Jahna Hartwig¹, Of Counsel at Wilson Sonsini Goodrich & Rosati, Professional Corporation.

At long last, the U.S. Department of Commerce and U.S. State Department have issued a series of rules to further relax the export controls on spacecraft and associated equipment². These latest rules are intended to “better enable a globally competitive U.S. space industrial base while continuing to protect U.S. national security and foreign policy interests.”³

To that end, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) made some immediate changes that remove license requirements for space-related items to Australia, Canada, the United Kingdom, and other close allies.

Both BIS and the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) have proposed additional changes that are intended to rationalize and modernize the existing space-related export controls. Each of these new rules is explained in more detail below.

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Final Rule for Australia, Canada, and the UK
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Remote sensing and space-based logistics satellites, as well as the remote sensing components specially designed for spacecraft, have historically been subject to a “worldwide license requirement,” such that a BIS license was required to export these items and related technology to any country. By contrast, other types of commercial satellites and satellite components were not controlled for export to Australia, Canada, or the United Kingdom.

On October 23, 2024, BIS removed the licensing requirement on those remote sensing and space-based logistics items and technologies for Australia, Canada, or the United Kingdom. As such, no license or license exception will be required to export, re-export, or transfer any of the BIS-controlled satellites or related technologies to customers, suppliers, or other business partners that are located in or nationals of Australia, Canada, or the United Kingdom.

BIS noted that this action “aligns the EAR’s requirements with interagency licensing practice, as BIS has not denied a license application for such items to these three allied countries in the past five years.”

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Interim Final Rule for Other Allied Countries
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BIS also published an interim final rule on October 23, 2024, that immediately reduced the level of control on “less sensitive” space-related items hardware, software, and technologies classified in Export Control Classification Numbers (ECCNs) 9A515.x, 9D515.x, and 9E515.x respectively. These three ECCNs effectively serve as a “catch-all” for items that are specially designed for spacecraft and associated equipment but are not listed elsewhere on the Commerce Control List (CCL) or the U.S. Munitions List (USML).

In recognition of the lower sensitivity of these items, BIS reduced the level of control on these items from “National Security 1 (NS1)” and “Regional Stability 1 (RS1)” to “National Security 2 (NS2)” and “Regional Stability 2 (RS2).” These items no longer require a license for export, re-export, or transfer to more than 40 allied countries, including Australia, Canada, the United Kingdom, the EU countries, Argentina, Iceland, India, Japan, South Korea, Mexico, New Zealand, South Africa, Switzerland, and Turkey.

BIS also identified a long list of items currently controlled under ECCN 9A515.x that warranted a “downgrade in their ‘specially designed’ control status.” These items were moved to ECCN 9A515.y, and are now only controlled for export, re-export, or transfer to a short list of countries, including Belarus, China, Cuba, Iran, North Korea, Russia, Syria, and Venezuela, as well as the occupied regions of Ukraine.

Conforming changes related to each of the above were also made to ECCN 9A004, and the License Requirement Note to ECCN 9A004 was modified to clarify the relationship between 9A515 and 9A004.

BIS also made changes to the controls on software and technology for space-based servicing, assembly, and logistics when the release is for standards-related activity.

Software classified in ECCN 9D515 (other than 9D515.d or .e) and technology classified under ECCN 9E515.a, .b, or .f that is related to hardware classified in ECCN 9A515.a.4 is not subject to the EAR when the release is for a ‘‘standards-related activity” and is either for a published standard or occurs with the intent that the resulting standard will be published.

BIS recognized that this software and technology is “crucial in the furtherance of commercial spacecraft flight safety ” and that “barriers to U.S. participation in the development of these standards would be detrimental and counterproductive to U.S. commercial spacecraft development and national security interests.”

This Interim Final Rule also included a variety of other, narrower changes to space-related export controls, including:

