There is a panel on investing in space startups consisting of Steve Fleming and Joe Pistritto (XCOR initial investors) and Tom Olson of The Colony Fund. Most of it is boilerplate, but one point made is that the hope was that business plans would become more realistic with the Rutan X-Prize breakthrough, but some even wackier plans have been crossing their desks recently (not actually surprising, considering what kinds of things were getting funded during the dot-com craze).

Consensus is that there will be serious investment by professional investors in the next twenty-four months, because people are now starting to take the market seriously based on Virgin Galactic’s numbers and plans.

Not news, again, but something that technologists and engineers have trouble understanding–investors invest in teams, not in products.

The meeting has picked up again at 4 PM with a discussion by Mitchell Burnside Clapp on what Rocketplane is up to in Oklahoma.

Mitchell starts off by explaining that he has left Rocketplane Limited over “creative differences.” Apparently Chuck Lauer will give the Rocketplane Limited talk tomorrow.

Pioneer Rocketplane Corporation is not Rocketplane Limited, and he is still Pioneer Rocketplane, looking for what to do now. He has a new rocket engine cycle that doesn’t involve combustion, using differential temperature between the propellants. By running a heat engine between the two, you can generate the enough shaft work to pressurize the propellants, which makes for a much simpler pressurization system. He likes it because it involves no chemistry–just physics. “Worst thing that can happen when starting a jet engine is starting a fire, which you can run away from. A rocket engine can generate an “earth-shattering kaboom.” He thinks it’s a good thing to be able to test the pressure condition of the powerhead before ignition, and this would allow that. The idea is to allow a non-catastrophic engine start sequence. Looking at Stirling, Brayton and Rankine cycles (he currently favors Brayton). This kind of technology would mitigate his concern about vertical takeoff/landing.

They’re also doing a lot of work on hot metal structure. Inconel, stainless steel and aluminum have similar strength/weigh ratio, but elastic modulus is different. Nonetheless, he thinks that one can learn a lot about Inconel behavior by building airplanes out of stainless, so he’s doing some research in that area as well.

Talk was quite entertaining (as always), but he talks too fast to do the raconteurage justice on a typed blog.

In questions, a discussion about why Brayton is preferable to Stirling. In short, better power density. Preferred working fluid is supercritical nitrogen.

Eric Anderson from Space Adventures had to cancel at the last minute, so I just gave an impromptu presentation on the market potential for delivering propellants to low earth orbit for the Vision for Space Exploration. It seemed well received. No decaying vegetation was hurled, at any rate.

Jeff Greason is now giving the XCOR pitch. Suborbital is turning into a very viable market, versus 1999 when the company was founded. Market segments are passengers, payloads (for a few minutes of microgravity, or scientific instruments), and use of suborbital vehicle with expendable upper stage for orbit.

Developments in the last couple or three years: a) customers coming to them, which indicate that the market was much larger than they thought; regulatory situation has had much of the risk reduced by learning how to work the process, getting to know the regulators, and Jeff can now say that regulatory risk is no longer (as it was earlier) one of the top three business risks for them. They are getting government contracts that are synergistic with their business, by developing things that both they and the government need, with government money. Capital formation has been tough, but they’re continuing to survive, and prospects are improving.

They have just won their largest government contract to date to develop a liquid oxygen tank using proprietary technology, that solves problems in composite tanks that NASA has been struggling with for years. It’s worth potentially up to seven million dollars over four years. They’ve come up with a composite material that is resistant to microcracking, unlike existing epoxy-based materials. They’re using a flouropolymer matrix with an inorganic fiber that maintains its flexibility at cryogenic temperatures, with high flammability resistance.

After five and a half years in this industry, they’re making progress, though they had no idea how hard it would be when they started. Their business prospects look good now, and certainly better than they’ve ever been. Expect an announcement sometime in the near future about a possible intermediate vehicle between EZ-Rocket and Xerus.

Aleta Jackson announces that there will be a flight of the EZ-Rocket on September 21st of 2005, for a big air show in Mojave.

Question from Jerry Pournelle: Why did you ask for a fixed-price contract, instead of cost-plus?

Answer (paraphrased): If we developed a cost-plus culture, we might be able to be financially successful doing government contracting, but we’d never be competitive in the commercial markets, and we wouldn’t be able to develop as much hardware for the money that we need in order to achieve our strategic business objectives of building affordable suborbital space planes. The cost-plus environment of the aerospace industry has created several decades in which a lot of very smart people have figured out ways to make things cost more, and they’ve been very successful. We want to make things cost less, instead of costing more.

XCOR is hiring for the first time in a while–looking for a structural designer with experience in composite aerostructures. There will be an announcement on the XCOR website in a couple weeks.

