches: 22. 

Year: 1999; 
FAA licensed launches: 17. 

Year: 2000; 
FAA licensed launches: 10. 

Year: 2001; 
FAA licensed launches: 6. 

Year: 2002; 
FAA licensed launches: 7. 

Year: 2003; 
FAA licensed launches: 8. 

Year: 2004[A]; 
FAA licensed launches: 14. 

Year: 2005; 
FAA licensed launches: 5. 

Year: 2006; 
FAA licensed launches: 7; 
FAA permitted launches: 6. 

Year: 2007; 
FAA licensed launches: 4; 
FAA permitted launches: 9. 

Year: 2008; 
FAA licensed launches: 11; 
FAA permitted launches: 5. 

Year: 2009; 
FAA licensed launches: 5. 

Year: 2010; 
FAA licensed launches: 4. 

Source: GAO analysis of FAA data. 

[A] Includes licensed suborbital launches by Scaled Composites. 

[End of figure] 

The Number of Commercial Spaceports Is Increasing in Anticipation of 
Increasing Commercial Space Tourism: 

Since we reported in 2006, private companies and states have been 
developing additional spaceports to accommodate anticipated commercial 
space tourism flights and expand the nation's launch capacity. In 
2006, there were six FAA-licensed spaceports. In 2011, the number had 
increased to eight FAA-licensed spaceports--including two in Florida 
whose licenses were approved since we last reported in 2009. State 
governments and local communities have proposed establishing 
commercial spaceports in Hawaii, Indiana, and Wisconsin. Figure 2 
shows the existing and proposed commercial spaceports and federal 
launch sites used for commercial launches. 

Figure 2: Existing and Proposed Spaceports in the United States as of 
January 2011: 

[Refer to PDF for image: illustrated U.S. map] 

U.S. federal spaceport: 
Edwards AFB, California; 
Kennedy Space Center and Cape Canaveral, Florida; 
Ronald Reagan Ballistic Missile Test Site (Kwajalein Atoll, Marshall 
Vandenberg AFB, California; 
Wallops Flight Facility, Virginia; 
White Sands Missile Range, New Mexico; 

Nonfederal spaceport: 
Blue Origin[A], Texas; 
California Spaceport, California; 
Cape Canaveral spaceport, Florida; 
Cecil Field Spaceport, Florida; 
Kodiak Launch Complex, Alaska; 
Mid-Atlantic Regional Spaceport, Virginia; 
Mojave Air and Space Port, California; 
Oklahoma Spaceport, Oklahoma; 
Sea Launch platform (Equatorial Pacific Ocean); 
Spaceport America, New Mexico; 

Proposed nonfederal spaceport: 
Spaceport Hawaii[B]; 
Spaceport Indiana; 
Spaceport Sheboygan, Wisconsin. 

Sources: FAA and GAO. 

[A] Private facility with a sole site operator. 

[B] Exact location has not been determined. 

[End of figure] 

Both states and FAA have provided support for the development of 
commercial spaceports. States have provided economic incentives to 
developers to build spaceports, which will in turn attract space 
tourism and provide economic benefits to localities. For example, as 
of June 2010, New Mexico provided approximately $190 million to 
construct Spaceport America.[Footnote 5] In addition, the Florida 
Space Authority, a state agency, invested over $500 million in new 
space industry infrastructure development at Cecil Field Spaceport, 
including upgrades to the launch pad, a new space operations support 
complex, and a reusable launch vehicle support complex. Virginia, 
which provides funding for the Mid-Atlantic Regional Spaceport, also 
passed legislation to limit the liability of those providing 
commercial human spaceflight in the event of an incident and exempt 
from state income taxes space transportation companies doing business 
in Virginia and intending to launch payloads or train at the 
spaceport. However, according to a senior FAA official, continued 
state support for spaceports in the current economic environment has 
been mixed. The official added that although there are eight licensed 
spaceports, there is not activity at all of them, and until there is a 
user bringing revenue to a location, support is difficult to justify. 
In addition, in 2010, FAA distributed a total of $500,000 to four 
spaceports in the first Commercial Space Transportation Grants. 
[Footnote 6] 

