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SPACE COMMERCIALIZATION PROMOTION

ACT OF 1996

WEDNESDAY, JULY 31, 1996
U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE ON SCIENCE,
SUBCOMMITTEE ON SPACE AND AERONAUTICS,

Washington, DC. The subcommittee met at 1:21 p.m. in Room 2318 of the Rayburn House Office Building, the Honorable F. James Sensenbrenner, chairman of the subcommittee, presiding.

Mr. SENSENBRENNER. The subcommittee will be in order.

Without objection, the Chair is granted permission to recess the subcommittee during votes this afternoon. We understand that there are going to be plenty of them, so I will apologize in advance to the witnesses who will be appearing, because I'm afraid that there are going to be numerous pregnant pauses. Without objection, so ordered.

The American aerospace industry has led the world for decades. But its position has been increasingly challenged in recent years.

First, defense cuts, which began in 1986, have reduced the business base for high-tech companies, and cut the amount of investment that this country makes in new space technologies.

Second, foreign governments have heavily subsidized their aerospace industries, and practiced a brand of mercantilism that minimizes the technical advances American companies have in the global marketplace.

As a result of these two trends, American companies have watched their profits shrink. And we've all watched the impact that defense cuts have had on our aerospace workers.

But there has been a silver lining in all of these dark clouds; and that has been commercial space development.

Commercial space activity generated $6.3 billion worth of revenue in 1994, and $7.5 billion in 1995, which makes it larger than the motion picture industry. In the last decade, this area of economic activity has experienced unprecedented growth. It has proven recession-proof, granted tax revenues, created new jobs, and leveraged space technology to improve everyday life.

Continued growth of the commercial space industry will increase investments in new space technologies that capabilities of government can use to augment its space missions.

Since we face cuts in our civil and military space programs, these private investments and capabilities play an important role in advancing our national space agenda goals. That's one reason that

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presidents and members of Congress from both parties have promoted commercial space development.

In the past, technology and capital were the main obstacles to commercial space development. Recent years have lowered the cost of technology, and largely solved these problems. Excessive and inefficient government regulations and policies have become the chief obstacle to new space enterprises.

Fortunately, Congress and the White House have worked on a bipartisan basis to eliminate these obstacles with some success.

Today we are considering the possibilities of the draft Space Commercialization Promotion Act of 1996 to see how we can build on that success. The draft bill has been circulated among committee members, begins with recent White House policy on space transportation, remote sensing, and the global positioning system.

It solidifies and expands those policies based in part on the experience we've had with them over the past few years.

Our witnesses this afternoon will hopefully provide us with their insights on the bill, its strengths and weaknesses, and their suggestion for changing it so we can make it a bipartisan success.

Is there a Democratic opening statement? The gentleman from Minnesota.

Mr. LUTHER. Thank you, Mr. Chairman. I just want to thank you on behalf of the Minority for this hearing. I think it's a very worthwhile exercise. As you stated very well, I think this has been a bipartisan undertaking in the past.

I certainly look forward to the witnesses' testimony. I'm sorry that it is on a day when we have this kind of a schedule, and many of us will have to run back and forth between other meetings, and the session.

But I want to thank you for scheduling the hearing, Mr. Chairman, look forward to the testimony. I would ask that Mr. Hall's opening comments, which I know he has prepared, and that the other members' opening comments, be made part of the record.

Mr. SENSENBRENNER. Without objection. And without objection all members will be able to insert opening statements at this part of the record.

[The opening statements of Mr. Weldon, Mr. Brown, and Mr. Hall follow:]

STATEMENT BY CONGRESSMAN DAVE WELDON (R-FL) ON THE SPACE

COMMERCIALIZATION ACT OF 1996 I first want to thank Chairman Walker for his leadership in bringing this bill forward. It is important that we begin to seriously address the policy needs of the commercial space sector, and I will work hard with him to get this enacted as soon as possible.

This is an important measure. I have been voicing my strong support for the commercial space sector since I came to Congress, and a strong commercial space sector is vital if the United States is to maintain its world-wide leadership in space. The nature of the space business is changing rapidly, and it is time for the federal government to recognize and adapt to these changes.

This bill addresses a number of critical space business areas, including common sense policies on remote sensing, promotion of the U.S.-developed Global Positioning System as the international standard, the strengthening of the commercial space science sector, and it includes important changes to U.S. law governing commercial space launches and operations.

Of particular concern to me, however, are the provisions governing NASA civil service personnel and their ability to take jobs with NASA contractors. Current U.S. law would prohibit federal civil servants from leaving their jobs and immediately

taking positions with contractors whom they had significant dealings, such as procurement or technical oversight. This is a good policy. It prevents conflicts of interest among former civil servants and ensures fair treatment of government contractors.

