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Boeing 702
Proposed export control reforms, current open for public comments, will make it easier for companies to export commercial satellites and related components, but some companies are still concerned about the technologies that will remain under ITAR. (credit: Boeing)

Export control reform enters the home stretch

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For over a decade, much of the commercial space industry in the United States had been fighting to overturn—or, at least, just complaining about—export control restrictions placed on it in the late 1990s. At that time, commercial satellites and related components were moved by law to the US Munitions List (USML), placing them under the more restrictive regulations of the International Traffic in Arms Regulations (ITAR). The US share of the commercial satellite manufacturing market fell in the years after that move, although establishing a clear cause-and-effect relationship was difficult.

“We applaud the move to move commercial satellites off the Munitions List,” said XCOR’s Nelson. “However, they added to the Munitions List crewed space vehicles, and that is a backwards step.”

Late last year, years of lobbying by the industry and other space advocates paid off: a provision in the fiscal year 2013 defense authorization bill that Congress passed in December struck that late-90s language that put satellites and related items onto the USML (see “Key space issues for 2013”, The Space Review, December 31, 2012). The bill left in place prohibitions on the export of such items to a number of countries, including China; the transfer of technologies by US companies to China during investigations of Chinese launch failures provided the impetus for moving satellites onto the USML in the first place.

While the bill removed the language from the earlier law that put satellites and related components onto the USML, it did not itself move those items off the list and back onto the less-restrictive Commerce Control List (CCL), administered by the Commerce Department. Instead, the law simply restored the authority to the President to determine which technologies should be on which control lists. The Obama Administration already was doing a complete review of the various categories of the USML, identifying which items no longer required the protections offered by ITAR, but could not act on Category XV—spacecraft systems and related articles—until the passage of the defense authorization bill with its export control provision.

The administration had already given a sign of what it intended to keep on the USML last year when it published the so-called “Section 1248” report—named after the section of the fiscal year 2010 defense authorization bill that requested it—on the national security implications of space export control reform. That report included, as an appendix, a draft revised description of Category XV, one that removed commercial communications and many remote sensing satellites, while retaining some more sensitive technologies.

Last month, administration officials said the official proposal for the revised Category XV of the USML would closely follow that draft. “The content was agreed to a while back,” said Kevin Wolf, Assistant Secretary of Commerce for Export Administration, at a meeting of the Export Control Working Group of the FAA’s Commercial Space Transportation Advisory Committee (COMSTAC) in Washington on May 14. At that time, he said the draft proposal for the new Category XV would be publicly released within days.

On May 24, the administration published in the Federal Register its proposed new USML Category XV, as well as a list of those items that would move to the CCL. As expected, the proposed Category XV list closely followed what appeared in last year’s Section 1248 report.

The release of the draft lists started a comment period that runs until July 8. And while the draft list takes care of the biggest export control concerns—moving commercial satellites off the list and thus outside of the purview of ITAR—there are still concerns about some of the items left on the draft list that would still be under ITAR.

One of the biggest concerns involves suborbital spacecraft. The draft Category XV list includes “man-rated sub-orbital, orbital, lunar, [and] interplanetary” spacecraft. That would include vehicles like Virgin Galactic’s SpaceShipTwo and XCOR Aerospace’s Lynx suborbital spacecraft, something that would make it more difficult for those companies to carry out plans to sell or operate those vehicles outside the US.

“We applaud the move to move commercial satellites off the Munitions List,” said Andrew Nelson, chief operating officer of XCOR Aerospace, in a speech at the Next-Generation Suborbital Researchers Conference (NSRC) in Colorado on June 3. “However, they added to the Munitions List crewed space vehicles, and that is a backwards step.”

“If everything works completely smoothly,” Wolf said, “November or December is probably the earliest when a final rule would be ready.”

Nelson, in that speech and a press conference later that day, expressed concern that leaving suborbital vehicles on the USML could hurt US companies in much the same way that American commercial satellite manufacturers were hurt when satellites were put on the list in the late 1990s. “It’s critically important for our country not to lose a competitive advantage before the market even opens,” he said. “There’s a ‘presumption of no’ if you get on the Munitions List… It’s doing to us, potentially, what they did to the commercial satellite market.”