FAA Anticipates That Increases in Commercial Launches and Regulatory 
Workload Will Add to Its Oversight Responsibilities and Has 
Subsequently Requested More Resources: 

FAA's Licensing and Oversight Responsibilities Would Expand with the 
Commercial Space Launch Industry: 

Like the states and private companies building commercial spaceports, 
FAA expects that the number of commercial space launches will increase 
over the next several years. This expectation is due, at least in 
part, to the continued private development of vehicles for human space 
flight, including space tourism, and NASA-sponsored commercial space 
launches resulting from the retirement of the space shuttle in 2011. 

According to a senior FAA official and a commercial spaceflight 
industry official, the first suborbital flights[Footnote 7] with paid 
passengers are expected to begin within 2 years, with numerous 
launches occurring each year, adding to the agency's licensing and 
oversight workload. Each launch, for example, requires both a launch 
and reentry license. Virgin Galactic, which formed a joint venture 
with Scaled Composites to develop SpaceShipTwo, is the farthest along 
among the companies that are undertaking research and development for 
launch vehicles designed to serve the anticipated space tourism 
market. The company began conducting related test flights in October 
2009. Because those test flights did not use a rocket, they were 
conducted under FAA airworthiness certificates. Once a rocket is added 
to the vehicle, as is planned for the next phase of the test flight 
program, expected to begin later in 2011, an FAA launch license will 
be required. As of April 2011, that license was still pending. A 
Virgin Galactic official said that as of April 2011, over 420 people 
had placed deposits with the company for future spaceflights. Other 
companies, such as XCOR Aerospace and Armadillo Aerospace, have also 
announced plans to develop vehicles to serve the space tourism market. 
Figures 3-5 show photos of several vehicles that are under development. 

Figure 3: Blue Origin's Goddard Space Vehicle: 

[Refer to PDF for image: photograph] 

Source: Blue Origin. 

[End of figure] 

Figure 4: Virgin Galactic's White Knight and SpaceShipTwo Vehicles: 

[Refer to PDF for image: photograph] 

Source: XCOR Aerospace. 

[End of figure] 

Figure 5: Virgin Galactic's SpaceShipTwo Vehicle: 

[Refer to PDF for image: photograph] 

Source: Virgin Galactic. 

[End of figure] 

Additionally, FAA licensing and oversight responsibilities will likely 
increase as NASA begins this year to use vehicles developed and 
operated by commercial partners Space Exploration Technologies 
(SpaceX) and Orbital Sciences Corporation (Orbital) to deliver cargo 
to the International Space Station following the last of the space 
shuttle flights this summer. In December 2010, SpaceX conducted an FAA-
licensed demonstration flight of its Falcon 9 launch vehicle and 
Dragon space capsule, and successfully retrieved the capsule after it 
completed its orbit and reentry maneuvers. A second demonstration 
flight is planned for later this year, along with the first 
demonstration flight of Orbital's Taurus II launch vehicle and Cygnus 
spacecraft.[Footnote 8] NASA has awarded Commercial Resupply Services 
(CRS) contracts for 12 SpaceX flights and eight Orbital flights to 
deliver cargo to the International Space Station once the 
demonstration flights are completed successfully. FAA is the licensing 
authority for the demonstration flights as well as for the flights to 
be carried out under the CRS contracts. 

