Long-sought changes in the way the U.S. controls satellite-component exports will not necessarily solve satcom-industry problems with the process, and could even make them worse in the near term.

Similarly, the export-reform regulations making their way through the U.S. federal bureaucracy may hamper new industries where the U.S. holds a clear lead today, including suborbital human spaceflight.

Officials are working their way through about 100 formal comments on proposed export-licensing reforms for satellites, but final action will not take effect until next year. The sheer volume of comments on the proposals to move some satellite hardware from the International Traffic in Arms Regulations (ITAR) administered by the State Department to the Commerce Control List (CCL) at the Commerce Department is slowing the process, as is the effect of funding sequestration on the officials' work schedules.

The target of all this bureaucratic back-and-forth is the Chinese launch industry (see page 50). But the draft measure to ease satellite-export controls itself includes language that can complicate future U.S. space-launch prospects by specifically excluding “man-rated” spacecraft.

“This is the same backward path provided to the U.S. satellite manufacturing and launch community two decades ago that almost decimated that industry,” blogs Andrew Nelson, chief operating officer at XCOR Aerospace, which is building a two-seat suborbital spaceplane for the research and space-tourist markets. “Even before we can achieve a meaningful-sized global market, and dominate it with U.S. companies, there is the real possibility that we will be hampered.”

Also unhappy with the way the “reform” law is shaking out is the hosted-payload community, which seeks to lower the cost of getting sensors, communications links and other payloads into space by sending them there piggybacked on other spacecraft. The new regulations exclude “Department of Defense-funded secondary or hosted payload[s] and specially designed parts and components therefor” from Commerce Department oversight. But the U.S. government plans to procure all of its hosted payloads through an indefinite-delivery/indefinite-quantity contract managed by the U.S. Air Force. That approach would force hosted payloads onto the munitions list, even if they are civilian or commercial in nature.

Because most state-of-the-art satellite hardware is U.S.-made, it is virtually impossible to launch a satellite that was not built in China on a Chinese Long March launch vehicle (see article below). Intelsat, the largest commercial fixed-satellite operator, does not even try, even though the Long March is competitive.

“We would feel comfortable launching some satellites on Chinese launch vehicles, but it is not an avenue we can pursue,” says Jean-Luc Froeliger, vice president for operations and engineering.

Instead, Intelsat buys its satellites in the U.S. and Europe, and launches them on European and Russian launch vehicles. Because they are focused on government launches, Froeliger says, U.S. launchers usually cannot compete on cost, although Intelsat has a contract with SpaceX for a Falcon 9 launch in a few years.

While the main ITAR impact on Intelsat has been in its launch and satellite procurements, the U.S. regulations also affect operations in ways that illustrate the Catch-22 nature of their enforcement. Most of Intelsat's ground stations use baseband processors manufactured in France by Zodiac Data Systems. If the French company ships a unit directly to an Intelsat ground station in South Africa or Australia, there is no problem. But if the unit passes through the U.S. en route to its final destination, it must get State Department clearance for re-export, Froeliger says. U.S. satellite builders must get an export license to return a component manufactured abroad to its factory for repairs or modifications.

Congress, which ordered satellites components onto the munitions list in 1998, removed that requirement in the fiscal 2013 defense authorization bill. That gives the president the authority to decide which satellite components should continue to be treated as munitions, and which can go back to the less stringent Commerce Department regulations.

Beth M. McCormick, deputy assistant secretary of state for defense trade and regional security, says overall the reviews necessary to shift some military technology export licensing from the State to the Commerce Department are going well. But the process is cumbersome, because the so-called “ITAR reforms” ordered by President Barack Obama in 2009 are as comprehensive and complex as the regulations themselves.

Proposed changes in the rules for all categories in the U.S. munitions list of ITAR-covered technology should be ready by the end of this year, says McCormick. Comments on previously announced Category XV—spacecraft systems and associated equipment—closed on July 8.

“Hopefully we can turn XV around quickly, although I have to say after seeing some of the public comments, I'm not sure,” she adds.

Many of the technical experts who evaluate ITAR license requests are Defense Department employees subject to “furlough days,” when they must stay at home without pay to stretch funding. McCormick, herself a Pentagon detailee, says the reviews are being conducted in parallel with regular licensing activities by the same personnel, which further slows the work.

In practice, ITAR controls probably have not been as hard to follow as the satellite industry has made them out to be, and Commerce Department oversight probably will not be a panacea. Kevin J. Wolf, assistant commerce secretary in the Bureau of Industry and Security, told Congress in April that the technologies transferred to the CCL will be subject to “tailored controls” on their export.

The U.S. aerospace industry hopes the changes will make it easier to understand where a particular piece of hardware falls—a “bright line” between the munitions list and Commerce controls. Plans call for a 180-day transition period once the new rules are final to give industry time to understand them and adapt compliance systems to meet them.

“What the U.S. government is doing is they're itemizing the U.S. Munitions List now, so there's no longer going to be this kind of nebulous gray line about when you cross over from the military to the dual use,” says Remy Nathan, vice president, international affairs, at the Aerospace Industries Association. “It will be on the U.S. Munitions List, specified this stuff's military, and on the other side, specified, this stuff is dual use.”

Tap the icon in the digital edition of AW&ST for a timeline of commercialsatellites built without export-controlled technology, or go to AviationWeek.com/itarfree