In response to a question from Chuck Lauer, he notes that they will retain rights to the technology used in building the tank, for which patents were filed a couple weeks before proposal submittal.

Note that Clark Lindsey is also posting summaries of the talks. Yesterday’s are up now.

There will be presentations from XCOR, Rocketplane, and a panel on investing after lunch, starting at 2 PM Pacific time (or Arizona standard–same thing). See you later.

Following the speakers’ presentations, there is now a panel discussion on regulations, consisting of the people who will be affected by them–Chuck Lauer from Rocketplane, Jeff Greason of XCOR, John Carmack of Armadillo Aerospace, and John Powell of JP Aerospace.

Chuck is describing the surprise when the bill passed late last year, and is excited by the prospects. “Right thing at right time” and AST seems to take it seriously and recognizes the importance of doing it right. “We’re the first, please be gentle with us.” Rocketplane’s schedule corresponds very closely with their rulemaking schedule (which was what happened to Burt). They plan to fly next year, and are working closely with AST. They are getting good feedback, and think that it’s a good collaborative process.

Greason: How many are in the launch business? How many actually respond to NPRMs? Those are the people are are really in the launch business.

“If this is like farming, last year was harvesting a great crop.” “Now we’re tilling and weeding and prepping, and the regulatory process never stops.” Message is to get involved. Regulations aren’t perfect, but are incredibly close to it compared to what they could have been. “Overall approach and architecture of regulations looks excellent.”

Carmack: Haven’t interacted this much this year because no race for the X-Prize, and vehicle has changed significantly. Much of testing can still be done under amateur rules. XCOR has a much easier time because he can test on premises in Mojave, whereas they have to travel all the way to New Mexico to do flight test. Still not comfortable with dealing with frustrating aspects of simply having to get permission for a smaller engine, burning slower. Want to get permission to operate closer to Dallas. In general AST people easy to work with, and Armadillo recognizes that many of the issus (e.g., environmental impact) aren’t within their power to ameliorate. Still need a licensed spaceport for vertical-launched vehicles. Thinking about launching and landing from a barge, and are planning to participate in X-Prize Cup activities in New Mexico.

John Powell: “In an unusual position with respect to AST–has read the rules, and he likes them, and isn’t quite sure how to handle that.” Rules are “shoulds” rather than “shalls,” which gives necessary flexibility at this stage of the game. Need to keep an eye on the words as the rules evolve, to keep them from becoming too prescriptive too early.

Lauer points out that Melchior Antunano at the FAA has provided a lot of good guidance as to potential medical protocols, and that Rocketplane has been getting good support from his people (he surmises that Antunano wants to fly himself). Greason says that the medical guidelines are the most detailed of all of them, and the approach is good, but is concerned that they’re looking beyond suborbital flight to orbital flight, and this is probably premature because we’re not that smart yet, and he’s concerned that some of the orbital thinking has crept back into suborbital. Need to recognize that the flight regimes are a continuum, no clear distinction between medical requirements for 3 gees and 3.1.

In response to question about vertical spaceports, it’s pointed out that space traffic and air traffic are currently poorly integrated. This needs to be fixed.

Mitchell Burnside Clapp points out Burt’s differences with many of us in the room, and that he’s built many more spaceplanes than many of us. Does the panel want to comment. Powell points out that certification regime is wonderful in theory, but it’s not here yet, and (Greason points out) it’s probably premature to have it now. Greason: “Fly at own risk” won’t last forever, and we all understand that. Most agree on level of safety necessary for viable industry. Mitchell interrupts to point out Burt’s research into early aviation safety (one in thirty-three thousand). It turns out to be the same as the current FAA numbers for uninvolved public. Question is whether to solve on consequence-based process (current approach) or probability-based process.

Greason points out that reusable vehicles drive reliability for business reasons, regardless of regulations or license requirements. Question is whether level of safety will evolve out of evolutionary design process, or safety mandates by federal government. Doesn’t think we’re smart enough for latter yet.

Lauer notes that in the future, if we’re doing suborbital flights for intercontinental transportation, the license/certification argument will become moot, because those vehicles will have to be integrated into the existing internationalair regulations.

Jeff says that we have to find the things we agree on, and push those as a united front. John Powell points out that there’s a new issue on UAV airspace, which has become extremely contentious. We have an opportunity right now to form things properly before some of the new airspace regimes come in, not to mention insurance companies and other stakeholders as the process evolves.

Criticism of AST that the regulatory process is too set in stone, with too much inertia, and cautions that we don’t want to have happen what happened to the ELV people, who got a set of rules that seemed designed to put them out of business, and had to work very hard and spend a lot of money to fix it. Important to get things going in the right direction early (i.e, now).

“Can’t get a categorical exclusion for environmental protection act until we have a category, and can’t get a category until there are multiple things to put in it.” A catex for this isn’t in the cards immediately, and it would be a very difficult thing to do politically.