NASA eventually plans to use commercial systems to transport agency 
crew members to the International Space Station and has initiated the 
Commercial Crew Development Program to further these plans. 
Specifically, in January 2010 the agency entered into several Space 
Act agreements totaling $50 million to provide financial and advisory 
assistance to private companies developing spacecraft and related 
systems for human spaceflight. Last month, NASA announced a new round 
of agreements totaling $269 million to further mature system concepts. 
[Footnote 9] NASA ultimately plans to contract with commercial 
partners to certify vehicles for human spaceflight and to procure crew 
transportation services; however, it is unclear at this point what 
role FAA will have in licensing such vehicles and services and, 
therefore, it is not clear how such contracts will affect FAA's 
workload. Further, FAA licensing applies only to vehicle launch and 
reentry operations and not to in-orbit activities. NASA officials are 
in the process of determining the extent to which the agency will 
exercise its own launch authority for commercial human spaceflight 
(versus a commercial launch license from the FAA) as they evaluate the 
impact FAA licensing would have on their ability to impose NASA's own 
safety and mission assurance requirements on commercial partners. NASA 
officials are also weighing issues concerning indemnification for 
commercial partners against catastrophic third-party loss (i.e., loss 
to a party other than the government or the commercial provider). We 
will evaluate NASA's commercial crew transportation procurement 
strategy, insight and oversight plans, and indemnification approach--
which NASA officials expect to provide to Congress in June--in 
response to a mandate in the NASA Authorization Act of 2010[Footnote 
10] and expect to issue a report later this year. 

Regulation of Crew and Passenger Safety after 2012 Would Add to FAA's 

FAA also expects its workload to increase over the next several years 
as it begins to develop safety regulations for commercial human 
spaceflight. The Commercial Space Launch Amendments Act of 2004 
[Footnote 11] gave FAA the specific responsibility of regulating 
commercial human spaceflight, but, to allow the industry to experiment 
and mature, the act allows FAA to regulate crew and passenger safety 
before 2012 only in response to high-risk incidents, serious injuries 
or fatalities, or an event that poses a high risk of causing a serious 
or fatal injury. A proposed amendment to the FAA Air Transportation 
Modernization and Safety Improvement Act would extend that date until 
8 years after the first licensed commercial launch of a spaceflight 
participant.[Footnote 12] FAA's Associate Administrator for Commercial 
Space Transportation and an industry association official told us that 
they expect such a flight to occur within the next 2 years. 

Despite this limitation, FAA is responsible for the protection of the 
uninvolved public, which could be affected by a failed mission that 
crashes. FAA has interpreted this limited authority as allowing it to 
regulate crew safety in certain circumstances and has been proactive 
in issuing a regulation concerning emergency training for crews and 
passengers.[Footnote 13] However, FAA has not developed indicators 
that it would use to monitor the safety of the developing space 
tourism sector and determine when to step in and regulate commercial 
human space flight. To allow the agency to be proactive about safety, 
rather than responding only after a fatality or serious incident 
occurs, we recommended that FAA identify and continually monitor 
indicators of space tourism industry safety that might trigger the 
need to regulate crew and passenger safety before 2012. According to 
agency officials, FAA has not been able to address our recommendation 
directly because there have been no launches with passengers. When 
such launches occur, those same officials told us, they intend to 
collect and analyze data on safety-related anomalies, safety-critical 
system failures, incidents, and accidents. However, those officials 
also told us that they intend to develop a means to share information 
with and assess lessons learned from the commercial spaceflight 
industry. Toward this end, the agency has hired a statistician to 
develop the architecture for such a data system, according to a senior 
FAA official. 

It is unclear when FAA should or will begin regulating crew and 
passenger safety, since data for evaluating risk do not exist and 
proposed legislation would extend the limitation on regulation more 
than 8 years. Nonetheless, FAA is taking steps that will enable it to 
be prepared to regulate. Senior FAA officials also told us that FAA is 
reviewing NASA's human rating of space launch vehicles, as well as 
FAA's Office of Aviation Safety aircraft certification process as they 
consider possible future regulations on human spaceflight standards. 
Futhermore, FAA's Office of Commercial Space Transportation expects to 
work closely with its industry advisory group--the Commercial Space 
Transportation Advisory Committee--on the issue. We believe FAA is 
taking reasonable preliminary steps to regulate crew and passenger 

FAA Is Requesting Significantly More Resources to Handle the Expanded 
Oversight Workload: 

As a result of the expected increase in responsibilities, FAA is 
requesting significantly more resources. FAA's fiscal year 2012 budget 
request would increase the budget for the Office of Commercial Space 
Transportation by nearly 75 percent from about $15 million in actual 
obligations in fiscal year 2010 to about $26.6 million in fiscal year 
2012. This would fund an increase of about 45 percent in staffing--
from 71 full-time equivalent staff in fiscal year 2010 to 103 in 
fiscal year 2012--as well as a $5 million increase in obligations on 
the office's space incentives grant program. 

