Draft U.S. Export Rules Raise Concerns Among Suborbital Firms

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WASHINGTON — While the U.S. satellite industry has largely welcomed a space export control reform proposal released by the U.S. State Department in May, the emerging commercial suborbital spaceflight industry is raising concerns about a provision that could restrict their ability to export such vehicles.

The draft of the revised Category 15 of the Munitions List issued by the State Department on May 24 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, keeping them under the jurisdiction of the International Traffic in Arms Regulations (ITAR) and thus making it more difficult for those companies to carry out plans to sell or operate those vehicles outside the United States.

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

Nelson, in that speech and a press conference later that day, expressed concern that leaving suborbital vehicles on the U.S. Munitions List (USML) could hurt U.S. companies in much the same way that 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 is not perfect: In the late 1990s there were already European satellite manufacturers competing with U.S. 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 15 list by July 8, when the public 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 15 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 15 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 June 14 by Women in Aerospace in Arlington, Va., 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, which has designed satellite servicing spacecraft, said company officials are 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 are working with.

Another issue with the draft Category 15 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 industry source said.

Kevin Wolf, U.S. assistant secretary of commerce for export administration, said there will be several weeks of review of the comments by administration staff, to be followed by development of a final draft of the Category 15 list, which would then reviewed by Congress in what are known as “38(f)” notifications.

“If everything works completely smoothly, November or December is probably the earliest when a final rule would be ready,” Wolf said May 14 here at a meeting of the U.S. Federal Aviation Administration’s Commercial Space Transportation Advisory Committee (COMSTAC). 

It is unlikely that Congress would have major objections to the plan, David Fite, senior professional staff member on the House Foreign Affairs Committee said during the COMSTAC meeting, adding that he was only speaking for himself. That is in large part, he noted, because they have 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 here in May.

Nevertheless, Fite held out the possibility some lawmakers might raise objections in the case of specific technologies proposed for removal from the USML. “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 the May 14 meeting to submit comments, even if they were happy with the draft Category 15 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.”

 

This story originally appeared in the June 17 edition of the Space Review.

 

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