• Addition of 9A515.w to impose NS1 and RS1 license requirements on parts, components, accessories, and attachments that would have otherwise been classified under 9A515.x but warrant a more restrictive NS1 and RS1 license requirement.
• Addition of 9A004.r and .s to clarify control on in-space habitats and related parts and components.
• Addition of Note 5 to 9A004 to further specify control for items operating on any celestial body other than Earth is treated as if it is on Earth for classification purposes on the CCL.
• Revisions to 9A515.b for consistency with the Wassenaar Arrangement Control text and to provide greater clarity on the types of equipment classified under this entry.
• Addition of new Note 5 to 9A515.b and .x and redesignation of existing Note to 9A515.x as Note 4 to 9A515.x to clarify the scope of controls over baseband units (BBU).
• Addition of Note 6 to 9A515 to specify that an item, such as a rover, operating on any celestial body other than Earth is treated as if it is on Earth for classification purposes on the CCL.
• Removal of ECCN 9A604.a and .b to clarify the jurisdictional control status of certain thermal batteries.
• Clarification to 9A604.x to add a cross-reference to 9A604.y.
• Addition of 9A604.y.1 for landing leg assemblies.
• Clarification that shipments to launch platforms located in international waters are treated as an export or reexport to the country or countries the platform or facility is owned by, controlled by, or being operated on behalf of.
• Confirming that Space Act Agreements (SAA) to which NASA is a party meet the criteria under License Exception GOV (740.11(b)(2) (ii) and (b)(2)(iii)(B) and (C)).
• Adding paragraph (e) to License Exception GOV, granting eligibility for ECCN 9A004 items when needed in Russia on short notice for launch to the International Space Station.

BIS invited comments from the public on both the changes made in this Interim Final Rule and additional changes to the EAR’s space-related export controls that “may enable a globally competitive U.S. space industrial base while protecting U.S. national security and foreign policy interests.” Comments were due before November 22, 2024.

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Proposed Rules for Modification of the CCL and USML
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The other two space-related export control rules issued on October 23, 2024, are companion proposed rules—one issued by DDTC and the other issued by BIS—to transfer jurisdiction of certain space-related defense articles from the ITAR to EAR.

Transfer of these items will obviate the need to obtain ITAR licenses, allow for use of the license exceptions available under the EAR, and avoid customer concerns related to ITAR jurisdiction.Both rules include other proposed changes, including a new license exemption and new license exception for commercial space activities.

DDTC’s proposed rule proposes changes for space-related items in Categories IV, XI, XII, and XV, as well as numerous other items that relate to missile systems, rockets, bombs, and other items in USML Categories IV and XIII.

The proposed revisions to Category XV are extensive and highly technical. Certain spacecraft and associated equipment are being moved from the USML to the CCL. Examples include spacecraft that perform remote proximity on-orbit services to other spacecraft (e.g., docking, delivery, refueling, or servicing), provide life-sustaining operations (e.g., space stations, space hotels, outposts, or laboratories), or capture, collect, and remove space debris, as well as certain space-qualified optics, electric (plasma/ion) thrusters and associated power control systems, control moment gyroscopes, and hold-down or satellite release mechanisms.

Other changes are purely structural or administrative, such as the movement of certain guidance from notes in USML Category XV to a new definition section in the USML. While the vast majority of these changes relax existing controls, DDTC is proposing to add some controls, such as controls on electronic parts and components capable of operation at temperatures in excess of 125° C and specially designed for spacecraft described in USML Category XV by expanding the scope of items described in USML Category XI(c)(15). Exporters should carefully review the proposed revisions to the USML for any change that might affect their products or technologies. DDTC is also proposing to create four new license exemptions for “Civil Space Promotion,” all of which will be included in ITAR Section 126.8.

The first is an exemption for activities related to the four official space agency programs listed in the exemption.

The second is a proposed exemption for certain equipment and services relating to the connection of an EAR-controlled spacecraft to its launch vehicle on condition that the scheduled launch date be within six months of when the activities are conducted.

The third is a proposed exemption for space tourism and research, subject to certain conditions.

Finally, DDTC is creating a new exemption to replace guidance currently in Category XV that BIS may license defense articles incorporated or integrated into EAR spacecraft while they are incorporated in, and included as an integral part of, a spacecraft subject to the EAR.

BIS’s companion proposed rule largely mirrors DDTC’s proposed rule, creating controls for the items removed from the USML. The proposed rule also includes a proposed new license exception for “Commercial Space Activities (CSA)” under EAR Section 740.26. The new License Exception would authorize activities related to six official space agency programs listed in the License Exception, as well as activities related to “Space Tourism and Research,” subject to the specific criteria described in the License Exception.

DDTC and BIS accepted public comments on the proposed rules until November 22, 2024. BIS stated that it “welcomes public comment on the impact of the changes proposed in this rule, as well as any additional changes to the EAR’s spacerelated export controls that could enable a globally competitive U.S. space industrial base while protecting U.S. national security and foreign policy interests.”

DDTC also requested comments on specific elements of the proposed rule, including comments on its changes to the USML and on additional space technologies having both military and commercial applications that should be considered for incorporation into the new exemptions.

The new administration has not yet indicated its position on these proposed rules. The President issued dozens of Executive Orders during his first week in office, including an order imposing a regulatory freeze that halts issuance of any new regulations until they can be reviewed by a Trump appointee.

