April 4, 2020

April 03, 2020

Subscribe to Latest Legal News and Analysis

April 02, 2020

Subscribe to Latest Legal News and Analysis

Export Control Reform (ECR) Series Episode VI: The One With Ewoks (And New Rules On Satellites)

This fall, the U.S. Government will finish considering public comments on its draft revision of U.S. Munitions List Category XV, which covers “Spacecraft Systems and Related Articles.” By the end of 2013 (unless delayed by the continued government shut-down debacle) the final regulation should be published. The most important headline is that many satellite-related items will return to U.S. Department of Commerce control, where they resided prior to 1995. This change will provide opportunities and challenges to the U.S. satellite industry.

Background

In the mid-1990s, the U.S. government’s investigation of satellite-related exports resulted in highly-publicized settlements of violations involving exports of launch and guidance technology to China. As a direct result of those violations, the National Defense Authorization Act for Fiscal Year 1999 satellites and related items to be controlled as defense articles. The law also removed the President’s authority to change the jurisdictional status of satellites.

Eleven years later, Section 1248 of the National Defense Authorization Act for Fiscal Year 2010 directed the Secretaries of Defense and State to assess and report on the risks associated with removing satellites and related components from the USML. Their report, published in April 2012, identified certain satellites and related items that could be moved to the Commerce Control List on the grounds that they do not contain technologies unique to the United States, are not critical to national security, and are more appropriately controlled by the Export Administration Regulations.

The National Defense Authorization Act for Fiscal Year 2013 reauthorized the President to determine which regulations govern the export of satellites and related articles. Thereafter, as part of President Barack Obama’s Export Control Reform initiative, the U.S. Department of State published proposed revisions to USML Category XV on May 24, 2013. The proposed regulation is available here.  Public comments posted on www.regulations.gov may be viewed here.

Items Proposed For Transfer to the CCL:

The proposed regulation would move commercial communication satellites to the CCL Category 9. Also moving to category 9 would be certain lower-performance remote sensing satellites, planetary rover vehicles, planetary and interplanetary probes, and most systems related to such equipment. Equally important, most parts and components of satellite bus and payloads not listed on the USML would move to the CCL. According to the Department of Commerce, satellite bus systems moving to the CCL would include the solar array, propulsion tank, optical solar reflector, tower structure, stationary plasma thruster, antenna reflector, antenna subreflector, communication panel electronics, spacecraft control electronics, thruster, antenna feed, earth sensor, thermal blanket, traveling wave tube antenna, batteries, and the tracking, telemetry, and command antenna. In general, the technical data controls related to items moving to the CCL will also move to the CCL.

Items Proposed To Remain on the USML:

The proposed regulation would retain under USML control satellites and spacecraft with certain listed military and intelligence functions, including nuclear detonation detection, intelligence collection, missile tracking, anti-satellite or space-based weapons, classified operation or equipment, and military navigation. The USML would also continue to control certain systems for remote sensing with military applications.

One area that has drawn substantial comment is the proposal for USML control of spacecraft and systems that are “man-rated sub-orbital, orbital, lunar, interplanetary or habitat.” Some commenters have called for EAR control of such items in order to foster commercial development of space. The Satellite Industry Association proposes that at least those spacecraft  and systems related to the International Space Station be EAR controlled. It remains to be seen how the agencies will react to those suggestions.

The regulation proposes that all classified equipment and technical data and all U.S. Department of Defense-funded payloads remain under USML jurisdiction. As to parts and components, the regulation contains a positive list of technologies considered to be critical to military functions that would remain under USML jurisdiction. Parts and components not listed would be transferred to the CCL.

The USML would also continue to control specified defense services, (including training) relating to satellite integration and launch services provided by a U.S. person to a foreign launch integrator or vehicle provider, and services regarding launch failure analysis.

Next Steps

Prior to the 2013 government shut-down, the Departments of State and Commerce anticipated finalizing the revised regulations by the end of Calendar Year 2013. We anticipate some delay in that schedule. In any event, anyone involved in the export of spacecraft, satellites, and related parts, components, services, and technologies should be actively preparing for the transition to the exciting new world of CCL control which, as we told you in Episode I, is not the same thing as de-control.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.

TRENDING LEGAL ANALYSIS


About this Author

J. Scott Maberry, Lawyer, Sheppard Mullin, International Trade, Trade Practice
Partner

Mr. Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Maberry's expertise includes counseling and litigation in export controls, the Foreign Corrupt Practices Act (FCPA), anti-terrorism, economic sanctions, anti-boycott controls, and Customs.  He also represents clients in negotiations and dispute resolution under the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and other multilateral and...

202-469-4975