Final export control rule offers some tweaks, but no major changes

Lost in yesterday’s news from Russia was a major milestone for the commercial space industry: after more than a decade of effort, the State Department issued its interim final rule for the revised Category XV of the US Munitions List, which covers satellites and related components. Like the proposed Category XV list released nearly a year ago, the final revision to Category XV removes many commercial satellites and components for them off of the USML, and thus no longer under the jurisdiction of the International Traffic in Arms Regulations (ITAR); they are now on the less-restrictive Commerce Control List (CCL).

While the proposed rule generated hundreds of pages of comments from companies, organizations, and the general public, the final rule didn’t change some hot-button issues. The one aspect of the proposed rule that attracted the most comments was a provision that retained human-rated spacecraft of any kind, both suborbital and orbital, on the USML. However, the administration elected to keep the provision in place in the final rule.

“For example, launching spacecraft to sub-orbit or orbit requires MTCR Category I items, upon which are placed the greatest restraint with regard to export,” the State Department noted, referring to the Missile Technology Control Regime (MTCR). “Spacecraft specially designed for human space flight that have integrated propulsion present another security concern, for such capabilities may be used for the purposes of weapons targeting from space. So, although these technologies and capabilities are used in commercial endeavors, they continue to merit control on the USML.”

The final rule did make some allowances on other issues, though. Industry sought to change the aperture limit on remote sensing satellites, above which such systems remain on the USML, from 0.35 meters to a larger value “more appropriate for current world capabilities and market conditions.” While the State Department didn’t change that aperture size threshold, it said it’s “committed to reviewing during the six months after the publication of this rule whether further amendments to the USML controls on civil and commercial remote sensing satellites are warranted, and seeks additional public comment on this matter.”

The final rule left in place language that keeps hosted payloads developed with Department of Defense funding on the USML, regardless of the nature of the payload itself. Industry had sought to change that, arguing that the source of funding has little relevance to the nature of any controlled technologies. The State Department did delay the date this provision goes into effect by six months (beyond the six-month inplementation period for the final rule in general), and notes that payload developers can ask the State Department to exempt payloads on a case-by-case basis if those payloads do not contain other technologies on the USML.

Although industry didn’t get everything they wanted in the final rule, they were, in general, pleased with what the administration published. “SIA congratulates the U.S. government on this truly comprehensive overhaul to the U.S. satellite export control system,” said Patricia Cooper, President of the Satellite Industry Association (SIA), an industry organization that has long advocated for export control reform. In the SIA statement, she also thanks the government officials “who undertook this thoughtful and wide-sweeping update.”

The Aerospace Industries Association (AIA) expressed its support for the final rule, while also calling for the reauthorization of the US Export-Import Bank, which has played a key role in recent years in helping finance commercial satellite and launch deals. “This revision, together with the re-authorization of the Export-Import Bank by Congress later this year, would dramatically level the global market playing field and greatly enhance the prospects for U.S. companies selling space related goods and services overseas,” said AIA president and CEO Marion Blakey.

The Commercial Spaceflight Federation (CSF), meanwhile, supported the final rule in general, but expressed disappointment that human-rated spacecraft remained on the USML. “Moving these vehicles to the CCL would give industry an opportunity to pursue global markets, enabling contributions to the U.S. economy and the growth of our space industrial base,” said CSF president Michael Lopez-Alegria. “We thank the Administration for their work on this critical issue and look forward to continued revisions to ensure that the U.S. remains a leader in spaceflight.”