Twenty-five of the additional full-time equivalent employees would be 
part of the anticipated Commercial Spaceflight Technical Center that 
is expected to be established in 2011 at the NASA Kennedy Space Center 
in Florida. FAA expects the center to provide technical support for 
commercial space launch activities in the areas of spaceflight safety, 
engineering and standards, launch operations, and space traffic 
management. The other seven full-time equivalent employees would 
provide technical expertise in two areas: 

* human factors, which is the study of how humans' abilities, 
characteristics, and limitations interact with the design of the 
equipment they use, environments in which they function, and jobs they 
perform; and; 

* human spaceflight. 

In past work, we have reported on the difficulty in finding expertise 
in human factors.[Footnote 14] 

In 2006, we raised concerns that FAA's experience in the area of human 
spaceflight is limited because its launch safety oversight has focused 
primarily on unmanned launches of satellites into orbit using 
expendable launch vehicles. As mentioned earlier in my statement, many 
companies are developing space vehicles of different designs for human 
spaceflight that are being tested for the first time, requiring that 
FAA have a sufficient level of expertise to provide oversight. In 
addition, FAA needs an adequate number of staff to oversee the 
anticipated growth in the number of launches at various locations. We 
recommended in 2006 that FAA assess the levels 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 response to our recommendations, FAA's Office of 
Commercial Space Transportation hired 12 aerospace engineers in fiscal 
year 2010. In addition, since our report, FAA has established field 
offices at Edwards Air Force Base and NASA's Johnson Space Center in 
anticipation of increased commercial space launches. As test flights 
expand, there may be the need for FAA to establish additional field 
offices. In addition, we have reported that as NASA-sponsored 
commercial space launches increase, FAA's need for regulatory 
resources and expertise may change, according to industry experts we 
spoke with. 

We believe FAA has taken reasonable steps thus far to ensure that it 
has adequate resources to fulfill its safety oversight role. The 
agency's focus on future needs for human factors and human spaceflight 
expertise seems reasonable given the research and development that the 
private sector is conducting in human spaceflight and the need for FAA 
to eventually establish regulations in this area. However, we have not 
analyzed in depth FAA's budget request for significantly more 
resources for fiscal year 2012 and there are uncertainties about how 
fast the demands on FAA's resources will grow. 

FAA Faces Challenges in Overseeing the Commercial Space Launch 

FAA Safety Regulations May Not Be Suitable for Both Federal Launch 
Sites and Commercial Spaceports: 

FAA faces challenges related to regulating commercial spaceports. 
Specifically, FAA must ensure that its regulations on licensing and 
safety requirements for launches and launch sites, which are based on 
safety requirements for expendable launch vehicle operations at 
federal launch sites, will also be suitable for operations at 
commercial spaceports. We have reported that the safety regulations 
for expendable launch vehicles may not be suitable for space tourism 
flights because of differences in vehicle types and launch operations, 
according to experts we spoke with. Similarly, spaceport operators and 
experts we spoke with raised concerns about the suitability of FAA 
safety regulations for commercial spaceports. Experts told us that 
safety regulations should be customized for each spaceport to address 
the different safety issues raised by various types of operations, 
such as different orbital trajectories and differences in the way that 
vehicles launch and return to earth--whether vertically or 
horizontally. To address these concerns, we reported that it will be 
important to measure and track safety information and use it to 
determine if the regulations should be revised. We did not make 
recommendations to FAA concerning these issues because the Commercial 
Space Launch Amendments Act of 2004 required the Department of 
Transportation (DOT) to commission an independent report to analyze, 
among other things, 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. The 
report, issued in November 2008, concluded that the launch of 
expendable vehicles, when used to lift reusable rockets carrying crew 
and passengers, as well as the launch and reentry of reusable launch 
vehicles with crew and passengers, should be regulated differently 
from the launch of expendable vehicles without humans aboard.[Footnote 
15] As previously discussed, such rulemaking cannot take place until 
after December 2012. Similar to our finding, the report noted that the 
development of a data system to monitor the development and actual 
performance of commercial launch systems and to better identify 
different launch risk factors and criteria would greatly assist the 
regulatory process. 

