Beyond the Sea of Stars: Modernizing and Streamlining Space-Related Export Controls for a New Frontier

The US Departments of Commerce and State (together, the Departments) have taken significant steps to update US export control rules pertaining to space-related export controls, impacting spacecraft, launch vehicles, and space-related items subject to US export controls. The Departments are accepting comments on two proposed rules and one interim final rule, providing industry a further opportunity to engage on these important developments.

Released on October 17, 2024 and published on October 23, the US Department of Commerce’s (Commerce’s) Bureau of Industry and Security (BIS) issued updates to space-related export controls regulated under the Export Administration Regulations (EAR) through one final rule, one interim final rule, and one proposed rule. Concurrently, the US Department of State (State) published a related proposed rule to amend the International Traffic in Arms Regulations (ITAR).

These concomitant actions reflect a coordinated effort to update US export controls in an industry experiencing accelerated technological advances and heightened global competition. These adjustments are also part of a broader strategy and ongoing efforts to modernize export control policies with advancements in space technology, national security considerations, and the needs of the US commercial space industry, as well as align these controls with US multilateral obligations.

BACKGROUND

This regulatory fusillade seeks to recalibrate US export controls to foster US competitive advantage in the commercial space sector without compromising national security. In March 2019, the Departments published two advanced notices of proposed rulemaking (ANPRMs), 84 FR 8485 and 84 FR 8486, inviting public input on potential revisions to export controls related to satellites and spacecraft under the ITAR and the EAR. These ANPRMs marked an initial step to gather insights from stakeholders on how to update the existing framework.

Public comments were submitted, and over the lengthy five-year-plus period the agencies conducted outreach, interagency meetings, and interactions with industry representatives. These efforts resulted in proposed changes or expressed support for the goals of promoting international collaboration, ensuring consistent regulation, and reclassifying certain defense articles from the US Munitions List (USML) to the Commerce Control List (CCL) to streamline regulatory oversight.

In December 2023, the National Space Council reiterated the need for the Departments to complete this ongoing, in-depth review of space export controls. Informed by responses to the 2019 ANPRM, recommendations from BIS’s Transportation and Related Equipment Technical Advisory Committee, engagements with the private sector, and a recent survey and assessment of the US civil space industrial base conducted by BIS in collaboration with NASA and the National Oceanic and Atmospheric Administration, the two agencies published updates and proposed changes to both the ITAR and the EAR.

OVERVIEW OF PROPOSED AND FINAL RULES

The series of regulatory changes and proposals consist of one proposed rule from State and one final rule, one interim final rule, and one proposed rule from Commerce.

State Department’s Proposed Rule

In its proposed rule, State seeks to update USML Categories IV and XV, which govern controls on missiles, rockets, space launch vehicles, and related technologies. The proposed updates include the following significant actions:

• Moving certain items from the USML to the CCL
• Relocating content from notes within the USML into main regulatory text or new definitions in Section 121.0
• Clarifying certain controls
• Creating new exemptions

Other notable changes proposed by State include the following:

• The term “specially designed” will be removed from certain paragraphs where it is either “too broad” or replaceable with specific technical criteria.
• The proposed rules will seek to improve structural consistency across the USML. Each paragraph will now start with the controlled item, followed by specific criteria or characteristics.
• In-line “catch-all” entries will be relocated to the end of relevant paragraphs unless the catch-all applies only to a portion of the regulation (i.e., less than all of it). This change could impact interpretation of a number of areas of the ITAR and reflects a more fulsome understanding of the need to ensure consistent regulatory construction.

The modernization effort also includes realigning USML category structures to better follow the organizational standards described in Sections 120.10(b) and 120.40. This will help users by grouping items according to their type, making analyses, especially around “specially designed” items, more efficient and reducing potential user errors.

For improved readability and usability, State is standardizing regulatory text by updating internal references and using consistent terms such as “controlled” and “described.” Metric units will replace US customary units where possible, aiming for a standardized approach to terminology and measurements throughout the USML and for multilateral purposes.

New Exemptions

State will implement four new license exemptions, primarily to support civil space activities. These include:

• Transfers of defense articles and defense services “when conducted entirely within the scope of an official U.S. government agency space programs”
• Certain transfers supporting space “activities” such as space launches
• Transfers of unmanned spacecraft for space tourism or in support of fundamental research
• Transfers of certain defense articles incorporated into spacecraft under EAR jurisdiction

State is specifically soliciting comments on several points in an effort to further refine and clarify export controls for space-related items on the USML. For example, State is seeking input on whether specific articles, services, or technical data should be ITAR-controlled, particularly if they are not currently described or are ambiguously defined. State is also asking for input on distinctions in technology for in-orbit refueling, potential overlaps within the USML, items in commercial use, and projected civil uses.

State also welcomes comments on clarifying criteria that differentiate military and civil technologies, such as in-star trackers, thermal protection systems, and surveillance spacecraft. Further, State is interested in suggestions for improving clarity, scope, and consistency across categories as well as performance criteria that could better prevent the control of noncritical commercial satellites.

Commerce Department’s Final Rule

Commerce’s final rule revises space-related export controls to bolster the US space industrial base, consistent with the directive from the National Space Council to support global competitiveness while safeguarding national security. Key changes include removing Australia, Canada, and the United Kingdom from the worldwide license requirement for certain space technologies, including remote sensing, logistics, assembly, and servicing spacecraft.

This exemption, applicable under ECCNs 9A515 and 9E515, enables license-free trade for specific spacecraft and technology exports to these close allies and, according to Commerce, will simplify regulatory requirements and enhance collaboration with National Technology and Industrial Base partners. This exemption, however, is not likely to cause any disruption to allies, as BIS noted that the agency had not denied any applications to these allies for at least the past five years. Conforming changes are made to the EAR and the CCL, updating the License Requirement Notes within ECCNs 9A515 and 9E515 to specify that the global license requirement no longer applies to Australia, Canada, and the UK.