However, NASA is facing a unique situation. With the rapid transition to a single prime contractor to operate the Space Shuttle fleet, NASA will be quickly downsizing its civil service workforce as the new presumed contractor, United Space Alliance (USA), begins to increase staffing. As this occurs, it will be vital for critical skills to be retained in the Shuttle program to ensure safe and efficient operations, and one logical source for these skills is the NASA civil service workforce. In order to provide USA with maximum flexibility in hiring the right skill mix to successfully and safely operate the Shuttle, they need the ability to hire any civil servant with the right training and/or experience. This may mean hiring civil servants who would normally be prohibited from working from the contractor, but the provisions in this bill would waive that restriction.

As I understand it, NASA does have some limited ability to waive these restrictions, as can the President, but it is important for Congress to reassure NASA that its authority will not be challenged. I fully support the provisions in the bill that provide NASA with this flexibility, and ask the White House to publicly support NASA and USA as they make their staffing decisions.

Thank you, Mr. Chairman.

OPENING STATEMENT

BY

HON. GEORGE E. BROWN, JR.

nesses.

JULY 31, 1996 Good afternoon. Mr. Chairman, I am pleased that we are holding this hearing on space commercialization, and I look forward to hearing the testimony of our wit

The Nation's space activities have long been carried out in three different domains: civil, military, and commercial. The relative importance and magnitude of each have varied over the nearly four decades since the dawn of the space age, and the outlook for each continues to evolve. I believe that there are opportunities to leverage the capabilities of each space sector and thereby reduce needless duplication across them. A healthy commercial space sector thus helps ensure the health of the Nation's overall space program.

The development of a robust, vital commercial space sector is a goal that has been shared by Members of this Committee on a bipartisan basis as long as I have been in Congress. Legislation passed over the last 15 years has done much to help the growth of the commercial launch services industry and the nascent commercial remote sensing industry.

The draft space commercialization bill that will be discussed at today's hearing may provide additional needed assistance. The testimony of today's witnesses will be helpful to me as I evaluate the various legislative proposals contained in it, and I look forward to working with the Chairman to make constructive progress in that regard.

I will be particularly interested in hearing from the witnesses about the proposed changes to the Land Remote Sensing Policy Act of 1992 contained in the draft bill. As some of you will recall, considerable effort was required in crafting the 1992 Act to achieve a delicate balance between the legitimate interests of the Federal government, the commerci service providers, and the ultimate end users of the remote sensing data. Nevertheless, four years have passed since that Act was enacted, and some modifications may be necessary or beneficial. I would, however, counsel that we not do anything without thoroughly examining the potential consequences.

There are a number of other provisions in the draft bill that I believe warrant scrutiny, and I hope that today's hearing will begin the process of review. Nevertheless, I want to commend Chairman Walker on his initiative in drafting this legislation.

Thank you.

OPENING STATEMENT

BY

HON. RALPH M. HALL

JULY 31, 1996 Good afternoon. I would like to welcome the witnesses to today's hearing. We look forward to your testimony. I also want to thank the Chairman for holding this hearing.

This Committee has long had a bipartisan interest in doing what we could to promote the growth of a thriving commercial space sector. This interest has been more than justified by what has been accomplished to date. We need only look at the booming activity in satellite communications and the plans for ever more advanced communications satellite networks to realize that commercial space activity is an important part of our economy now—not just at some point in the indefinite future.

In the 1980s and 1990s, this Committee passed important legislation to promote the development of commercial launch services and commercial remote sensing. I welcome today's hearing as a chance to take stock of where we are and to examine whether additional legislation might be needed.

While commercial space activity cannot substitute for the Federal government's necessary role in ensuring that America maintains a world-class space program, it will help to deliver important benefits to our economy and to our taxpayers. Mr. Chairman, I look forward to working with you in the remaining days of this Session and—the voters willing-in the next Congress to continue our bipartisan efforts to advance space commercialization.

Thank you.

Also without objection, we will hold the record open for seven business days in order for individuals and organizations that are not appearing today to submit written testimony for inclusion in the record, following the testimony of the witnesses that are appearing.

Today we have two panels. The first panel includes the Honorable Lionel Johns, Associate Director of Technology of the Office of Science and Technology Policy: Lt. Gen. Spence Armstrong, Retired, Associate Director for Human Resources and Education of NASA; and Mr. Gil Klinger, the Principal Assistant Secretary of Defense for Space of the Department of Defense.

Each of your full written statements will be included in the record without objection. We'd like to ask you to limit your testimony to five minutes so that there will be plenty of time, we hope, for questions and answers.

So, Mr. Johns, why don't you go first. STATEMENT OF HONORABLE LIONEL S. JOHNS, ASSOCIATE

DIRECTOR FOR TECHNOLOGY, OFFICE OF SCIENCE AND TECHNOLOGY POLICY

Mr. JOHNS. Mr. Chairman, it's a pleasure to be here today to discuss the developments of space. I'd like to submit my testimony for the record, along with a facts sheet for the Presidential Decision Directives on Space and Transportation

Mr. SENSENBRENNER. Without objection.
Mr. JOHNS. (continuing) -and the Global Positioning System.

I've excerpted about five minutes of my testimony in response to your letter.

Over the past three decades, we've seen space technology become a powerful force in our domestic economy and in the global marketplace. Over the past three years, the Administration has been a strong supporter of both the government and private sector invest

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