Tim Hughes, the staffer for the House Science Committee primarily responsible for last year’s legislation clarifying the regulatory situation for suborbital passenger flight, gave an interesting talk at the conference about the history and philosophy behind the bill.

The intent of the legislation was clearly to help the industry grow, and they came up with what they hope was a good balance between safety and progress. Things they didn’t consider included ITAR issues, which came up repeatedly in last week’s hearings, and he said that this perhaps should have been considered, but that it might have held up the bill, because this is a much more contentious issue, particularly in terms of its implications for national security. In response to questions, he said that there are no current plans of which he’s aware to renegotiate the Outer Space Treaty and Liability Conventions to mitigate some of the insurance issues.

George Nield of the FAA will be speaking next.

He’s giving a short history of the AST office, pointing out that they have to maintain a balance between safety and avoiding stifling the industry, which is a delicate balancing act (Simberg note: and it’s one that the FAA no longer has to do for aviation, as a result of changes made in the charter after the Valuejet crash a few years ago–they’re now supposed to focus only on safety, which is why it might be a good idea to get this office back out of the FAA).

Now he’s talking about the Vision for Space Exploration, and pointing out that part of the vision was to include commercial opportunities as well. He’s describing a US Space Transportation Policy update early this year that mandates that the government procure commercial space transportation services whereever and whenever possible. Going over a list of significant events last year, including Burt’s historic flights, and the provision of XCOR’s launch license at this conference last year.

“We’re at the dawn of a new era.” “First to market groups will be small entrepreneurial companies.” “Designs will feature creative application of existing technologies. Citing Futron study to indicate that there is indeed a market for suborbital flights, capable of generating over a billion dollars a year by 2021. Orbital flights will happen as well, but market will be smaller in near term.

What’s different now? We have supportive national policy, including the words “public space travel” in the Space Transportation Policy for the first time in history, with responsibility falling on Secs of Commerce and Transportation to carry that out. We have realistic objectives this time: no technology breakthroughs required, suborbital trajectories with primary emphasis on passengers, using available technologies. We also are seeing non-federal funding become available from numerous wealthy individuals, as well as good support by state and local governments. Prizes are helping as well. The regulatory framework is in place with the Commercial Spacelaunch Amendments Act, which puts Congress and administration on the record as supporting human spaceflight.

FAA has a very ambitious homework assignment to write the regulations for passengers, experimental permits, and license requirements, which will result in a Notification of Proposed Rule Making (NPRM) in a year or two.

Talking about Branson, because he’s the one we know the most about, not necessarily because FAA thinks that he’s got the inside track. Branson’s plans imply 2600 people launched into space each year, so that if Shuttle retires in 2010, and Branson flies in 2008, there will be ten times as many people flown into space privately by that time as have flown in space to date by governments. He sees no showstoppers, and FAA is committed to promote this activity in a way that continuously improves its safety.

Question: Do the new regs apply to orbital as well as suborbital? Yes and no. The experimental permit, for one, only applies to suborbital. Orbital regulation will continue to evolve as we learn more from suborbital experience. FAA is strongly supportive of this conference and think that it plays a major contribution. Announcing Craig Day, from AIAA to come up to announce a cooperative effort between government and industry to come up with guidelines for RLV safety regulations. Neild points out that there are still people who want to see reusable vehicles certified (didn’t mention Rutan’s name, but we all know who he means). He still doesn’t think we understand enough about reusables to do this, and points out that a feathered tail for reentry or a propulsion system using laughing gas and rubber wouldn’t have gotten certification (amusing dig at Burt).

Half hour break starting now, after which will be a talk from Michelle Murray of FAA about the launch licensing process.

[Update a couple minutes later]

Michael Mealing, who’s sitting behind me, has pictures.

Michelle has started talking. I don’t know if she’ll have much worth blogging–it seems to be a description of the process for regulatory rulemaking.

One key point she’s coming to now–they want public participation in the development of these rules. Feedback can be provided electronically or by paper. Everyone will be able to see everyone else’s comments (unless someone wants to provide proprietary info, in which case a note will be made in the public docket that such an input exists but it not available). They may have public meetings for the purpose of fact finding where a particular issue is controversial. Meetings may be in meatspace or virtual, and will be announced in the Federal Register, at least thirty days prior, along with email notifications to affected parties if they know who they are (e.g., in this case, they might send an email to Henry Vanderbilt, or the RLV working group of the Commercial Space Transportation Committee (COMSTAC)). Public requests of a public meeting can also trigger one. They haven’t yet come to a decision as to whether or not they plan to have a public meeting for this new rule-making process arising from last year’s legislation. They probably will have one, but haven’t determined when yet. May consider having one in conjunction with this conference or an RLV working group meeting.