That analogy isn’t perfect: in the late 1990s there were already European satellite manufacturers competing with American firms for commercial communications satellites, whereas today nearly all development of commercial suborbital crewed spacecraft is taking place within the United States. Still, Nelson warned of an adverse economic impact should such vehicles remain on the USML. “We want to make sure that we don’t allow this activity to slow or inhibit the employment that’s going to be created by these groups,” he said, adding that jobs being created by companies like XCOR are in “rural, underserved areas” or places that have had “great challenges,” like the Space Coast region of Florida.

Nelson said that XCOR and other companies, as well as the Commercial Spaceflight Federation, planned to submit comments regarding that provision in the draft Category XV list by July 8, when the comment period closes. He said the industry also has supporters in Congress that he believes will write “supporting letters” on their behalf. “We’re pushing on all of those strings, and hoping for the best.”

Another emerging market that could be affected by the proposed Category XV list of technologies is the nascent satellite servicing field. Several companies have been working on technologies to extend the life of satellites that are running out of propellant, or to refuel or repair such spacecraft. However, the draft Category XV list of technologies that would remain under ITAR includes those that provide “space-based logistics, assembly or servicing of any spacecraft (e.g., refueling).”

At a panel session about satellite servicing at the Aerospace 2013 conference, held Friday by Women in Aerospace in Arlington, Virginia, an audience member asked the panel what effect keeping such technologies on the USML would have on the emerging field. Jim Armor, vice president of strategy and business development for ATK Space Systems, said they were aware of those potential issues. “We are working through the industry associations, primarily, to get those modified,” he said, referring to the Satellite Industry Association and the Aerospace Industries Association as two such groups they’re working with.

Another issue with the draft Category XV document is that while it is very specific regarding the technical parameters of those technologies that should remain on the USML, another provision keeps on the list any “Department of Defense-funded secondary or hosted payload, and specially designed parts and components therefor,” without any qualifications regarding technology. Some fear this could hinder greater adoption of government hosted payloads—typically sensors or communications transponders—on commercial satellites.

Industry officials are pushing the government to reconsider using the funding source, rather than the technology, as the basis for keeping hosted payloads under the purview of ITAR. “Categorizing by funding source, instead of the actual technology, is not smart, and probably not what the drafters intended,” an unnamed industry source told Space News last week.

After the comment period closes in July, Wolf said last month, there will be several weeks of review of the comments by administration staff and development of a final draft of the Category XV list, which would then reviewed by Congress in what are known as “38(f)” notifications.

“If everything works completely smoothly,” Wolf said, “November or December is probably the earliest when a final rule would be ready.”

“If companies or organizations fail to submit positive comments, don’t come back here and complain if export control falls apart,” Gold warned. “If they get just a few comments, or negative comments, we could be back to square one.”

It’s unlikely that Congress would have major objections to the plan, said David Fite, senior professional staff member on the House Foreign Affairs Committee, adding that he was only speaking for himself. That’s in large part, he noted, because they’ve had time to review and comment on the Section 1248 report. “I don’t expect, really, any more Congressional problems with this. We’ve seen this before, the intention is clear, the concerns are taken care of,” he said at the COMSTAC working group meeting last month.

The one exception, Fite said, is that some members might object to specific technologies listed in the 38(f) notifications that the administration wants to move from the USML to the CCL. “There are members, some very powerful members, who are still concerned about this action,” he said. “And if there is a perception that something of a national security application that has been added to this list to be taken off, there could be some problems.”

Bigelow Aerospace’s Mike Gold, chairman of the full COMSTAC and former chairman of its export control working group, urged attendees at last month’s COMSTAC meeting to submit comments, even if they were happy with the draft Category XV list. “If companies or organizations fail to submit positive comments, don’t come back here and complain if export control falls apart,” he warned. “If they get just a few comments, or negative comments, we could be back to square one.”

Even with those issues and concerns, there is still something of a feeling of relief, if not celebration, that the export control reforms long sought by the space industry are now finally on the verge of becoming reality. With the implementation of export control reform making its way through the administration, there is now little in the way of new business for space export control reform. Fite said at the COMSTAC working group meeting that he was unaware of any interest in Congress on tackling additional issues regarding space-related export reform, such as allowing exports of some space items to China.

Perhaps the surest sign of impending success: the COMSTAC export control working group supported a proposal at its meeting last month to change its name to the “international” working group to allow it to expand its focus to related issues beyond export control.