Distinguishing FAA's Dual Role of Industry Promotion and Safety: 

In 2006, we reported that FAA faced the potential challenge of 
overseeing the safety of commercial space launches while promoting the 
industry.[Footnote 16] While we found no evidence that FAA's 
promotional activities--such as sponsoring an annual industry 
conference and publishing industry studies--conflicted with its safety 
regulatory role, we noted that potential conflicts may arise as the 
space tourism sector develops. We reported that as the commercial 
space launch industry evolves, it may be necessary to separate FAA's 
regulatory and promotional activities. Recognizing the potential 
conflict, Congress required the 2008 DOT-commissioned report to 
discuss whether the federal government should separate the promotion 
of commercial human spaceflight from the regulation of such activity. 
We suggested as a matter for congressional consideration that, if the 
report did not fully address the potential for a conflict of interest, 
Congress should revisit the granting of FAA's dual mandate for safety 
and promotion of human spaceflight and decide whether the elimination 
of FAA's promotional role is necessary to alleviate the potential 
conflict. The 2008 commissioned report concluded there was no 
compelling reason to remove promotional responsibilities from FAA in 
the near term (through 2012). Moreover, the report noted that the 
Office of Commercial Space Transportation's estimated resource 
allocation for promotional activities was approximately 16 percent of 
the office's budget in fiscal year 2008, which was significantly less 
than what the office allocated for activities directly related to 
safety. However, the report noted that the commercial space launch 
industry will experience significant changes in its environment in the 
coming decades; therefore, periodic review of this issue is warranted. 
As we reported in 2009, we still concur with the commissioned report's 
assessment and see no need for Congress to step in at this time to 
require a separation of regulatory and promotional activities. 
However, FAA and Congress must remain vigilant that any inappropriate 
relationship between FAA and the commercial space launch industry does 
not occur. 

Integrating Space Transportation into NextGen: 

NextGen--FAA's efforts to transform the current radar-based air 
traffic management system into a more automated, aircraft-centered, 
satellite-based system--will need to accommodate spacecraft that are 
traveling to and from space through the national airspace system. As 
the commercial space launch industry grows and spaceflight technology 
advances, FAA expects that commercial spacecraft will frequently make 
that transition and the agency will need tools to manage a mix of 
diverse aircraft and space vehicles in the national airspace system. 
In addition, the agency will need to develop new policies, procedures, 
and standards for integrating spaceflight operations into NextGen. For 
example, it will have to define new upper limits to the national 
airspace system to include corridors for flights transitioning to 
space; establish new air traffic procedures for flights of various 
types of space vehicles, such as aircraft-ferried spacecraft and 
gliders; develop air traffic standards for separating aircraft and 
spacecraft in shared airspace; and determine controller workload and 
crew rest requirements for space operations. FAA has begun to consider 
such issues and includes them in a general way in its concept of 
operations for NextGen. 

Maintaining an International Competitive Position for the U.S. 
Commercial Space Launch Industry: 

We reported in 2006 that as the commercial space launch industry 
expands, it will face key competitive issues concerning high launch 
costs and export controls that affect its ability to sell its services 
abroad. Foreign competitors have historically offered lower launch 
prices than U.S. launch providers, and the U.S. industry has responded 
by merging launch companies, forming international partnerships, and 
developing lower-cost launch vehicles. For example, Boeing and 
Lockheed Martin merged their launch operations to form United Launch 
Alliance, and SpaceX developed a lower-cost launch vehicle. The U.S. 
government has responded to the foreign competition by providing the 
commercial space launch industry support, including research and 
development funds, government launch contracts, use of its launch 
facilities, and third-party liability insurance through which it 
indemnifies launch operators. 

