House Approval of NDAA Includes Reform of Satellite Export Controls

The amendment shifts control of civilian satellites from the U.S. Munitions List to the dual-use Commerce Control List (http://xrl.us/bm8ipj). The provision reverses a 1998 congressional mandate to categorize U.S. satellites as weapons, a decision which commercial satellite manufacturers say has harmed their competitiveness in the international satellite market. The amendment also prohibits any commercial satellite exports to China, Iran, North Korea, Syria, Sudan or Cuba.

The measure was co-sponsored by Rep. Howard Berman, D-Calif., the Ranking Member of the House Foreign Affairs Committee. The amendment largely reflects the language of HR-3288, the Safeguarding United States Satellite Leadership and Security Act, which Berman introduced last year (CD Nov 3 p13). “Treating commercial satellites and components as if they were lethal weapons, regardless of whether they're going to friend or foe, has gravely harmed American space manufacturers,” Berman said Thursday. “We depend on these manufacturers for our own critical defense needs; if onerous restrictions prevent them from competing in the international marketplace, then they can’t innovate and ultimately cannot survive,” he said.

House Intelligence Committee Ranking Member Dutch Ruppersberger, D-Md., was also a strong advocate for the provision. “I've been trying to loosen the restrictions on American companies,” he told us following the vote. “When Congress passes laws there are a lot of unintended consequences and I think the [International Traffic in Arms Regulations] is one. Before we had the ITAR legislation the American satellite companies controlled close to 70 percent of the manufacturing. We are at about 27 percent and slipping right now.” Ruppersberger could not say whether the provision would survive the Senate but was optimistic that his work brought more attention to the issue. “As a result of our activity on the bill, the administration understands how this is negatively affecting the satellite industry.” The amendment was also co-sponsored by House Armed Services Committee Chairman Buck McKeon, R-Calif., Ranking Member Adam Smith, D-Wash., and Foreign Affairs Chairman Ileana Ros-Lehtinen, R-Fla.

Many companies in the satellite industry have pushed for reform of rules that impose restrictions on the export of U.S. satellites. Last month, the Defense and State departments recommended removing some satellites and their equipment from application of the International Traffic in Arms Regulations rules and USML (CD April 19 p7). The provision will significantly benefit the satellite industry, said Maury Mechanick, a satellite attorney at White & Case. The export restrictions “have imposed significant burdens on the satellite industry,” he said. The way that ITAR and other export restrictions apply to satellite components “is devoid of rationale,” he said. “It’s punitive in a sense.” There’s nothing in terms of the technical aspects “that could give any foreign country any competitive advantage or insight that could be harmful to U.S. interests,” he said.

Passage of the satellite export control reform provision “is a vital step for the U.S. satellite industry,” the Satellite Industry Association said. The association plans to work with Congress and the Obama administration to perfect the provision, President Patricia Cooper said. “We continue to encourage the reform of satellite export controls to ensure the competitiveness of the U.S. satellite and space industries.” The provision is helpful to the competitiveness of the entire industry, said Kalpak Gude, associate general counsel for Intelsat. As a satellite operator, it “allows us to be more efficient and more competitive with foreign counterparts and to be more communicative with customers,” he said. The current regulations hold satellite components to a high degree of security “irrespective of how the technology evolves,” he added.

Lawmakers failed to include amendments to shore up critical infrastructure from cyberattacks or to create a National Office for Cyberspace in the executive branch. The House Rules Committee prevented consideration of the measures, which were proposed by Congressional Cybersecurity Caucus co-founder Rep. Jim Langevin, D-R.I. “It appears that the Majority Leadership has decided to limit what areas of cybersecurity they will consider,” Langevin said. “Time is not on our side as we are already experiencing the results of lax cybersecurity.” Ruppersberger said he thought Langevin “had the right concept but it just didn’t pass.” Ruppersberger is a co-sponsor of HR-3523, the Cyber Intelligence Sharing and Protection Act, which passed the House last month. “I'm in favor of making cyber a higher priority in the administration,” he said. “Cyber is one of the more serious threats facing our country.”

The Senate will mark up its version of the bill this week. Lawmakers will seek to balance the House version against the White House’s recent veto threat concerning disagreements with the bill’s provisions on gays in the military, biofuel limits and nuclear weapons stockpiles.