The President also issued the America First Trade Policy, which includes a directive to the Secretaries of State and Commerce to recommend modifications to the U.S. export control system to “maintain, obtain, and enhance our Nation’s technological edge and . . . eliminate loopholes in existing export controls.”

The new administration may choose to move forward with the rules based on the existing proposals and public comments, or could result in new proposed rules and additional opportunities to comment.

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Conclusion
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These new rules are a recognition by the U.S. government that it has a national security interest in supporting and promoting our commercial space industry. This includes creating a regulatory environment that allows U.S. companies to compete in the global marketplace.

Some technologies, such as space launch vehicles, may always warrant ITAR protection because the technologies too heavily overlap with critical military technologies. When technologies no longer provide a critical military or intelligence advantage the level of control should be reduced.

While these new rules may represent welcome relief for many U.S. companies working to expand the U.S. commercial space industry, companies should not be shy about providing additional feedback to the relevant government agencies when opportunities arise.

References
¹ Jahna Hartwig (jhartwig@wsgr.com) is Of Counsel at Wilson Sonsini Goodrich & Rosati, Professional Corporation. The opinions expressed are those of the author and do not necessarily reflect the view of the firm or its clients.
2 See Bureau of Industry & Security Press Release, Commerce Announces Series of Rules to Modernize Space-Related Export Controls (Oct. 17, 2024) (available at https://www.bis.gov/press-release/commerce-announces-seriesrules- modernize-space-related-export-controls); Directorate of Defense Trade Controls Press Release, Proposed Rule: Revisions to U.S. Munitions List (USML) Categories IV and XV (Oct. 18, 2024) (available at https://www. pmddtc.state.gov/ddtc_public/ddtc_public?id=ddtc_public_portal_news_and_ events).
³ See U.S. Commerce Department Bureau of Industry and Security, Final Rule, Export Administration Regulations: Removal of License Requirements for Certain Spacecraft and Related Items for Australia, Canada, and the United Kingdom, 89 Fed. Reg. 84,766 (available at https://www.federalregister. gov/d/2024-23932) (“AUKUS Rule”); U.S. Commerce Department Bureau of Industry and Security, Interim Final Rule, Export Administration Regulations: Revisions to Space-Related Export Controls, 89 Fed. Reg. 84,770 (available at https://www.federalregister.gov/d/2024-23958) (“Space-Related Export Controls Rule”); U.S. Commerce Department Bureau of Industry and Security, Proposed Rule, Export Administration Regulations: Revisions to Space-Related Export Controls, Including Addition of License Exception Commercial Space Activities (CSA), 89 Fed. Reg. 84,784 (available at https://www.federalregister.gov/d/2024-23975) (“CCL Proposed Rule”); U.S. State Department Directorate of Defense Trade Controls, Proposed Rule, International Traffic in Arms Regulations (ITAR): U.S. Munitions List Categories IV and XV, 89 Fed. Reg. 84,482 (available at https://www.federalregister gov/d/2024-24091) (“USML Proposed Rule”).
⁴ AUKUS Rule, 89 Fed. Reg. at 84,766.
⁵ Id.
⁶ Space-Related Export Controls Rule, 89 Fed. Reg. at 84,770.
⁷ See 15 C.F.R. Pts. 738, 774.
⁸ Space-Related Export Controls Rule, 89 Fed. Reg. at 84,772.
⁹ See 15 C.F.R. Pts. 73
⁸, 746, 774.
¹⁰ 15 CFR § 734.10(b).11 Space-Related Export Controls Rule, 89 Fed. Reg. at 84,772.
¹² Id. at 84,770.
¹³ USML Proposed Rule, 89 Fed. Reg. at 84,482.
¹⁴ CCL Proposed Rule, 89 Fed. Reg. at 84,784.
¹⁵ Regulatory Freeze Pending Review (Jan. 20, 2025), available at https://www. whitehouse.gov/presidential-actions/2025/01/regulatory-freeze-pendingreview/.
¹⁶ America First Trade Policy (Jan. 20, 2025), available at https://www. whitehouse.gov/presidential-actions/2025/01/america-first-trade-policy/.

Jahna Hartwig

Author Jahna Hartwig (jhartwig@wsgr.com) is Of Counsel at Wilson Sonsini Goodrich & Rosati, Professional Corporation. For more than 60 years, Wilson Sonsini has represented technology pioneers associated with virtually every milestone innovation, as well as life sciences trailblazers shaping the future of healthcare. Today, the firm is synonymous with ushering promising, innovative companies through their business life cycle.

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