The continuation of such federal involvement will assist industry 
growth, according to industry experts that we spoke with. For example, 
the U.S. government indemnifies launch operators by providing 
catastrophic loss protection covering third-party liability claims in 
excess of required launch insurance in the event of a commercial 
launch incident. Currently, launch operators are required to buy third-
party liability insurance for up to $500 million in addition to 
insurance for their vehicle and its operations, and the U.S. 
government provides up to $1.5 billion in indemnification. Some 
industry experts have said that government indemnification is 
important because the cost of providing insurance for launches could 
be unaffordable without indemnification. A senior Department of 
Commerce official told us that without federal indemnification, 
smaller launch companies may go out of business. 

In addition, industry representatives that we interviewed told us that 
export licensing requirements affect the ability of the U.S. 
commercial space launch industry to sell its services abroad. These 
regulations are designed to establish controls to ensure that arms 
exports, consistent with national security and foreign policy 
interests, include launch vehicles because they can deliver chemical, 
biological, and nuclear weapons. In previous work, a senior Department 
of Commerce official told us that the U.S. commercial space launch 
industry had asked Congress to consider changing the statute that 
restricts space manufacturing items for export. A change in statute 
would allow for the Departments of State and Defense to review 
individual items, as they do for other industries. 

As the space tourism industry develops, the issue will arise of 
establishing a foundation for a common global approach to launch 
safety. According to senior FAA officials, when space tourism 
operations eventually occur, they are planned to be international, 
with takeoffs and landings from U.S. commercial spaceports to United 
Arab Emirates and Singapore spaceports, among others. Thus, the 
development, interoperability, and harmonization of safety standards 
and regulations, particularly concerning space tourism flights, will 
be important for the safety of U.S. and international space 
operations. In the future, if suborbital point-to-point space travel 
becomes a reality, entirely new issues will have to be addressed, 
including bilateral and international interoperability, air and space 
traffic integration, existing treaty and law implications, national 
security issues (such as friend or foe identification), customs, 
international technical standards, and other transportation issues. In 
response, FAA has established an international outreach program to 
promote FAA commercial space transportation regulations as a model for 
other countries to adopt. The outreach program includes establishing 
initial contacts with interested countries and introductory briefings 
about FAA regulations. 

Lack of an Overarching National Space Launch Policy: 

Finally, an overarching issue that has implications for the U.S. 
commercial space launch industry is the lack of a comprehensive 
national space launch strategy, which includes issues such as 
development, procurement, certification, licensing, and regulation of 
launch vehicles and other aspects of the industry.[Footnote 17] 
Numerous federal agencies have responsibility for space activities, 
including FAA's oversight of commercial space launches, NASA's 
scientific space activities, the Department of Defense's national 
security space launches, the State Department's involvement in 
international trade issues, and the Department of Commerce's advocacy 
and promotion of the industry. According to the National Academy of 
Sciences, aligning the strategies of the various civil and national 
security space agencies will address many current issues arising from 
or exacerbated by the current uncoordinated, overlapping, and 
unilateral strategies.[Footnote 18] A process of alignment offers the 
opportunity to leverage resources from various agencies to address 
such shared challenges as the diminished space industrial base, the 
dwindling technical workforce, and reduced funding levels, according 
to the Academy report. A national space launch strategy could identify 
and fill gaps in federal policy concerning the commercial space launch 
industry, according to senior FAA and Department of Commerce officials. 

