Virgin Galactic Granted License Exemption for Spaceflight Experience

by

WASHINGTON — Virgin Galactic, the U.S.-based space tourism business bankrolled by Sir Richard Branson’s Virgin Group and a sovereign investment fund in the United Arab Emirates, cleared what some space lawyers said was an important regulatory hurdle for flying non-U.S. citizens on suborbital jaunts departing from New Mexico’s Spaceport America.

New Mexico-based Virgin Galactic, which now expects to fly its first paying customers in 2013, was told by the U.S. government that the company may fly non-U.S. citizens to the edge of space without first obtaining an export license from the State Department.

Virgin Galactic asked “that their operations be removed from the scope of the International Traffic in Arms Regulations,” or ITAR, Mark Sundahl, an associate professor of law at Cleveland State University in Ohio, told Space News in an April 10 phone interview. Early this year, the State Department announced “a favorable EAR99 ruling, which means that [Virgin Galactic’s] operations will not be ITAR-controlled.”

Virgin’s flight hardware, Sundahl added, would remain under export control. However, he said the determination was, on the whole, “good news for Virgin Galactic and the entire space tourism industry.”

Marc Holzapfel, Virgin Galactic’s New York-based senior vice president and legal director, did not reply to an April 10 request for comment.

When the State Department announced its decision in an online posting in January, Virgin Galactic did not publicize the decision. On an April 5 visit to Washington, Virgin Galactic Chief Executive George Whitesides — a former NASA chief of staff — declined to comment about the business ramifications of the decision.

Sundahl said that without this determination from State, allowing a non-U.S. citizen to ride in a Virgin spacecraft — or even training a non-U.S. citizen to do so — would legally have been an export activity that required federal approval. The time it takes to obtain an export license varies, but several months is a reasonable estimate, said Sundahl, who specializes in international commerce and space law.

“Under ITAR, any disclosure of controlled technical data to a foreign national, even if the disclosure takes place in the U.S., is treated as an ‘export’ of the technical data — which would require a license from the Department of State in addition to imposing other regulatory burdens on the exporter,” Sundahl said.

Mike Gold, a lawyer who works full time as director of Washington operations for Bigelow Aerospace, said that the January decision handed to Virgin appeared to be similar to a favorable response Bigelow received from the State Department in 2009. In that decision, which Bigelow has not released, the State Department found that the presence of a non-U.S. citizen in a commercially manufactured U.S. vehicle did not require a license.

“The response by the Department of State to our own Commodity Jurisdiction Request, and, to the best of my understanding, Virgin Galactic’s, was based on a very simple principle, which, to provide an analogy, is that I’ve flown on a lot of 747s, but I still can’t build one,” Gold said.

North Las Vegas, Nev.-based Bigelow Aerospace deployed prototype inflatable modules in low Earth orbit in 2006 and 2007 but has flown no hardware since. Bigelow is now pitching an inflatable adjunct to the international space station, the Bigelow Expandable Activity Module, to NASA. Bigelow is also a partner on Boeing Space Exploration’s CST-100 space capsule, which the latter company is pitching to NASA as part of a future astronaut taxi system. Bigelow laid off nearly half its work force last year before resuming limited hiring in March.

Virgin Galactic plans to charge customers $200,000 for a ride in SpaceShipTwo, a rocketplane capable of reaching an altitude of 110 kilometers after being carried aloft by its WhiteKnightTwo carrier aircraft. The design for the system is based on the smaller SpaceShipOne/WhiteKnight combination, which in 2004 claimed the $10 million Ansari X Prize for becoming the first privately owned manned spacecraft to fly to an altitude of 100 kilometers twice within two weeks.

Virgin says it has deposits from more than 500 future customers.

The company is for the moment limiting its operations to Spaceport America in New Mexico, but it also has aspirations to fly tourists on suborbital space flights from locations across the globe, including Sweden and the United Arab Emirates.

The licensing exemption Virgin received in January from the U.S. government would not make international operations dramatically easier, according to Sundahl. He said that as long as Virgin’s hardware is made in the United States — and the company has not announced plans to manufacture elsewhere — the U.S. government will have regulatory authority over anything Virgin sends overseas to support tourist sorties to the edge of space.

Virgin’s primary supplier is  the Mojave, Calif.-based Spaceship Company, a joint venture formed in 2005 by aircraft maker Scaled Composites and Virgin Galactic to manufacture WhiteKnightTwo carrier planes and SpaceShipTwo spacecraft. Virgin has the majority stake.