Preparing for the next phase of export control reform

Despite the uncertainty in exports to Russia created by the Ukraine crisis, the overall export control reform effort is moving forward. As of last month, the final rule for Category XV of the US Munitions List (USML), which covers satellites and related components, and its corresponding section of the Commerce Control List (CCL), was due to be published in May. That final rule would be an update of the proposed rule published in May of last year.

The final rule, when it is released, is expected to include only relatively minor changes to the draft rule from last year. At a panel on export control reform at last month’s Space Tech Expo in Long Beach, California, Mark Jaso of the Department of Commerce said he couldn’t go into details about the final rule since it was still in review. He did say there are additions to the proposed rule in the form of “further definitions to help you understand what may or may not be controlled.”

Those additional definitions and other changes may address some areas of the draft rule that attracted comments and criticism. One of those, said John Ordway, partner at Berliner, Corcoran & Rowe LLP, is the rule that keeps secondary and hosted payloads funded by the Department of Defense on the USML, and thus under the more restrictive jurisdiction of the International Traffic in Arms Regulations (ITAR). He noted one area of uncertainty was just how much DOD funding was required for that payload to be considered “DOD-funded” and thus on the USML. “My understanding is that, in the final rule, there will be more gradations” in that definition, he said. “They’ll make it a little more clear than it is now, because right now it’s very ambiguous.”

Another area of interest is satellite servicing technology, which also remained on the USML in the draft rule. “Satellite refueling has great promise,” Ordway said, “but if it’s all ITAR-controlled, it’s going to have that same heavy cloak on it that commercial communications satellites do today.” He said he’s “hopeful” that that the final rule will have some more gradations on what satellite servicing technologies would remain on the USML and which would go to the CCL.

When the final rule is published, be it this month or later, it will not immediately go into effect. Instead, the rule’s publication will start a 180-day waiting period to give companies time to digest the new contents of the USML and CCL and revise their export control processes accordingly. “The six-month implementation period between when the final rules are published and when they actually take effect is going to be really critical for industry,” said Sam Black, director of policy for the Satellite Industry Association (SIA), a major proponent of export control reform. “This is not going to be a trivial task.”

In particular, he said the reforms will create some complexity, since there will be more exceptions and need for interpretation than under the current system, where effectively all satellites and related technologies fall under ITAR. “I sort of think of it as going from a math world to a grammar world,” he explained, contrasting the certainty of mathematics with the often irregular, complex rules of grammar. “It’s not as black and white as it used to be. And any time you give people more flexibility from a regulatory standpoint, it adds complexity. There’s no way to do one without the other.”

It’s uncertain if the final rule will address some other areas of concern about the draft rules, such as what classes of Earth observation satellites and systems to keep on the USML, as well as the inclusion of crewed spacecraft on the USML. However, even if changes aren’t made to these sections in the final rule, there will be future opportunities to change those sections. Satellites and related components were placed on the USML by Congress by law in the late 1990s, but in 2012 Congress restored the President’s ability to remove satellites and related components off the USML. “The advantage of it no longer being Congressionally mandated is that the administration, whatever administration, can take a second look,” Ordway said.

2 comments to Preparing for the next phase of export control reform

  • Hiram

    It would be unfortunate if current events seriously hindered the long awaited reassessment of the munitions list, and the particular technologies that are restricted. That list was originally put together with little thought, in that, if it’s about space, then it’s worth restricting. The increasing importance of international collaboration for both science and human space flight makes a blanket list hugely constraining. Now, the recent addition of a number of Russian firms to the Entity List is certainly of importance to export control, but those are restrictions that aren’t technology-specific.

  • Export control reform is suddenly ill-timed. A hostile, revanchist Russia must considered. Indeed, the policy should be reworked to provide increased sanctions on all technology transfer to Russia. Would you rather see dual use technology fired back the US and NATO?

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