In 2009, we reported on several gaps in federal policy for commercial 
space launches. For example, we reported that while FAA has safety 
oversight responsibility for the launch and reentry of commercial 
space vehicles, agency officials told us that no federal entity has 
oversight of orbital operations, including the collision hazard while 
in orbit posed by satellites and debris (such as spent rocket stages, 
defunct satellites, and paint flakes from orbiting objects). The 
President's National Space Policy of 2010[Footnote 19]--which outlines 
the principles and goals of the United States with regard to its 
participation in space-related activities--addressed this issue by 
assigning the Secretary of Defense, in collaboration with the Director 
of National Intelligence the responsibility for operation of space 
situational awareness (SSA) capabilities. Through our ongoing work, we 
have preliminarily found that the Department of Defense has 
established a program to make SSA data more available and usable for 
the space community; however, increased participation by commercial 
and foreign entities, and a way to validate information provided by 
these entities, is necessary for an effective system of collision 
awareness.[Footnote 20] One issue that remains unresolved is the role 
of the National Transportation Safety Board (NTSB) in investigating 
any accidents that occur. NTSB does not have space transportation 
explicitly included in its statutory jurisdiction, although it does 
have agreements with FAA and the Air Force under which it will lead 
investigations of commercial space launch accidents. The 2008 DOT-
commissioned report on human space flight suggested that Congress may 
want to consider explicitly designating a lead agency for accident 
investigations involving space vehicles to avoid potential overlapping 
jurisdictions. Finally, the National Space Policy of 2010 continues to 
outline a requirement that responsible entities shall promote U.S. 
commercial space regulations and encourage interoperability with these 
regulations. Further, it requires that the responsible departments and 
agencies should minimize, as much as possible, the regulatory burden 
for commercial space activities and ensure that the regulatory 
environment for licensing space activities is timely and responsive. 
Our current work indicates that agencies, such as FAA and NASA, are 
just beginning the process of addressing this issue as the number of 
commercial space launches, as well as commercial launches for 
government customers, is planned to increase in the next several years. 

Chairman Palazzo, this concludes my prepared statement. I would be 
pleased to respond to any questions from you or other Members of the 

GAO Contact and Staff Acknowledgments: 

For further information on this testimony, please contact Dr. Gerald 
L. Dillingham at (202) 512-2834 or Individuals 
making key contributions to this testimony include Teresa Spisak, Bob 
Homan, David Hooper, Maureen Luna-Long, Shelby Oakley, Amy Rosewarne, 
and Jessica Wintfeld. 

[End of section] 

Appendix I: Status of GAO's Recommendations to FAA Concerning 
Commercial Space Launches: 

Recommendation: The Federal Aviation Administration (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 
commercial spaceports under various scenarios and timetables; 
Action taken: FAA has assessed resources and hired additional 
aerospace engineers. Its most recent assessment calls for a requested 
32 additional full-time equivalent staff for the Office of Commercial 
Space Transportation for fiscal year 2012. 

Recommendation: FAA's Office of Commercial Space Transportation should 
develop a formal process for consulting with the Office of Aviation 
Safety about licensing reusable launch vehicles; 
Action taken: FAA has not developed a formal process, but the two 
offices signed a formal agreement for the licensing of SpaceShipTwo, 
which delineates the responsibilities for each office. Agency 
officials expect that a similar process will be used as future 
applications are received. 

Recommendation: FAA should identify and continually monitor space 
tourism safety indicators that might trigger the need to regulate crew 
and flight participant safety before 2012; 
Action taken: No action has been taken to monitor safety indicators 
because commercial human spaceflights have not occurred since 2004. 
The Office of Commercial Space Transportation has, however, consulted 
on data issues with another FAA office and hired a statistician to 
begin working on a database architecture, according to a senior FAA 

Recommendation: FAA should develop and issue guidance on the 
circumstances under which it would regulate crew and flight 
participant safety before 2012; 
Action taken: No action has been taken to issue guidance. 