Commerce Department’s Proposed Rule

Commerce’s proposed rule, released in parallel with State’s, seeks to amend the EAR to incorporate feedback received during the 2019 ANPRM and address items moving from the USML to the CCL.

The proposed rule introduces two primary changes:

• Commerce proposes amendments to the EAR to align with recent revisions to USML Categories IV and XV, addressing various ECCNs such as 9A515, 9C515, 9D515, and 9E515. The updates include removing redundant language from 9A515.a, expanding control parameters for remote spacecraft services, refining optics specifications, and clarifying component-specific controls. Additionally, ECCN 9C515 is newly introduced to manage materials intended to reduce radar, optical, and infrared spacecraft signatures. Updated software and technology controls in ECCNs 9D515 and 9E515 now include software for situational awareness and technology supporting new spacecraft components in 9A515.
• Commerce proposes a new license exception for certain Commercial Space Activities (CSA) to mirror ITAR’s civil space-related exemptions. The License Exception CSA would support US official space programs (e.g., currently including NASA’s Lunar Gateway, NASA’s Mars Sample Return, Nancy Grace Roman Telescope, and the Orion spacecraft) and space tourism, providing authorization for exports, reexports, and transfers within programs like NASA’s Lunar Gateway and Mars Sample Return. It also permits specific manned spacecraft activities for space tourism and research provided that conditions such as FAA-approved destinations are met and restrictions on foreign ownership are adhered to. This new exception, however, excludes transfers involving proscribed countries and sensitive destinations to balance support for commercial space endeavors with national security protections.

Commerce Department’s Interim Final Rule

Commerce’s interim final rule (IFR) also introduces updates to streamline the EAR’s approach to controlling space-related technology.

First, Commerce proposes to reduce licensing requirements for less sensitive items to support collaboration with close US allies. Specifically, BIS is “downgrading” certain controls under ECCN 9A515.x from National Security (NS1) and Regional Stability (RS1) to National Security (NS2) and Regional Stability (RS2), making it easier to export less sensitive parts, components, accessories, and attachments to trusted partners. For items that remain highly sensitive, a new reserved category, 9A515.w, will maintain NS1 and RS1 controls to ensure higher security standards where needed.

Commerce also introduces refinements and clarifications across existing controls to enhance usability. This includes adding ECCNs 9D515 and 9E515 to the exclusion list for standards-related activities, which promotes US participation in developing global space safety standards. Additionally, the rule creates new .y items within 9A515 and 9A004, simplifying controls by downgrading specific components identified as less sensitive. These updates to ECCNs 9A004 and 9A515 help align the EAR with the USML and offer improved definitions for items such as in-space habitats and in-space servicing tools. Key software and technology essential for spacecraft operations now fall under newly defined subcategories.

Additional provisions in the IFR introduce specific export guidance such as new license exceptions for US involvement in standards activities and eligibility for space-related exports to Russia for International Space Station support. The IFR also clarifies requirements for exports to launch platforms in international waters, which will be treated as exports to the controlling or operating country of the platform.

Practical Implications

The regulatory framework around satellite-related export controls have not kept pace with technological advancements in the fast-evolving commercial space sector. As BIS and the Directorate of Defense Trade Controls seek to balance US national security interests with US space competitiveness, these agencies will continue to be challenged.

By narrowly defining exemptions for civil space activities and partnerships and limiting the loosening of controls for only traditional allies, the US government has concluded that the US industry’s competitiveness must be tempered by the national security issues with broader releases of these key technologies. While the proposed regulations reduce some redundancy, the dual regulation of overlapping technologies remains in some areas, continuing to create compliance challenges.

Some takeaways from the combined effect of these rules include the following:

• The removal of “specially designed” could still leave ambiguities when it comes to interpreting the scope of certain items.
• While License Exception CSA under the EAR proposed by Commerce and Civil Space-Related License Exemptions proposed by State under Part 126 of the ITAR appear to support NASA-led programs, whether this exception and exemption will be effective for private sector initiatives in space tourism remains to be seen. The scoping of the exception and exemptions will likely need further attention to keep pace with the growing presence of private companies in the space sector.
• The CSA exception’s restrictions on foreign ownership and FAA-approved destinations could limit US companies’ ability to engage in innovative cross-border partnerships and capitalize on emerging space tourism markets where international competition is particularly intense. BIS will likely need to consider expanding the exception’s scope (e.g., to include private space activities under regulated conditions by likeminded countries and partners) to support continuing US industry growth.
• There will be further updates that will likely be applicable to current and planned products and activities including supply chain and sourcing plans, international collaborations in development, design, and production, acquisition and employment of non-US talent, access of non-US investors and owners to key technology, international customers, and cross-border operational activities such as launch, space operations, and reentry.

BIS hosted a public meeting on November 6, 2024 to discuss the new rules. While a recording is not available, the slides from that presentation may be found on Commerce’s website. As always, companies should also monitor the comments submitted on the proposed rules and stay informed about potential changes that might be adopted in the final rules.

CONCLUSION

The regulatory updates by Commerce and State underscore the United States’ commitment to safeguarding national security while helping ease the path for the US space industry to make progress in this critical sector. Yet, these changes also highlight the ongoing need for a more agile, streamlined, and globally competitive export control framework.

For the US space sector to meet rising global demand, foster partnerships across a broader spectrum of international players, and sustain leadership in space innovation, the US government must continue evolving its approach to space-related technology regulation. This next chapter in space exploration will require policies as dynamic and adaptable as the industry itself to ensure that the United States not only keeps pace with global advancements but sets the trajectory.