Recommendation: As long as it has a promotional role, FAA should work 
with the Department of Commerce to develop a memorandum of 
understanding that clearly delineates the two agencies' responsive 
promotional roles in line with their statutory obligations and larger 
agency missions; 
Action taken: FAA's Office of Commercial Space Transportation and 
Commerce's Office of Space Commercialization signed a memorandum of 
understanding in September 2007. FAA has no agreement with Commerce's 
International Trade Administration, which also has responsibilities 
for promoting the commercial space industry and its competitiveness. 

Source: GAO. 

[End of table] 

[End of section] 


[1] A reusable launch vehicle is one that is capable of being launched 
into space more than once and takes off and returns to the original 
launch site. 

[2] GAO, Commercial Space Launches: FAA Needs Continued Planning and 
Monitoring to Oversee the Safety of the Emerging Space Tourism 
Industry, [hyperlink,] 
(Washington, D.C.: Oct. 20, 2006) and Commercial Space Transportation: 
Development of the Commercial Space Launch Industry Presents Safety 
Oversight Challenges for FAA and Raises Issues Affecting Federal 
Roles, [hyperlink,] 
(Washington, D.C.: Dec. 2, 2009). 

[3] 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. FAA also issues experimental permits for test flights of 
reusable launch vehicles. 

[4] 73 Fed. Reg. 73768, December 4, 2008. 

[5] Approximately $132 million came from state appropriations. The 
remainder came from tax bonds collected from Dona Ana and Sierra 

[6] Consolidated Appropriations Act, Pub. L. No. 111-117, 123 Stat. 
3034, 3039 (2009). 

[7] A suborbital flight is one in which the launch vehicle ascends and 
descends close to the launch site. An orbital flight is one that has 
an orbital trajectory over the earth. The difference between orbital 
and suborbital flights is based on the trajectory of the flight rather 
than altitude. 

[8] The SpaceX and Orbital Sciences tests were or will be conducted in 
fulfillment of Space Act agreement milestones under NASA's Commercial 
Orbital Transportation Services Program. 

[9] NASA signed Space Act agreements with five companies in the first 
round of its Commercial Crew Development Program: Blue Origin, The 
Boeing Company, Paragon Space Development Corporation, Sierra Nevada 
Corporation, and United Launch Alliance. In the second round of the 
program, NASA awarded agreements to Blue Origin, The Boeing Company, 
Sierra Nevada Corporation, and SpaceX. 

[10] National Aeronautics and Space Administration (NASA) 
Authorization Act of 2010, Pub.L. No. 111-267, Section 503(2)(2). 

[11] Pub.L. No. 108-492, 118 Stat. 3974 (2004). 

[12] FAA Air Transportation Modernization and Safety Improvement bill, 
H.R. 658, recently passed by the House of Representatives. 

[13] 71 Fed. Reg. 75616, December 15, 2006. 

[14] See GAO, Next Generation Air Transportation System: FAA and NASA 
Have Improved Human Factors Research Coordination, but Stronger 
Leadership Needed, [hyperlink,] 
(Washington, D.C.: Aug. 6, 2010). 

[15] The Aerospace Corporation, et al., Analysis of Human Space Flight 
Safety, Report to Congress (El Segundo, Calif.: Nov. 11, 2008). 

[16] In 1984, the Commercial Space Launch Act gave the Department of 
Transportation the authority to license and monitor the safety of 
commercial space launches and to promote the industry. Pub.L. No. 98- 
575, 98 Stat. 3055 (1984). 

[17] GAO has planned work examining the coordination of development, 
procurement, and certification of launch vehicles. 

[18] Committee on the Rationale and Goals of the U.S. Civil Space 
Program, National Research Council, America's Future in Space: 
Aligning the Civil Space Program with National Needs (Washington, 
D.C.: 2009). 

[19] Office of the President of the United States of America, National 
Space Policy of the United States of America (Washington, D.C.: June 
28, 2010). 

[20] We plan to issue a report on space situational awareness 
capabilities in June 2011. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink,]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink,] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 

To Report Fraud, Waste, and Abuse in Federal Programs: 


Web site: [hyperlink,]: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: